Counties respond to government consultation on the fair funding review

County and unitary councils have responded to the government’s consultation on the fair funding review – calling for the review to be transparent and ‘evidence-led’.

The fair funding review, due to be completed later this year, will permanently update the methodology used to distribute central government funds to councils. This consultation asked for councils’ views on the objectives and principles for the reforms.

Responding to the consultation, the County Councils Network (CCN), the Society of County Treasurers and the Association of County Chief Executives say that county and rural authorities are concerned that ministers will increase the weighting and extent of deprivation and other urban-based indicators, such as density and day-time population, based on ‘judgement rather than robust evidence’.

This is despite previous analysis by the Ministry of Housing, Communities & Local Government revealing that the best statistical analysis showed factors such as deprivation and density did not explain higher spending in non-social care services.

Download the consultation response here.

CCN’s warning comes following the Local Government Finance Settlement for 2025-26, which targeted new funding towards urban and city councils at the expense of county and rural authorities. The government’s £600m Recovery Grant was distributed exclusively using deprivation within the methodology.

The CCN says that it will be vital that the government ‘does not repeat the poor practices’ seen in this settlement, calling for greater transparency in the fair funding review in order for the process to have support from the local government sector. This should include publishing evidence that backs up ministers’ decisions.

The consultation response argues that whilst deprivation is a factor in council spending, other factors are more important in explaining council’s funding pressures.  Demand and market failure, particularly around special educational needs home to school transport and children’s social care are ‘just as important factors’, the response argues.

Areas of high deprivation already receive higher allocations of money because deprivation is recognised in high-demand service specific formulae, such as adult and children’s social care.

Alongside separate updated funding formulas to take account of specific pressures in the likes of adult social care and children’s services, the CCN is calling for home to school transport to have its own bespoke formula as ‘demand cannot be explained by a simple population-based formula’. Last year, councils across England spent £1.9bn on school transport, with CCN councils accounting for over half – £1bn – of this total.

The CCN also argues that the government’s adult social care formula must be updated as part of the fair funding review, with the government currently non-committal to updating this formula as part of the review. Considering adult social care is the largest part of a council’s budget, the network says that not only is it imperative that the formula is updated but that it must use the latest data, drilled down to the lowest level, so that the distribution is as accurate as possible.