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EXCLUSIVE: Pressure mounts over transition grant 'scandal'

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Ministers are coming under increasing pressure to reveal how the distribution of the transition grant announced in this year’s local government finance settlement was calculated, LGC has learned.

The Information Commissioner is set to investigate the Department for Communities & Local Government’s refusal to release details of the formula after the department refused a Freedom of Information request from Nottingham City Council deputy leader Graham Chapman (Lab) earlier this year.

Meanwhile, the Special Interest Group of Municipal Authorities yesterday wrote to the National Audit Office raising concerns about the lack of transparency surrounding the funding, worth £150m a year in 2016-17 and 2017-18.

LGC analysis has previously found that in the first year of the grant more than 70% was due to go to county councils. Metropolitan authorities were set to receive just 1.6%, or £2.5m, split between three councils, two of which Trafford and Solihull MBCs are run by Conservative administrations.

Surrey and Hampshire CCs, also Conservative run, were the biggest winners in cash terms with an additional £11.9m and £9.4m respectively. Regionally, almost 38% of the cash went to the south east while the north east will get less than 1%.

Cllr Chapman said: “I’m not giving up on this. It’s on the verge of scandal and if it wasn’t they would be giving us the information.”

When the funding was announced alongside the 2016-17 local government finance settlement, which also included indicative settlement figures up to 2020, the DCLG said the transition grant had been distributed to councils which had lost out due to a change in how cuts to revenue support grant were distributed from 2016-17 onwards.

Unlike in previous years, a council’s total income from revenue support grant, council tax and business rates was considered before the cut was applied. This meant metropolitan authorities saw a smaller cut than they would have done under the old methodology, but they still saw the largest reduction in overall spending power.

Cllr Chapman submitted an FOI request for the model used to calculate the distribution of the grant back in May but this was rejected. A subsequent internal review by the DCLG upheld the rejection on the grounds the formula related to the formulation of government policy as the transition grant for 2017-18 has yet to be approved by parliament.

Cllr Chapman had contested that under the FOI Act statistical information used in policy formulation must be released once the policy decision has been taken. But although the DCLG acknowledged this was the case it argued that as the local government finance settlement was “very much a numerical policy” the spreadsheet in question “constitutes a policy document rather than background statistical information”.

Cllr Chapman appealed to the Information Commissioner’s Office which has accepted the complaint as eligible for consideration.

He described the DCLG’s response as “fatuous”.

“This is public money, it affects every household in the country it affects households in Birmingham that have lost £97 per head and households in Rutland that have gained £44 a head and they’re telling us it’s not in the public interest,” said Cllr Chapman.

In his letter to NAO comptroller and auditor general Sir Amyas Morse, Sigoma chair Sir Stephen Houghton (Lab) said the FOI response “clearly does not deal with the lack of transparency around this issue”. He said he had ”sought clarity on the calculations through our officers and government officials [but] full details were not forthcoming”.

A DCLG spokesman said: “Our long-term funding settlement includes £300 million to support those councils facing the sharpest transition from dependence on central government grants to financial autonomy. This money has been allocated fairly and we have published a detailed explanation of how it was calculated.

“We are aware of the investigation and will respond in due course.”

*This story was updated on 15/09 at 10.20am to include a comment from DCLG

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