Laura Sharman 26 October 2016

Research reveals winners and losers in council funding reforms

Funding reforms could affect the quality of council services across the country, with county and metropolitan councils likely to lose significant sums of money by 2020, new research has warned.

The Institute for Fiscal Studies found that allowing councils in England to retain 100% of business rates revenue will help boost the funding of 52 (mostly district) councils by 5% or more by 2017.

However, 119 councils will lose money under the scheme which could lead to ‘greater divergence in council service quality’.

The report found that poorer councils more reliant on grants have cut their spending by 33% on average, compared to 9% by richer councils.

‘The changes to local government finance in England during the 2010s will be truly revolutionary,’ said David Phillips, a senior research economist and an author of the report. ‘We will have moved from a system where equalisation and insurance was paramount, to one with much more emphasis on incentives for growth, but also more financial risk for councils.

‘Along the way there will be lots of tricky policy decisions. And there are big picture questions, such as whether these changes will actually empower councils to deliver more growth, or just burden them with additional revenue and spending risks. The IFS’s new programme will look at both types of issues, in an effort to ensure this revolution is subject to proper public scrutiny.’

The report also found that - excluding education spending - councils are planning to spend 22% less on service provision in 2016-17 than they did in 2009-10.

For an in-depth look at how plans to scrap government funding to local authorities and replace it with business rate revenue are fraught with problems, visit The MJ.

SIGN UP
For your free daily news bulletin
Highways jobs

Assistant Director Housing

North Yorkshire Council
£111,533 to £119,774 plus relocation support
Housing is one of the most high profile and closely scrutinised areas in local government Northallerton, North Yorkshire
Recuriter: North Yorkshire Council

Director of Legal & Governance (Monitoring Officer)

Hampshire and the Solent Combined Authority
Up to £118,000
The Hampshire & Solent Combined County Authority is being established at pace, bringing together a uniquely complex geography and economy. Hampshire / Hybrid
Recuriter: Hampshire and the Solent Combined Authority

Executive Director of Finance (Section 73 Officer)

Hampshire and the Solent Combined Authority
Up to £150,000
As our first Executive Director of Finance and statutory Section 73 Officer, you will build the financial architecture that makes this possible. Hampshire / Hybrid
Recuriter: Hampshire and the Solent Combined Authority

Managing Director

South London Legal Partnership
circa £140,000
The continued success of South London Legal Partnership (SLLP) is rooted in our shared commitment. London (South), London (Greater)
Recuriter: South London Legal Partnership

Assistant Director

Gloucestershire County Council
£85,838 pa to £94,585 pa
Gloucestershire County Council is seeking a forward-thinking, highly credible senior leader. Gloucestershire
Recuriter: Gloucestershire County Council
Linkedin Banner