Funding reform 'helps Labour councils'

Labour councils in the North of England are set to benefit from a wide-ranging reform of local government funding set out yesterday.

Labour councils in the North of England are set to benefit from a wide-ranging reform of local government funding set out yesterday.

The Tories accused the Government of skewing funding away from the shire counties that they control.

A new formula, to be chosen next April from a number of options published yesterday, would see deprived areas gain top-up funding to pay for extra costs. But some authorities in the South of England may have to raise council tax to pay for lost revenue, critics warned.

Nick Raynsford, the minister for local government, who unveiled the proposals to reform the funding formula, said that the change would simplify the grant allocation system for councils. He admitted that "a number of northern authorities" will benefit.

Local authorities account for around 25 per cent of public spending and pay for services such as schools, police and fire services. The new formula, which will be used to allocate around £36bn a year, is designed to replace the Standard Spending Assessment which the Government believes is too complicated. The proposed formula will include top-ups for councils which have high costs because of social deprivation.

Eric Pickles, the Tory local government spokesman, said Tory councils would miss out. He said: "We wait to see which option is chosen. However, one thing is clear: the Government has achieved the unachievable by replacing a complicated system of finance with an even more complicated one."