CCN Statement: Fair Funding Review

Following recent press articles and statements on the position of CCN in relation to the Fair Funding Review, the network is concerned that its advocacy, and that of its member councils, on fairer funding is being misrepresented by some in the local government sector. This is to the detriment of the aims of the fair funding review and sector collaboration.

Below, CCN sets out its position in relation to three key areas of advocacy. The network believes recent commentary has misrepresented its position, and in some cases, has been factually incorrect in relation to the areas outlined below.

• Sustainable funding for all: CCN rejects recent claims that counties are arguing for fair funding in isolation from the underlining funding gaps facing local government. CCN is firmly of the view that the fair funding review must be undertaken in conjunction with providing sustainable funding for all, as outlined in its recent publication A New Deal for Counties. In particular, CCN has strongly supported the Local Government Association and the cross-sector position on the need for the additional quantum of business rates to be devolved to local government, with the first call on the quantum to bridge existing funding gaps; which the LGA estimate to be £5.8bn for all of local government, and the Society of County Treasurers (SCT) and CCN estimate to be £2.54bn by 2020/21 for CCN members alone. This should be a priority for Government when considering reform, whether this is delivered through higher local retention or grant funding.
• Equalisation: CCN strongly refutes claims that counties are arguing for an ‘equal share per head’ of grant funding or complete equalisation of council tax rates across the country. Analysing funding figures per head across different measures, alongside highlighting the differential council tax rates amongst different local authority types, is crucial in illustrating the funding disparities across the country and the current inadequacies of the current funding formula. However, this does not correlate with an argument for complete equalisation, which CCN has never sought to advance. We recognise that a new evidence-based funding formula will fund councils more equitably but local authorities will continue to be funded at different levels. In arriving at this, CCN have been clear that the new, fairer, funding formula for local government must be based on a clear, evidence-based assessment of relative need built on a simple and transparent new funding formula. As others have argued, this should be based on a new cost-drivers approach which moves away from the current opaque funding formula and reliance on past spend and regression analysis. The ability to raise local resources through council tax must continue to be a central part of new funding arrangements. However, this again must take into consideration the ability to pay locally and inequities in council tax levels that have built up over time due to the current funding formula.
• Cross-sector collaboration: Since the launch of the fair funding review CCN and the SCT have been supporting cross-sector collaboration through the Association of Local Authority Treasurers (ALATs) to reach a consensus on the most appropriate way of measuring relative need. Through this, a strong consensus has been developed not only on the need to move away from past spend and regression analysis but towards a new cost-drivers approach, based on a small number of areas such as population, deprivation, sparsity, statutory service and infrastructure pressures. CCN remain firmly committed to supporting this collaborative cross-sector work in arriving at a needs-based, fair funding formula.

The evidence presented to date by CCN and the SCT on local government funding and business rates retention underlines the fact that on whatever measure you compare funding allocations, county and district authorities remain the lowest funded local authority types and have the highest council tax burdens across the country. This was outlined in CCN’s recent response to the local government finance settlement, which can be viewed here.