Local government finance

Funding from local taxes available in the new local government finance system proposed by the government is unlikely to keep pace with rising spending pressures in coming years.

Following the provisional local government finance settlement for 2019–20, we look at how the funding cuts made over the four years between 2015–16 and 2019–20 are set to vary around the country.

This presentation was given at an IFS public talk held at the University of Birmingham on 7 November 2018.

David Phillips, associate director at the Institute for Fiscal Studies, discusses the current health of local government finance, and the prospects of a 'fairer' funding formula helping improve the situation.

Whitehall and councils agree: new assessments of spending needs should be evidence-based and objective. But is that possible?

The government is undertaking a ‘Fair Funding Review’ in conjunction with councils. The aim of this review is to propose a new system for allocating funding between councils, which will be based on updated and improved methods for estimating councils’ differing revenue-raising capacities and differing spending needs. The IFS and CIPFA hosted a roundtable on 12th September 2018 to discuss some of the big questions the review needs to address and tricky issues it needs to contend with. This presentation, which kicked off the roundtable, sets out the key findings from recent IFS research on the Fair Funding Review which speaks to these issues.

When it comes to big decisions around Brexit and independence it is dangerous to pretend that the political choice does not require some serious economic choices too, says IFS Director Paul Johnson in The Times.

The recalculation of local government funding allocations should take into account all the ways councils could bring in money.

The last time the government updated its assessment of what different councils in England need to spend was in 2013. And since 2016, the cuts the government has been making to the grants it gives to councils have taken into account the council tax revenues they raised in 2015-16. This has left things in need of reform – we cannot end up with a local government finance system where funding in the 2020s and 2030s simply depends on the distribution of grants and council tax revenues in the mid 2010s.

Major changes are afoot in English local government finance. The Fair Funding Review will see new methods and formulae to redistribute funding between councils according to their assessed spending needs and revenue-raising capacity. The expansion of the business rates retention scheme is likely to see the abolition of revenue support grant. And changes to the adult social care system could have big impacts on the cost of the system and how it is financed. In this article for the Municipal Journal, David Phillips, discusses the big picture questions that need to considered along the policy detail in coming years.

With substantial budget cuts and ongoing major reforms to the finance system (such as business rates retention and the Fair Funding Review), what scope is there for fair and sustainable funding for local government? This presentation, by David Phillips, IFS Associate Director, was given at the CIPFA annual conference in Bournemouth.

It is now just over two years since the UK’s vote to leave the European Union. Since then, it is fair to say that there has been a confusing barrage of apparently contradictory claims about the state of the economy.

The Prime Minister has committed to spending increases for the NHS over the next five years and promised this would be at least partly funded by a ‘Brexit dividend’. This is not the first time that NHS spending increases have been linked to the UK’s exit from the EU – the now infamous £350 million per week pledge was a significant feature of the 2016 referendum campaign.

How should we fund social care? When you try to answer such a big question, you quickly realise there are a whole host of underlying questions one needs to think about.