UK Council Funding Up for a Shake‑Up
On Friday the government is closing a big consultation on a plan to rethink how local councils get money. Act now, because the next word in the future of English local government might hold an unexpected surprise!
Why Does It Matter?
Long‑running mismatch – for almost two decades council budgets have sat in a pot that never quite matched the cash that was actually needed. The Institute for Fiscal Studies (IFS) says the new proposals aim to finally balance that mess.
What the IFS Report Says
- In a nutshell: if council tax rates were set on a national average baseline, 85 % of councils would be within just 2 % of their “real spending needs” by 2028‑29.
- Without reforms, fewer than one in five councils would hit that mark.
- However, the changes mean that some councils will look a lot richer and others – well, not so lucky.
- One‑in‑ten councils could lose 14 % or more of funding (including council tax) if the reforms hit fast.
- Another one‑in‑ten could see a sweet 10 % or more boost.
Phased Roll‑Out & “Funding Floors”
To keep everyone from tumbling over short‑term cuts, the government plans a three‑year step‑up. It will also set a minimum “funding floor” for councils that face reductions. Between 2025‑26 and 2028‑29 the average council is expected to enjoy an 8 % real‑terms rise in support.
- About 25 % of councils will actually see real‑terms cuts (up to 11‑12 %).
- Another 25 % will enjoy 12 % or more real‑terms gains.
Where Winners & Losers Lurk
Inner London – the heavy weight loss
Congrats, Camden, Hammersmith & Fulham, Kensington & Chelsea, Wandsworth, Westminster: You’re heading straight into the financial cold shoulder with a 11‑12 % dip in real terms by 2028‑29, even if council tax climbs to the hard limit (5 %) each year.
Outer London – A shining bright for some
Hooray for Enfield, Havering, and Hillingdon! Those boroughs could earn a 20 % real‑terms bump in the next three years if we play along with the tax increases.
Beyond London – The Midlands and Yorkshire shine
- East Midlands: 15 % real‑terms gain on average.
- Yorkshire & the Humber: 12 % gain.
- South East: 7 % gain – the smallest of the bunch.
Deprived vs. Rural – What’s the story?
Stunned? One would think deprived areas would swoop in for a perk. Instead, the average increase in funding for the most deprived 30 % matches that of the middle 40 %. The sweet spot of extra grant money in the current year kept the deprived councils happy.
Rural councils, in the 10 % least densely populated group, are not being left behind either – they’ll be so close to the national average over the next three years.
What the Report‑Authors Want to See
Kate Ogden (IFS)
“England’s unshakable funding chaos has lasted more than a decade.” She believes the reforms are a step in the right direction but warns that councils flagged as “over‑funded” will feel the sting. She recommends giving those councils more flexibility to bump up council tax to mitigate losses.
David Phillips (IFS)
“If we want to avoid repeated upheavals, the new system must update regularly.” He says politics will shift and so will economies – the new design must be flexible enough for future governments to tweak.
Bottom Line: Change is coming
Every UK council is on a different path: some will get a tangible slice of the pie, others may have to tighten the belt. Keep your ear to the ground – public funds will see a big shuffle, and it’s not just a numbers game. It’s about how local services survive, thrive, or, in some cases, limp on the hopes of a better system.
