With each passing year the case for funding reform has sharpened as structural pressures and funding gaps have become more acute. Until this year, the system seemingly evolved to divert funding away from the most deprived areas who receive the least against their assessed need.
The Fair Funding Review 2.0 lays out long-awaited changes. Total funding available won't increase and there are big changes planned around where it will go – towards more deprived areas and away from shire districts and some London boroughs. Whilst this blueprint is understood, the measurements remain unclear. There is helpful insight into indicative individual changes in need, but no full exemplification.
Transitional arrangements will be critical. The key question is at what level is protection triggered?
Estimating next year's funding position therefore remains a modelling exercise. The sector is collaborating, and there's a growing sense of what the changes might mean for individual councils, but confidence remains informed rather than certain.
There's a sense of inevitability about the plans. We knew this change was coming and have scenario-modelled it, but its elusiveness over the years has made real preparation difficult.
Transitional arrangements will be critical. The key question is at what level is protection triggered? The Government hasn't confirmed, but a 7% annual loss cap has been used illustratively. The relationship with council tax also needs attention – could additional tax-raising flexibilities be a right for those facing funding reductions, rather than an agreement upon request?
Some councils may have reserves to support transition, but this is not sustainable long-term. Moreover, reorganisation costs could undermine the benefits of reform in the short term unless they are acknowledged and supported.
We must also recognise that the broader and fundamental issue of council tax reform has not been addressed in the review. There is still much to work out.
Tracy Bingham is executive director – resources and transformation (s151 officer) at South Derbyshire DC
