Waltham Forest Council is voicing concerns regarding the government's proposed reforms to local government funding, slated for implementation in the 2026/27 financial year, with a transitional period extending until 2028/29. The reforms aim to revise the allocation of funding to local authorities.
The timeline for the 2026/27 Budget Report is set out as follows:
| Month | |
|---|---|
| Fair Funding Consultation Responses Due | 15th August 2025 |
| Business Rates Retention consultation | Autumn 2025 |
| Policy Statement on LGF Issues | October 2025 |
| Provisional Settlement | November 2025 |
| Budget Scrutiny – 2026/27 Budget Report | 17th February 2026 |
| Cabinet – 2026/27 Budget Report | 19th February 2026 |
| Full Council – 2026/27 Budget Report | 26th February 2026 |
The Public Reports Pack indicates that these reforms build upon consultations initiated in 2018 but were delayed due to Brexit and the Covid-19 pandemic. The key components of the funding review include:
- Relative Needs: Ensuring funding is targeted where it is most needed, with individual formulas for areas like Adults Social Care, Children's and Young People, Highway Maintenance, Home to School transport, and Temporary Accommodation. The Adults Social Care and Children's and Young People formula determine approximately 61% of the funding. The collective total of these individual formulas will determine authorities available funding.
- Relative Resources: Equalising local authority funding using a notional council tax level.
- Notional Settlement Funding Assessment (SFA): Including the impact of a full Business Rates Reset and grant funding aligned to the overall funding envelope. This assessment will include arrangements for the transition period which is likely to be three years, with full reset of funding planned for 2028/29, though specific details of these arrangements are not yet available.
London Councils has voiced concerns, detailed in the Update on Local Government Funding Reforms, that deprivation measures may not sufficiently reflect housing costs and that the proposed children's funding formula requires improvement. Their modelling suggests that London boroughs could collectively lose up to £700 million without sufficient transition or protections.
Research from the Institute for Fiscal Studies, also cited in the Update on Local Government Funding Reforms, estimates a 17% gap between funding need and actual funding levels for local government across London, the highest of any region in England.
One specific concern is the government's use of the Index of Multiple Deprivation as the default option for measuring deprivation, despite its failure to fully account for housing costs. London Councils argues that any deprivation measure used in funding formulae must calculate income after housing costs.
Several flaws have been identified in the proposed children's funding formula by London Councils:
- using a deprivation index that does not properly reflect housing costs
- the lack of adjustment for Free Schools Meals eligibility, despite income and housing differentials in London
- a new
child health
metric which is based on a parent's subjective opinion of their child's health - including a parent's educational attainment instead of a metric with a more direct impact on a child's wellbeing
- changes to other factors like overcrowded housing which have not been explained or evidenced.
London Councils' modelling indicates that the changes to the children's funding formula alone could reduce London's funding share by £1.5 billion, a 27% decrease in its share of grant funding.