- Outdated funding formulas that penalised deprived areas for
decades are being scrapped, so local people finally get the vital
public services they deserve - no matter where they live.
- Backed by a £5 billion boost for local services over the next
three years to correct historic imbalances and level the playing
field, delivering national renewal for the long term.
- Overhaul of decades-old data and fragmented funding pots will
free up local leaders to deliver on community priorities – from
housing to growth – and give taxpayers better value.
For too long, an outdated council funding system based on
decades-old data has entrenched inequality – leaving some
councils on a financial cliff edge and communities in deprived
areas facing crumbling services, cuts and rising bills.
Meanwhile, some councils in less deprived areas have benefited
disproportionately, building up reserves while others struggled
to cope.
Today's reforms reverse this injustice and ensure councils will
be funded fairly, based on the latest deprivation data and local
need, so that communities with the highest demands get the public
services they rightly deserve. This is about ending postcode
lotteries, closing regional divides, and restoring fairness at
the heart of local government. By taking account of the differing
ability to raise funds locally, all local authorities will be
able to provide the same level of service to residents.
Making funding fairer and simpler is part of wider work to fix
the foundations of local government under the Plan for Change –
consolidating grants, reducing bureaucracy, and enabling councils
to invest in prevention to tackle the root causes of rising costs
through reforming Children's Social Care and a new Homelessness
and Domestic Abuse grant.
Secretary of State, said:
We are reforming the funding system that led to regional divides,
postcode lotteries, and substandard public services for too many
people.
Our changes will make sure cash going to councils is shared out
in a fairer way that follows needs.
We want every family to benefit from our Plan for Change, and
fairer funding means people will soon be able to see and feel the
difference in their own local area.
Minister for Local Government, said:
It's simply wrong that where you live determines the quality of
services you get and ultimately determines your life – from birth
to old age.
These reforms end that injustice. By using up-to-date data and
targeting funding to areas with greatest need, we're reversing
years of unfairness and unlocking opportunity in every part of
the country.
Following extensive consultation with councils of all types in
England, a renewed, modern and fairer approach to funding
councils has been set out:
- Closing the gap: Funding allocations will now reflect true
local need using 2025
Indices of Multiple Deprivation, population projections,
and service demand.
- Protecting vulnerable families: £2.4 billion for children's
social care reforms over the Settlement– so every child gets the
best start in life.
- Tackling homelessness and supporting domestic abuse
survivors: At least £2.4 billion for a new ring-fenced combined
Homelessness, Rough Sleeping and Domestic Abuse grant over three
years including funding on prevention services and a move away
from over reliance on temporary accommodation.
- Targeted support: £600 million Recovery Grant maintained
for areas with greatest immediate needs and less ability to raise
income locally.
- Fairer housing incentives: Councils keep all additional
council tax from new homes – boosting local growth and home
ownership.
- Simplifying the system: Cutting red tape by
consolidating more than 30 funding streams into five - worth
nearly £47 billion over three years.
- Equalising for local income: Directing funding towards the
places that are less able to meet their needs through locally
raised income so residents get the same level of service.
- Certainty and stability: First multi-year Settlement in
a decade, with funding floors and phased changes to protect
councils during transition.
