Local government funding will be overhauled to support left behind places, while competitive bidding for funding pots will be scrapped and the ‘statutory override’ for SEND deficits will be extended, the Government has announced.

The Government today launched an eight-week consultation on reforms that aim to change how funding for councils is allocated to ensure that deprivation is properly recognised in the ‘assessment of need’ of councils.

It proposes simplifing the system by which councils bid for grants and reforming how adult and children’s social care services are funded to better reflect the level of demand.

The ‘statutory override’, which has allowed councils to keep Special Educational Needs and Disabilities (SEND) deficits off their main budgets, will also stay in place until 2027/28.

Minister for Local Government and English Devolution, Jim McMahon OBE said: ‘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.’

Cllr Sir Stephen Houghton, chair of the Special Interest Group of Municipal Authorities (SIGOMA), said the proposed reforms will deliver ‘a fairer and more sustainable system’.

‘A decade of disproportionate cuts, outdated formulas and short-term settlements have left our members with shrinking resources, struggling to meet rising demand. It is therefore very welcome that there will now be a focus on delivering a funding system that supports?the most deprived areas.’

Critics have reportedly raised concerns that the reforms could lead to a reduction in funding for councils in London and the South East, which in turn could result in council tax rises and service cuts.

In a statement responding to the announcement, the District Councils' Network (DCN) said the change would redistribute funding away from small towns and rural areas towards bigger cities.

Cllr Jeremy Newmark, DCN Finance spokesperson, said it would 'unfairly penalise' users of district council services.

Cllr Pete Marland, chair of the Local Government Association's (LGA) Economy and Resources Board, said the LGA will be ‘working through the details of this consultation.’

‘Different councils will have contrasting views on these proposals. Individual councils will need to know the implications, and a transitional mechanism is crucial to avoid putting services at risk.’