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

To ask the Secretary of State for Housing, Communities and Local Government, whether the Department plans to review the Area Cost Adjustment.

The government published the Local government finance policy statement 2026-27 to 2028-29 - GOV.UK and response to the Fair Funding Review 2.0 on Thursday 20 November, which set out the government's plans to introduce a fairer and evidence-led funding system. These updates will account for local circumstances, including for different ability to raise income locally from council tax, and the variation in cost of delivering services, including between rural and urban areas.

As part of this, we will continue to apply Area Cost Adjustments to account for the different costs faced in delivering services, including in rural and urban areas. The Area Cost Adjustment considers differences in labour and rental costs, as well as the cost impact of longer journey times. We will also apply a remoteness adjustment to the Adult Social Care Formula. Our cost adjustment methodology has been subject to a technical peer review by the Institute for Fiscal Studies.

We will publish provisional local authority allocations at the upcoming provisional multi-year Settlement in December, which will be subject to consultation and the usual Parliamentary process.