The Government must consider London’s ‘high levels of deprivation’ in the Fair Funding Review 2.0, says the cross-party group representing the capital’s councils.

The group argued that aspects of the Government’s proposed funding reforms are ‘flawed’ in their approach to deprivation measures, creating ‘potentially devastating consequences’ for London boroughs’ future budgets.

While the Government has employed the Index of Multiple Deprivation (IMD) as a measure, London Councils claims that the tool is inaccurate in its representation of housing poverty, given that ‘road distance to a post office’ and homelessness are presented as ‘factors [which] have the same level of impact on deprivation in a community’.

Emphasising the levels of housing poverty in the city, London Councils urged the Government to ensure the ‘new funding formula is robust’ and ‘accurately measures levels of need for local services’.

According to the group, the current measures could ‘risk undermining the government’s aim of ensuring funding follows need’. It flagged the proposed children’s services formula and the introduction of a 'a new, unevidenced “remoteness” factor’ as further possible issues within the reforms.

Cllr Claire Holland, Chair of London Councils, said: ‘We have long called for reform to local government funding to ensure money is distributed fairly on the basis of need. However, the current proposals risk failing to achieve this. After more than a decade of structural underfunding, rising demand and skyrocketing costs, the impact on London could be severe.’

For more on the impact of the Government's fairer funding reforms, check out The Unfair Cost of ‘Fairer’ Funding for London by Cllr Elizabeth Campbell, leader of Kensington and Chelsea Council.