Council’s funding assessments could be more transparent

The CLG Committee has today published independent analysis suggesting ways in which the current needs and funding assessments for councils could be made simpler and more transparent.

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The research is aimed at contributing to the government’s Fair Funding Review and the work implementing 100% retention of business rates for local authorities.

The analysis suggests a method for simplifying the needs assessment formula – reducing the number of indicators used – and for simplifying the wider funding model that translates these assessed needs into funding. The research also reviews the data that is used in the calculations.

It also assesses the implications of two potential models for the ongoing ‘resetting’ of the funding system in light of the introduction of 100 per cent retention of business rates for local authorities.  

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

“The secretary of state told us when he appeared before the committee in October that the government was committed to a review of the funding formula and the implementation of 100% retention of business rates for councils.

“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 research was undertaken by public sector funding and financial management specialists LG Futures.

The committee requested research exploring:

  • A potential approach to simplifying the current needs assessment formula
  • Options for simplifying the wider funding system
  • The timeliness of the data sources used in the current needs assessment formula
  • A comparison of potential approaches to the ‘reset’ – ‘fixed period’ or ‘rolling’ – of the business rates baseline.

The research can be found on the Committee’s website at:  LG Futures Research

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