The Government has revealed details of its multi-year funding deal for local government that aims to shift funding to England’s most deprived areas.

Councils overall will see increase in their spending power compared to last year of more than 23%, said the Ministry of Housing Communities and Local Government (MHCLG) and the per head boost for the most deprived 10% of areas will be 24%.

The three-year settlement is worth £78bn to local government, adds the department.

It describes the settlement as a ‘turning point for the way local government is funded’ that aims to tackle an ‘outdated system that saw some councils build up savings while others faced financial collapse’.

‘Instead, places are now being funded using an evidence-based system that properly recognises local circumstances and the true costs of providing services in deprived communities,’ said the MHCLG.

Among the most deprived areas to see a funding hike are Middlesbrough, Birmingham and Manchester, as well as outer London boroughs including Haringey.

Six affluent councils in London and the South East, which are set to lose out under the funding deal, are to be allowed to raise their council tax above the current 4.99% cap from April, added ministers.

These are: Wandsworth, Westminster, Hammersmith and Fulham, City of London, Kensington and Chelsea, and Windsor and Maidenhead. All have ‘historically very low’ council tax bills, adds the Government.

‘By fixing the link between funding and deprivation, we’re giving local areas the tools to create opportunities, support families, and rebuild the services that hold communities together,’ said local government minister Alison McGovern.

The Local Government Association’s chair, Cllr Louise Gittens, has welcomed the multi-year financial settlement to local authorities, but she remains ‘concerned by the number of councils having to use unsustainable emergency bailouts, which are a clear warning sign about the financial pressures facing local government’.

She added that councils also need to be protected from rising costs and rising demand, particularly around social care and supporting children with special educational needs and disabilities (SEND).

County Councils Network finance spokesperson, Cllr Steven Broadbent, said many of its member authorities ‘will see their Government grant cut’.

He warned that ‘county taxpayers, the length and breadth of this country, will foot the bill for these reforms’, adding that an estimated nine in 10 of its member councils will need to increase council tax by more than the 5% cap to benefit from the Government’s ‘much-vaunted increase in total core spending power’.

Cllr Stephen Houghton, chair of the Special Interest Group of Municipal Authorities (SIGOMA), said that while the funding settlement is a ‘welcome step’ towards a fairer system, ‘several of our members will be disappointed’ by their allocations.