This presentation was given by David Phillips at the CIOT/IFS debate, "Tax devolution - a help or hindrance to the UK's cities, regions and nations?", on 22 October 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.
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.
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.
The financing of local public services involves a potential trade-off between the equalisation of funding between areas and the provision of fiscal incentives for economic growth. It also involves trade-offs between local discretion and national service standards. This chapter of the British Academy publication Governing England: Devolution and Funding, examines how these redistribution incentives, discretion and national service standards have been traded off in England - and offers options for the future.
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.
