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Grant funding to local authorities

Since 2010, the government has aimed to improve the flexibility and certainty of the funding it provides to local government, to help local authorities manage increasing financial pressures. Our 2014 report Local government funding: assurance to Parliament highlighted early progress in this direction. It found that grants which place restrictions on how local authorities can spend the funds received had fallen as a share of central government funding.  

However, our 2018 report Financial sustainability of local authorities highlighted how the more recent funding landscape has come to be characterised by one-off and short-term funding initiatives, which can undermine strategic planning and create risks to value for money. For example, many funding streams outside the main local government financial settlement can require application and reporting processes.  

This study is part of the National Audit Office’s programme of work on the financial sustainability of local authorities and focuses on the structure of the grant funding that central government provides to them. The report will:  

  • examine how the structure of central government funding of local authorities has changed since our 2014 report Local government funding: assurance to Parliament; 
  • assess what effect any changes in the structure of central government funding are having on the value for money local authorities can achieve; and 
  • examine whether departments’ approaches to local authorities’ funding are optimising government’s ability to achieve value for money.