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

Room 151

  • 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

Spending Review uncertainty leaves fair funding reforms in balance

0
  • by Colin Marrs
  • in 151 News · Resources
  • — 19 Jun, 2019

The emerging fair funding regime for local government finance could be delayed if the Treasury is unable to produce a multi-year Spending Review this year, according to local government minister Rishi Sunak.

Amid mixed messages emanating from the Treasury, Sunak this week told MPs that his department is still preparing for a multi-year funding settlement to be announced later this year.

The minister added that implementation of the ongoing fair funding review could prove difficult without certainty on funding levels for councils over a number of years.

Appearing before the Housing, Communities and Local Government Select Committee, Sunak said: “The benefit of a multi-year funding review is less to implement the fair funding formula in itself. It is more about the transition.

“Obviously if you are moving to a new system, that requires an element of transition and you would want a multi-year settlement to put in place a transition programme.

“You might have the new formula and formulas ready to go and the new distribution mechanism.

“But if you didn’t have a multi-year sight over how you could transition from one system to another that would make it more challenging.”

Earlier this year, Rob Whiteman, chief executive of the Chartered Institute for Public Finance and Accountancy, told the committee that he thought the fair funding review should be delayed until after the Spending Review.

And Sunak told the committee that his department was open to that argument.

“People in local government have raised that with us proactively,” he said.

“This conversation is around whether it is better to have some more time to prepare for some significant changes versus having to make those changes in a very compressed period of time.

“That is a conversation we are open to having with local government as they want to have that conversation.”

Uncertainty about the timing and length of the Spending Review has been fuelled by Brexit negotiations and the ongoing Conservative leadership contest.

In March, chancellor Philip Hammond dangled the prospect of a three-year Spending Review with an increased funding envelope alongside the autumn budget – but only if a Brexit deal is reached with the European Union.

In May, chief secretary to the Treasury Liz Truss told a gathering of local government figures that the government was still likely to launch the review before the summer recess.

However, earlier this month, she changed her tune, in the light of Theresa May’s decision to step down as prime minister.

She told a House of Lords committee: “The plan had been to launch the spending review and the zero-based capital review just before the summer recess.

“I would suggest that is unlikely to happen given the current timetable for the Conservative leadership election,” she said.

However, Sunak told this week’s committee that the Ministry of Housing, Communities and Local Government is “still working under the assumption that the chancellor’s statement is the right one, which is that pending the outcome of the Brexit situation there are plans for a Spending Review that will happen over the summer and conclude at the budget and will be for a multi-year period.

“The team in my dept are very much working to that goal and deadline and all our preparation work is centred on that deadline.”

Sunak was challenged by committee chairman Clive Betts on whether the department has a fall-back position if that scenario did not materialise.

Responding, the minister said: “We work for all potential scenarios but fundamentally the work is not so dissimilar – the work is figuring out the right resources for local government, not just in the immediate year but for the period going forward.

“In a sense the same underlying work is needed regardless of the period.”

The government has been under fire for a suggestion in a consultation on the fair funding review that the current deprivation measure in the foundation formula could be removed.

Sunak told the committee: “We will come back with a final view on that…but people are very happy to have a system that is simpler and has fewer variables driving it.

“Deprivation was found not to be a particularly significant variable, and it was a way to reduce complexity in the system.”

After the session, a County Councils Network spokesman said: “If there is no full three-year review, the new administration must move quickly to provide immediate clarity for the sector; at a minimum providing substantial emergency funding and council tax freedoms to help close the funding gap facing councils next year, estimated by PwC to be £6.7bn.

“This must come alongside the conclusion of the fair funding review, and a cast iron commitment to implement the proposals as soon as possible after the review’s publication.”

Former Boston Council chief executive Richard Harbord this week writes for Room 151 on how the uncertainty over the Spending Review is hurting local authorities’ ability to plan their finances.

Get the Room 151 Newsletter

Room151 Conferences & Events

Share

You may also like...

  • News roundup: CCLA fund grows to £500m, Barnet LGPS fined, councils must pay for post-Grenfell works News roundup: CCLA fund grows to £500m, Barnet LGPS fined, councils must pay for post-Grenfell works 3 Aug, 2017
  • Jonathan Bunt: Necessity will create the solution for housing in 2018 Jonathan Bunt: Necessity will create the solution for housing in 2018 11 Jan, 2018
  • Council finance managers embrace cloud technology Council finance managers embrace cloud technology 8 Jan, 2014
  • Herts agrees JV with Morgan Sindall to develop 500 homes Herts agrees JV with Morgan Sindall to develop 500 homes 19 Apr, 2018

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 2 days ago

    The vaccine may help settle cash flows but inflation remains a risk: Sponsored article: Lauren Sewell examines the prospects for long-term borrowing as Brexit settles and vaccines are deployed against Covid-19. On the 9th October 2019 Whitehall sent… dlvr.it/RqZXCr pic.twitter.com/PzgOZOGQ0k

    Room151 2 days ago

    ESG in liquidity: Sponsored article: Gavin Haywood looks at the integration of ESG in Federated Hermes’ money market funds. Federated Hermes has over 300 public sector clients invested in our AAA rated money[...] dlvr.it/RqZX5f pic.twitter.com/E87sBXsay8

    Room151 3 days ago

    New realities of investing cash and liquidity: “What to do now?”: Sponsored article: Brian Buck looks at the “unique challenge” for cash management strategies. As investors assess the ongoing impact of the pandemic on their business, levels of cash and… dlvr.it/RqVbk9 pic.twitter.com/ZElVASmEUV

    Room151 3 days ago

    Extra finance promised by the government receives a broad welcome: Sponsored article: The financial pressures facing local authorities this year continue to pose challenges for council treasurers. While the launch of the UK’s Covid-19 vaccination… dlvr.it/RqTzTF pic.twitter.com/HCjH0pyHR5

    Room151 3 days ago

    A savvy approach to managing your cash: Sponsored article: Caroline Hedges examines the need for active cash management to achieve a higher than average return. Last year saw the already mountainous pile of negative-yielding debt around the[...] dlvr.it/RqTzMK pic.twitter.com/uP0RQYTJLt

    Room151 4 days ago

    Putting alternatives at the heart of multi-asset portfolios: Sponsored article: Nick Edwardson looks at the assets that provide the “most attractive opportunities”. We believe that asset allocation is the primary driver of investment returns and that the… dlvr.it/RqQ2Qt pic.twitter.com/WLBzvRRRUQ

    Room151 4 days ago

    Thriving in the pandemic: Avoiding the stragglers: Sponsored article: George Crowdy looks at the sectors providing opportunities for sustainable investment. Throughout much of 2020, we talked about why sustainable investing has thrived in the pandemic,… dlvr.it/RqQ2NQ pic.twitter.com/dxiPWKFsPl

    Room151 4 days ago

    The development of CCLA’s mental health benchmark: Sponsored article: Amy Browne examines the importance of investing in mental health in the workplace. We are living through a public health emergency in more ways than one. Physical health[...] dlvr.it/RqQ2Jx pic.twitter.com/o6yRSCX3oF

    Room151 5 days ago

    Brexit: What the EU trade deal means for the UK economy: Sponsored article: Hetal Mehta looks at the impact of Brexit on economic prospects. Four and a half years after voting to leave the EU, on Christmas Eve the UK finally[...] dlvr.it/RqLBDt pic.twitter.com/No62srfE8h

    Room151 5 days ago

    Cash dethroned: The quest for liquid yield: Sponsored article: Peter Hunt and George Carne ask how treasury departments can balance the need for yield and liquidity. The massive stimulus and waves of liquidity provided by central banks[...] dlvr.it/RqLBDj pic.twitter.com/05g6Zhu1kU

    Room151 5 days ago

    Richard Harbord: Delayed “capital determinations” make section 25 opinions a new crunch point: The severe pressure on local government budgets now means section 151 officers confront a tricky call on  whether they can make a judgement on the robustness… dlvr.it/RqLBDV pic.twitter.com/vTAbDKFzkI

    Room151 1 month ago

    PWLB Consultation: Analysis straight from Dickens: Helen Radall and Paul McDermott present a legal examination of the new PWLB borrowing rules as Charles Dickens might have imagined it. Free and easy PWLB (“Marley” to his friends)[...] dlvr.it/RnmwLq pic.twitter.com/yFxcPrQqEG

    Room151 1 month ago

    Room151’s top stories from a momentous year: 2020 was the year in which local government grappled with Covid-19, funding strains, controversy over borrowing rules and the threat of financial collapse. It has been an exhausting and historic[...] dlvr.it/RnlpZg pic.twitter.com/g3myNyox6J

    Room151 1 month ago

    Tracy Bingham: 2020, a year best forgotten but also one of learning: Many will rush to erase 2020 from their memories but, writes Tracy Bingham, there were also many lessons about finance teams, strategic planning and leadership. 2020: A year we’d… dlvr.it/RnlpY2 pic.twitter.com/m7G1krrtCu

    Room151 1 month ago

    Settlement must address ‘precarious’ local government finances: Dan Bates crosses his fingers for “no nasty surprises” in this week’s funding settlement but argues the “bigger prize” is post-Covid financial certainty. Thursday (17 December) should be the… dlvr.it/Rnj9dG pic.twitter.com/KLKjjuBqJE

    Room151 1 month ago

    PWLB consultation: Big change on the way but there are ‘grey areas’ and opportunities: The consultation on PWLB borrowing has concluded creating a new landscape for funding property acquisition. Our experts look at the implications. Tracie Langley The… dlvr.it/RndRvJ pic.twitter.com/KEqXEBmEfq

    Room151 1 month ago

    2021: Better income outcomes?: Sponsored article: Investors should be mindful of structural challenges posed to income generation as a result of rapid thematic change. Jon Bell looks at the prospects for the coming year.[...] dlvr.it/RndRsw pic.twitter.com/TxVk8aXkMq

  • 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 Low PWLB rates prompt borrowing surge
  • Next story Leeds strikes deal with government over rising PFI schools costs

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we'll assume that you are happy to receive all cookies from this website.OK