LGS0001
Written evidence submitted by SIGOMA
The Special Interest Group of Municipal Authorities (Outside London)
1.1. This submission is made on behalf of SIGOMA, the Special Interest Group of Municipal Authorities.
1.2. SIGOMA is a special interest group (within the LGA) representing 47 local authorities covering key urban areas in the North West , East and West Midlands, the North East, Yorkshire & Humberside and the South-coast ; consisting of 33 metropolitan districts and 14 major unitary authorities.
1.3. Our members are striving to provide services to a population that includes a disproportionately high number of those most affected by changes to the welfare system. For example around 33% of all recorded working age benefit claimants are from SIGOMA authorities and 35% of all looked after children .
1.4. Therefore the distribution of Government funding and a fair redistribution of locally collected taxes, is a matter of vital concern for the continuity of services by our authorities.
2.1. The creation of a set of financial resilience indicators has support amongst some members but is not universally supported. Most members have strong reservations about the publication of information but some can see the benefit of using the information for a dialogue between councils and the Ministry. Most members found the CIPFA suggested indicators to be overly focussed on reserve use and not to contain enough forward looking measures, given that the objective is to avoid financial failure, not explain it.
2.2. SIGOMA members support the PAC in their recommendation for an evaluation of an average weighted cost of delivering services. Whilst this may not offer a great deal in terms of authority comparators it would, we feel, allow the Ministry to advise Treasury on the finance needs of local authorities for the key services we provide.
3.1. SIGOMA members have concerns about the possible effect of an extended transition period to the extent that transition funding to authorities who would receive less under a new formula has, in the past, been funded by giving less funds to those who would receive (and need) increased funding.
3.2. PAC members may be aware that the existing formula grant, which has underpinned grant allocations since 2013, itself contained “damping” grant which buffered the impact of formula in 2013 and through which our members suffered a total reduction in formula funding of around £70 million in 2013-14. We estimate that by 2018 the annual value of damping adjustment within formula is around £40 million.
3.3. As the quantum of funding has diminished, we suggest that authorities in need cannot sustain an even greater reduction than formula suggests they need in order to soften the blow for those who need less.
3.4. The principles of a transition formula agreed within working groups is that it should address only material reductions in formula grant, have a clear, short end date and be easily identifiable. We have supported MHCLG and our colleagues in working groups in the assertion that transition cannot be assessed until the outcome of formula grant is understood.
3.5. Ideally of course transition grant should be funded as an additional cost to Treasury rather than resulting in less funding to needy authorities
4.1. We would add to this observation that one impact of academisation is the loss of Business Rate Income to authorities due to the operation of charitable relief. In overall terms this means that the Department for Education Benefits and Local Government loses without any compensating adjustment at Departmental Level. This is a distortion in Departmental funding allocations.