London Councils welcomes the opportunity to respond to the Government’s technical consultation on relative needs and resources as part of the Fair Funding Review.
The way local government is funded is overly complex, lacks transparency and is out of date. We welcome this much needed reform, which must be the first step in establishing a more responsive and sustainable local government finance system.
However, the distribution of funding is a secondary issue to the overall level of funding available to local government. A decade of funding cuts and rising demand for local government services has put the financial sustainability of the sector in question. This must be addressed in the Spending Review.
This response firstly outlines our general comments regarding the consultation, followed by detailed answers to the specific questions on relative needs, relative resources and transition.
In summary, our general comments raise a number of concerns regarding:
- the size of the overall quantum of funding for local government, which must be set at an
appropriate and sustainable level in the Spending Review
- the lack of progress of the Review and the uncertainty this causes for our members
- the proposal not to include deprivation as a variable in the foundation formula
- the proposals that homelessness and concessionary fares are funded by the foundation formula
rather than through separate formulae
- the evidence base being used to justify changes to the area cost adjustment
- the lack of detail about the level at which notional council tax will be set and its potential
- the proposal to include parking income within the relative resources assessment
- the lack of specific detail about transitional arrangements; notably, the length of the reset period