The Institute for Fiscal Studies predicts significant funding changes for councils under a new government plan. Inner London boroughs could see drops of up to 12% once inflation is accounted for. The changes, effective from 2026, will redistribute around £2.1bn annually, with 186 authorities losing funding and 161 benefiting. Areas in outer London and urban centers outside the capital, like Nottingham and Wolverhampton, will gain. The new system aims to address disparities in council funding by emphasizing service demand variations.
The government plan to update council funding rules will cause significant funding drops for inner London boroughs, with some seeing reductions of up to 12% under inflation adjustments.
A total of 186 authorities are projected to lose funding while 161 will benefit, as the new system redistributes about £2.1bn in annual government funding.
Councils in outer London and urban areas outside the capital will receive increased funding, addressing discrepancies in service demands and delivery costs.
The new funding system aims to adjust for demand variations, with a shift towards areas with more properties in lower council tax bands.
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