Home > General Politics, Local Democracy, Terrible Tories > Formula grant for dummies

Formula grant for dummies

I apologise right away to those readers whose intelligence I insult with this short post.

There’s been a recent spate of Tories arguing that the local government grant settlement, in which the budgets of poorer areas are slashed harder than those of richer areas, is actually very fair. 

The Tory argument goes like this, as recently modelled for the BBC by Tory Minister Grant Shapps when defending the massive cuts to Manchester’s formula grant:

He [Shapps] said the settlement was fair across different parts of the country and that funding per person was highest in areas with most need.

In 2011/12 Manchester will still receive a central government grant of £713 per head, compared, for example, to £125 per head in Wokingham,” he said.

 Here’s another example from one of our thicker Tory councillor tweeters:

@JohnDMerry I’m glad that the government still provides Salford with a formula grant over 4 times as big as somewhere like Wokingham

Wokingham again? I guess there must have been an email from Tory HQ. 

But of course, said to the right people at the right time, the argument that Manchester will get a central government grant 5.7 times as much per head as Wokingham may sound pretty convincing, so it’s important to have ready access to the facts to show that the Tories are being staggeringly selective in the way they present their argument.

The data you’ll need is here.  Scroll down this page till you come to the ‘Supporting data for 2011-12 calculation (MS Excel 248kb)’ hyperlink, and download the excel file.

In here you’ll find the data for all councils. Look at columns E & G (2010-11 baseline) and AG & AI (2011-12 settlement) which show that the formula grant as a percentage of overall income depends primarily on what money a local council needs from government over and above its locally gathered ‘council tax base’. (Forget for now, in the interests of simplicity) all the other special grants being cut from poorer areas).

So you’ll find that Wokingham (conveniently located at the very bottom of the table because it has the lowest overall reduction in ‘spending power’ in the country) takes in around 4 times as much in council tax as it gets in formula grant.

This is because it is a rich area, with big houses and a relatively small number of people exempt from council tax.

Manchester, on the other hand, is the other way round.  Its formula grant is 2.5 times the council tax intake.

This is because it is a relatively poor area.

Yes, I know it’s simple enough, but I hope ready access to the data is handy when arguing with Tories who may increasingly spout this stuff.

Two other quick points:

It may be worth asking Tories whether, in using this formual grant argument, they are arguing for a 21st century poll tax.  That’s the logical conclusion to their argument.

And just for a laugh, ask which area they think gets the ‘iunfairest’ formula grant in their terms.   No, it’s not Manchester, or Liverpool, or any of those poor places. 

It’s the City of London, which gets a whopping 20 times as much in formula grant as it brings in from council tax, because few people live there. 

How unfair is that, Tories!  Make the bankers take their own rubbish to the tip.

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