Research highlights ways to streamline local authority funding

1 Dec 17

The way funding for local authorities in England is assessed could be simpler, fairer and more transparent, according to communities and local government committee-commissioned research.

Reducing the number of indicators used could be a way of simplifying the needs assessment, according to one of four papers written by LG Futures consultancy, which will inform the committee’s scrutiny of the government’s fair funding review.

The research, released on Tuesday, pointed out the data used in the current needs assessments is now of a “very historical nature” and suggested it should be updated.

A business rate ‘rolling reset’ – where a ‘reset’ would take place every year – would be of “more benefits in terms of fairness”, LG Futures concluded, compared to a ‘fixed period reset’.

Chair of the CLG committee Clive Betts said: “Councils are currently facing an uncertain future when it comes to funding with current settlements coming to an end in 2020. 

“We hope that ministers will find this a useful piece of research and that it makes a value contribution to the debate on how best to formulate a funding system that is both simple, transparent and fair.”  

The Department for Communities and Local Government's fair funding review is re-looking at local authority funding allocations in England.

It was intended the review would accompany the introduction of 100% business rate retention, although the deadline for that to be implemented is expected to slip from the original plan of 2019-20. 

In the Budget last month the government announced that London councils will trial a system of retaining 100% business rates from 2018/19.

The CLG committee commissioned LG Futures to address four areas:

  • Possible ways to simplify needs assessments
  • Options for simplifying the wider funding system
  • A review of the data sources used in the previous needs assessments formula
  • Issues associated with a potential ‘reset’ of the business rates baseline [in place since 2013-14].

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