Just under a year ago, I sat before the MHCLG Select Committee in Parliament to give evidence on the issue of fair funding. In that committee meeting, I proposed the Fair Funding Review be delayed by a year. Back in September, this call was heeded by government, with Robert Jenrick pledging to delay the review to 2020/21, after a comprehensive spending review.
This was absolutely the right decision. However, part of our rationale behind our call for the delay was to give authorities a full year to plan for what would be a substantial change. We are now approaching the new financial year, and councils around the country are tying up their budget-setting processes in a more complex and uncertain environment than ever. The conversation around fair funding has not moved on at all, and a comprehensive spending review is still nowhere in sight.
With a strong majority, and having finally taken a concrete step forward on Brexit, the government should now have sufficient political bandwidth to start building understanding and consensus around other issues affecting the public sector. In short, it’s high time a fair funding solution was identified and implemented for local government.
This must start with a comprehensive spending review to follow the March Budget as soon as practically possible, ideally before local elections in May. Following a number of years of annual budget cycles, it’s vital that the next spending review provides a longer term planning horizon of 4–5 years. The medium- to long-term certainty this would provide is essential for councils to be able to manage resources appropriately and make provisions for increasing demand.
On the specific issue of fair funding, clarity is needed more than ever. CIPFA’s concerns about the volatility of local government finance remain strong. Many authorities, particularly those with social care responsibilities, are grappling with huge financial pressures that threaten their long-term resilience. Any settlement must reflect the particular needs of the most hard-pressed councils.
Back in May, I argued that an independent body be appointed to handle decisions around a new fair funding formula. I strongly believe the case for this remains compelling today. In the last month, we have seen various groups take a highly caveated fair funding model created by the Local Government Association and come to wildly different conclusions about who the winners and losers will be. The assortment of dissenting headlines that followed was indicative of both the lack of clarity, and the fundamental lack of trust, surrounding this issue.
While we cannot escape the fact that the Fair Funding Review will yield both winners and losers, speculation helps no one. Independent, evidence-based decisions need to be made for the good of all. An independent body would go some way towards depoliticising the issue and building trust and consensus around the decisions taken.
While CIPFA remains clear that a serious and focused discussion is still needed with the Treasury regarding the size of the funding envelope for the sector, this conversation needs to also consider the long-term threat of rising demand in services like adults and children’s social care. As demand on local services continues to rise, the trio of central government grant, business rates and council tax is no longer sufficient to support service delivery.
CIPFA has been at the heart of advocating for fairness and transparency in local government funding for many years. As we move towards the Budget, and the comprehensive spending review that must follow, we would like to see political willingness from Whitehall to talk openly with the sector about how a fair funding solution fits into the wider picture of long-term sustainability for services.
This article first appeared in Local Government Chronicle.
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