The Chartered Institute of Public Finance and Accountancy (CIPFA) has responded to the Ministry of Housing, Communities and Local Government’s (MHCLG) consultation on the Fair Funding Review 2.0 and Council Tax Reform.

It has expressed cautious optimism about the government’s commitment to reforming local government finance.

CIPFA director of Public Financial Management Iain Murray said: “We welcome the Government’s recognition that local government finance needs reform. The commitment to address long-standing disparities in funding allocations and simplify the complex patchwork of grants is a positive step toward greater fairness and transparency.”

Murray emphasised on the need for careful implementation and “robust data” to support the transition.

The institute has acknowledged the government’s efforts but warns that structural challenges persist, particularly in the allocation and redistribution of funds.

The proposed reforms, including a return to a multi-year settlement and the consolidation of funding pots, have been well-received by finance professionals for providing a clearer basis for planning and accountability.

However, CIPFA has raised concerns that the government has yet to address fundamental pressures, such as the statutory override for SEND (special educational needs and disabilities)  high-need deficits, which has been extended to 2028 without serving its intended purpose of facilitating reform.

Murray added: “Without urgent solutions to both existing and future SEND deficits, those councils grappling with unsustainable high needs costs and rapidly growing cumulative deficits may, at best, be forced to make further reductions in essential services, and at worst, risk declaring themselves effectively bankrupt.”

Recently, CIPFA has issued a warning in response to the Public Accounts Committee (PAC) report on local government financial sustainability., which indicates a looming financial crisis for councils across the UK.