North East could be 'big losers' as funding reformed

PARTS of the North East could be “big losers” from a Labour overhaul of how crisis-hit town halls are funded, a new report has warned.

- DANIEL HOLLAND Local Democracy Reporter

The Government is planning major reforms aimed at addressing “unfair” disparities in the core funding it gives to councils.

This is expected to divert money from wealthier parts of the country towards more deprived areas where needs are greater and local leaders are less able to raise funds through council tax.

But new analysis from the Institute for Fiscal Studies (IFS) claims that gains for cash-strapped local authorities in the North East “may be lower than expected” overall and pinpoints two areas, Sunderland and South Tyneside, as “set to be big losers”.

The IFS report says that about a quarter of councils in England could suffer a real-terms drop in money under the Government's plans.

The worst-hit will be inner London boroughs, including Sir Keir Starmer’s own council in Camden, while some shire counties are also expected to lose out significantly.

It is estimated that London as a whole would see a 7% reduction in overall funding if the Fair Funding Review 2.0 changes were in force this year.

The East Midlands and Yorkshire and the Humber are named as the biggest winners, with significant variation seen across the North and not everywhere seeing major gains.

The North East would be 2% better off if the reforms were in place now.