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Address concerns about the fairness of local government funding

Last updated: 09:48am 30 October 2019

We will continue to give local government greater control over the money they raise and address concerns about the fairness of current funding distributions.

Conservative Party Manifesto 2017, p.32

Our verdict

Funding from central government for local authorities, mostly in the form of grants, fell by 38% between 2010 and 2017 due to austerity measures. Such deep and prolonged budget cuts led to complaints of unfairness, one of the reasons behind the launch of the Fair Funding Review in 2016. This policy commits the government to continuing to address concerns about fairness in local government funding.

The Fair Funding Review of local authority funding has continued, and fed into the local government finance settlement 2019-2020. That settlement is expected to bring local authorities’ combined spending power from £45.1 billion in 2018-19 to £46.4 billion in 2019-20.

Following a consultation on business rates retention reform, the 2019-2020 settlement also confirmed 15 new pilot areas for 75% business rate retention. Alterations to the business rate retention scheme are likely to result in the most significant changes to local authority funding levels under this government (see “Related Policy” below).

A consultation was held from December 2018 to February 2019 on “the assessment of local authorities’ relative needs, relative resources and transitional arrangements”. The outcome of that consultation will help determine funding allocations for local authorities in 2020-2021.

It’s worth noting that although the government claims the 2019-2020 annual funding settlement represents a real-terms increase, there are still concerns that councils are facing a funding shortfall. However, this was a promise to “address” concerns about fairness – meaning to consider and act on them – and not necessarily to “resolve” them. On that basis, we think there’s enough evidence of government action on the issue of fairness in local government funding to consider this ‘done’.

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Related Policy

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