Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 36
36
Accepted
Updated local government funding formula focusing on higher need areas is supported
Conclusion
We acknowledge the trade-offs that the Government is making in updating the local government funding formula, and we support the Government’s decision to focus funding towards areas with higher need, which will help correct an existing imbalance in the system. We are pleased to see that factors considered in the Fair Funding Review take account of the different pressures faced by urban and rural authorities. (Conclusion, Paragraph 132)
Government Response Summary
The government is committed to targeting funding effectively at areas with the greatest need through the Fair Funding Review 2.0, utilizing updated needs assessments that account for deprivation at local authority and sub-ward levels for social care.
Government Response
Accepted
HM Government
Accepted
The Fair Funding Review 2.0 (FFR 2.0) marks the next step in reforming local government. The last time funding was allocated to local authorities using an up to date set of funding formulae that sought to account for local authority differences in demand, costs and council tax raising ability was in 2013–14. This failure to update since then and the subsequent mismatch between funding and need has led to unequal outcomes for people and places, with visible neighbourhood services in deprived areas worst hit. The Government is committed to ensuring that funding is targeted effectively at the places and services that need it most and allocated in a way that empowers local leaders to deliver against local priorities. MHCLG is co-ordinating work across government on our programme of local government finance reform, as set out in the FFR 2.0 consultation. This includes close cross-government working on an up-to-date assessment of local need across service areas. The formulae utilised in the Government’s needs assessments vary in granularity. For measuring social care need, need is assessed at the sub-ward level to give an overall local authority need share. Whilst the ‘foundation formula’ used to measure need is not assessed at the sub-ward level, it accounts for deprivation using an average Index of Multiple Deprivation (IMD) score at the Local Authority level, where the average score is calculated based on the distribution of deprivation at a sub-ward level.