A major shake-up in local government funding is brewing—and it’s already causing a storm of controversy.
At the heart of it? A bold move by Deputy Prime Minister Angela Rayner to redistribute council cash from southern towns to northern communities.
Supporters call it fair. Critics are calling it “class war.”
What’s Changing Under Rayner’s Plan?
Angela Rayner, who also serves as Local Government Secretary, unveiled a proposal that would adjust how councils in England receive government money.
The key idea is to shift more funding toward areas with weaker tax bases—many of which are located in the North.
That means town halls in wealthier areas, like parts of London and the Home Counties, could soon see a drop in funding.
To make up for the shortfall, they may need to hike council tax bills, raise fees (for things like parking and planning), or even cut back services.
The Redistribution Formula Explained
So how does this work in practice? The new formula takes into account factors like population size, poverty levels, and the age makeup of each community.
These are meant to highlight the areas that need more financial help.
Another big shift is how the government calculates what a council could raise through council tax, assuming every region charged the same rate based on housing type.
Wealthier areas that typically keep taxes lower could therefore lose a significant chunk of their funding.
Furious Backlash from Southern MPs and Councils
Unsurprisingly, the proposal hasn’t gone down well in the South.
Tory MP Greg Smith from Mid Buckinghamshire didn’t hold back, saying: “Anything that takes from the South to pay for the North is class war.”
Kevin Hollinrake, the Conservatives’ local government spokesperson, was equally scathing: “These new backdoor rises in fees and charges are nothing more than stealth taxes—punishing the very councils that have kept taxes low and responsible.”
Vikki Slade of the Liberal Democrats added that cutting funding to already under-supported councils was the wrong move: “It beggars belief that Angela Rayner is considering reducing funding entitlements for many, including councils which already receive very little.”
Will This Actually Lead to Higher Taxes?
Government ministers insist that councils won’t be forced off a financial cliff.
The changes would roll out gradually over three years, which they argue prevents sudden funding gaps.
There’s also a current 5% cap on council tax increases, which many councils already hit annually.
However, they can apply for special permission from Rayner to go beyond that limit—especially if financial pressure escalates.
It’s also likely that councils will start looking into raising fees for other services—parking, licensing, etc.—as they scramble to plug any funding holes.
Could Services Be Affected?
Yes, and that’s one of the big worries. Some southern councils may have to scale back services if they lose too much funding.
While ministers argue that redistribution is necessary to fix a broken system, others warn it could make life harder in areas already operating on tight budgets.
A consultation document released with the plan confirmed the government will “review all fees previously identified and consider where there is the strongest case for reform.”
Economic Experts Weigh In
Kate Ogden, a senior research economist at the Institute for Fiscal Studies, warned that leafy suburbs and rural councils in the South would likely feel the biggest pinch.
Despite the concerns, some experts agree that reform has been a long time coming.
Local Government Minister Jim McMahon defended the proposal, saying: “There’s broad agreement that the current funding model is broken and unfair.
We’re stepping up to finally deliver the fairer system promised years ago but never implemented.”
What Happens Next?
The government has opened up a consultation period on the funding reforms, which runs until August 15.
That means council leaders, MPs, and the public have a chance to weigh in before anything is finalized.
So for now, the battle lines are drawn—North vs. South, fairness vs. fairness-for-whom—and all eyes are on Angela Rayner as the debate over council cash continues to heat up.