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Government funding for London waste services could fall

The proposed new formula for central Government funding of council services, including waste collection, will see more than £500m diverted away from London authorities, independent analysis shared with MRW’s sister title Local Government Chronicle (LGC) has found.

The way funding for local authority services including waste collection, homelessness, parks and core administration is to be changed under proposals set out by the Ministry for Housing, Communities & Local Government.  

The ministry’s ’foundation formula’ will account for just over a quarter of funding for metropolitan and unitary councils, a fifth of funding for county councils and 95% of funding for district councils.

An analysis of the formula was carried out by Ben Barr, senior clinical lecturer in applied public health research at Liverpool University. It revealed London as the main loser and shire areas the main beneficiaries.

Inner London boroughs also make up eight of the 10 councils nationally which would lose the highest percentage of funding under the new foundation formula. The other two are Haringey Council and Hull City Council.

Westminster City Council would see the largest reduction of 54%, followed by Kensington & Chelsea and Tower Hamlets, which would experience a 49% reduction. However, Wandsworth would receive an increase of 41%, the largest amount in London.

South Buckinghamshire District Council would have the largest increase of 81%, followed by Solihull Metropolitan Borough Council (65%) and Wokingham Borough Council (58%).

Further analysis by LGC also found the 20% most deprived areas lose a total of £390m a year if an adjustment for deprivation is not included, in favour of using population as the only cost driver.

Regions

Total expenditure on foundation services 2016 (000)

Sum if proposed formula applied to 2016 funding (000)

% change

East Midlands

£92,857

£108,583

17%

East of England

£1,222,548

£1,408,369

15%

London

£2,545,189

£2,013,494

-21%

North-East

£609,606

£605,855

-1%

North-West

£1,802,604

£1,659,976

-8%

South-East

£2,008,268

£2,075,061

3%

South-West

£1,190,515

£1,267,196

6%

West Midlands

£1,161,331

£1,335,243

15%

Yorkshire and Humber

£1,229,082

£1,246,682

1%

As LGC has previously reported, the ministry’s exclusion of deprivation from the foundation formula has proved controversial, with the sector now united in saying it should be included, although not in the level it should be weighted at.

Barr said the Government’s assertion that deprivation explains only 4% of variations in historical spending on services covered by the foundation formula is based on a “flawed analysis that investigates predictors of total spend, rather than per capita spend, as would be standard practice”.

He added that his analysis shows deprivation accounts for 16% of variation in spending per head, when looking at 2016 spending levels.

“These services have a major impact on people’s health, and greater investment in these is needed in more disadvantaged communities which have poorer health, if we are to address the huge and widening health divide that blights this country,“ he added.

David Phillips, associate director at the Institute for Fiscal Studies, said it was too early to say what the overall impact of the fair funding review will be on different councils because elements such as formulas for social care have yet to be published.

“Many of the Government’s proposals on assessing councils’ needs and revenue-raising capacities are eminently sensible,” he said. ”However, the statistical analysis it cites to justify not including deprivation in the funding formula for many key services does not stand up to full scrutiny.”

A ministry spokesperson said: “The Government is currently consulting on what factors should be included in a new funding formula for local government. We will carefully consider the feedback before responding.”

  • This is an edited version of a story that first appeared in MRW’s sister title LGC

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