17 September 2019

The government’s tendency to dole out small amounts of money to local areas is no substitute for getting a grip on how those areas are impacted by public spending as a whole, writes Martin Wheatley.

Announcing one-off pots of money for a selection of areas is becoming a favourite spending tactic for the Johnson government. Since the summer, it has announced that 69 towns will share £95 million to revive high streets and another 100 towns would be given a jackpot fund to develop “multi-million-pound Town Deals”.

Also in the money are the 37 councils given a £2-million fund to tackle illegal building on the green belt and a further six which shared £753,000 for digital projects. And an earlier decision saw 76 pubs handed £188,000 “to bring communities together by expanding their services beyond food and drink". 

Far from meriting a celebratory beverage, however, this approach to public spending requires rather more sober analysis.

The pace of one-off spending announcements has stepped up since the EU referendum

A tendency to allocate money in this way is nothing new. New Labour pursued urban renewal through “an aggregate of separately conceived and implemented programmes". Lord Heseltine, in a 2012 local economic growth report for David Cameron, bemoaned the tendency of government to hand out money in “penny packets” rather than looking at areas’ needs and government spending in the round. His critique appears to have had little impact, especially since the 2016 referendum. An analysis by local government organisation Solace found that the number of on-off funding pots had risen from 20 a year or less before 2017 to around 50 in 2019.

As our new report shows, there is a widespread view that government should stop handing out money in this way. The effort and bureaucracy it creates, both for government, councils and other bidding organisations, is out of all proportion to the scale of funding or its benefits. And the purposes which the funds serve are often anything but a one-off. In the report, a council CEO wryly points out that the annual funding allocations for “winter pressures” address an event “which is predictable". 

While each individual fund is fairly small in scale, the amount allocated through such schemes is substantial in total: £2.4bn in the first half of 2019, according to the Solace analysis. Set against council spending of £59bn in 2018-19, that is a not insignificant sum.

There is a lack of government understanding or planning of public spending 

Doling out money in this way consumes a serious amount of energy at both a local and national level, and contrasts sharply with government’s failure to properly understand and plan the whole of public spending in local areas.

For example, there was much fanfare – from the government – when Wigan received a £1.27m one-off grant for renovating historic buildings. In contrast, the government does not regularly collect or publish any kind of analysis of the public money it spends – estimated over £3bn – on Wigan ever year, and nor does the Treasury make any attempt to evaluate its impact and whether spending money in a different way would achieve better value.

This needs to change. There needs to be proper planning, across government, about how money is spent in local areas and the impact it achieves. The Treasury needs to ensure that good decisions are being taken about the much larger amounts of public money which are being spent in local areas, and any departments that misuse public spending through one-off, unevaluated schemes must be brought into line.