Question to the Ministry of Housing, Communities and Local Government:

To ask the Secretary of State for Housing, Communities and Local Government, with reference to paragraph 4.1.6 of the consultation entitled Local authority funding reform: objectives and principles, published on 18 December 2024, whether councils which have set council tax levels above the assumed level of council tax will, all other factors being equal, receive a higher grant.

The government is inviting views on the objectives and principles of local authority funding reform, including on measuring differences in locally available resources such as council tax. Following this consultation, we will develop, publish and consult on a detailed plan for local authority funding reform ahead of the provisional Settlement for 2026-27.

With reference to proposals set out in paragraph 4.1.6 of the consultation, councils which have set council tax levels above the assumed level of council tax, will not, all else equal, receive higher grant allocations.

This is because by making a uniform assumption of the council tax level in our measure of locally available resources, any individual council’s council tax level is not directly associated with their grant allocation. A council’s grant allocation will instead be impacted by the number and banding of liable dwellings in the local authority (i.e. their ‘Tax Base’).

Any council that sets council tax levels above the assumed level of council tax will receive more income in total than if it had not done so.

As set out in the consultation on local authority funding reform, the government believes that making uniform assumptions on the council tax level charged by all authorities, and on factors which determine their ability to raise council tax, promotes simplicity, fairness, and accountability.