funding

As the children return to school in September, the change in Pupil Premium funding will see many schools lose out

/ inlogov / Leave a comment

Cllr Ketan Sheth

Cllr Sheth on a recent visit to a school

Pupil Premium funding for our most disadvantaged children, based on the number of children eligible for free school meals (FSM) data collated every January, provides critical funding to schools for essential resources, which in turn benefits all children. Each FSM successfully registered increases the funding to schools, a substantial amount of which does not reach schools because not all parents who are eligible apply for FSM for their child.

New Government conditions have seen a change in how it is calculated. By shifting from a January date, for calculation, to the previous October date, a stretched borough, such as Brent, now, will have 900 fewer secondary school pupils eligible, amounting to a loss of £860K in their budget. 

Pupils at primary schools fare a little better in Brent; but the picture elsewhere in the country is less kind – 62,000 fewer eligible pupils in primary schools in England, according to FFT Education Datalab analysis of the Department of Education recent figures.

The need for FSM and eligibility is rising, as are casual admissions all year round, due to changes in family incomes. This change results in £90M missing from budgets when schools have already been under intense pressure with lockdown and are attempting to build-up again as we recover following Covid-19.

The result means that the Government has introduced a detrimental lag in funding, which will introduce a current year saving; but will impact on the much needed essential support for children who have had the greatest challenges of home-learning throughout the pandemic and now beyond.

We are often reminded of the mantra: “every child matters”; if we are serious about levelling-up everywhere then we must rethink this decision and how we best support our children, so no child is disadvantage. The time between September, the start of the school year, and January allows for an accurate reflection of school children in need of FSM; and therefore, schools requirement for Pupil Premium. The timing is essential to promote and ensure effective communication with parents/carers, enabling them to register for FSM.

There is some speculation amongst head teachers that the Government may overhaul or perhaps completely remove the funding – this will be catastrophic and a retrograde step for the levelling-up agenda.

Cllr Ketan Sheth is Chair of the Community and Wellbeing Scrutiny Committee of Brent Council

Help council commissioning to ‘build back better’

/ inlogov / Leave a comment

Jason Lowther

Local government is digging deep into its financial reserves and hiking council tax bills by double inflation, but still anticipates making further service cuts in 2021–22. The Public Accounts Committee report earlier this month shows how central government support hasn’t matched Covid-related budget reductions. More positively, at the same time, councils and partners are eyeing the improvements made to commissioning and procurement during the pandemic and asking whether these could help balance the budget. Can adding value to local government’s annual procurement spend of £100bn help improve outcomes for citizens, sustain local councils, and build a better recovery?

As NESTA’s recent report, A Catalyst for Change, evidenced, councils’ collaboration with other public sector bodies, citizens and the voluntary and private sectors was at the centre of the response to COVID-19. Local authorities ‘stepped into their role as conveners, leveraged their existing relationships and partnerships, and forged new ones to dynamically address key issues. This allowed organisations to link up volunteers with vulnerable people, support businesses, deliver food parcels or find temporary accommodation for rough sleepers’.

I’ve heard from some of the council managers on INLOGOV’s teaching programmes of the amazing agility and flexibility councils have been able to develop with partners in areas such as social care and housing. Commissioning and procurement processes that in the past were seen as inflexible, slow, risk-averse, price-obsessed and lacking innovation were transformed rapidly in response to the immediate threats of the pandemic. Data was shared in more depth and quickly, enabling better targeting of services. More flexible financial and performance management arrangements opened the door to flexible service delivery.

Now, a major research programme led by Dr. Richard Simmons at Stirling University, called Optimising Outcomes, is looking at the impact of Covid on partnering and procurement. The programme is working with key sector bodies such as CIPFA and SOLACE as well as universities and research councils, to answer key questions such as:

  • How, and how effectively, are local authorities deploying their commissioning and procurement functions to address the challenges posed by Covid-19? What are the successes to be celebrated? Where are the tensions that need to be managed? Where is the system at risk of breaking down?
  • What are the opportunities for improved procurement performance? How do local authorities optimise every aspect of procurement spend?
  • Can local authorities adopt more innovative, strategic, entrepreneurial and relational approaches to strengthen local resilience and avoid a weak and incapacitated system?
  • What role can greater data-analytic capacity play in supporting a more agile and effective response?

As part of this research, council managers have been invited to take part in a survey to capture learning from the many challenges and achievements of the sector during the last year.  The survey is aimed at all UK council managers (there is a separate survey for procurement teams) and takes around 10 minutes to complete.  The closing date for responses is 21st June.

If you are a UK council manager and haven’t yet taken part, please would you complete the survey here.    

This is a great opportunity to ‘build back better’ by applying the lessons and innovations councils and partners have developed over the last 18 months. I’ll report back on the results later this year.

Source: DHSC website

Jason Lowther is Director of the Institute for Local Government Studies (INLOGOV)

The £3 Billion Pound Question

/ inlogov / Leave a comment

Jason Lowther

The Institute for Fiscal Studies’ latest review of English council finances documents why so many chief executives and treasurers have been having sleepless nights since “whatever it takes to tackle Covid” transformed into “as little as we can get away with giving you”.

On Wilkins Micawber’s “income” side, Covid has hit councils’ commercial activities, notably around retail rents, as well as fees for facilities such as leisure centres, and revenue from local taxes.   On the expenditure side, councils are seeing persistent cost increases.  As Micawber predicted: “result misery”.

In social care alone, expenditure on the care of older people will need to increase substantially and quickly.  Adult social care has faced a combination of pressures arising from demographic change and increased costs, rising need and demand, and short-term funding settlements. 

The IFS recognises the huge uncertainties involved in predicting financial and economic issues at present, addressing this by analysing a range of scenarios.

The bottom line across all council services is a £3bn+ shortfall in 2020–21, with the IFS concluding this may well be an optimistic estimate, and a middle scenario projecting a gap of over £3bn a year by 2024-25.  Not surprisingly they conclude that “without additional funding and/or flexibility over council tax rates, it is highly likely that councils will have insufficient revenues to keep pace with rising spending needs”.

What to do about this?  Aside from yet more austerity, the IFS identifies changing the rules on council tax rises (which would increase inequalities between rich and poor areas), increasing government grants, or giving councils additional tax powers such as new local taxes.

Austerity, the sustained and widespread cuts to government budgets which characterised Britain’s public policy from 2010, has already shrunk the capacity of the local state, increasing inequality between local governments and exacerbating territorial injustice[ii].

Greater local freedom on taxation is well overdue in the UK, where a larger proportion of local government spending is financed through grants from central government, and much less use is made of local and regional taxation than in almost all other European countries[iii]. 

Although the body of existing academic evidence about the impact of devolving fiscal powers is inconclusive[iv], comparative research on how municipal governments function in a number of major international cities demonstrates that British cities have very low levels of fiscal autonomy[v] and lower productivity than these cities.  There are also positive effects on economic outcomes when powers are held at the appropriate level and when local authorities are incentivised to create pro-growth planning regimes[vi] 

It’s also worth noticing again that much local government funding is still distributed through competitions which place considerable pressures upon local authorities and partners[vii], and result in wasted effort and ineffective use of resources.  And, whilst councils and other public bodies can share resources and pool funds to deliver joint outcomes more effectively and efficiently, there are still legal, cultural, governance and other barriers to this collaboration. 

In the short term, government should cull competitive funding and address the barriers to resource sharing.  They must plug the £3bn+ funding gaps over this and the next few years.  And in the medium term much more local freedom on taxation and autonomy are needed to give local government a sustainable future.

Jason Lowther, Director – Institute for Local Government Studies

[i] Ogden, K. et al, 2020, COVID-19 and English council funding: what is the medium-term outlook?, Institute for Fiscal Studies

[ii] Gray, M. and Barford, A., 2018. The depths of the cuts: the uneven geography of local government austerity. Cambridge Journal of Regions, Economy and Society, 11(3), pp.541-563.

[iii] Loughlin, J. and Martin, S., 2003. Options for Reforming Local Government Funding to Increase Local Streams of Funding: International Comparisons. Lyons Inquiry into Local Government Funding.

[iv] London Finance Commission, 2013. Raising the capital: The report of the London Finance Commission. London, the Commission.

[v] Slack, E., 2016. International Comparison of Global City Financing: A Report to the London Finance Commission. Institute on Municipal Finance and Governance Munk School of Global Affairs. University of Toronto.

[vi] Cheshire, P.C. and Hilber, C.A., 2008. Office space supply restrictions in Britain: the political economy of market revenge. The Economic Journal, 118(529), pp.F185-F221.

[vii] Loader, K., 2002. What price competition? The management of competitive funding in UK local government. International Journal of Public Sector Management.

Social care reform – comprehensive is good, but comprehensible vital

/ inlogov / Leave a comment

Chris Game

Cllr Ketan Sheth’s recent blog on ‘Local Government and the NHS Integrated Care System’ was, as he explained, timely for him personally – as an elected London borough councillor about to take on a novel scrutiny role in a new ICS.

For us Midlands readers it was timely too, for reasons most easily conveyed by the King’s Fund’s recent highly colourful Map 1 of ICSs so far established – highly colourful, that is, for some parts of England, including Cllr Sheth’s London, but bleak grey for others, like the whole of the Midlands, with merely our at least slightly more localised Sustainability and Transformation Partnerships (STPs).

This blog is not directly about either STPs or ICSs, which have only a late walk-on role. It is, though, about the future of social care and local government’s involvement in, or marginalisation from, that future, and it opens with one of Boris Johnson’s first Prime Ministerial broken pledges, in his very first speech as PM, to “fix the crisis in social care once and for all with a clear plan we have prepared”.

The ‘clear prepared plan’ bit was obvious fiction, and confirmed as such in the Conservatives’ December election manifesto.  60 pages, nearly 1,000 days working on a promised but still undelivered Green Paper, and no sniff of a plan.  One un-costed pre-condition (p.23) – that nobody should have to sell their home to pay for care – and a slightly desperate hope to build cross-party consensus on reform.

But last week, just eight months on, jostling with daily lockdown bulletins and courtesy mainly of The Guardian newspaper, saw a sudden small flurry of tantalising leaks. First came Ministers’ “radical plans for everyone over 40 to contribute towards the cost of social care in later life” – paying more in tax or national insurance, or insuring themselves against “hefty care bills when they are older”.

Broadly resembling the German and Japanese funding systems, it is variously labelled a ‘comprehensive’ and ‘compulsory’ insurance model, both of which, to be effective, it surely has to be.

But an even bigger question, I suggest in the blog’s title, is surely whether it can become a comprehensible and comprehended model, and pretty quickly – because the evidence is that our collective understanding of even the existing system is worryingly low.

With coincidental but near-perfect timing, the New Statesman magazine recently commissioned a poll by Redfield & Wilton Strategies asking a sample of 2,000 GB adults about their awareness of how social care is currently funded and organised. Its findings, for a topic dominating news headlines for several months now, were concerning.

Fewer than one in eight felt they were “significantly aware”, under half even “moderately aware”, and nearly a quarter “not aware at all”. They were then asked which of (1) the NHS, (2) private operators, and (3) my local council, they thought were currently providing community care in their locality.  Being a GB-wide sample, there are no precisely right or wrong answers, and ‘providing’ makes it almost a trick question – which personally I’d have opposed phrasing in this way. Still, there are better and worse guesses.

“My local council”, chosen by 55%, is a decent pick – if, by providing, you mean paying for.  But not, for decades now, if you mean actual care home beds.  As Covid has tragically demonstrated, funding is nowadays effectively separated from extremely fragmented provision, with only some 3% of beds directly provided by councils and at least 80% in over 11,000 homes by for-profit private companies, local organisations and charities.

As for payment – roughly £600 per week here in the West Midlands – just over one-third of residents have their fees met by their local authority; one in eight pay top-up fees, but the biggest fraction must find the full fees themselves.  Which, given our apparently limited understanding of the present-day system, must frequently come as a serious shock.

Exactly half the poll respondents ticked the “private operators” option. However, virtually as many (48%) nominated the NHS, which, note the authors, is nowadays “a very small player” indeed in providing social care.  It’s not totally wrong, but close – and that, in the proverbial nutshell, is Ministers’ social care problem.

The public generally have low understanding of how even the present care home system works, of how literally dis-integrated it has become, with home care provision twice as fragmented and considerably more expensive. But they love, clap for, and think they know ‘their’ NHS.

It was even more starkly highlighted in the crunch question: “Which of three options for the future of social care comes closest to your own view?”  Exactly half the respondents selected the ‘NHS model’ that many had just demonstrated they seriously misperceived: “Social care should be free at the point of use, regardless of whether individuals contributed taxation into the system during their working lives”.

Just over one-third preferred the ‘pension’ or ‘compulsory insurance’ model referenced in the Guardian story – or, rather, first story.  For, the following day, it reported Government plans to in effect merge health and social care services, taking the latter away from local councils altogether and handing them and their £22.5 billion annual funding over to the NHS.

The Department of Health and Social Care issued a routine denial, but the PM’s long awaited ‘plan’ appears, currently, to be that care services would be commissioned by, and funded through, the new NHS regional Integrated Care Systems (ICSs) gradually unrolling across England – although not, as yet, the Midlands, where we’re still in the Sustainability and Transformation Partnership phase.

I conclude with what seems a bit of a personal dilemma. Having worked for over half my life for an ‘Institute of Local Government Studies’, I instinctively deprecate both the fact and implications of elected and accountable local authorities losing a major function for so long integral to their existence.

On the other hand, if that’s what most people reckon they want, and the Government fundamentally misunderstands, distrusts, and already wants to diminish and/or abolish local councils ….   The question is: would the public be prepared to pay the cost of NHS-style “social care, free at the point of use”, largely unaddressed in the New Statesman questionnaire?  But that’s for another blog.

 

Photo

Chris Game is an INLOGOV Associate, and Visiting Professor at Kwansei Gakuin University, Osaka, Japan.  He is joint-author (with Professor David Wilson) of the successive editions of Local Government in the United Kingdom, and a regular columnist for The Birmingham Post.