Overview

• The government will phase in the funding formula reform from 2026/27 to 2028/29 with minimum funding floors to ease losses for councils losing out under the new model.
• Institute for Fiscal Studies analysis finds about 25% of councils will face real-terms funding cuts and another 25% will see increases of 12% or more despite overall spending staying flat.
• Inner London boroughs including Camden and Westminster are forecast to lose 11–12% of their budgets in real terms by 2028–29 even if they raise council tax at the 5% annual cap.
• Rural councils benefit from a remoteness adjustment that boosts grants for areas far from large towns while some deprived northern authorities also face unexpected losses.
• Councils with lower council tax bases are under pressure to seek greater flexibility to exceed the existing 5% cap in order to plug funding shortfalls and maintain services.