Over 86% of councils' SSAs are dependant on regression analysis, the local authority associations told the inquiry.Critics of regression believe it leads to 'circularity' - as capping forces more councils to spend at or close to their SSA, past spending patterns increasingly determine future funding allocations, which eventually cease to bear any resemblance to the true costs of providing adequate services.
Local government expert Tony Travers, who gave evidence to the committee, told LGC the government should move away from regression analysis. 'The DoE will have to investigate the real costs of providing particular levels of service, using surveys and sample data. The Conservatives said they were going to move away from regression in 1980', he said.
He believed the extra costs involved would be worth it. 'I would argue that more needs to be spent on the SSA process, bearing in mind the huge amounts of money it distributes'.
'We obviously expect the government to come up with some thoughts on the bigger issues', he said. He highlighted the committee's recommendation that the DoE reviews the balance between local and central funding of local government. The three national local authority associations, which all gave evidence to the inquiry, applauded the committee for taking on many of their criticisms.
The report called for more openness in the SSA system. 'Ministers should highlight the points at which they have exercised judgment; spell out what those judgments are; and explain the factors which led them to make those judgments', the MPs say.
The committee opposed the use of SSAs to determine the amount councils have to spend on each service.The inquiry touched on the controversial topic of the DoE's refusal to define a standard level of service. The report backed the government's contention that it would not be a useful exercise.
Recently Local Government Minister David Curry has been referring to it as a 'common' level of services, to move away from the trap that the government should be able to list what councils can provide with their 'standard' funding.
Among the report's other recommendations was a call for the DoE to review whether local spending in London should be dealt with separately. But the MPs recognised the danger of the 'enhanced potential for the exercise of political judgment' this would offer ministers.