Formula funding systems lack transparency, say MPs
Summary
According to MPs, existing approaches to formula funding across government lack clarity and the principles that should be carried forward to new arrangements have been highlighted in a report.
In 'Formula Funding of Local Public Services' (HC 1502) the Committee of Public Accounts finds that funding to local public bodies in a range of sectors are complex and difficult to understand.
Dissemination of the budget occurred across three grants:
- Primary Care Trust Allocations
- Dedicated Schools Grant
- The Department for Communities and Local Government's (DCLG) Formula Grant.
Government departments distributed £152 billion, one-fifth of all government spending, to local public bodies in 2011-12 through these three funding systems.
These funding systems have led to unfair allocations across health, education, local government, police and fire and rescue services.
For the Dedicated Schools Grant, based mainly on historical spending patterns, per pupil funding for schools with similar characteristics can vary by as much as 40%. Under the Formula Grant, nearly 20% of authorities received allocations which are more than 10% different from calculated needs.
The priorities accorded to different elements of the formulae are judgements which have a direct impact on the distribution of funds. In some cases the basis for the judgement is guided by authoritative, published independent advice. In other cases, the basis for judgement lacks transparency, and external advice lacks status and influence.
Only 4% of respondents to DCLG's consultation supported the current version of the model used to calculate Formula Grant. Some of the data used by departments in calculating relative needs is inaccurate and out of date.
Current reviews of formula funding provide opportunities to address the weaknesses identified.
Found this story interesting?
Spread the news by
clicking below to add it to your bookmarking service: