• Home
  • About
  • 151 IMPACT AWARDS
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

Impact Awards –>
  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Agent151: Funding and a ‘gentleman’s agreement’

0
  • by Agent 151
  • in Agent 151 · Blogs · Funding
  • — 26 Apr, 2017

Someone should just come out and say it. We local government insiders all know it’s the case, but I wonder if the general public, the voters out there, are conscious of it. They won’t be surprised to hear it, I am sure, as there can’t be anyone left out there in this time of Trump, Brexit, fake news and election fever who hasn’t already been inoculated with a healthy dose of cynicism.

What am I on about? Well, since no-one else wants to make a big deal of it, I will say it: the government fixes local government funding to favour local authorities of the right political persuasion. Indeed, whilst openly talking about funding based on need and fairness, behind the scenes it goes to some lengths to ensure that funding isn’t fair. To spell it out, this means that some people get a better deal on council tax and the quality of their local services than others because their council is aligned politically with the government. And that isn’t right.

Aha! You say. The pundits always talk about the settlement moving money around between London and the shire counties, the north and the south. This is not news! Well, yes they do. But the language used in the analysis they provide is surprisingly neutral. They describe what happens, but they stop short of attributing a motive. They don’t say anything about the behind-the-scenes deal-making that goes on.  Well, they didn’t… until the case of Surrey County Council popped up earlier this year.

Gentleman’s agreement

You may remember that Surrey, a Conservative council, had planned a government-embarrassing 15% council tax increase, which was then scrapped after secret meetings with senior cabinet ministers had taken place.

David Hodge, the leader of Surrey council, was recorded telling Conservative colleagues that a “gentleman’s agreement” had been reached with Sajid Javid, the communities secretary, and Philip Hammond, the chancellor. And there it is: a Conservative government and a Conservative council caught, if you’ll forgive the expression, in the act with their pants down.

Hodge also said in the recording that, “There may come a time that if what I call gentleman’s agreements, that the Conservative party often does, are not honoured, we will have to revisit this in nine months or a year’s time.” We learn from this that this sort of secret agreement with the government is done “often”!

When the news broke both Sajid Javid and Surrey Council firmly denied there was a deal. The government’s official statement on the matter denied that any deal had been done, but helpfully confirmed that conversations about local government funding with councils took place regularly. What kind of conversations it omitted to say, but by mentioning this regular dialogue no doubt it was hoping to make it sound commonplace and entirely above board. I’m sure most of it is.

Jeremy Corbyn, the Labour leader, raised the matter in the House of Commons the next day. Had there been a sweetheart deal? The prime minister said any such suggestion was an “alternative fact”.  Then, the day after, it emerged that Surrey county council would be part of a new government pilot on business rates retention.

So what happened? Was there a deal? Did David Hodge unfortunately misreport what had happened to his colleagues? Or did ministers, DCLG officials, councillors and council officers lie, in order to cover up a dodgy deal?

You can draw your own conclusions on that particular case. But the fact is that political favouritism by government, whether Conservative, Con/Lib Dem Alliance, or Labour (and it has happened under all of these) in funding local government causes real inequality and is a fact of life. So, other than through bare-faced denial, how do they get away with it?

Getting away with it

Method one is by having a very complex formula for distributing funds — so complicated, in fact, that perhaps only two or three people in the entire world understand it fully. This formula contains several levers that can be used to influence the distribution of funds in a way that almost no-one would ever notice or be able to unpick. Method two involves presenting the funding outcome in a way that no-one can make sense of. Spending power is an abstract concept that leaves the average voter none the wiser.

Method three is awarding specific grants outside the normal funding method, based on very cleverly woven criteria, and method four is inventing pilots and joint working initiatives that councils can be selected to join based on invisible criteria.

It won’t have escaped you that the government is currently in the process of designing the system for 100% business rates retention by councils. If you were hoping for a transparent and simple system that recognises need and distributes the gains from growth fairly, then you should prepare for disappointment. The design brief isn’t what you think.

Agent151 is a senior local authority finance director.

Get the Room151 Newsletter

Share

You may also like...

  • The credit conundrum: a matter of opinion The credit conundrum: a matter of opinion 22 Oct, 2012
  • Councils strengthen reserves despite funding cuts says Audit Commission Councils strengthen reserves despite funding cuts says Audit Commission 21 Nov, 2012
  • Does QE have to mean inflation? Does QE have to mean inflation? 20 Jan, 2012
  • Business rates retention to take over funding of three existing grants Business rates retention to take over funding of three existing grants 16 Feb, 2017

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 2 hours ago

    Impact Awards: Liverpool’s cafe culture and Warrington’s investment in homes: The CCLA/Room151 Impact Awards showcase  finance teams with a direct impact on their local communities and the environment. This week we spotlight Liverpool City Council’s… dlvr.it/RxJsKb pic.twitter.com/dEYpaz6HP0

    Room151 5 hours ago

    Doing something in #localgov #finance for housing or regeneration? Check out the 'Place Shaping' category room151.co.uk/impact-awards/… sponsored by @31tenConsulting in the CCLA/Room151 Impact Awards. #timetoenter !! pic.twitter.com/dU99vE6Wws

    Room151 24 hours ago

    Doing something in #localgov #finance for Adult Social Care & Health? Check out the ASC&H category room151.co.uk/impact-awards/… sponsored by Fundamentum Social Housing REIT in the CCLA/Room151 Impact Awards. #timetoenter !!

    Room151 24 hours ago

    Doing something in #localgov #finance for the environment? Check out the 'carbon management' category room151.co.uk/impact-awards/… sponsored by @ACSLLP in the CCLA/Room151 Impact Awards. #timetoenter !!

    Room151 24 hours ago

    So what are the seven categories for the CCLA/Room151 Impact Awards? Here they are room151.co.uk/impact-awards/… #localgov #finance #outcomes

    Room151 1 day ago

    Why should LGPS be concerned about rising inflation?: The impact of the coronavirus pandemic, lockdown and wider economic uncertainty created  deflationary pressures which raise important considerations for the Local Government Pension Scheme writes… dlvr.it/RxF7Fs pic.twitter.com/JlcjROBIpz

    Room151 2 days ago

    JOB ALERT: LPFA Finance Director vacancy: London Pensions Fund Authority Finance Director and s151 Officer Competitive salary and benefits The largest Local Government Pension (LGPS) provider in London with around £6.5 billion of assets and 135[...] dlvr.it/RxBdJP

    Room151 2 days ago

    Richard Harbord: Further signs that local government finance is failing: The crisis in Liverpool and a fix for education budgets are further indication that local government finance is in need of a root and branch review. Even for those students[...] dlvr.it/Rx9PSV pic.twitter.com/sAanC2gEyu

    Room151 1 week ago

    Impact Awards: Finance helps launch school meals company and support business during lockdown: The CCLA/Room151 Impact Awards will showcase the way finance teams have a direct impact on their local communities and the environment. This week we spotlight… dlvr.it/RwnlF4 pic.twitter.com/AJhne1MVG4

    Room151 1 week ago

    "This work has made a vital, practical contribution to ensuring people have been supported through the pandemic." #impact #151awards #covid #s151 room151.co.uk/treasury/impac… #impactcasestudies #councilfinancemakesadifference

    Room151 1 week ago

    room151.co.uk/impact-awards/ #passiton #localgov #s151 #151awards pic.twitter.com/A0uO0dwBkM

    Room151 1 week ago

    Financial pressures loom for 2023 and beyond: Kate Ogden writes the government has addressed most of the short-term Covid-19 financial pressures facing English councils, but problems loom in 2022-23 and the years following. As we enter the[...] dlvr.it/RwfDsz pic.twitter.com/hpv2R09w75

    Room151 2 weeks ago

    Calling all #localgov finance officers and #s151s room151.co.uk/impact-awards/ It's the #151Awards Thanks to the @LGALocalism for helping us get the word out along with all the LA treasury societies. pic.twitter.com/Nkal9BrH1J

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Richard Harbord: Commercialisation brings its own risks
  • Next story £45m Brummie Bond beats PWLB rate

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.