Provisional local government finance settlement 2017/18

posted on 16 December 2016, updated on 16 December 2016

The provisional local government finance settlement for 2017/18 has been issued on 15 December 2016, for consultation. Responses are sought by 13 January 2017 and the final settlement will be issued in February 2017.

Four-year settlements

The government has confirmed that 97% of local authorities in England have taken up the offer of a four-year settlement. For these authorities the settlement therefore confirms spending allocations first set out in 2015.

For the ten local authorities that did not take up the offer the settlement sets out allocations for 2017/18 only.

Referendum principles and the adult social care precept

The referendum principles for 2017/18 have also been announced. The core principle of a referendum threshold of 2% will continue to apply, however there are changes to the adult social care precept.

Instead of 2% per year up to 2019/20 as announced in 2015, social care authorities can introduce the increase sooner, by raising council tax by up to 3% in 2017/18 or 2018/19. The overall limit of 6% in total over three years remains.

Shire district councils will continue to be allowed increases of up to 2% or up to and including £5, whichever is higher. Police and crime commissioners whose Band D precept is in the lowest quartile will continue to be allowed increases of up to 2% or up to and including £5, whichever is higher.

New Homes Bonus

The government has published its response to the consultation New Homes Bonus: Sharpening the Incentive.

It has been confirmed that the number of years for which the bonus is paid will be reduced from six years to five years in 2017/18 and then four years from 2018/19. There will also be a baseline for housing growth, set at 0.4% initially for 2017/18, with the bonus only payable for growth above this level.

£1.16bn will be held back from Revenue Support Grant to fund the New Homes Bonus in 2017/18.

The government is considering withholding New Homes Bonus from local authorities where it considers that planning is not effective in terms of decisions on planning applications and delivering new homes.

The changes to New Homes Bonus will result in savings, expected to be £240m in 2017/18, and this will be used to fund a new Adult Social Care Support Grant which will be distributed to local authorities with social care responsibilities in proportion to the adult social care relative needs formula.

Other announcements

Other announcements relating to the local government finance settlement include:

  • arrangements for local authorities piloting 100% business rates retention
  • arrangements for Transition Grant and Rural Services Delivery Grant in 2017/18
  • proposals for improvement to the business rates revaluation adjustment methodology
  • details of the approach to allocating funding through the improved Better Care Fund.

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