Ministers have announced the diversion of council funding from England’s most wealthy areas to the most deprived towns and cities in a major reform to local government financing, in a bid to reverse a decade-long trend of austerity.
A new £600m recovery grant will be targeted at the country’s regions, mainly in the North and Midlands, alongside longer-term “fair funding” reforms to reallocate money from the more affluent South East councils.
The government also said it would consider individual requests from councils in financial difficulties to breach the council tax limits of 5 per cent for upper-tier authorities and 3 per cent for districts to balance their books.
Deputy prime minister and local government secretary Angela Rayner said: “For too long, councils have been let down by an outdated and inefficient funding system which has led to public services creaking and taxpayers’ money not being spent efficiently.
“Whilst there’s no magic wand to fix what we’ve inherited, we’re taking the necessary steps to fix the foundations of local government by creating a fairer system and ensuring every penny is spent on the services so many people rely on every day.”
The Ministry of Housing, Communities and Local Government added: “The government is under no illusions about the scale of the issues facing local government, and this settlement will begin to address the pressures that councils are under. But this is a long-term project to deliver financial security for councils, and we recognise that we may see some continued instability as we adjust to the new system.”
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