Measuring need to spend on education

As part of a legislative package designed to reform the finance of local government in England and Wales, the Government has proposed simplifying the measures of ‘need to spend’, which will continue to be a key determinant of a local authority’s grant income. This paper examines the construction of a measure of ‘need to spend’ on education in some detail, and argues that ‘fairness’ would be better served by slightly increasing the degree of complexity of the current measure rather than attempting to follow the path to simplification advocated by the Government. The impact on local authorities of adopting the more complex measure of ‘need to spend’ which the paper proposes is described.