The Institute for Government has published a new report that looks into how the funding of all local and combined authorities can be improved, whilst warning why the current method doesn’t work.
The report, titled Funding Local Growth in England, has claimed that local growth is being held up by the government’s ‘over-reliance’ on competitive bidding over local and combined authority funding. This has been explored in three different features of the funding landscape, which the IfG claims is undermining the government’s attempts to fund levelling up and other priorities.
These three features include the fact that there is a wide range of different funding methods available to authorities, but these have tight ringfences inhibiting how the money can be spent, as well as the fact that funding is often only for the short-term. The report has found that almost half of the grants that were issued in 2022/23 were due to expire after a year, with this making it harder to achieve stability or long-term planning.
Also found in the report is the fact that competitive funding is responsible for awarding a quarter of funding streams, with this bringing a major burden on local authority resources. According to the report, bids for competitive funding often come at a cost of between £20,000 and £30,000.
Recommendations for the future of local authority funding have come in the form of five priorities outlined in the report, these are:
- Early in the next parliament, a strategy for regional policy agenda should be published by the government
- When institutions are ready, the single settlement model should be extended to more combined authorities
- Most local growth funding should be streamlined into a smaller number of larger, multi-year funds that cover spending review periods
- New funding to support an existing objective should top up the larger funding, with competitive funding only to be used in exceptional circumstances
- At the next spending review, the treasury should commit to simpler funding for growth, with guidelines being established for how any funding streams will be spent.
Rebecca McKee, Senior Researcher at the Institute for Government and author of the report, commented:
“The current funding model is a major barrier to local growth across the country, undermining both central and local government efforts to reduce regional inequalities. Simplifying funding has to be an early priority for a new government, failing to tackle it again risks undermining any future regional growth programmes.”
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