A controversial new funding formula proposed by the government for children’s services is sparking alarm among local authorities across the United Kingdom, with warnings that it could severely undermine vital support systems for vulnerable young people.

The Government’s ongoing consultation aims to establish a fairer funding system for local government by altering the distribution of core council funding from 2026/27. A central component of this reform is a new formula specifically designed to determine funding levels for individual councils’ children’s services.

Councils nationwide, particularly those representing London boroughs, argue that this new approach dramatically underestimates the actual levels of need within their communities. They contend that the proposed formula for local government funding fails to account for critical local circumstances and demands.

Modelling conducted by London Councils, representing 32 boroughs and the City of London, projects a significant redistribution of £1.5 billion away from the capital’s boroughs over three years if this specific children’s services UK formula is implemented in isolation. This highlights the potential for severe financial strain on already stretched budgets.

Further independent analysis by the National Children’s Bureau casts doubt on the formula’s overall robustness and accuracy, citing a lack of comprehensive testing and the use of metrics not directly correlated with actual need. Their research particularly notes the omission of high housing costs, especially pertinent to regions like London, which could lead to skewed social care funding allocations.

The report also critiques the “subjective” nature of the proposed child health measure, advocating for more objective indicators like figures on special educational needs and disability to ensure a broader capture of genuine need. Alarmingly, the new formula reportedly assumes a nearly 40% decrease in London’s demand for children’s services, despite continuous collective budget overspends exceeding £150 million annually in recent years, signaling a clear disconnect with reality in council budget cuts.

Claire Holland, Chair of London Councils, while welcoming reform intentions, strongly emphasizes the critical flaws within the proposed funding formula, warning of its “devastating impact” on the ability to deliver essential services for vulnerable children. She stresses the importance of an accurate needs assessment for robust financial stability in local government.

James Shutkever of the National Children’s Bureau reiterates the formula’s crucial role in fair funding distribution amidst increasing pressure on public services impact. He urges the government to refine its proposals, ensuring the formula genuinely reflects and addresses the needs of children, young people, and their families.

In response, the Ministry for Housing, Communities and Local Government maintains that their reforms aim to stabilize local government finances and deliver fairer funding for all councils. They cite substantial financial provisions, including £13.35 billion for London councils this year, as evidence of their commitment to reform.