The Fair Funding Review 2.0: How will council funding change?
The government proposes to change the way total funding for local authorities is distributed, aiming to make it fairer and simpler.

This briefing looks at estimates of public spending and revenues in UK countries and regions.
Country and regional public sector finances (1 MB , PDF)
The Office for National Statistics published data for 2022/23 on 7 June 2024. The Library has no plans to update the below briefing. |
The Office for National Statistics (ONS) estimates how much the UK public sector spends for the benefit of each UK country and region and how much tax and other revenues are raised from each.
The difference between spending and revenue is the area’s net fiscal balance. In this Library briefing:
In 2018/19, London, South East and East of England all had net fiscal surpluses. In these regions the revenues raised were greater than the public spending received. All other countries and regions had a net fiscal deficit with each receiving more public spending than was raised in revenues.
In 19 of the past 20 years London and South East have been in surplus. East of England had a surplus in 13 of the 20 years, while East Midlands and South West had surpluses in two years. All other countries and regions had a deficit in all 20 years.
In 2018/19, spending per person was highest in Northern Ireland, Scotland and London. Spending per person was lowest in East of England, East Midlands and South East.
In all UK countries and regions social protection – which covers social security benefits, including the state pension, as well as personal tax credits and adult social care – is the most significant area of public spending, followed by health. In all but one area education is the third most significant area of public spending. These three categories cover around two thirds of public spending on services in the UK.
London, South East and East of England raised the most revenue per person in 2018/19. London and South East raised the most in absolute terms. These two regions raised around 36% of UK revenues in 2018/19.
Wales, North East and Northern Ireland raised the least revenue per person in 2018/19.
Income tax, VAT and National Insurance contributions (NICs) are the three most significant revenue raisers in each country and region.
The data are classified as experimental statistics. The label of ‘experimental statistics’ doesn’t mean that the statisics are of low quality, but it does signify that they are novel and still being developed.
The ONS mainly allocates spending and revenues to regions using assumptions, rather than administrative data. This is because revenues are generally not collected on a regional basis – they are largely collected centrally by HMRC – and, similarly spending is generally planned to benefit a category of people or businesses irrespective of location. The data should be treated as statistical estimates only.
Country and regional public sector finances (1 MB , PDF)
The government proposes to change the way total funding for local authorities is distributed, aiming to make it fairer and simpler.
A briefing paper on the June 2025 government consultation on reforming local government funding, "The Fair Funding Review 2.0"
The state pension is liable to income tax, though pensioners are unlikely to pay tax in practice if their only income is the state pension.