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LGA's diplomacy test over funding formula

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LGC commentary on the LGA’s struggles with ‘deprivation’ in the foundation fair funding formula

‘Deprivation’ according to the Oxford English Dictionary means: “The damaging lack of material benefits considered to be basic necessities in a society”, or “the lack or denial of something considered to be a necessity”.

Which of these did the Local Government Association (LGA) mean when it decided this week that deprivation should form part of the foundation formula for fair funding? And how would it assess ‘basic necessities’?

(We can probably leave aside the dictionary’s third definition of removing someone from an ecclesiastical office.)

The details of funding formulae usually manage the double of being important but incomprehensible to all but specialists, and the proposed foundation formula under the fair funding review is no exception.

Under the government plan deprivation should not to be included as a cost driver in the foundation formula.

Population would be the sole cost driver, alongside seven service-specific formulae, with deprivation taken account of in those for adult social care, children’s services, public health and fire and rescue.

This duly enraged Labour leaders of urban councils, which have high deprivation levels in many cases.

They saw a plot to divert their money into the gaping maws of Conservative shire counties’ social care budgets.

Newcastle City Council leader Nick Forbes (Lab) went so far as to call the proposed formula an “act of war”.

The County Councils Network (CCN) by contrast said: “The proposals announced by government rightly recognised that current weightings for deprivation were disproportionate.”

What was the LGA to do? It is supposed to speak for the whole sector with one voice and the Conservatives anyway lack an overall majority.

This forced it into a compromise that it may have trouble sticking to as discussion of the formula develops, and an eventual decision comes to which it must react.

The LGA thus decided this week that it wanted deprivation in the formula. Its Conservative chair Lord Porter went so far as to say it was unanimously.

It was though not unanimous on how deprivation should be counted in the formula or how much weight it should be accorded, nor on how these issues can be resolved.

The cities got deprivation accepted but the shires ensured it was unclear to what extent.

There will be plenty of lobbying, but what can the LGA lobby for beyond saying deprivation should have some more prominent but unspecified role?

With the CCN broadly supportive of the proposed formula, and the urban authorities decidedly not, the LGA will sooner or late face a test of its leadership’s diplomatic skills.

Mark Smulian, contributor

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