The Local Government Finance Settlement distributes resources fairly by taking into account the main sources of income available to councils, including council tax and business rates. This means that funding is allocated in a way that ensures authorities delivering the same set of services receive broadly the same annual percentage change in these main sources of income.
Councils facing the highest demand for services generally continue to receive more funding and have higher spending power than less deprived authorities. In 2016-17 the 10% most deprived authorities received 23% more funding than the 10% least deprived.
We have also announced a Fair Funding Review to consider the funding needs of different types of areas. This will involve a thorough review of what the needs assessment formula should be in a world in which local government spending is funded by local resources, not central grant. The Review will be done in partnership with the Local Government Association and the wider local government sector, so that all councils have the opportunity to contribute their views.