The Four-Block Model
Introduced in April 2006, this approach to need and resource equalisation was meant to provide a robust and equitable system for distributing the formula grant between the 456 ‘receiving authorities’ in England. Fast-forward to 2011 and it was used to allocate £29 billion from central to local government in the UK. This funding (together with other government allocations and grants) supports provision for social services for children and adults, police, fire and rescue services.
Constructed in four components, the model:
1. Calculates the needs of each authority’s population for the services provided (relative need block).
2. Calculates and deducts the resource that is available through council tax revenue (relative resource block).
3. Then distributes to all authorities the unallocated proportion of the funding clawed back through step 2 (central allocation block).
4. Then allocates a minimum funding increase, or if an authority was already receiving more than the minimum increase, would scale back their funding (floor damping block).
This model then produces a RNF score (relative needs formula).