Fair Funding for Towns & Cities

The Government has recently consulted on proposals for new formulae to distribute funding for local government from 2020 onward.

It is vital that these are based on the different levels of need across the country. We are concerned that the current proposals will not deliver this and could leave vital services woefully underfunded.

The proposal to exclude a measure of deprivation from the foundation formula in particular would result in significant underfunding for the least well off areas.

Asks 3
  • Deprivation must be included within the foundation formula with at least the same weighting as its equivalent in the existing formula
  • Sustainable overall funding must be provided at the 2019 Spending Review to help all councils plug the £8bn funding gap facing local government as a whole
  • Rural sparsity and urban density should only influence service-specific formulae where there is independent evidence to demonstrate they drive costs for those services
  • The Government must publish the exact evidence used to arrive at each of its key funding proposals and omissions in a detailed technical paper
  • To find out more, read our consultation response

“The statistical results cited by the MHCLG are not strong enough to support such a decision… A population-only Foundation Formula would lead to lower assessments of needs – and hence lower funding – for deprived (often inner city) councils...” The Institute for Fiscal Studies

“If implemented today… the new allocation formula would lead to the most deprived 20% of councils losing £35 per head per year – a total of £390m per year, whilst the most affluent 20% of councils would gain £24 per head – a total of £260m per year.” Ben Barr, David Taylor-Robinson & Dame Margaret Whitehead, University of Liverpool


“Excluding deprivation from the Foundation Formula is perverse and counter-intuitive.” The Society of Local Authority Chief Executives

“Deprivation is a key driver of need and must be accurately reflected in any new funding formula” London Councils

"We are unanimous that deprivation should be in.” Lord Porter, LGA Chair