Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 37
37
Accepted in Part
Require the new funding formula to consider sub-ward disparities and local housing costs.
Recommendation
The Government’s new funding formula must consider the effect of disparities between wards and sub-wards within single local authorities, which can be hidden when only considering the data at the level of whole local authorities. Measures of deprivation used in the new funding formula must account for local housing costs. (Recommendation, Paragraph 133) 78
Government Response Summary
The government states its needs assessments vary in granularity and that MHCLG is working with DWP to incorporate housing costs into the 2025 Index of Multiple Deprivation, with a final decision on its inclusion to be made in the autumn.
Government Response
Accepted in Part
HM Government
Accepted in Part
The Government outlined its plans for updating the funding formulae used in the Settlement as part of the FFR 2.0 consultation. The formulae utilised in the Government’s needs assessments vary in granularity. For measuring social care need, need is assessed at the sub-ward level to give an overall local authority need share. Whilst the ‘foundation formula’ used to measure need is not assessed at the sub-ward level, it accounts for deprivation using an average Index of Multiple Deprivation (IMD) score at the Local Authority level, where the average score is calculated based on the distribution of deprivation at a sub-ward level. There is an update to the IMD planned for publication between October and November 2025, and MHCLG is working closely with DWP to incorporate more direct aspects of housing costs within the Income Domain. This has become possible since the roll out of Universal Credit (UC) and the integration of Housing Allowance into the overall UC award. A new DWP dataset on UC claimant families means that we now can access data on claimants’ housing costs, which has not been possible for previous Indices. We will continue to explore and review new data on measures of deprivation as it becomes available, and a final decision on the inclusion of the 2025 IMD in the updated assessment will be set out in the autumn.