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Inquiry into local government finance launched by MPs

MPs have launched an inquiry into local government finance to review its policy ahead of the 2019 Spending Review.

The Housing, Communities and Local Government Committee will examine how effective the existing funding set-up for local government is in providing resources to meet demands for local services across the UK.

The announcement comes amid a backdrop of heavy cuts to public services and jobs as councils try to combat a loss in central government funding of up to 70% since 2010, with some such as Northamptonshire County Council unable to produce a balanced budget.

As council tax rises across the majority of councils in the UK, Doncaster and Nottingham were the latest local authorities to approve a total of £40m of cuts, and both slammed the government’s austerity as “totally unfair” and “no way to run public services.”

The government said the new inquiry will directly inform government policy towards local government funding in the Spending Review and beyond.

The committee’s chair Clive Betts said: “As the government this week announced targeted funding to some struggling local areas, and ahead of the forthcoming Spending Review, it is the perfect time to look at the bigger picture of local government funding.”

He said the committee had launched the inquiry to understand the current impact of the arrangements for funding local government services and the different challenges and demands.

“We will also investigate how the government arrives at its spending decisions and what mechanisms are in place to assess local need.

“Our aim is to provide constructive recommendations that can feed in to the upcoming Spending Review to provide a fair and effective funding system to support the provision of local services.”

The 2019 Spending Review is expected this autumn and will allocate over £4T of funding to government departments for the 2020-21 financial year and beyond.

The IFS recently warned that government proposals to assess local authorities’ spending needs based on population will only divert funding from councils serving deprived areas to those serving more affluent areas.


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