Overview

• Government published proposals for a needs-based grant formula covering population, deprivation, social care and schooling, to be phased from 2026/27 to 2028/29 with transitional funding floors and no rise in total spending.
• Institute for Fiscal Studies projects that one in four councils, including many in inner London and the South, will face real-terms cuts of 11–12%, while a similar share could gain more than 12%, notably in the East Midlands and Yorkshire & the Humber.
• The new methodology factors in adult and children’s service demand along with a remoteness adjustment to address rural funding disparities.
• Critics argue that the reforms fall short for some deprived urban areas such as South Tyneside and Sunderland, suggesting the formula may not fully capture local pressures.
• Councils hardest hit by reductions are expected to press for exemptions to the 5% council tax cap to prevent deep service cuts.