Welsh Government commissions review of local authority funding

The Welsh Government has commissioned a major review of the funding formula used to allocate resources to local authorities across Wales. Led by the Wales Centre for Public Policy (WCPP), the initiative fulfills a ‘First 100 Days’ commitment to reform a system that has been in place for decades.

The review aims to ensure that funding distribution accurately reflects the actual costs of delivering essential services. Initial research is focusing on Education and Personal Social Services, which represent nearly 75% of total funding distribution. The investigation will examine how factors such as rurality, sparsity, deprivation, and demographic shifts impact service delivery costs.

In addition to updating the domestic evidence base, the WCPP will conduct an external review of funding distribution models used throughout the UK and internationally. Due to the complexity of the project, any resulting changes are not expected to be implemented until the 2028-29 local government settlement. Local government leaders and the Welsh Local Government Association have been consulted and have expressed support for the direction of the review.