North Northamptonshire Council welcomes plan that could see Government overhaul the way local authorities are funded

The Government has announced that it is planning to give councils multi-year settlements to allow them to make longer term plans. Currently, local authorities are only given one year of funding at a time, leaving them unable to make comprehensive decisions on major projects and day-to-day spending

The funding will also be based on much more accurate and up-to-date data. Old data has particularly affected counties like Northamptonshire where growth and demographic change has been among the most rapid in the country.

The Labour Government has also said that it will scrap complicated grant bidding systems, cutting down on paperwork and administrative time, and replace them with a more streamlined system.

Before Northamptonshire County Council went bust, leaders there had repeatedly blamed the Government for using old data when making funding decisions, selling local residents short.

The new plan has been welcomed by NNC’s administration, which told this newspaper in a statement: “We welcome a review of the highly complex local government funding system and look forward to going through these new proposals in detail.

“This proposal is still in the consultation phase and we’re keen to input into this process to make sure whatever is put in place gets the best deal for the residents and businesses of North Northamptonshire.”

In a written statement to the Commons on Friday, Minister of State for Housing, Communities and Local Government, Jim McMahon, announced the opening of a consultation into the overhaul.

He said that the Government would work hand-in-hand with the sector, to create a fairer system that reflects areas’ changing needs, differing delivery costs and the level of demand on front-line services that people rely on such as social care.

The new allocations will be made based on the latest and best available data and recognise the areas where demand for council services is greatest. As a result of these changes, left behind places should on balance see larger increases in available income.

The review will also scrap existing competitive bidding processes councils often have to go through for small pots of money, simplifying the 300 grants that already exist to slash time waste in councils.

Jim McMahon said: "We inherited a local government sector on its knees – councils pushed to the financial brink, facing rising demand, and working people not receiving the quality local services they rightly deserve.

“There’s broad agreement across council leaders, experts, and parliamentarians that the current funding model is broken and unfair. This government is stepping up to deliver the fairer system promised in the 2017 Fair Funding Review but never delivered.

“These reforms are urgently needed to put councils on a stable footing and ensure better services for residents — especially working people — right across the country.”

The eight-week consultation sets out how the government will make funding allocations fairer for councils of all sizes and across all parts of England.

The review also promises to update formula used to work out social care funding for local authorities, as well as reforming Special Educational Needs and Disabilities (SEND) funding.

The chances are expected to come into effect during the provisional Local Government Finance Settlement 2026-27 period.