New government reforms will shift funding from affluent areas to places with higher need, reversing years of cuts to Northern councils.

21st June 2025

Luke Myer, Member of Parliament for Middlesbrough South and East Cleveland, has welcomed a major overhaul to the way local councils are funded, with the Government pledging to direct more money to communities with the highest levels of need, including areas like Teesside.

The new system will replace outdated formulas that have failed to reflect rising pressures on services in some of the most deprived parts of the country. The reforms will end a decade of short-term settlements, simplify the grants system, and base funding allocations on factors like deprivation, population change and rural costs.

Luke Myer MP said:
“For too long, our local councils have been forced to do more with less while the old system kept public money flowing to the richest areas. This is good news for our communities in Teesside and long overdue. We’ve pushed for this change because fair funding means better services for the people who need them most.”

Mayor Chris Cooke, Middlesbrough said:

“We welcome the government’s decision to overhaul the local council funding formula with the intention of finally allocating funding based on where it is most needed. These changes will mean more support for deprived areas, less bureaucracy, and empowering councils in places like Middlesbrough to deliver better services for everyone.”

Alec Brown, Leader of Redcar & Cleveland said:

“We welcome the government’s commitment to reforming the local council funding formula, redistributing funding away from the South East and towards places like ours where it’s most urgently needed. This is a step in the right direction – towards a fairer, more balanced system that recognises deprivation, reduces costs for hardworking Teessiders and gives councils like ours the tools to deliver better services.”

The reform will also end the competitive bidding process for hundreds of small grant pots, replacing them with broader, more stable funding allocations. Councils will also benefit from multi-year budgets from 2026 onwards, the first time in over a decade they will be able to plan ahead with confidence.

A consultation is now open on the proposed changes, with final allocations due later this year ahead of full implementation from 2026.