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FINANCE - PISA THE ACTION

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Lessons the government can learn from Italy's leaning tower ...
Lessons the government can learn from Italy's leaning tower

The need for a column on local government finance put me in mind of the leaning tower of Pisa. The first inkling that all was not right with the tower dates back to 1178, but in the eight centuries since, no attempt to resolve the structural problems has met with any real success. Local government finance might not have been under review for eight centuries - although sometimes I wonder - but there are clear parallels between these two notoriously irregular edifices.

No one could accuse the authorities in Pisa of failing to consider solutions to their problem: the first commission into the matter was set up in 1298 and a further 16 have followed over the centuries. Various ingenious solutions were proposed - some, like the injection of concrete into the foundations in 1934, actually made things worse - but the tower remains impervious to remedy.

This summer, local government minister Nick Raynsford is expected to report his conclusions from the balance of funding review. Like the Pisa commissions, we can be sure this review will be neither the first nor the last - and we can be equally certain that the tower of funding will still lean at the end of it.

The government and the Pisa commissions have fallen into the same trap: looking at issues in isolation. Local government finance isn't a monolithic structure or solely about the balance of funding. The reason

the local government finance regime is leaning at a perilous angle is that the various elements of its architecture - the spending review process, reviews of the grant distribution mechanism, the Gershon efficiency review, floors and ceilings, minimum funding guarantees, capping - do not form any coherent design.

When the tower took a fresh and alarming tilt in 1995, the authorities hastily added 230 tons of lead to prevent a complete collapse. It is hard not to see education secretary Charles Clarke's response to last year's school funding problems as the government's own 230 tons of lead: a short-term answer intended to prevent a crisis becoming a disaster. Yet the schools funding debacle was not a surprise to councils, especially those grappling with minimal formula spending share increases as a result of grant distribution changes. It was inevitable that a system being reformed piecemeal by at least three government departments - the Department for Education & Skills, the Treasury and the ODPM - would simply become more and more complex and unstable.

The authorities in Pisa have at least managed to make a major tourist attraction out of their architectural ineptitude; while they cannot afford the tower to collapse completely, they would not straighten it if they could. It is fair to assume, however, that nobody wants to see a crooked local government finance system. The time may have come to overhaul the whole design, but it will take rather more than another 230 tons of lead.

Helen Kilpatrick

Director of resources and deputy chief executive,

West Sussex CC

  • View LGCnet's mini-site dedicated to the Chartered Institute of Public Finance and Accountancy's annual conference in Brighton here.
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