Ring-fenced funds are not well suited to the roaring demand challenges of the twenties

By Jessica Studdert | 16 November 2021

The noughties are back in fashion. I don’t mean Nokia phones or velour tracksuits – I’m talking the return of the ring-fenced funding pot. In the 2000s, the defining local government finance trend was lots of money but limited flexibility – cash from the centre to local areas was routed through a complex maze of funding streams. No great initiative was asked of councils beyond delivering what was prescribed (and if you did it well, the glamour of Beacon status beckoned).

In the 2010s the arrival of austerity reversed this trend: limited money was combined with lots of flexibility over what little there was. This led to some new ways of working, because councils had to focus more on what outcomes they were getting for diminishing resource. But over the years, cash-starved services inevitably encountered crises. As the Government has tried to respond to each in turn, the bespoke funding pot has crept back into style.

An early years support vacuum? Let’s bring back Sure Start style family hubs. Homelessness getting worse? Rather than Supporting these people, here’s a new Rough Sleeping Initiative. Some communities still experiencing deprivation? Instead of getting a New Deal they can now hope to be Levelled Up.

But Ringfence 2.0 has a different vibe to its predecessor. In fact, it combines the worst features of the previous two decades: limited funding and limited flexibility. This has created a new range of accessories: scarce council capacity diverted to writing bids; competition between areas over finite pots; and a sector increasingly divided and ruled by a Government gripping the purse strings ever-tighter.

There’s another noughties trend I’d love to see make a comeback: Total Place style funding. Or at least a revamped version which would reach its logical conclusion: place-based budgets. These would align and devolve all public service spend in a local area, maximising its impact.

By doing away with ring-fences all together, local partners would be freed up to collaborate and share more power and resource directly with communities. The flexibility to invest collectively in prevention would over time shift the balance of spend away from an over-reliance on acute response. This would be a much better look: one more suited to the roaring demand challenges of the twenties.

Jessica Studdert is deputy chief executive of New Local

@jesstud

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