A North East council leader has vowed to keep pressing ministers for a fairer local government finance system, warning that planned reforms will fall short of meeting growing social care demands.
Cllr Andrew Husband, Leader of Durham County Council, is urging a rethink of the Local Government Fair Funding Review 2.0. He argues the proposals would continue to place an unfair burden on council tax payers while leaving authorities like Durham subsidising services in wealthier areas.
Independent analysis of the consultation proposals published by the Government shows that the additional funding local authorities need to deliver essential statutory services is dependent on maximum council tax rises of up to 5 per cent being applied in each of the next three years and that without this, authorities like Durham face a real terms funding cut.
Under the proposed revised system, a new set of formulae will be introduced to determine each council’s funding needs and how much they can raise in council tax. Although many councils, including Durham County Council, will receive a modest increase in grant funding, this will not be enough to cover the significant cost pressures in adult and children’s social care. These pressures particularly affect areas with higher levels of deprivation and are mainly driven by national decisions around the National Living Wage.
Based on the updated financial analysis, Durham County Council faces a £20 million deficit in 2026/2027, and £71 million deficit over the next four years, if no council tax increases are introduced.
Over the last 15 years, successive Governments have failed to allocate sufficient resources towards councils like Durham, which have seen the most significant increases in costs of children’s social care. This funding system has benefited local authorities in more affluent areas that are able to generate higher levels of income from more modest increases in council tax and from business rates growth, while often having much lower demand for children and adult social care.
The new funding formula allocations seek to address these issues, but the fact they are being phased in over three years to offset the impact on those areas that would lose out from these reforms will come at the expense of local authorities such as Durham County Council.
Cllr Husband said:
“While some of the reforms to the way council funding is being distributed are welcome, the Fair Funding Review 2.0 must ensure that councils like ours receive our updated funding allocations as soon as possible, rather than spreading the increases out over a three-year period.
“It is widely acknowledged and understood through independent analysis that the impact of Government changes to local government funding since 2010 has resulted in a transfer of resources from more deprived to less deprived areas. These proposals go no way towards unpicking the damage from these political choices by the previous Government, and this new Government is simply not doing anywhere near enough to reverse those impacts.
“In County Durham, we provide services to some of the most deprived communities in the country and this review completely fails to recognise the extreme financial challenges we face to cover rising social care costs that are out of our control.
“And not only are we being expected to increase council tax to continue to fund these vital frontline services, millions of pounds worth of additional revenue grants we are due to receive based on the needs of our residents, is being held back to provide parachute payments to councils in more affluent areas whose government funding is due to reduce in recognition they are more self-sufficient. This is perpetuating the inherent unfairness of the current arrangements and effectively means that County Durham council taxer payers would be footing the bill for services in areas that do not face the same challenges as we do.
“We are absolutely committed to prioritising maximising value for money for council tax payers, but the scale of national Government underfunding is nothing short of a tax shunt from the treasury to hard working local people.
“If you live in County Durham, please be assured that we will continue to fight for funding reforms that are truly fair and that more adequately reflect the demands and cost pressures we face due to our relatively higher levels of deprivation and our low council tax raising capacity in comparison to other areas. It’s also important that the proposals are implemented quickly and effectively.
“If that additional funding is not forthcoming then we will need to make some pretty stark choices between council tax increases and cuts to vital local services – services our residents rely on.”
Durham County Council has submitted a detailed response to the Government’s consultation on the Fair Funding Review proposals.
The council’s Cabinet will consider an updated forecast of its budget position and Medium Term Financial Planning forecasts on 17 September, factoring in the assumed impacts on its funding position from the Governments proposals.
The Government has committed to issuing a Policy Statement in the early autumn outlining its intentions following the consultation feedback. Councils are not expected to have their funding allocations confirmed until just before Christmas time, just two months before new budgets need to be set.
