Local government: from financing famine to food balance

Room151’s editorial director discusses indications from ministers that they are ready to move away from competitive bidding and return to a ‘balanced regime’ of funding.

Photo by Dan Gold on Unsplash

At Room151’s recent investment forum for cash managers, there was general fatigue when the topic of competitive funding came up. Even those who were successful in their bids found the process exhausting and uncertain.

The exercise has been succinctly summed up by Professor Stephen Broomhead, chief executive of Warrington Borough Council, as the ‘tyranny of competitive funding’. It’s not a new complaint, but the number of pots that require a bidding process has increased as the central government has moved to take control of local government funding for the upgrade program. level.

There are a plethora of funds that support economic growth for which local authorities must compete or are pre-selected and ‘invited to bid’. These include funds for: leveling, community renewal, cities and freeports.

Preparing bids for these funds is a time-consuming and resource-intensive affair. Wealthier authorities seek the help of consultants, which can lead to a result based on the best application rather than the best proposal. Winners often only receive short-term funding, with no guarantee of extension.

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And, of course, there is the opportunity cost of what might have been done by senior management had they not overseen many tender proposals. At the Room151 investment forum, the constant refrain from delegates was that they no longer had the time to think or the chance to consider a long-term strategy – the day-to-day work is exhausting.

This is not to say that funding should be handed out without care or attention – just that central government oversight may be too burdensome, and sometimes a formula-based approach would be more appropriate.

There seems to be a growing consensus that the pendulum has swung too far from the funding formula. Both CIPFA and the Local Government Association criticized the direction of the trip. And, according to the National Audit Office’s February report (Support local economic growth) “multiple funding pots and overlapping timelines, combined with competitive funding, create uncertainty for local leaders.”

At the Room151 investment forum, the constant refrain from delegates was that they no longer had the time to think or the chance to consider a long-term strategy – the day-to-day work is exhausting.

“Application Duplication Process”

If only the Secretary of State for Leveling Up thought the same. Well, strangely enough, it seems so. Speaking to a Respublica online chat last week, Michael Gove admitted there was too much competitive funding in local government. “There is a process of duplication of applications, and some local institutions just don’t have the capacity to jump through all those hoops,” he said.

There needs to be “more role for formula-based allocations”, argued Gove, and for local authorities to have more certainty about their funding. Well, he won’t find too many people in local government who don’t agree with that view.

So when will we see a different approach taken? To give credit to the government, the UK Shared Prosperity Fund, which will replace EU structural funds, is being set up so that all parts of the UK will receive a formula-based allocation rather than competitive bids .

And Gove handed responsibility for “simplifying and streamlining” the funding process to Neil O’Brien, the minister for upgrading. O’Brien also speaks of a good game, telling the leveling committee in February that a “balanced diet” was needed, with “stable, non-competitive core funding that places know they will get so that ‘they can plan on that basis’. .

We live in hope, but with low expectations given the experience so far. A signal of good intentions, perhaps, would be if there was an announcement about the long-promised reform of local government finances, or if there were indications of a longer-term funding deal.

I suspect bid advisors will be busy for some time to come.

Mike Thatcher is Room151’s Editorial Director.


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