The government's consultation on its proposed approach to
local authority funding reform through the Local Government Finance Settlement
from 2026-27 is due to close this week (15 August).
London Councils’ analysis has highlighted some serious issues within
the proposals that risk dramatically underestimating levels of need for local
services in London.
London Councils is calling for a more accurate approach to
assessing local levels of need, which is key to ensuring resource matches need,
sustaining hard-pressed local services, and restoring local government’s
financial stability.
This includes calling for the government to re-examine proposed changes
to the way it assesses need for children’s services, as research suggests the
reforms fail to account for housing poverty when calculating deprivation and
could have a “devastating impact” on budgets.
London Councils’ analysis indicates £1.5bn of funding share
could be redistributed away from the capital as a result, with all but one
London borough seeing their funding share decrease.
Chair of London Councils Cllr Claire Holland,
said: “We welcome the government’s intention to reform council funding
since this is long overdue, and it is critical that funding is distributed
fairly and efficiently on the basis of need.
"However, it’s clear there are serious issues with the
proposed children’s services formula, which risks dramatically underestimating
levels of need in London and other parts of the country. This would have a
devastating impact on our ability to deliver vital local services, particularly
for our most vulnerable children and young people.
“A more accurate approach to assessing local levels of need
is in everyone’s interests. It will help create a funding system that is
robust, provides councils with the resources they need and – following 14 years
of structural underfunding – restores long-term financial stability to boroughs
and the wider local government sector.
“The consultation is an essential opportunity to reexamine
the formula, and we are keen to work with the government to develop a model
that is accurate and robust.”
You can read our briefing on the proposed funding reforms here.
