Fragmented and reactive public funding

October 12, 2020

Research from the Local Government Association (LGA) has found an increase in 'fragmented and reactive' use of public funding, with English councils receiving at least 448 individual government grants between 2015/16 to 2018/19.

LGA's study had found that councils in England have seen their core funding from central government reduce by £15bn in the last decade. In recent years, they have seen a rise in the number of short-term, ringfenced, small grants they receive annually from government departments and agencies.

The LGA is calling for the Government to use the Spending Review to end this fragmented and reactive use of public funding and meeting demand pressures through individual grants. It has set out how the Government can provide £10bn in additional core funding to councils to protect and improve services.

The research has also found:

  • In any given year, councils received around 250 grants - this compares to around 61 main grants paid to local authorities in 2013/14.
  • More than a third were discontinued from one year to the next – this is creating negative impacts on staff retention, long-term strategic planning, and joint commissioning.
  • Almost a quarter of grants issued each year were worth less than £1m – each one equating to less than 0.25% of the budget for a typical metropolitan district or London borough.
  • Around a third of the grants were awarded on a competitive basis. Often, more is spent by councils in preparing bids at hugely short notice than they stand to receive back.
  • The LGA said many grants received by councils each year are designed to try and manage rising levels of demand pressures.

For example, homelessness services have been issued with 12 short-term funding grants since 2015 - half of these were allocated through a competitive process. This is placing extra stress on an over-stretched homelessness system, as officers are often required to scope and complete an extensive application within limited timeframes – sometimes as short as one month.

LGA wants the Government to reserve targeted funding for transformational purposes, including genuine pilots, and provide councils with long-term certainty by issuing funding through multi-year settlements tied to the life of a parliament.

Councillor Richard Watts, Chair of the LGA’s Resources Board, said, 'The use of short-term grants is increasingly representing poor value for money. Councils need certainty to plan local services without the added burden of navigating a complex and fragmented funding landscape.

'If fragmentation and ringfencing of grants is reduced, councils can provide much better value for the same amount of funding and provide services which prevent crises from happening, rather than simply managing them when it is too late.

'The Government needs to use the Spending Review to radically re-think public spending in a way that is fit for the future and empowers councils to deliver on the ambition for our communities that central and local government share.'

On Twitter, James Bullion, President of Association of Directors of Adult Social Services (ADASS) said, 'You cannot run social care with a short term mindset and the current gap of £3.5bn. The NHS plan will have a generational effect because of sustained strategy (well hopefully). In local gov, adult care faces overspends, reduced grants, no winter spend. I've never been angrier.'

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