IFS: who is getting the funding?

The Institute for Fiscal Studies (IFS) has published a useful analysis of the £1.6bn that the government has made available to councils to help respond to the Covid-19 crisis.

The IFS points out that the basis for allocation of the funding - driven by 2013-14 needs assessments, in particular for social care - is open to question (and many of the critiques of this allocation approach were reflected in the pre-crisis Fair Funding Review). County Councils had been deeply critical of this funding methodology.

The funding formulas are over-general and out of date, including with respect to differences in population growth. The formula also makes very little available to District Councils, who are deeply exposed to risk on council tax collection (although how this risk is crystallised in two-tier areas is unclear) and massive losses in parking income.

The paper argues that it might make more sense for the government to relax rules on councils' ability to borrow to meet day to day spending, with government looking (subject to suitable record-keeping and safeguards) to reimburse councils for crisis spending. Councils have argued for this, and ministers have insisted (including at meetings and on calls in which I have taken part) that they will back councils in spending what is needed.

What is also clear - though not so much a focus of this report - is that, with severe spending pressures in areas such as social care and support to vulnerable people in the community, and with revenues at significant risk or already falling, the £1.6bn support to councils is unlikely to be the end of the story. KCC's share of that grant is £39 million, and it is not hard to see how that can be quickly committed and spent.

You can find the IFS statement on the release of the report here, with a link to the report itself.