5 year freeze on Council Tax and £3.8 billion for social care announced in today's Spending Round.

The spending commitments announced by the government today (26 June 2013) will put families first with 2 more years of Council Tax freeze and improvement to the way services are delivered, which include a new £2 billion investment to help local authorities protect service levels in social care that will help save more taxpayers’ money in the long term.

The package of measures announced for local government will encourage more joint working between councils themselves and between local government and central government. The spending settlement for local government in 2015 to 2016 delivers 4 key aims:

  • £3.8 billion, including £2 billion of new NHS investment, to improve adult social care and join up with health services. This will help older and vulnerable people to stay healthy and remain at home thereby avoiding unnecessary hospital admissions or emergency visits to A&E. To stimulate real change, £1 billion of this funding will be paid when local results are achieved.
  • Enable local authorities to freeze Council Tax bills in England for another 2 years (2014 to 2015 and 2015 to 2016) supporting people with their cost of living. This is worth potentially up to £1,100 for taxpayers in an average Band D home over the lifetime of Parliament. In stark contrast in the years between 1997 to 1998 and 2010 to 2011 Council Tax more than doubled. Any increase above 2% will require a referendum.
  • Extend the government’s groundbreaking Troubled Families programme with an additional £200 million in 2015 to 2016 to start intensive help to reach 400,000 high risk families, the first year of a 5 year programme that will get to grips with their problems before they spiral out of control.
  • Incentivise councils so they transform local services for the long term benefit of their communities. Pilot programmes have shown there is huge scope for savings. Local government estimates Community Budgets could save £20 billion if rolled out country wide. The new Public Service Transformation Network will extend collaboration and intensive support to more local service partners via a rolling programme. A new £100 million transformation fund will give councils the impetus to implement efficiencies and another £30 million will encourage greater collaboration across emergency services.

Eric Pickles said:

This is an important step towards achieving a seamless transition between health and social care. For the last 30 years all too often the care home, social services, and the local GP haven’t been working together to prevent unplanned hospitalisation of elderly or vulnerable people. This £3.8 billion has the potential to transform adult health care reducing unnecessary distress and stopping taxpayer money from being wasted.

The spending commitments announced today represent a fair deal for councils and a fair deal for Council Tax payers. By cancelling duplication, curtailing bureaucracy and cutting back on Whitehall and Town Hall silos, we can do more for less and deliver better value services with taxpayers’ money.

A further 2 years of Council Tax funding will deliver an unprecedented 5 year freeze covering the whole lifetime of this Parliament - potentially worth up to £1,100 for a taxpayer in an average Band D home.

This government’s carefully considered reforms are helping councils achieve greater financial independence and deliver sensible savings while protecting frontline services, as demonstrated by local government’s own figures which show residents’ satisfaction has risen slightly since 2010.

The government knows this means some tough choices for councils, but central government is making the same tough choices. The Department for Communities and Local Government (DCLG) has delivered a 40% saving in administration costs over this 2010 spending review and it has been confirmed today that it will deliver 10% more in 2015 to 2016.

Notes to editors

1) Authorities that freeze or reduce their Band D Council Tax will receive a grant equivalent to a 1% increase on 2013 to 2014 Band D Council Tax levels. In addition, the government intends to hold the Council Tax referendum threshold to 2% for the next 2 years. This would mean if a local authority seeks to raise its Council Tax by more than 2%, they would need to put it to their local electorate in a binding referendum.

The 5 year £1,099 saving is based on a cumulative annual saving of £72 where an assumed rise of 5% in average Council Tax bills is used. This has been calculated based on an average Band D Council Tax figure for 2011 to 2012 of £1,439. A rise of 5% reflects the typical Council Tax capping level under the last Administration (2005 to 2006: 5.5%; 2006 to 2007: 5.0%; 2008 to 2009: 5.0%; 2009 to 2010: 5.0%; 2010 to 2011: 4.5%). The average annual rise in Council Tax under the last Administration was 5.9%.

2) Local government budgets were protected for 2013 to 2014. This means that councils can protect taxpayers while working to deliver the service transformation necessary to rewire services for the future. 2015 to 2016 will see an overall local government spending reduction of 2.3% when considering Office for Budget Responsibility estimates, which do not factor in Council Tax freeze support.

3) The new Transformation Fund in 2015 will help council meet up front costs for shared services, investment in IT to join up services, co-location of services, more joint procurement, and other cost saving / service improving initiatives. The government is backing local integrated services that share resources and aims so they put families, not organisations, first. This will reduce costs.

4) DCLG has received a resource settlement of £1.13 billion from HM Treasury for 2015 to 2016. Since the 2010 Spending Review DCLG has become a smaller, more flexible organisation, but is committed to delivering the best value for money for the taxpayer. Administration savings have already been secured for 2015 to 2016 such as sharing headquarters with the Home Office from September 2014 and implementing a new IT contract with 40% savings.

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