Inflexible Local Authority Funding
Over-reliance on bid-based, inflexible funding mechanisms for local authorities, preventing them from effectively addressing local needs.
2,045 items
12 sources
4 inquiries
Strongest theme matches
Mixed across source types and ranked by classifier confidence plus text match strength.
LGO / SPSO decision
100match
25-002-449 - Shropshire Council
Summary: Ms C complains about the care provided to her son, Mr D, by Yani Care Solutions Ltd, which was commissioned by the Council. I have ended my investigation of Ms C’s complaint. I cannot say whether Ms C, or Mr B acting on behalf of Ms C, are suitable representatives to bring the complaint to us. It...
Matched on
terms: local
Committee recommendation
100match
#15 - Second Report - Long-term funding of adult social care
We recognise the benefits of raising a proportion of funding for adult social care locally. As we have argued in previous reports, we support greater fiscal devolution. In finding the right balance of funding sources for adult social care, however, we are concerned by the increasing reliance on locally raised tax revenue as currently constituted. In our previous...
Matched on
terms: authority, funding, local
Committee recommendation
100match
#27 - Review local authority funding and taxation, including land value taxes and fiscal devolution
The next Government must embark on a fundamental review of the system of local authority funding and local taxation, exploring all options for removing its current regressive elements and bringing it into the 21st Century. This should include consideration of land value taxes, and of wider fiscal devolution including the option of granting local authorities a specific share...
Matched on
terms: authority, funding, local
Committee recommendation
100match
#24 - Department's local road funding primarily allocates based on road network length and assets.
Most of the Department’s funding to local authorities over the last decade has been through the eight funding pots that use road network length as the main basis for allocations. The mechanism for these pots uses simple data sets to allocate funding, weighted between road length (82.4%), the number of bridges (15.4%) and the number of lighting columns...
Matched on
terms: authority, funding, local
Committee recommendation
100match
#4 - Revise local road funding allocation considering usage, environment, and explore Community Infrastructure Levy use.
The Department does not allocate funding to local authorities for the maintenance of local roads according to where it is most needed. The Department provides most of its funding to local authorities based on road length, number of bridges, and number of lighting columns in a local authority. It does not, however, take into account traffic volumes or...
Matched on
terms: authority, funding, local
Committee recommendation
100match
#3 - Simplify local authority road funding, provide long-term certainty, and clarify maintenance monitoring.
The Department’s approach to funding is short-term and fragmented, hindering local authorities from planning more cost-effective work. In the last decade funding for local roads has become more complex, with the Department providing funding to local authorities via 12 different funding pots, each with differing eligibility criteria. It has largely provided funding to local authorities on an annual...
Matched on
terms: authority, funding, local
Committee recommendation
99match
#5 - Define government health prevention spending and increase flexible funding for local systems.
Given the constraints on public spending, it is highly likely that re- focusing attention from sickness to prevention cannot be achieved without re-allocating existing NHS funds in the same direction. Senior ICB leaders report a continued lack of progress with the government’s long-standing aim to move towards preventing ill health rather than 5 treating it. Furthermore, the public...
Matched on
terms: funding, local
Committee recommendation
98match
#5 - Detail how MHCLG's cross-government homelessness strategy will consolidate funding and improve coordination.
Tackling homelessness has long been hampered by the absence of a joined up, cross-government approach. Each of the UK devolved administrations has an overarching homelessness strategy or action plan. By contrast, there is no strategy or target for homelessness in England, despite this Committee having recommended in 2017 that a cross-government strategy be published. The Government agreed with...
Matched on
terms: authority, funding, local
Committee recommendation
95match
#3 - Council tax is outdated, regressive, and disproportionately impacts deprived local authorities' funding.
There is widespread agreement that Council tax is outdated, regressive, and long overdue for reform. The Government’s increasing reliance on council tax to fund local authorities is causing a disproportionately negative impact on funding levels for authorities in the most deprived areas of England. The Government’s imposition of referendum thresholds for increasing council tax is restricting local authorities’...
Matched on
terms: funding, local
Committee recommendation
95match
#17 - Local road funding has become increasingly complex with twelve different funding pots.
During the past decade, funding for local roads has become more complex, with the Department providing 12 different funding pots for road maintenance. Each type of funding has different eligibility criteria; eight of the 12 are based on road network length; three require local authorities to bid for money; and one is an incentive fund.30 The Local Councils...
Matched on
terms: funding, local
Committee recommendation
95match
#28 - MHCLG aims to align local funding with needs but acknowledges reform distribution risks.
We asked MHCLG how its reforms will help councils deal with the immense financial challenges they face. It told us it recognised the problems and, through funding reform, it was seeking to align the way funding is distributed much more closely with changes in demographics, levels of 69 Committee of Public Accounts, Support for children and young people...
Matched on
terms: funding, local
Committee recommendation
94match
#9 - Discrepant budget timings impede joint strategic planning between local authorities and NHS bodies.
We asked how local authorities and NHS bodies could be expected to work together and deliver a joint strategy when local authorities receive provisional budgets in December, and final ones by February, but NHS 8 C&AG’s Report, paras 1.6 and 1.8 9 C&AG’s Report, para 2.9 10 Q 57 11 Q 57 12 Q 59 13 Qq 65,...
Matched on
terms: authority, funding, local
Committee recommendation
94match
#27 - Central government acknowledges outdated local government finance system and plans reforms.
Central government acknowledges the local government finance system is complex and outdated, with long-standing plans for reform not having taken place.75 In autumn 2024 government committed to reforms over the medium term. Alongside confirming the reintroduction of multi-year funding settlements from 2026–27 and funding simplification, it launched consultations on local audit and local authority funding reform in December...
Matched on
terms: authority, funding, local
Committee recommendation
91match
#2 - Include additional funding in 2024–25 settlement to bridge local authorities' £4bn gap, outlining prioritisation.
The Government must include additional funding in the local government finance settlement for 2024–25 to ensure local authorities bridge their estimated £4 billion funding gap. The Government must set out which local authorities are being prioritised and why for this financial settlement. The Government must also set out what longer- term support will be provided to local authorities...
Matched on
terms: funding, local
Committee recommendation
91match
#1 - Local authorities face systemic underfunding and £4 billion gap from demand and inflation.
Local authorities have seen significant reductions in their spending power coincide with increasing demand for their services and inflationary pressures exceeding those in the wider economy. Recent funding settlements, while increasing in cash terms, have not kept pace with these pressures leading to a downward spiral. The prospect of further real terms funding cuts is likely to exacerbate...
Matched on
terms: funding, local
Committee recommendation
91match
#17 - Multi-year funding settlement for adult social care remains uncertain for local government.
We challenged the Department on whether we were ever going to see a multi-year funding settlement for local government and if the extra money for adult social care in 2023–24 and 2024–25 would continue into future years. Both the Department and DLUHC acknowledged the benefits of multi-year funding but also the potential downsides if circumstances are volatile, such...
Matched on
terms: funding, local
Committee recommendation
91match
#3 - Set out spending review preparations and long-term funding certainty for local authorities.
Local authorities are having to plan and commission adult social care services against a backdrop of fragmented and uncertain funding. We have long voiced our frustration at the short-term and multiple funding pots provided to local government and recommended that government explore ways to provide more confidence over long-term funding. We note that funding announced for adult social...
Matched on
terms: funding, local
Committee recommendation
91match
#20 - Department defers providing certainty on future multi-year local road funding to HM Treasury.
We asked the Department when it will provide certainty over the number of years and amount of funding local authorities will receive. The Department told us that it would be a decision for HM Treasury and the Government during the next phase of the spending review to decide what time period funding would cover, and not the Department’s...
Matched on
terms: funding, local
Committee recommendation
91match
#18 - Department acknowledges current local road funding arrangements are complex and require simplification.
We questioned the Department on the complexity of its current funding arrangements and how well they are currently working. The Department agreed that funding is not streamlined and acknowledged arguments for simplification, recognising that consolidating funding might allow local authorities to spend money more effectively.32
Matched on
terms: funding, local
Committee recommendation
91match
#20 - Ringfencing of Homelessness Prevention Grant funding may detrimentally impact some local authorities.
We welcome the Government’s decision to increase homelessness funding for 2025/26, including the £192.9 million uplift to the Homelessness Prevention Grant (HPG). However, the decision to ringfence 49% of HPG funding for activities to prevent and relieve homelessness may be a detrimental, one-size-fits-all approach towards the pressures facing some local authorities. The ringfence may leave a gap in...
Matched on
terms: funding, local
Committee recommendation
91match
#13 - Lack of joined-up working results in competing funding demands for local authorities.
Many departments rely on local authorities to deliver policy initiatives, although lack of joined-up working has resulted in competing funding demands. Our predecessors warned that competition between the Home Office and local authorities for local accommodation was “driving up prices and exacerbating the homelessness challenges that local authorities already face”.31 HM Treasury told us that it was using...
Matched on
terms: funding, local
Committee recommendation
90match
#15 - Plan a sustainable mechanism to deliver billions in annual funding for adult social care.
We reiterate the recommendation we made in our July 2022 report Long-term Funding of Adult Social Care, that the Government needs to recognise the need for more funding to local authorities for delivery of adult social care, in the order of several billions each year, and to plan a sustainable mechanism to deliver this funding, for example through...
Matched on
terms: funding, local
Committee recommendation
90match
#6 - Mandate DfE to provide support for local authorities to manage long-term sustainable SEN spending.
In the longer term, the SEN system remains unviable with piecemeal interventions, such as Safety Valve, doing nothing to provide a financially sustainable system. Based on the Department’s current forecasts on the need for SEN support, the annual gap between funding and forecast costs across local authorities will grow to between £2.9 billion and £3.9 billion in 2027–28....
Matched on
terms: funding, local
Committee recommendation
87match
#19 - Local road maintenance funding predominantly provided annually, lacking longer-term settlements.
The Department has largely provided its funding to most local authorities on an annual basis, instead of via longer-term settlements as in other areas of transport.33 For example, the strategic road network (motorways and some major A roads) is funded through one dedicated fund in five-year periods. Spending review settlements do include multi-year annual totals for local road...
Matched on
terms: funding, local
Committee recommendation
86match
#16 - Second Report - Long-term funding of adult social care
One-year funding settlements and short-term grants are hampering local authorities’ ability to plan and to deliver value for money, which in turn affects local care markets as it makes it more difficult for local authorities to enter longer term contracts with providers. The Government must provide a multi-year funding settlement to give local authorities the visibility they need...
Matched on
terms: funding, local
Committee recommendation
86match
#9 - Business rates system is outdated, complex, misaligned, disproportionately impacting deprived local authorities.
The business rates system is overly complex, outdated and in urgent need of reform. The baselines used in the business rates retention scheme are over 10 years out of date and their continued use is causing a significant misalignment between the level of funding distributed to local authorities and those authorities’ spending needs. There is a disproportionately negative...
Matched on
terms: funding, local
Committee recommendation
86match
#28 - MHCLG acknowledges poor coordination of homelessness funding, committing to synthesise multiple grant streams
We pressed MHCLG on the poor coordination in funding for homelessness caused by the absence of a cross-government strategy. Local authorities need to understand numerous funding streams, from different government departments. MHCLG explained that its November 2024 local government funding policy statement undertook to roll together three of its funding streams for 2025–26–the Rough Sleeping Initiative, the Ex-Offenders...
Matched on
terms: funding, local
Committee recommendation
86match
#23 - Exceptional Financial Support for councils allows capital asset use for revenue, not new funding.
Central government has introduced measures to help local authorities manage budget overspends. In 2020–21, MHCLG introduced the Exceptional Financial Support (EFS) framework to help local authorities that are in financial trouble.57 Since then, 42 local authorities have received over £5 billion of support through EFS.58 Thirty local authorities received support in 2025–26 to help them balance their budgets.59...
Matched on
terms: funding, local
Committee recommendation
86match
#12 - Numerous ring-fenced grants create administrative burden for local authorities, prompting consolidation efforts.
Outside of the finance settlement, local authorities can receive hundreds of different local grants from several government departments. While there is no official count, Councillor Pete Marland suggested that there are around 300 funding streams coming from central government to support specific services or policy objectives.25 These are often small, and ring fenced for a specific purpose, but...
Matched on
terms: funding, local
Committee recommendation
82match
#17 - Second Report - Long-term funding of adult social care
The geographical inequity of relying on council tax to provide the majority of funding for adult social care is compounded by an out-of-date adult social care relative needs formula. The Government must update the adult social care relative needs formula by the next financial year. This should be implemented alongside the Fair Funding Review and council tax equalisation....
Matched on
terms: funding, local
Committee recommendation
82match
#18 - Temporary funding fails to resolve fundamental mismatch in Dedicated Schools Grant and SEND costs.
The Government’s use of the statutory override and one-off ‘safety valve’ funding are temporary measures and do not address the underlying mismatch between demand, costs, and annual Dedicated Schools Grant funding. They will not prevent local authorities from accumulating further deficits until the underlying mismatch is resolved, and we do not believe it is realistic to expect local...
Matched on
terms: funding, local
Committee recommendation
82match
#7 - Using capital funding for revenue is unsustainable, risking asset sales and delaying reforms.
However, local authorities’ use of capital funding for revenue expenditure is not sustainable and at best it can only be a temporary solution to short-term financial pressures. We have concerns that the Government, if it does grant these additional flexibilities, may delay its engagement with the more fundamental reforms to the Financial distress in local authorities 43 funding...
Matched on
terms: funding, local
Committee recommendation
82match
#15 - Fragmented, uncertain short-term funding stifles long-term planning and investment in adult social care.
We have reported before on the prevalence of short-term, one-off funding for local authorities and recommended that government explore ways to provide greater confidence over long-term funding.31 With regard to adult social care, this lack of financial certainty has constrained local authorities’ and providers’ ability to plan for the longer term, and caused investment in areas such as...
Matched on
terms: funding, local
Committee recommendation
82match
#23 - Local authorities face rising 'Temporary Accommodation Subsidy loss' from outdated LHA rates
LHA rates also impact the amount that local authorities can reclaim as a subsidy from DWP for temporary accommodation costs. The amount that can be reclaimed depends on a number of factors, including the January 2011 LHA rate appropriate to the size of the property. Given that the subsidy is based on an historic rate rather than being...
Matched on
terms: funding, local
Committee recommendation
82match
#31 - Local government reforms and reorganisation present opportunities but begin from a fragile financial position.
Written evidence we received from the Chartered Institute of Public Finance and Accountancy pointed out that funding reform and local government reorganisation were opportunities to improve sustainability in the sector, but that local government approached these extensive reforms from a very fragile position.88 While MHCLG recognised there would be upfront costs to reorganisation, it expected to see savings...
Matched on
terms: funding, local
Committee recommendation
82match
#29 - MHCLG acknowledges insufficient funding, aiming for efficiency and demand management amid uncertainties.
We challenged MHCLG as to whether its reforms will put local government finance on a sustainable footing. It acknowledged that there was not enough money in the system, so the aim of the reforms was to use the money available more efficiently and productively. But MHCLG also recognised the need to manage the demand pressures on local government...
Matched on
terms: funding, local
Committee recommendation
82match
#24 - Exceptional Financial Support is no longer exceptional and lacks long-term funding strategy.
Written evidence we received highlighted that EFS was no longer considered exceptional and there were concerns that some local authorities required measures ‘over and above’ the EFS framework, given the scale of their financial distress.64 MHCLG told us it recognised that whilst EFS provided support in the short term, it formed “part of a toolkit”, and was not...
Matched on
terms: funding, local
NAO recommendation
81match
Local government finance in the pandemic
c) the Department and HM Treasury should explore how to provide the sector with greater clarity over future funding both during the pandemic and the recovery including: • signalling clearly on a timely basis the likelihood of further funding or support; and • supporting value for money in local decision-making by looking for ways to reduce uncertainty in...
Matched on
terms: authority, funding, local
Committee recommendation
78match
#5 - Require central government to involve local authorities in solving critical SEN financial challenges.
Departmental witnesses could not provide any potential solution to the critical and immediate financial challenges facing many local authorities due to persistent and significant SEN-related overspends. The impact of these are being deferred under the temporary “statutory override” scheme, which is due to expire in March 2026. This is currently expected to cause nearly half of all English...
Matched on
terms: local
Committee recommendation
78match
#26 - Department acknowledges arguments for re-evaluating funding allocation, considering flood risk impacts.
We asked the Department whether it considers where investment could have the greatest impact and why a factor such as traffic volume has not been included.52 The Department said that arguments for including other factors are often made, and that its last consultation on this subject was some time ago, but that this decision is one for Ministers....
Matched on
terms: funding, local
Committee recommendation
78match
#23 - Short-term funding allocations may drive reactive maintenance despite single funding source perception.
The Department acknowledged that the succession of short-term funding allocations may have driven local authorities to be more reactive.44 However, the Department believes that local authorities treat the funding from the Department as a single source and are not concerned about the specific funding pot the money came from.45 The Department also told us that it is in...
Matched on
terms: funding, local
Committee recommendation
77match
#26 - Fundamental reform of the SEND system is essential to address ongoing deficits.
Iain Murray from CIPFA warned that even if these deficits were written off, local authorities would immediately start to accumulate new deficits due to high levels of demand in SEND.71 MHCLG told us that there was huge amounts of work currently going on in central government on special educational needs funding, specifically on the statutory override, and government...
Matched on
terms: funding, local
PFD report
73match
Mary Jones
Persistent and unacceptable ambulance delays, compounded by patient offload issues at emergency departments, are linked to a lack of local authority involvement in addressing social care deficiencies affecting patient flow.
Matched on
terms: authority, local
PFD report
73match
Lauren Bridges
Underfunding for local mental health beds and reliance on independent providers caused delayed discharges for out-of-area patients. Fragmented IT systems and inconsistent processes created significant communication failures.
Matched on
terms: funding, local
Committee recommendation
73match
#27 - Significant unspent Community Infrastructure Levy funds exist, with potential for transport investment.
Just over half of local planning authorities in England charge a Community Infrastructure Levy (CIL) to fund local infrastructure for new developments.55 This levy can be used to increase the capacity of or to repair existing infrastructure, including transport, flood defences, schools, hospitals and 47 C&AG’s Report, paras 2.7-2.8 and Figure 9 48 Q 53 49 C&AG’s Report,...
Matched on
terms: authority, local
Committee recommendation
73match
#24 - DWP temporary accommodation subsidy remains below full costs; MHCLG's consideration unclear
DWP explained that it sets the subsidy level using a rate that has never covered local authorities’ full costs, to incentivise them in their procurement of temporary accommodation. MHCLG added that it considers local authorities’ financial position with regard to the temporary accommodation subsidy when making decisions about the local government funding settlement, but it did not explain...
Matched on
terms: funding, local
Committee recommendation
73match
#18 - HM Treasury NICs compensation excludes indirect cost increases passed onto public sector.
HM Treasury told us that it calculated the level of compensation for public authorities by apportioning the expected increase in direct NICs between the different work forces within the public sector. We were told that this did not account for any increase in charges passed on to the public sector, as these would be taken into account in...
Matched on
terms: funding, local
NAO recommendation
73match
Local government financial sustainability
We recommend that MHCLG: work with the local government sector to improve the transparency and consistency of local authority reporting on reserves to aid understanding of local authorities? overall financial positions;
Matched on
terms: authority, local
NAO recommendation
73match
The condition and maintenance of local roads in England
To improve its approach to funding local road maintenance, DfT should consolidate the number of shorter-term funds through which local authorities receive funding for road maintenance. This should include consolidating funding pots that use similar mechanisms to allocate funds.
Matched on
terms: funding, local
Inquiry recommendation
72match
P2-46 - Local authority funding for security expedited
There must be a process to ensure that, where there is a requirement for funding to strengthen mortuary security, it is expedited and considered at the highest levels within the local authority.
Matched on
terms: authority, funding, local