This article demonstrates the hugely complex issue that is Local Government Funding. Essentially we have two problems. The current funding formula which is subject to the forthcoming fair funding review has lost credibility with a number of local authority bodies for not having taken sufficient account of demographic changes.
However funding based on economic growth and driven by Business Rates does not reflect need either current or future. Hence it all comes back to the fair funding review. Will this see the light of day as Brexit consumes political life? It’s a challenging and complex issue which will involve many different stakeholders. It ticks all the boxes for putting something on the back burner as "too difficult". For most councils they would rather there just be a bigger cake. An increase in overall funding is more important to the sector.
The alarm bells are ringing - we need to focus on the immediate alleviation of pressure points and be able to reflect on the best way of achieving fair funding in a context where councils don't have the spectre of section 114 hanging over them.
The move to fund councils through business rates retention and council tax revenue could exacerbate inequalities, analysis by the Institute of Fiscal Studies has found. The analysis also found there to be no correlation between changes in councils’ business rates bases and shifts in productivity and employment. The IFS’ report, published today, found a “negative correlation” between individual councils’ capacity to raise revenue and the amount they need to spend to meet local needs