Time is running out for the government to enable an orderly transition to new funding arrangements for local authorities from next year, according to sector experts.
Voices across the local government spectrum have raised concerns over a lack of clarity in a government consultation on the Fair Funding Review, which will revamp the way in which central government funding is allocated from April 2020.
In its response to the consultation, the Local Government Association said it was worried by a lack of clarity over formulas used to work out funding for a number of services which “account for a significant part of local authority budgets”.
The response said: “With further business rates retention, the results of the Spending Review and the outcome of the Fair Funding Review all being implemented from April 2020, local authorities have no reliable basis on which to appropriately plan their budgets even in the short term.
“At the moment it is unclear how much funding there will be from April 2020, how it will be distributed, and the means of delivery.
“As a result, local authorities will have to make assumptions about future funding and, in some cases, this will result in completely unnecessary cutbacks to services which could be avoided with more certainty.”
The LGA called on the government to provide local authorities with “exemplifications of further business rates retention and the Fair Funding Review in Spring 2019, rather than the summer or autumn…as currently planned.”
It said that there was particular concern over a lack of clarity on sector-specific formulas for children and young people’s services, public health, fire and rescue services, concessionary fares and home-to-school transport.
“It is also important,” the LGA added, “to test whether the proposed adult social care formula is still reflective of relative local authority needs, especially given the out-of-date welfare statistics that are used”.
Richard Harbord, former chief executive of Boston Borough Council, told Room151: “The timetable is now looking very compressed and things look very difficult for local authorities now.
“Local authorities need to know the amount of money that will be available to them.
“Not only do they not have any idea over formulas, the Comprehensive Spending Review is not going to report until November.”
One local authority director of finance, who did not want to be named, said: “It is all getting very complicated and the window for structured, considered and coordinated change is closing fast.”
Earlier this week The Guardian newspaper reported that leaders of urban councils had written to ministers to complain about the proposals in the Fair Funding Review consultation that they claim would switch millions of pounds to rural and suburban council areas.
It quoted Richard Watts, the leader of London Borough of Islington and chair of Labour’s local government resources group, as saying: “The evidence used by the government to justify these changes seems so bizarrely selective that it’s impossible to avoid the conclusion that the review is a brutal political stitch-up aimed at sparing Tory councils and Tory voters from more cuts while piling misery on the most deprived areas of the country.”
However, Harbord said: “This is not really true. The worst hit areas are likely to be rural district councils.
“Urban areas are likely to benefit from the fact that the main foundation formula will now be calculated on a per capita basis, while the service-specific formula proposed will only benefit upper tier authorities.”
The chairman of the County Councils Network (CCN) also rejected the claims in The Guardian that the consultation proposals unfairly favour counties.
Paul Carter, chairman of the CCN and leader of Kent County Council, said: “CCN has long argued the case for a flatter formula that is most responsive to population levels.
“As the government has set out, there is little evidence to support the continuation of this situation that unfairly bakes in higher expenditure in urban areas and fails to recognise unmet need elsewhere.”
He said that the current weighting for density in the revenue support grant is eight times higher than for sparsity.
“The government proposals rightly put rurality and density on a more equal footing,” he said.
