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More money and clarity: sector sets out fair funding review responses

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Local government bodies have warned that the fair funding review will do little to resolve councils’ financial plight unless it comes with clarity and more money.

The Local Government Association this month said councils’ financial planning had been made meaningless because of the uncertainty over what to expect from review.

In other reactions to the fairer funding review consultaton, which closed last week, the Society of Local Authority Chief Executives & Senior Managers said it was questionable whether fairness could be achieved while council tax and business rates remained unreformed.

“It cannot be right that funding for local services will in future be even more dependent on regressive, outdated tax mechanisms that are reflective of neither the current property market nor the modern economy,” Solace said.

The County Councils Network (CCN) said it was “very supportive” of the review’s direction of travel but any new funding formula “must be capable of addressing spikes in demand for social care services”.

District Councils Network (DCN) complained its members had seen continued reductions in spending power but pitched its case for additional funding in terms of districts’ ability to save public money overall through preventative work.

London Councils’ response called for service specific formulae for housing and looked after children.

Key points from the reactions were:

Solace 

  • strong concerns about focusing on issues of distribution before sufficiency has been addressed;
  • unilateral mid-year central government decisions such as on rates relief and referenda threshold undermine the long-term planning for value for money;
  • any policy decisions in the review should be subject to an independent review of the local impact of a final Brexit settlement;
  • using a single formula to estimate relative needs across local government is not feasible, nor could it deliver an equitable result.

CCN

  • a simple formula based on the genuine costs of delivering services, with ‘rurality’ given a higher profile;
  • any formula must be capable of responding to growth in social care pressures;
  • excessive weight is at present proposed to be given to deprivation;
  • New homes bonus should be part of the review.

DCN

  • changes in core spending power have hit district councils far harder than others;
  • district services are close enough to people to solve problems and reduce the caseload on the wider state;
  • any formula-based approach must be sensitive to individual council issues;
  • A formula should include powerful incentives to grow the economy and avoid perverse incentives.

London Councils

  • key priorities in driving needs assessment are population growth, deprivation and area costs;
  • balance of the foundation and service-specific formulae must be confirmed as soon as possible;
  • concerns raised over evidence for, and the potential multiple counting of, rurality;
  • housing services and costs of those with no recourse to public funds and unaccompanied asylum-seeking children should have specific formulae.
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