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Outcome of fair funding review mooted for implementation in 2021

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Councils should prepare for the outcome of the government’s forthcoming fair funding review to be implemented in 2021, according to the Local Government Association.

There are hopes the Department for Communities & Local Government will “shortly” publish its long-awaited consultation paper on fair funding – it had been expected earlier in the year only for it to be delayed due to the general election.

Nicola Morton, head of local government finance at the LGA, told members at a meeting of the LGA’s executive board on Thursday: “Now we are looking at implementation for 2021 rather than 2019-20. That’s not definite and there’s not a government statement on that but that’s what we’re working to.”

Later she said: “In 2019, assuming we have got the 2021 implementation date, that is when we will start to see full consultation document with specific options and exemplifications of what it might look like for individual local authorities.”

In the meantime the government is considering commissioning research into and looking at the way funding for children’s and adults services is allocated, said Ms Morton.

As a result, the LGA is proposing to carry out some “additional work on top of what we had planned”, she added. This will include looking at the criteria used to assess funding need, council tax equalisation, the damping system designed to protect councils from big reductions in income, and options for transition funding.

During the meeting Conservative group leader David Simmonds said the LGA’s position would be strengthened in its negotiations with the government if it could come to some “valued judgements” about which options would be best for the sector overall.

Nick Forbes, leader of the Labour group on the LGA, said: “There is a danger we end up with a pick and mix of options that people can choose which is best for their council and that means we’re making financial decisions without any reference to need. A system of need is a crucial part of this.”

Cllr Forbes also said the LGA needed to “think seriously about what transition arrangements” will be available to councils which will face “potentially earth-shattering financial changes in 2020”.

LGC reported last week how communities secretary Sajid Javid said the DCLG is exploring a “graduated approach” to business rates reforms which could see ministers stop short of devolving 100% business rates retention straight away.

During Thursday’s meeting, Ms Morton said: “The government has explored whether 100% retention could be introduced without primary legislation. That is not the case – they do need primary legislation.

“They looked at whether that would be possible to do for 2019-20 and the parliamentary timetable, because of Brexit, just does not allow that to happen.

“But what could happen is specific grants already there at the moment could be rolled in and that could be done without primary legislation… If we did that that would take us up to 75% retention of business rates. The option then is for 100% retention at a later date.”

The LGA’s steering group on business rates retention reconvened this month, Ms Morton added.

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