UK Government's Fair Funding Review 2.0 Falls Short of Addressing Social Care Costs, Says Durham Council

The UK Government's proposed reforms to the local government finance system, outlined in the Fair Funding Review 2.0, are insufficient to cover mounting social care costs, according to Durham Council. The council's leader, Cllr Andrew Husband, is calling for a rethink of the review, highlighting how the reforms would place a disproportionate burden on council tax payers and require local authorities to foot the bill for services in more affluent areas. Independent analysis suggests that the additional funding needed to deliver essential statutory services would require maximum council tax rises of up to 5% per year for the next three years, resulting in real terms funding cuts for authorities like Durham.

Key Takeaways:

• The Fair Funding Review 2.0 proposals would require local authorities to foot the bill for services in more affluent areas, placing a disproportionate burden on council tax payers in areas like Durham.
• The reforms would introduce a new set of formulae to determine each council's funding needs and council tax raises, but the increased funding would not be sufficient to cover the significant cost pressures in adult and children's social care.
• Based on the updated financial analysis, Durham Council faces a £20 million deficit in 2026/2027 and a £71 million deficit over the next four years if no council tax increases are introduced.
• The new funding formula allocations seek to address the funding disparities, but the phasing in of the increases over three years would come at the expense of local authorities like Durham.
• Cllr Andrew Husband calls for the review to ensure that councils like Durham receive their updated funding allocations as soon as possible, rather than spreading the increases over a three-year period.
• The proposals fail to recognize the extreme financial challenges faced by Durham, which provides services to some of the most deprived communities in the country.
• The council admits that if the additional funding is not forthcoming, it will need to make stark choices between council tax increases and cuts to vital local services.

Statistics:

• The additional funding needed to deliver essential statutory services is dependent on maximum council tax rises of up to 5% per year for the next three years.
• Based on the updated financial analysis, Durham Council faces a £20 million deficit in 2026/2027.
• The council faces a £71 million deficit over the next four years if no council tax increases are introduced.
• The number of council tax payers in Durham is impacted by the proposed reforms, with residents potentially facing higher council tax bills to cover services in more affluent areas.
• The government's Fair Funding Review proposals are expected to affect over 300 councils in England.

Sources:

• [1] Our leader has pledged to continue to lobby ministers for a fairer local government finance system, as major reforms to how funding is allocated look set to be insufficient to cover mounting social care costs. (Source: Durham Council)
• [2] 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. (Source: UK Government)
• [3] 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 like us. (Source: Cllr Andrew Husband, Leader of Durham Council)
• [4] The consultation on the Fair Funding Review proposals is ongoing, and Durham Council has submitted a detailed response to the government. (Source: Durham Council)