Smaller towns penalised by government, MPs say

A group of Labour MPs from Merseyside has told the government that some North West towns will lose out from the way it will decide how to hand out funding.

They have written to the government to argue that its so-called Fair Funding settlement for councils is far from fair for the region.

The new funding formula is designed to shift government support to areas that need it most.

Critics argue that while cities like Manchester and Liverpool have benefited from the new criteria, northern towns have not.

The main thrust of their argument is that councils like Halton and St Helens are losing out because the funding formula allocates funds partially on housing costs, as part of a "deprivation index".

MPs argue that their areas may have lower housing costs than places in the south of England, but they are still deprived by every other measure, particularly income.

MPs are reluctant to speak publicly on the issue - and many believe that the settlement can be tweaked to everyone's satisfaction before a commons vote.

Knowsley MP Anneliese Midgley told the commons last week that "after 14 years of Conservative austerity, councils like Knowsley have been cut to the bone, with deep cuts and rising demand".

"I know this Labour government is committed to fixing a broken system and to funding councils based on their need," she said.

"However in Knowsley where deprivation is based on low incomes, the provisional local government settlement does not meet the real pressure that we face".

The BBC understands metro mayor Steve Rotheram has privately also written to the Secretary of State on the issue.

The funding settlement will eventually be put to a vote in the House of Commons.

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