Cautious welcome for final local government finance settlement 2016-17

10-02-2016

The Chartered Institute of Public Finance and Accountancy (CIPFA) today welcomed that Whitehall appears to have listened to the concerns of local government and slowed the drop in funding levels, which was announced during the provisional settlement.

No authority has less Revenue Support Grant (RSG) than outlined in December, with around £200m extra funding built into the final settlement.

In particular, CIPFA was pleased to see transitional support for councils facing the sharpest reductions in RSG between 2016/17 and 2018/19.

However, CIPFA called for greater clarity on where this additional funding would come from, to address concerns that money would simply be used from other parts of the public sector and their departmental expenditure limits (DEL).

Rob Whiteman, Chief Executive at CIPFA, said: “Ministers have clearly listened to the concerns of local authorities and responded with a funding settlement that sets out a journey towards more sustainable public finance. But the Government must provide clarity over where the money is coming from to allay fears of more cuts elsewhere.

“During this transition period, as councils move towards 100% business rate retention, it is important that no one is left behind, so it is encouraging to hear ministers acknowledge the importance of a review of the needs formula.”

Whitehall’s plan to lessen the impact of proposed funding cuts, during its final settlement statement was published on Monday 8 February. CIPFA welcomes Secretary of State for Department for Communities and Local Government Greg Clark’s announcement of an annual £150m transitional grant (for two years from 2016/17) for those high tax-base, low-need authorities that were facing the most significant cut in RSG. Equally, that the Rural Service Delivery Grant has been increased so significantly from the £20m announced to £80.5m in 16/17 will be a relief to shire areas.

Changes to the proposals set out in December 2015 recognise that some councils would have been left far worse off than they had planned to be due to a change in the way the RSG will be distributed, alongside ongoing cuts. This was central to CIPFA’s response to the proposals, which also highlighted the challenges faced by local authorities from the late and unexpected change.

The institute will continue supporting the sector by playing an active role in the needs formula dialogue and by pushing for greater clarity, transparency and timeliness over the settlement.

ENDS

For media enquiries contact the CIPFA press office on 020 7543 5830/ 07833 091 303  or E: david.stone@cipfa.org.

About CIPFA

The Chartered Institute of Public Finance and Accountancy (CIPFA) is one of the leading professional accountancy bodies in the UK and the only one which specialises in the public services. It is responsible for the education and training of professional accountants and for their regulation through the setting and monitoring of professional standards.

Uniquely among the professional accountancy bodies in the UK, CIPFA has responsibility for setting accounting standards for a significant part of the economy, namely local government. CIPFA’s members work (often at the most senior level) in the public service bodies, in the national audit agencies and major accountancy firms. They are respected throughout for their high technical and ethical standards and professional integrity. CIPFA also provides a range of high quality advisory, information and training and consultancy services to public service organisations. As such, CIPFA is the leading independent commentator on managing and accounting for public money.