Responding to COVID-19: insight, support and guidance

Let's talk about grants

08-07-2021

By Joanne Pitt, CIPFA Local Government Policy Manager

A couple of weeks ago, CIPFA had the pleasure of hosting a roundtable sponsored by Capita. The roundtable looked at some of the challenges surrounding local government grants and how effective they are at supporting our communities.

We were joined by a host of experienced and well-informed finance directors from across the country representing different tiers of local government. Many of these contributors had asked to attend the roundtable following our recent white paper "Local government grants: how effectively do they support communities?"

The white paper covered the economic context of grants across the UK, reflected on the relationship between local and national government, and provided a deep dive into a case study on the challenges around grant dispersal and allocation, before finally considering the issue of fraud.

Although the publication was broad in scope, it was evident that there was a high degree of consensus amongst our attendees on the key topics. There was also a clear desire to construct a common message back to government about how lessons should be learnt, particularly from the experience of the pandemic and the frustrations some practitioners had experienced because of the complexity of grant administration.

Here is a flavour of the discussion that took place, highlighting what came through as important messages for government.

Grant payments

The grant funding landscape has become dominated by short-term, ring-fenced allocations that create real difficulty for local authorities in terms of forward strategic planning. It curtails ambition and it restricts the value of funding.

Individual ring-fenced grants are unhelpful from a regional perspective as they do not lend themselves to generating economies of scale, while grants in general often come with conditions that local authorities find restrictive. The discussion highlighted the problems around timescales that accompanied some of the COVID grants, particularly where there was a disconnect between allocation and guidance.

There is a current vogue for grants to be accessed through a bidding process. We have seen this in the levelling up funding. The cost of bidding can outweigh the value of the grant and the uncertainty surrounding the bidding process is seen as a barrier. The rising resource requirements around securing and administrating grants was a concern.

Financial Planning

Because of the short-term nature of funding and the lack of certainty, Directors of Finance are struggling as they prepare the budgets, waiting to see whether the budgeted assumptions will be realised, especially in terms of grant funding. Different authorities reflected on the lack of certainty around different grants. For example, district directors expressed concern over the new home bonus.

As one director put it: "As more information emerges, perhaps the autumn statement and budget statement in November, then you get a bit of clarification. But from a planning perspective when you look at your budget gaps moving forward, some of that is because you haven't got any certainty."

Level of assurance

Specifically for COVID related expenditure, the increasing number of grants was accompanied by an increasing level of assurance. While assurance is important, it should be proportionate and the consensus around the table was that this was not the case. It was pointed out that "some of the latter grants required a pre-check, almost a credit check on the businesses before they could be sent out."

This led to an interesting discussion around themes of trust, transparency and communication with the attendees. It was clear that proportionality of assurance should be one of the lessons learnt by government and that more trust should have been shown in Section 151s. 

Conclusion

The fragmented grant landscape, which is what we described in the white paper, leads to a disjointed economic framework where local government is not able to benefit from economies of scale or scope in the kinds of projects and services they seek to deliver. Government should reflect on the need to effectively structure this funding mechanism to ensure it works for all those it is intended to help.

Grants are primary drivers for much of the activity that happens throughout government, both nationally and sub-nationally. It's important that we all work together to improve how grants are delivered. This means discussions about ring fencing, allocation and assurance. There needs to be a whole system approach which focuses on outcomes.

It is important for local authorities to have good systems in place for administering grants since the requirements from government to distribute quickly and effectively, whilst minimising fraud risk, can be quite burdensome. This has been particularly evident during COVID. There can be no doubt that having the right system in place to manage the end-to-end grant process is crucial to the future efficiency and resilience of local authorities.