Council's legal action over 'unfair' funds formula

Richmond Council claimed plans to update funding rules could see it lose up to £45m a year

"Devastating" government proposals to reform council funding has spurred one south-west London borough to declare it is planning legal action.

Richmond Council claimed plans to update funding rules could see it lose up to £45m a year - or over 90% - of its current allocation.

If realised, it would make it the worst-hit local authority in England - but the government has disputed this and said it "did not recognise the figure".

Instead, the Ministry of Housing, Communities and Local Government (MHCLG) said the changes would make the funding process fairer and simpler.

Gareth Roberts said he was worried the local authority would be penalised for managing finances responsibly

The council sent a letter to Secretary of State Steve Reed outlining its grounds for challenging the consultation process for the Fair Funding Review 2.0, the government's plan to redistribute funding across local authorities in England from 2026/27.

Lib Dem council leader Gareth Roberts said the authority had saved nearly £50m since 2018 by modernising services, streamlining processes, improving procurement and generating income.

He said he was concerned the proposed formulae would punish local authorities which manage their finances responsibly.

He added: "We're fighting for a funding deal that recognises the real needs of our residents. This legal action is about defending our values and making sure every voice in Richmond is heard."

The council has asked the government to release the impact models used to predict the potential effects in terms of human impact - such as elderly residents reliant on social care, children with complex needs and low-income families.

Roberts said it was "unheard of" for a government to give councils less than three months' formal notice to implement cuts of this scale, and said it was "bordering on irresponsible".

He outlined ways Richmond had managed its budget, including measures such as sharing back-office staff with Wandsworth Council.

He said: "We're not trying to build up huge amounts of money and just protect our income here. As a council, we're trying to protect services for residents."

'Deeply unfair'

Richmond Council member for finance, Jim Millard, described the challenge as "a moment for courage and leadership".

He said: "We owe it to our residents - especially the most vulnerable - to challenge a process that has been rushed, opaque, and deeply unfair."

An MHCLG spokesperson said the planned reforms would mean "people in areas previously left behind will get the vital public services they deserve from their local council", the Local Democracy Reporting Service reported.

Other London councils have spoken out over the expected impact of the review, with Kensington and Chelsea Council saying it faced an £82m loss in funding between now and 2030.