Funding proposals would systematically disadvantage the most deprived

Posted on February 21, 2019

The Special Interest Group of Municipal Authorities (SIGOMA) has today responded to the Review of Local Authorities’ Relative Needs and Resources, challenging government proposals which they say would systematically disadvantage residents in deprived urban areas for years to come.

The interest group, which represents 47 mostly urban councils across the country, have consistently opposed the omission of deprivation from a foundation formula, which would allocate around a third of council funding.

SIGOMA Chair Cllr Sir Stephen Houghton CBE said:

“If the total funding is inadequate we are all in trouble. But since this appears all but inevitable, fair redistribution may be the only way statutory services can be sustained in the poorest areas.

“Despite this, the government is proposing to omit deprivation from the foundation formula – impacting services such as homelessness support, which are particularly in demand in urban areas and more vulnerable communities.

“This omission flies in the face of the evidence and common sense. The government’s own calculations suggest deprivation explains at least 4% of the variation in spending on foundation services. Independent academics from Liverpool University have argued the real impact could be as much as 40%.

“Our analysis suggests the government’s use of a simple average – which bundles together 11 services and hundreds of councils – hides significant variation in the impact deprivation has on individual authorities, including in the most vulnerable communities. And independent experts like the IFS concur.

“We say deprivation must be in the foundation formula, London Councils says it must be in, the Local Government Association says it must be in. Most importantly, the evidence says it must be in. The government must recognise this compelling consensus. Simplicity must not be pursued at the expense of accuracy and fairness.”