A leading financial think-tank has warned that the Government risks ‘misleading’ local authorities if it does not provide more clarity on its plans to reform funding.
A new report by the Institute for Fiscal Studies (IFS) concludes the Government must be much clearer on both its expectations of local public services and its objectives for reform – or risk undermining its efforts.
The think-tank said assessments of councils’ spending needs and their ability to raise revenue must be updated to inform a new system for allocating central government funding.
The IFS said current allocations were too often ‘essentially arbitrary’, being no longer reflective of areas’ populations or other socio-economic characteristics.
Its new report proposes that an independent body advises on local government funding and its distribution, and floats the idea of legislation that requires the Government to provide sufficient funding for statutory services.
The think-tank also found that ‘the evidence that devolution boosts economic performance is less strong than sometimes claimed’.
IFS associate director David Phillips said: ‘The technical details of the reforms will matter.
‘But what matters most is a clear articulation of what services the UK government expects local government in England to be able to provide, and its objectives for a reformed system – including the extent to which it prioritises redistribution to poorer areas, versus financial incentives for growth.’
