Future versions of the Fair Funding Review should be carried out by an independent body, according to Rob Whiteman, chief executive of the Chartered Institute of Public Finance and Accountancy.
Earlier this year, initial proposals resulting from the government’s current review sparked an angry response from urban councils, which claimed they would be hit by the removal of the current deprivation measure in the foundation formula.
Speaking before the Housing, Communities and Local Government Committee this week, Whiteman said reducing government’s role in the process could lead to a more transparent and fairer outcome for councils.
He said: “I hope one day a government would consider some of that work being carried out independently.
“In my career on the whole I have seen generally Labour governments redistribute to Labour councils and Conservative governments redistribute to Conservative councils.
“There are various technical arguments made for doing that but at some point I would like to see an independent body considering the drivers and the data used and the evidence and in a transparent way advising government how a fair funding formula could be achieved.”
He said that government would still have the power to agree with independent recommendations, “but at the moment I don’t think it is transparent enough and it never has been”.
However, Whiteman said initial results from CIPFA’s new resilience index indicate that county councils are under the greatest financial pressure, according to the organisation’s chief executive.
“Looking at those data put councils in categories of resilience risk. It is CIPFA’s view that county councils are facing particularly [high challenges],” Whiteman said.
He added: “On the whole I think counties in relative terms are under the greatest pressure when I look at their budgets.”
Whiteman explained: “I think that is because most councils are spending more on children’s services for example and have diverted money into children’s services by making bigger cuts in other areas.
“Very often counties don’t provide the services that have tended to be cut by a bigger amount so they are dealing with the pressures in adults and children’s [services] without the ability to cut other services to a greater degree.”
The point was backed by Peter Murphy, director of the Public Policy and Management Research Group at Nottingham Business School, who told the committee: “There is a lack of flexibility for a county council versus a unitary because [unitaries] are spread across a number of services.”
Whiteman said that the results from the resilience index would be released publicly in the Autumn.
During the session, Whiteman also said it might be sensible for the government to delay the Fair Funding review until after the forthcoming Spending Review.
“The fair funding review has quite a bit of work to do yet and although I like to see things progress I do wonder if it might be delayed in order that there are no unintended consequences to it…” he said.
This would mean “the sector is clear on the quantum, clear on its ability to raise money and then any re-distributive effects of the fair funding formula is understood with more than a year to go in order that transition and dampening can be effected,” he added.
The committee later heard from Sir Amyas Morse, outgoing comptroller and auditor general of the National Audit Office, who revealed that his body is investigating the growing trend of councils borrowing from the Public Works Loan Board to fund property investment.
In March, Room151’s Current Affairs Survey found that lower tier authorities were perceived to be most at risk of losing out as a result of the Fair Funding Review, with two-thirds of respondents expecting counties to end up better off.
