The government has announced plans to create a “simpler, fairer and more transparent” funding system for local authorities in England.
Yesterday (10 January), the Department for Levelling Up, Housing and Communities (DLUHC) outlined proposals to increase the “effectiveness and efficiency” of the current council funding system by reducing administrative burdens.
DLUHC detailed three main phases of the proposals: the immediate simplification of existing funds and communication; the establishment of a new funding simplification doctrine; and reforms to be implemented at the next spending review.
The new funding plans build on steps the department has already taken to streamline existing processes and simplify funds into larger pots, which can be invested across local strategic priorities. These include the launch of the Levelling Up Fund and UK Shared Prosperity Fund.
“The Levelling Up White Paper set out our ambition for a simple and streamlined funding landscape. By reducing administrative burdens, this plan will support local authorities to maximise their return on spending, generating the best outcomes for communities,” DLUHC stated.
Devolving greater decision-making
The first phase of the plans will simplify the delivery of existing funds, with all funding that goes from DLUHC to local authorities to support local economic growth eligible.
Measures under the first phase include simplifying the project adjustment request (PAR) process for the Levelling Up Fund, Town Deals and Future High Streets Fund; inviting ten local authorities in England to take part in a Simplification Pathfinder Pilot to test the streamlined delivery of capital funding; and publishing a new framework to simplify the department’s approach to monitoring and evaluation funding.
According to DLUHC, simplifying the PAR process will “devolve a greater degree of decision-making to local authorities”, giving them more flexibility to change projects.
Building on this, the government stated that the Simplification Pathfinder Pilot scheme will give authorities taking part greater spending flexibility over three existing local growth funding allocations. These include the Future High Streets Fund, Town Deals and DLUHC funding from round one of the Levelling Up Fund.
“Pilot authorities will have greater ability to make decisions locally about moving funding between projects in their funding portfolio,” DLUHC’s proposals said.
Distribution of funding
Under the second and third phases, DLUHC will consider all funding that is made available exclusively to local authorities by central government. However, this explicitly excludes funding within the local government finance settlement and services that are mandated by statute such as funding for schools and children’s and adult social care.
The proposals outlined that establishing a new funding simplification doctrine (phase two) will be created to assess suitable distribution methodologies for new funding streams. The doctrine is anticipated to be implemented in 2024.
Under phase three, simplification reforms will be implemented at the next spending review, including multiyear, single departmental-style funding settlements for trailblazer mayoral combined authorities.
DLUHC stated that it will consider how lessons learned on streamlining the funding landscape in England can be applied to Scotland, Wales and Northern Ireland.
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