Council leader vows to continue fighting for fair funding for County Durham
A North East council 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.
Cllr Andrew Husband, Leader of Durham County Council, is calling for a rethink of the Local
Government Fair Funding Review 2.0, highlighting how the reforms would not only continue to place
a disproportionate burden on council tax payers but would see local authorities such as Durham
continuing to foot the bill for services in more affluent 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.
