Taking from the poorest ...
John Freeman
Thursday, January 13, 2011
The news from Manchester will not surprise those who have even a general understanding of how local government finance has worked over the last two decades. The Formula Grant - the base central government funding for local authorities, topped up by the local Council Tax - takes account of many factors including population and poverty, but, complex though it is, it has proved an unsubtle tool to direct funding to areas of greatest need. So DCLG and other departments have directed specific ring-fenced grants to local authorities using different formulae to compensate for the bluntness of the Formula Grant. Over a lengthy period, local authorities have learned to rely on specific grant funding as part of their overall budget. What has happened now is that the Coalition government has ended many of the specific grants and rolled others into the Formula Grant, with a very substantial redistributive effect away from local authorities with the highest need - and that has caught Manchester. The LGA has long promoted the end of ring-fencing, arguing that it erodes local decision-making. That is true, of course, but it depends on a 'fair' formula for mainstream funding. So while we have cuts everywhere, they will be deepest where the need is greatest. And it is at least disingenuous for DCLG to say that local authorities can make up the slack without cutting front-line services; I know of no children's services department where all the staff are working their socks off, from senior management to administration and the front line. Cuts will mean children getting a less good deal from the state; and this will be felt most severely in those areas that need help most.