Inefficiencies in provision of grants in local government highlighted

A new report has warned that councils, businesses and communities could be losing out on vital financial support from central government.

The report, Supporting local communities and people: are local government grants effective?, published by CIPFA and Capita, highlights the complex landscape of local government grant funding.

It says that, in 2019/20, the Ministry of Housing, Communities and Local Government paid out nearly £14 billion in grants to local authorities. The short-term nature of many grants that councils receive, largely a product of multiple single-year finance settlements, presents local government with a challenge when it comes to long-term, strategic planning, with those projects requiring an ongoing financial commitment at particular risk.

The report outlines the recent trend towards bidding processes, arguing that such methods of allocation can result in areas with less resource or experience being excluded. As a result, winners of such funding pots are not always those in greatest need. Unringfenced grants provide councils with the greatest financial flexibility and support a more localist approach.

Following the huge sums of grant funding distributed over the course of the pandemic, the report also calls for strong governance, calling for a balance to be struck between speed and due diligence to protect public funds from the risk of fraud.

Rob Whiteman, CIPFA CEO, said: “The landscape for local authority grant funding, particularly following the chaos of Coid-19, is increasingly complex and inefficient. It’s absurd and unfair that communities in need could be losing out on funds for vital services, whether via lack of resource, obsolete data, conflicting guidance or fraud.

“The need for improvement is clear. This is why CIPFA is pleased to be working with Capita to provide solutions to councils that free up resource and smooth out processes to enable them to focus their attention on local needs.”

CIPFA has also announced a partnership with Capita to support local authorities in getting the best outcomes from their grants through Capita’s digital grant management services.