Fragmented funding - the complex local authority funding landscape

The 2020 Spending Review is an opportunity to think differently about how we fund our public services – to serve our residents, empower communities, and ensure that local plans deliver for local people.  

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Even prior to the COVID-19 pandemic, councils had seen dramatic reductions in core funding from government over the last decade. Now – dealing with the significant financial impact caused by extra costs, loss of income, and cash flow pressures – councils will need at least £2 billion more to meet the full financial impact of the pandemic in 2020/21. This is placing serious and ongoing pressures on local services. 

Councils have innovated, reimagined and changed the ways they work to deliver significant savings and efficiencies. But there is only so much that they can do in the face of large reductions in government funding and increasing demand for their services. 


At the same time, the funding landscape is becoming more complex. In face of reductions in core funding, councils are seeing a proliferation in the number of small grants. Unlike core funding programmes, these grants are often very specific, very short-term, and competitively accessed, limiting what councils can deliver. They are also replacing flexible funding, oriented towards prevention, with reactive grants designed to manage rising levels of demand. 

This research, commissioned by the LGA and delivered by TRL Insight, looks at how the local government funding landscape has developed in recent years, with a focus on the characteristics of grants coming from central government.