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This data uncovers the inequity of some of the funding decisions

Alison Scott
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Authorities hit by the deepest cuts are those least able to increase funding from elsewhere, say Cifpa’s assistant direct of local government finance and policy

Last week, the Chartered Institute of Public Finance & Accountancy released data on estimated local authority spending up to 2015.

This demonstrated that over the course of this Parliament spending per head by local authorities will have fallen by 14.5%, or almost 30% when you adjust the figures to take account of inflation. This will have come as little surprise; indeed many will have taken in the figures and moved on to the next story.

This is both understandable and deeply unfortunate. After four years of austerity we have become numb to both the relentless downward trend of spending figures and the upward tick of demand. Often new statistics tell us what we all already know, that budgets are falling, resources are shrinking and all communities across the country are bearing the brunt.

However, when you dig into the data you find that behind the top-line trend there are significant variations in the impact of austerity and you can start to see the inequity of some of the funding decisions.

It was frustration with the political see-saw of local funding that led Cipfa to set up the independent finance commission

Cipfa has long criticised what we see as the political see-saw of local funding, where one party is able to favour formulas or systems that give more resources to its base or take away less from those that already have more.

It was frustration with this system that led Cipfa to join forces with the LGA to set up the independent finance commission to examine how we can take the political ping pong out of local government funding.

When you dig into this year’s finance and general estimates you see that councils are all spending less, and this isn’t a surprise. But what you also see is that those whose budgets are decreasing the most are often those with the most vulnerable communities that can’t mitigate reduced budgets through other means.

Whether small rural district councils, metropolitan authorities or central London boroughs, there often seems a correlation between the level of need and reductions in spending.

What appears to be happening is that some authorities are being hit by the double impact of a history of high reliance on revenue support grant, at the same time as being the least well positioned to benefit from growth in council tax and non-domestic rates. This means that those being hit by the deepest cuts are those least able to increase funding from elsewhere to help them live within their means.

The data shows that austerity is affecting all local authorities, but under the system introduced by this government it is likely to continue to hit some, usually those serving the most vulnerable communities, the hardest.

This is why we need to seriously tackle reform to local government finance and to reform it now.

Alison Scott, assistant director, local government finance and policy, Chartered Institute of Public Finance & Accountancy

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