Recommendation 10

The funding system for local government is extremely complex. The local government finance settlement provides formula-based funding to local authorities, which MHCLG distributes through a combination of formula- based grants, general grants and locally retained business rates. Local authorities also fund services through locally raised income, such as council tax and sales, fees and charges.21 Written evidence we received from London Councils pointed out that the complexity of local funding “perpetuates a lack of transparency and erodes public trust of both central and local government”.22