Welsh Government commissions review of local government funding formula

It said work is already underway to update the evidence base underpinning the formula, with an initial focus on Education and Personal Social Services, which together account for nearly three-quarters of the funding distribution.

“This includes evidence to reflect any additional costs arising from sparsity, rurality, deprivation and demographic change.”

As part of the programme, the WCPP will review wider approaches to distribution, examining funding distribution methods used across the UK and internationally. 

The Welsh Government noted that “given the scale and complexity of the review”, the earliest point at which any changes could be implemented would be for the 2028 to 2029 local government settlement.

Minister for Local Government, Housing and Planning, Siân Gwenllian, said: “Local authorities across Wales are on the front line of delivering the services people rely on every day, and it's right that the way we fund them is based on evidence and keeps pace with how our communities are changing.  

“That's why I've been clear that this review must be done in partnership with local government, and I'm pleased colleagues on the Finance Sub-Group have supported the work so far.  

“This is about making sure that funding reflects the real pressures faced by different parts of Wales, whether that's a sparsely populated rural authority or an area with a growing and ageing population.”

Dr Helen Tilley, Director of Policy and Practice (Welsh Government) at the Wales Centre for Public Policy said: “We are delighted to have been invited to provide evidence for this critically important review, particularly by considering how the experiences of other countries may be relevant to Wales.

“The thorough nature of the review is commensurate with the significant impact that the revised formula will have on the day-to-day lives of people across Wales, both directly through the provision of public services and more broadly through its influence on labour market participation and, in turn, the Welsh economy.”