Fair funding for London: how about some, minister?

By Dave Hill

The government has been conducting a review of how it allocates cash to local authorities. Many in London, as you might imagine, have firm views on the matter.

London Councils, the body that represents the capital’s 32 boroughs plus the City of London, has calculated that by financial year 2019/20 the reduction in “core funding” from central government to London local government will be 63% less in real terms compared with the level ten years earlier, immediately preceding what has become known as “austerity”.

There have been compensating measures, such as allowing boroughs to retain a larger share of business rates raised locally. But the overall story is the now familiar one, especially for some of the poorest boroughs in the capital: cut after cut after cut, each of which has had to be coped with, sometimes in the face of conspicuous local opposition.

At least the Fair Funding Review, as Sajid Javid‘s recently renamed Ministry of Housing, Communities and Local Government has called it, offers some prospect of a partial respite. It is not a review of the cuts programme itself, but of the complex set of calculations that govern how different sorts of services provided by types of local authority are allocated money.

These include 15 formulae for defining “relative need”, and a whole bunch of additional ones for figuring out what particular services cost to deliver. Not only are these mind-bendingly complicated and opaque – disagreeably so, in the view of many – they are also pretty aged. The ministry itself acknowledges that the basic methodology is a good ten years old, and critics say it is well out of date, with the data fed into it also unchanged since 2013/14.

From a London point of view, perhaps especially an Inner London one, this means that the huge population increases and changes of recent years – the number of Londoners alone has gone up by 13% since 2010 – are simply not factored in to the government’s local government funding equations. What’s more, that population is projected to keep on getting bigger and might be growing even faster than thought, due to the sheer difficulty of counting people in parts of the city where population churn is particularly high.

A consultation on the Fair Funding review closed on 12 March. Along with underlining the fact that Greater London now contains a lot more people than it did when George Osborne got his hands on the public purse, the London Councils response has, I learn, pointed out that deprivation levels in much of London are higher than elsewhere, and that the peculiar character of the capital’s housing and labour markets making delivering services more costly. It has also made the case that there should be a special formula reflecting the punishing costs of helping the capital’s homeless, including with temporary accommodation.

The ministry says it is now analysing feedback. Will it recognise that London is more different than ever and, if so, how will it behave as a result?

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