Government grants poor value for money

A new study by the Local Government Association has shown that councils received at least 448 individual government grants between 2015/16 to 2018/19 in an increasingly ‘fragmented and reactive’ use of public funding.

Councils in England have seen their core funding from central government reduce by £15 billion in the last decade. In recent years, they have seen a rise in the number of short-term, ringfenced, small grants they receive annually from government departments and agencies.

The LGA is urging the government to use the Spending Review to end this fragmented funding of council services and meeting demand pressures through individual grants. It has set out how the government can provide £10 billion in additional core funding to councils to protect and improve services. It wants the government to reserve targeted funding for transformational purposes, including genuine pilots, and provide councils with long-term certainty by issuing funding through multi-year settlements tied to the life of a parliament.

Analysis has found that, in any given year, councils received around 250 grants - this compares to around 61 main grants paid to local authorities in 2013/14. More than a third were discontinued from one year to the next, which council leaders say is creating negative impacts on staff retention, long-term strategic planning, and joint commissioning.

The LGA also warns that approximately a third of the grants were awarded on a competitive basis. Often more is spent by councils in preparing bids at hugely short notice than they stand to receive back.

Richard Watts, chair of the LGA’s Resources Board, said: “The use of short-term grants is increasingly representing poor value for money. Councils need certainty to plan local services without the added burden of navigating a complex and fragmented funding landscape.

“If fragmentation and ringfencing of grants is reduced, councils can provide much better value for the same amount of funding and provide services which prevent crises from happening, rather than simply managing them when it is too late. The government needs to use the Spending Review to radically re-think public spending in a way that is fit for the future and empowers councils to deliver on the ambition for our communities that central and local government share.”