Ensuring funding is distributed as fairly and sustainably as possible is never going to be easy. In every iteration of any situation where a set quantity of funding is being allocated, there will be winners and there will be losers. We have seen this most recently in the second allocation of emergency funding to support local authorities in their fight against COVID-19, with districts receiving the lion’s share of the £1.6bn central government has made available.
While it’s true that districts are facing severe financial constraints as a result of the pandemic, largely due to reduced income from fees and charges, we must also recognise the pressure that is still being borne by those authorities with social care responsibilities. Local authorities across the board are feeling the strain from COVID-19, and much of that has to do with the fact that councils were being stretched long before the pandemic came along.
The fact of the matter is councils have been under severe financial strain for quite some time, following a decade of brutal funding cuts. The back and forth over how the insufficient emergency funding that has been granted to local authorities has been allocated is testament to the fact that the business-as-usual funding envelope is just not close to enough. This is why, when I spoke to the HCLG select committee recently, I advocated for a rethink of the planned fair funding review.
At present, the fair funding review would simply re-cut the cake of local government funding. No matter which way you slice it, someone is going to lose out unless you have a bigger cake to cut.
COVID-19 has very publicly exposed what CFOs and CEOs in councils up and down the country have known for some time - local government as a whole requires a larger quantum of funding in order to achieve sustainability in the long term. Finding capacity for service delivery and local investment was hard for councils before the coronavirus. After the crisis it will be even more difficult for them to deliver the services that residents need.
If the fair funding review does not acknowledge this fundamental truth, it will fail in its objective.
Rob Whiteman CBE is chief executive of the Chartered Institute of Public Finance and Accountancy (CIPFA)