HCLG committee report on local government funding: CCN response

Today the Housing, Communities, and Local Government committee have released a new report on council finances, ‘Local government funding and the 2019 Spending Review’.

During the inquiry, which ran over the spring and summer, the County Councils Network provided written and oral evidence to the committee of MPs.

The committee’s report features analysis from CCN heavily, including our recent report with PricewaterhouseCoopers. It references the funding gap for councils of £5.2bn next year as outlined in the report’s analysis, as well as backing the network’s calls for the Fair Funding Review to be as ‘transparent and understandable’ as possible and for urgent clarity over funding for local authorities next year.

Below, the CCN chairman Cllr Paul Carter, who appeared in front of the committee in June, responded to the report’s findings.

He said:

“The County Councils Network (CCN) has been making a clear case for funding certainty and emergency resource for all local authorities in 2020/21. Today’s report from the Housing, Communities, and Local Government committee adds further weight to those calls and we are pleased that our recent independent report from PricewaterhouseCoopers is given further credibility and referenced widely in the committee’s findings.

“The committee heard from various witnesses, including from the government, that county authorities face the most financial pressure due to historic underfunding and acute demand-led pressures. As our analysis shows, local authorities face a £5.2bn funding gap next year, with county areas accounting for £2.1bn of this figure. County leaders are clear that filling this gap will result in further cuts to highly-valued and frontline services, unless extra resource is provided by the government. It is paramount that the new government provides short-term resource, targeted at those areas most in need, in next month’s one-year Spending Review, ahead of a more long term settlement and reforms to adult social care in early 2020.

“We are pleased that the committee have backed CCN’s calls for the Fair Funding Review to be as transparent and as understandable as possible. Whilst we would reluctantly accept a short delay in the review’s implementation, we are calling for a cast-iron commitment from the new government to continue the review through, and to create a new formula that genuinely seeks to rebalance funding between county and urban areas.

“Due to this historical underfunding, residents in county areas are currently paying council tax rates at almost double the amount that residents pay in some of the most affluent areas in London. Therefore, we agree that reform is needed to ensure a fairer approach to council tax as part of the fair funding review.

“Finally, we agree that reform to business rates is required and we support the committee’s calls for a simplified system. We recognise there is a tension between the requirement for funding based on an area’s need, whilst providing authorities the impetus to grow their economies, and the current rates system in two-tier areas is unfit for purpose.”