§ Mr. BoswellTo ask the Secretary of State for the Environment, Transport and the Regions what studies he has commissioned into the establishment costs of local authorities, as distinct from those related to the size or needs of their populations, and any consequent implications for the studies of local government finance. [153399]
§ Ms Beverley HughesThe Green Paper "Modernising Local Government Finance", notes that future revenue grant distribution formulae could distinguish more clearly between fixed costs and the costs that vary according to the number of people for whom a service is provided.
To help us explore how such formulae could be developed, we commissioned a scoping study from PricewaterhouseCoopers. The aim of the study was to review the existing evidence, and make recommendations as to the most promising avenues for further research if that was found to be needed. The study will shortly be published on the LGA website: www.lga.gov.uk. It 469W suggests that fixed costs that do not vary much according to the size or needs of authority populations are most likely to relate to authorities' corporate administration costs. Examples are the costs of statutory external audits, and the costs of completing statements of accounts, annual reports and Best Value Performance Plans.
We are currently considering the implications of the scoping study as part of our review of the local government finance system, including whether we need to commission more detailed follow-up research.