The government’s Fair Funding Review fails to address the fact that the total amount of funding for local government is inadequate, according to speakers at Room151’s FD Summit today.
The government is now more than two and a half years into the review, which ongoing review aims to devise a new system for allocating resources between councils.
Local authorities need to unite to make the case for overall greater funding, rather than argue over how the money is divided, heard delegates at the summit, which is being held alongside the Local Authority Treasury Investment Forum.
Tony Kirkham, director of resources at Newcastle City Council, said: “The cake needs to be bigger. The question of who gets what out of the distribution is in some ways secondary for me – the cake isn’t big enough.”
“The government has not validated that we have not got enough money in the first place. It hasn’t assessed the 1400 statutory requirements placed on us and the amount needed to deliver them. And it doesn’t allow us to raise council tax.”
Tony Travers, visiting professor at the London School of Economics, also speaking at the summit, said: “The truth is that national politicians in government and indeed at the top of the opposition are unwilling to face the fact that local government can’t deliver £100 worth of services for £70.
Travers predicted that the government’s fair funding review is likely to redistribute money away from urban and district councils to counties, partly because the troubles at Northamptonshire County Council have been so well publicised.
He said: “Northamptonshire will make ministers think they ought to give more money to counties. Even though their funding has been cut less than other authorities, they have made more noise. Ministers respond to creaking doors.”
Speaking during a separate session of the summit, Paul Johnston, director of the Institute for Fiscal Studies, said: “When it comes to doing the fair funding review, ‘fair’ will be completely in the eye of the beholder.
“What will look like a terribly clever analytical exercise will depend on a judgement about how to use the data.”
Martin Reeves, chief executive of Coventry City Council, said that local authorities need to make the seriousness of their financial situation clearer to central government.
He said: “We have an existential threat to public services. Through a failure to create a coherent narrative we are finding ourselves in a more perilous state.”
Making a keynote speech at the summit, Meg Hillier, chair of parliament’s Public Accounts Committee, said that the Ministry of Housing, Communities and Local Government lacked the clout within Whitehall to compete for resources with health and defence departments.
She said: “MHCLG is not in a strong position in Whitehall. It is not a spending department as such – it gets money and passes it to local government.”
Hillier also voiced frustrations about a hearing session in May where MHCLG permanent secretary Melanie Dawes was quizzed on how central government could spot and prevent future crises, such as Northamptonshire, occurring in future.
She said: “We were really disappointed the government had no measure of a sustainable council or what the warning signs would be. We felt the department was flying blind – almost in denial there would be a problem.”
