SIGOMA councils issue warning ahead of last minute funding formula changes

Posted on October 28, 2025

With changes to the Index of Multiple Deprivation (IMD) set to be published later this week, our Chair, Cllr Sir Stephen Houghton, spoke to The Times to raise concerns about the potential watering down of reforms for the benefit of London:

'Sir Stephen Houghton, Labour leader of Barnsley council and chair of Sigoma, which represents 50 urban authorities outside London, said: “This would certainly not be good news. London has had very low council taxes but a very substantial amount in grants. I don’t want to see the hard work of previous ministers disappear.”

A government source said the changes were based on the release of objective new data and the decisions would still have been made under previous ministers. The initial review published earlier this year included a “remoteness factor”, where more rural councils were allocated extra funding to account for how far apart their services were.

Urban councils argued there was no evidence that this led to higher costs for councils. The final funding review, due to be published in late November, is expected to significantly downgrade the weighting given to the factor.'

You can read more here.

Our Chair also spoke to The Independent, explaining why housing costs are not a credible measure of local need, and would be a "peverse" adjustment to the funding formula, in addition to the proposed Remoteness Adjustment:

'Authorities in the north and the Midlands are braced for bad news when a new measure of deprivation that affects income is published on Thursday.

Urban councils in the Midlands and north of England are expecting a “perverse” late adjustment to proposed funding reform which they fear would deprive them of hundreds of millions of pounds.

Concerns are focused on what has been described as a last minute Government decision to increase the impact of housing costs in an updated formula for measuring deprivation which would determine grants to local authorities.

The Special Interest Group of Municipal Authorities (Sigoma), which represents metropolitan authorities outside London, told the PA news agency its members have been told to expect the shift in emphasis before the new measure of poverty is published on Thursday...

With the consultation on the funding review having entered its final phase, Sigoma said 50 councils and more than 100 Labour MPs oppose London councils benefiting from the changes at the expense of other areas with high needs.

Sigoma said that further weighting for housing costs in new indices of multiple deprivation (IMD), due to be published on Thursday, would “permanently” move huge levels of funding away from councils in the Midlands and the north. These authorities are said to have faced cuts that are 25% worse than the national average.

Sigoma dismissed property costs as a credible measure of local needs. It said: “Including housing costs as an indicator of deprivation would be perverse as higher housing costs reflect buoyant house prices, higher levels of economic activity and extremely high levels of housing wealth.

“This proposal would allow London councils to continue to set very low council tax, effectively subsidising low bills for London residents.

“These proposals would significantly worsen the outcome for Sigoma councils, a dozen of whom could be set to lose out from the proposals despite representing the most deprived communities in England, and having experienced significant and disproportionate cuts in funding and increases in demand over the last 15 years.”

The group also challenged the new proposed inclusion of a “remoteness adjustment” in the formula aimed at supporting rural areas.

It argued the policy in its current form is based on a “weak theoretical case, lacks sufficient evidence justification and would divert vital funding away from some of the most deprived urban communities in England”.

Modelling by Sigoma showed the inclusion of remoteness would result in a collective loss in funding for its members totalling £300 million.

Sigoma chairman and Labour leader of Barnsley council, Sir Stephen Houghton, said: “This is a once-in-a-generation opportunity to put right the funding inequalities our communities have faced for too long.

“If councils cannot address funding gaps, they will inevitably be forced to cut costs — and more often than not, this will impact the frontline services that residents see and rely on every day, such as highways maintenance, grass cutting, and street cleaning.

“With more council tax increasingly directed toward the growing demand for vital services like social care, further funds are shifting away from the visible, everyday services that shape public perception and quality of life, on which voters make decisions.”

Sigoma has welcomed other funding review proposals, including the equalisation of council tax revenue and a new formula for children’s services which recognises factors such as overcrowding.'

You can read the full article in The Independent here.

Our Chair was also quoted in The MJ, which you can read here.