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Finance settlement: a golden opportunity

Source: PSE Feb/March 2018

The local government finance settlement must enable counties to continue to be the engines of the English economy by providing a fairer funding approach, says Philip Atkins, vice-chairman of the County Councils Network (CCN) and leader of Staffordshire County Council.

As we begin to finalise our budgets for next year, we were given some cheer in the final local government finance settlement with the announcement of an extra £166m for councils.

This is the result of a measured campaign that the CCN has coordinated since Christmas, working with a cohort of rural MPs and through the County All-Party Parliamentary Group to advocate the need for additional resource to both the chancellor and Sajid Javid.

We welcome their recognition of the severe pressures counties face in delivering social care services, as they are home to the largest and fastest growing elderly populations.

Business rate pilots

The other flagship announcement was the location of the next tranche of business rate pilots, including seven in two-tier county areas.

These will be important in county areas: as Oxford Economics’ report last summer showed, counties are the engines of the English economy, representing 41% of England’s GVA, or £600bn. They are embedded in their local economies, knowing them extensively and intimately.

In my own county, this knowledge helped bring together private business and the public sector in the flagship i54 business park development.

The housing market

Counties are willing and able to step up to meet the housing challenge; this is especially pertinent with average house prices in some counties nine times the average local yearly salary.

The recent Oxfordshire ‘housing deal’ showed the art of the possible when it comes to strategic, countywide planning, in partnership with other local authorities, and CCN will be advocating this approach for other parts of the country.

Social care funding

Counties’ performance in delayed transfers of care shows the impact of targeted resource: since part of the £2bn social care funding from last March’s Budget was re-routed towards reducing delayed days, counties have got their heads down and have worked extremely hard on performance.

The results are significant: since February last year, counties have reduced delayed transfers of care attributable to social care by 29%.

Whilst the extra resource made available by the government is very much welcome, if we are to continue to do all these things, and more, we need fair and sufficient funding to continue to make a positive difference in our areas.

Drastic cuts

Indeed, counties will see their core grant funding reduce the most out of any upper-tier class of authority, with a 43% reduction on average by 2019-20.

These drastic funding reductions have come at a time of unprecedented demand for services.

Recent CCN figures show that county areas have seen an elderly population boom of almost half a million over-65s in the period between 2013 and 2016, which has put a huge amount of pressure on public services, not least in adult social care.

As a result, efficiencies that are being made elsewhere are being re-routed to care services.

The crux of the issue here is that this added demand is not accounted for in the way that councils are presently funded, because the formula that takes into account population growth was frozen in 2013.

Fairer funding

The government’s Fair Funding Review could resolve this, as well as providing greater recognition of factors such as rural sparsity, which can drive up costs. Ministers have confirmed that it will be in place by 2020 when announcing the settlement, and published the long-awaited fairer funding consultation.

Whilst CCN was disappointed with the delay in implementation, the consultation shows encouraging signs in recognising these factors; however, it is by no means certain what the outcome may be.

CCN will work with its members, government and the wider sector to devise a fairer and less complex methodology that funds local authorities based on their need, both current and in the future.

Yes, there will be some winners and losers from this approach, but from our work with the Association of Local Authority Treasurers and other parts of the sector, a strong consensus has been developed on the need to move away from past spend and regression analysis and towards a cost-drivers approach.

All in all, it is shaping up to be a crucial year in terms of local government funding.

There is no doubt ministers have begun 2018 in a positive fashion – not only in recognising the enormity of the pressures facing counties, but in the fairer funding consultation.

We look forward to working with government on sustainable funding solutions for counties.

(Top image © Victoria Jonese/PA Wire)




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