Source · Select Committees · Public Accounts Committee
Recommendation 28
28
The Treasury told us the balance between formula and competitive funding should be different for...
Conclusion
The Treasury told us the balance between formula and competitive funding should be different for different areas of government activity, giving levelling up and social care as examples of areas where formula funding should predominate. In contrast, the Treasury felt that net zero is an area where it is the right thing to have a competitive process as it can lead to better outcomes for taxpayers by, for example, ensuring that funding flows to the locations and projects where the most carbon will be saved.109 Operating net zero funding in this way led to significant disparities in grant funding per person across different council areas, with some receiving over £50 per person in 2020–21 and others receiving less than £12.50 per person.110 102 HM Treasury, Autumn budget and Spending Review 2021, 27 October 2021; (LGA/LFS0002) 103 Local Government Association, Fragmented funding: the complex local authority funding landscape, October
Government Response
Not Addressed
HM Government
Not Addressed
7.2 The government agrees with the Committee’s recommendation. The department has an established policy to rationalise funding for local government so that local authorities can make decisions based on local priorities. There is, however, a balance to be struck between giving flexibility and ensuring that the money will be used as intended and effectively. There are instances where ringfencing or bid-based grants are required, for example when we need detailed data from local authorities. 7.3 There is work taking place in both local growth and local government funding spaces to tackle this issue. The department is considering options to simplify grants under section 31 of the Local Government Act 2003 that fall outside of the Local Government Finance Settlement. Additionally, the department is looking at options to streamline the funding process for grants, such as the Levelling Up Fund and the UK Shared Prosperity Fund. 7.4 From the perspective of local authorities, any measures to simplify the local government finance system will be closely linked to local growth ambition on wider funding simplification. Measures across both areas are complementary in reducing the administrative burdens and support the delivery of wider government levelling up ambitions. 7.5 The government’s approach will be to deliver a more transparent, simpler and accountable system, reducing the number of grants whilst also considering options to limit the creation of new grants. We will work closely with local authorities to consolidate in the most appropriate way.