Councils are to be freed to invest more money in neighbourhood regeneration under a radical new system for local government funding.

The proposal, announced by deputy prime minister John Prescott on Tuesday, will be piloted in nine authorities over the next three years.

It aims to cut through the mass of central government funding streams, which a critical report from the Audit Commission published last month said was holding back regeneration (HT 25 June, page 8).

There are currently 42 separate funding streams for different initiatives, which account for 2.5% of local government expenditure.

The ODPM proposed that they be integrated with mainstream local government funding and put into just three funding pots: “safer and stronger communities”, children and young people, and healthier communities and older people.

The local council would then agree with ministers how to spend the money, with only dedicated funding such as the housing revenue account exempt from the three pots.

But Prescott, who admitted he was “staggered” by the complexity of the current system, said councils could not use the new regime to top up decent homes expenditure.

Source

Housing Today