Local Government Finance
The question
To ask the Secretary of State for Housing, Communities and Local Government, with reference to the Local Government Finance Statement made on 23 February 2026, what changes have been made to the assessment of relative need within the Settlement; whether independent validation has been undertaken to test the updated needs formula; what weightings have been applied to deprivation, rurality, population growth and service demand; and if he will publish any technical modelling and equality impact assessment.
Answered by Alison McGovern
The recent Local Government Finance Settlement is our most significant step yet to make English local government more sustainable. For the first time since 2013-14, the government is updating the relative needs formulas that form a key part of how local authorities' funding allocations are calculated, using more up-to-date data. This includes using the recently published 2025 Indices of Multiple Deprivation, an official Statistic produced by MHCLG.
Each relative needs formula has been constructed using consistent principles, applying statistical techniques to weight variables according to their influence on service demand. An overview of the weightings applied to the formulas within the assessment of relative need can be found within the Fair Funding Share Calculator on gov.uk here. For further detail on the weightings and technical modelling underpinning the relative needs assessment, please refer to the relevant technical annex published on gov.uk here.
The methodology proposed by the government was subject to a technical peer review by the Institute for Fiscal Studies, which can be found here.
An assessment of the equalities impacts of our proposals was published as part of the government’s response to the provisional Local Government Finance Settlement, which can be found on gov.uk here Overall, the government assessed that the changes delivered through the Settlement would have positive equalities impacts.
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