Minutes:
Sarah Pickup (Deputy Chief Executive) introduced the report, which presented an overview of the emergent propositions regarding funding assessment models which could be adopted at the end of the Fair Funding Review, and outlined their features, strengths and limitations. The Leadership Board noted that although there was some emerging consensus over the principles of designing a new assessment, none of the propositions outlined in the report were currently ready for implementation.
The three current propositions were:
· The Government model, which was LGA officers’ assessment of the tentative direction of travel of the Government’s approach to the Fair Funding Review, which aimed for a simplified system of funding distribution, and a single formula with a number of different service-specific formulae.
· The ALATS model, which had been prepared as a result of discussion between a small group of local authority chief finance officers, representing the different treasurer societies. The group had established a number of cost drivers that could form part of a relative needs assessment, as well as discussing various principles on how to balance simplicity and fairness. There was recognition that the model should encourage good behaviours across local government, but the group had not assigned weightings to the various cost drivers so the implications for individual local authorities were unknown.
· The Leicestershire model, which was a proposed relative needs based assessment which had been developed by officers at Leicestershire County Council, based on a small number of formulae and indicators with some similarities to the ALATS model. Officers had assigned weightings to various indicators based on internal and external discussions, and national average council tax levels had been used as opposed to actual council tax income. Exemplifications had been produced but in two tier areas the allocation to County and Districts was aggregated at this stage.
In the following discussion, comments included:
· Generally the three models showed that progress was being made, but more evidence was needed as none could be used to distribute funding immediately and all required further development. All three models would feed into the joint work on fair funding that the LGA and councils were undertaking with DCLG.
· Weightings would be the vital factor, and while Leicestershire had developed methodology more work was needed to validate weightings assigned.
· Members commented that it would be useful for the LGA to give consideration to the process of evaluation, and it was suggested that the Resources Board or the Business Rates Task and Finish Group consider taking this work forward.
· It was suggested that the process be renamed ‘effective funding’, in order to address the assumption that all councils would see increased funding as a result of the Fair Funding review. There should also be consideration given to what review mechanism would be in place to ensure that the process was embedded correctly.
· Consideration should be given to what would subsequently happen when a council became self-funding, for example the mechanism be for unfunded cost pressures.
· The proposals would be kept under review, and Members’ comments would inform ongoing work on the funding assessment models. Suggestions for how the work would be taken forward would be brought back to the Leadership Board at a future meeting.
Decision
The LGA Leadership Board noted the contents of the report.
Action
A further report on the funding assessment models to be considered at a future meeting. (Sarah Pickup)