This is a response by David Phillips, a senior research economist at the Institute for Fiscal Studies (IFS). The views and opinions expressed here are those of the author only. The IFS has no corporate views.

The appropriate degree of redistribution and risk-sharing across local authority areas (and, on the flip-side, the appropriate degree of financial incentives) in the local government finance system is to a significant extent a political as opposed to economic one, and therefore lies outside the remit of the IFS. In the responses below, the focus is therefore on highlighting key considerations and trade-offs that need to be taken account of.