Abstract:
In any system for funding local government, there are inherent trade-offs between competing policy objectives. We have discussed these at length in a recent report (Phillips, 2024), and in our submission to the Ministry of Housing, Communities and Local Government (MHCLG) December 2024 consultation on the principles and objectives of reform. This report does not consider these broad policy objectives. It focuses on technical aspects of the design of certain elements of the proposed funding system: area cost adjustments; the council tax resource adjustments; assessments of spending needs outside social care; and the overall approach to bringing these together through a system with equalisation. We assess the reasonableness of the approaches proposed by MHCLG, making recommendations for robustness checks and potential improvements that could be made in the short, medium and longer term. By short term, we mean prior to the confirmation of final plans for local government finance reform; by medium term, we mean within the next two to three years at the very latest; and by longer term, we mean within the next two to three years if possible, but recognise that this may not be practical.
