The funding system for local government is extremely complex. The local government finance settlement provides formula-based funding to local authorities, which MHCLG distributes through a combination of formula- based grants, general grants and locally retained business rates. Local authorities also fund services through locally raised income, such as council tax and sales, fees and charges.21 Written evidence we received from London Councils pointed out that the complexity of local funding ...

The funding system for local government is extremely complex. The local government finance settlement provides formula-based funding to local authorities, which MHCLG distributes through a combination of formula- based grants, general grants and locally retained business rates. Local authorities also fund services through locally raised income, such as council tax and sales, fees and charges.21 Written evidence we received from London Councils pointed out that the complexity of local funding “perpetuates a lack of transparency and erodes public trust of both central and local government”.22 Type: conclusion | Number: 10 | Response status: accepted Government response: 2.1 The government agrees with the Committee’s recommendation. Target implementation date: by the end of 2025, as part of the upcoming multi-year Local Government Finance Settlement. 2.2 On 20 June 2025, the government published the Fair Funding Review 2.0 consultation which set out the approach to