Yesterday the government published the final funding allocations for local authorities following its overhaul of local government finance. The result destroys incentives to grow.
Neil O’Brien presents this as neutral analysis, but it overlooks the central empirical finding of the last decade: Conservative governments redesigned local government funding in ways that consistently advantaged Conservative-leaning areas.
Independent analysis by the Institute for Fiscal Studies shows that the most deprived councils lost far more funding per household than affluent ones, even after accounting for need. At the same time, ministers shifted money from transparent, needs-based grants to politically discretionary bidding pots, and pushed councils towards council tax — a move that structurally favours wealthier areas.
O’Brien’s argument rests on the claim that Labour councils were inefficient and unresponsive to local needs. But this narrative sidesteps a more straightforward explanation: the funding system itself was redesigned in ways whose distributional effects were obvious and repeatedly flagged by the IFS, NAO, and local government associations at the time.
There may be no memo saying “reward our voters”, but the design choices, discretion and outcomes all point in the same direction. To describe this pattern as merely technical reform is selective reading of a settlement whose political consequences were clear from the outset.
This is not about abstract incentives. It is about whether local government funding is allocated by need or by political convenience — and on that test, the recent Conservative record speaks for itself.
Thank you for this analysis, Neil. Am I right in thinking that the (paltry) rural services grant has also been abolished, which was there to recognise that the costs of providing services eg waste collection, is much higher in rural areas?
Here in Essex the government cancelled the A12 upgrade despite huge amount of money having been spent on preliminary works and have just cancelled a new primary school to serve a new development. Hard not to draw the conclusion they are just funnelling money to areas which traditionally support Labour.
Neil O’Brien presents this as neutral analysis, but it overlooks the central empirical finding of the last decade: Conservative governments redesigned local government funding in ways that consistently advantaged Conservative-leaning areas.
Independent analysis by the Institute for Fiscal Studies shows that the most deprived councils lost far more funding per household than affluent ones, even after accounting for need. At the same time, ministers shifted money from transparent, needs-based grants to politically discretionary bidding pots, and pushed councils towards council tax — a move that structurally favours wealthier areas.
O’Brien’s argument rests on the claim that Labour councils were inefficient and unresponsive to local needs. But this narrative sidesteps a more straightforward explanation: the funding system itself was redesigned in ways whose distributional effects were obvious and repeatedly flagged by the IFS, NAO, and local government associations at the time.
There may be no memo saying “reward our voters”, but the design choices, discretion and outcomes all point in the same direction. To describe this pattern as merely technical reform is selective reading of a settlement whose political consequences were clear from the outset.
This is not about abstract incentives. It is about whether local government funding is allocated by need or by political convenience — and on that test, the recent Conservative record speaks for itself.
Thank you for this analysis, Neil. Am I right in thinking that the (paltry) rural services grant has also been abolished, which was there to recognise that the costs of providing services eg waste collection, is much higher in rural areas?
Here in Essex the government cancelled the A12 upgrade despite huge amount of money having been spent on preliminary works and have just cancelled a new primary school to serve a new development. Hard not to draw the conclusion they are just funnelling money to areas which traditionally support Labour.
They made great play of a small new element for distance but have watered it down