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Fair funding review must not drive us apart

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Commentary on the ramping up of the battle for fairness

Leave/remain is not the only indication of just how divided this country is. LGC’s Council Control Map is a pretty useful indicator of the enormity of the gulf in the outlooks of different types of area.

Our map, produced after last year’s polls, shows 24 of the 27 county councils are Conservative controlled (and the blue party is the largest block in the three with no overall control).

In contrast, 30 of the 36 metropolitan councils are controlled by Labour, with the Conservatives holding just Solihull MBC. In London, the Conservatives won just 511 seats – their lowest ever figure.

In short, urban areas have lately become more Labour while rural areas have become more Tory. This simple fact is of critical importance when it comes to this year’s fair funding review, which (sad to relate) will determine the distribution of the pie rather than the enlargement of the pie.

Governments have a tendency to skew funding towards areas their party controls and the fact that there is such a clear split in political control between rural and urban areas gives Theresa May’s administration much leeway to seek to redistribute funding from urban to rural authorities.

This thesis was backed by two consultations released alongside the local government finance settlement in December. As an LGC analysis showed last week, the proposed new financial system would be built around a single per capita foundation formula for which population is the only cost driver. However, factors such as deprivation would be reflected in additional service specific formulae covering areas such as social care and children’s services.

This is leading to considerable concern in urban areas fearful that the importance of deprivation will diminish in the new funding system – and some optimism in county councils and districts.

The urban area’s concern was exacerbated by the fact that the majority of the areas chosen to pilot 75% business rates retention next year will be counties. And London, which was previously able to retain 100% of business rates as part of its pilot will now only be able to retain 75%. While this may offer a more level playing field it nevertheless tilts the generosity away from the capital. And there is the government decision to wipe out the £153m cost of negative revenue support grant – something which largely benefits wealthier shires and not the northern mets.

All of this has the potential to cause conflict within local government – a conflict which was brought to an even wider audience than LGC when the Guardian covered it this weekend.

Richard Watts (Lab), leader of Islington LBC, told the paper: “The evidence used by the government to justify these changes seems so bizarrely selective that it’s impossible to avoid the conclusion that the review is a brutal political stitch-up aimed at sparing Tory councils and Tory voters from more cuts while piling misery on the most deprived areas of the country.”

Newcastle City Council leader Nick Forbes (Lab), who also (of course) represents Labour shire councillors in his role as the party’s Local Government Association group leader, described the government proposal as “an act of war” which was to “the serious detriment of urban, economically and socially disadvantaged areas, which also mainly happen to be Labour-run council areas”.

While LGC readers may be familiar with the fair funding review, Cllr Forbes’ and Cllr Watts’ statements are merely the opening shots of the battle on the national stage.

There is a danger that 2019 could be characterised as a year of conflict between different types of councils. Little wonder then that Martin Swales, the new president of the Society of Local Authority Chief Executives & Senior Managers, has urged the sector to “unite behind a single vision for the future of local government”, even if it has “acknowledged points of difference”.

Mr Swales has a point. While this decade has been financially kinder to some types of councils than others, it has not been kind to any. While it is legitimate for counties, mets, London boroughs, unitaries and districts to all make their case, all must remember that they are stronger together than apart.

While there is a need for local government to avoid escalating its conflicts, there is also a requirement on the government to avoid escalating the nation’s conflicts. Many people in both northern metropolitan and non-urban areas feel prosperity and opportunity have left them behind. And while London has some ostentatious wealth, life is a struggle for many, possibly a majority, of its inhabitants, many of whom are dependent on stretched public services.

Any move to dramatically tilt the financial system in favour of a type of council or region has the potential to make life much worse for many people. Indeed, when modern Britain is more divided than ever before, it has the potential to exacerbate the fissures in our nation’s social cohesion. As the fair funding review proceeds, the onus is on ministers to go out of their way to demonstrate a commitment to fairness and to avoid party politics.

Nick Golding, editor

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