3
Conclusion
Second Report - Local authority financi…
Deferred
The question of the BRRS is closely related to the debate about the longstanding role of equalisation in how local government in England is funded. Whilst the purpose of equalisation is to ensure fairness between councils, there is little agreement on the appropriate level: 100% equalisation would provide local authorities …
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The question of the BRRS is closely related to the debate about the longstanding role of equalisation in how local government in England is funded. Whilst the purpose of equalisation is to ensure fairness between councils, there is little agreement on the appropriate level: 100% equalisation would provide local authorities with no incentive to build up their tax base, whereas no equalisation would leave some councils chronically underfunded through no fault of their own. The system of local government finance should both enable councils to increase revenue by growing their tax base and protect those in more deprived areas. Rules about equalisation need to be transparent, comprehensible and predictable.
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Government response AI summary
The government has deferred decisions on local government finance reform, including the BRRS and equalisation rules, to an ongoing Spending Review, citing the need to assess the pandemic's impact.
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Ministry of Housing, Communities and Local Government
9
Conclusion
Second Report - Local authority financi…
Deferred
We understand the Government’s reasons for resorting to a one-year spending review last year, but we note it followed a one-year spending review in 2019 and that the last multi-year spending review came in 2015. Local government cannot manage its spending and borrowing without the medium-term certainty that multi-year funding …
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We understand the Government’s reasons for resorting to a one-year spending review last year, but we note it followed a one-year spending review in 2019 and that the last multi-year spending review came in 2015. Local government cannot manage its spending and borrowing without the medium-term certainty that multi-year funding settlements bring. If the next spending review is not a multi- year settlement, the recovery of local authority finances after the covid-19 pandemic will be impeded. We are pleased that the Minister acknowledged the importance of multi-year settlements to local government but note he expressed only the hope that the next one would be a multi-year settlement.
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Government response AI summary
The government agrees that multi-year settlements provide certainty for effective planning. However, the approach to the next settlement will be informed by the ongoing Spending Review, and the government is exploring opportunities to simplify the funding system.
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Ministry of Housing, Communities and Local Government
11
Recommendation
Second Report - Local authority financi…
Deferred
The next financial settlement for local government must be a multi-year settlement. The Government should also consolidate the number of small and ring-fenced grants, which can limit local authorities’ ability to provide services flexibly, and should reduce the number of bidding processes, which can be burdensome and time consuming. (Paragraph …
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The next financial settlement for local government must be a multi-year settlement. The Government should also consolidate the number of small and ring-fenced grants, which can limit local authorities’ ability to provide services flexibly, and should reduce the number of bidding processes, which can be burdensome and time consuming. (Paragraph 44) Covid-19
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Government response AI summary
The government agrees that multi-year settlements provide certainty and is exploring opportunities to simplify the funding system, but defers a decision on the next settlement being multi-year, stating it will be informed by the ongoing Spending Review.
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Ministry of Housing, Communities and Local Government