The government is considering placing less weight on population density in the calculation of needs-based funding for children's personal social services as part of its ongoing formula review.
Although greater weight will be placed on ethnicity indicators, urban areas are expected to emerge as net losers. Tower Hamlets LBC, Hackney LBC, Southwark LBC and Lambeth LBC are all expected to lose more than£20m.
Mets, sustaining a loss of£79m overall, will also be badly hit. Stephen Hughes, strategic director of resources at Birmingham City Council - which stands to lose more than£5m - said the move was at odds with government pressure on councils to spend more on children's services.
County councils, which stand to gain£260m, are also calling for waste management - currently the biggest component of the environmental, protective and cultural services block - to be allocated a separate funding block in recognition of its increasing importance.
However, one senior source dismissed that solution as unlikely to be accepted. 'But it could be given a higher profile in the next spending review,' he said.
Discussions are also continuing within the settlement working group over the implications of the dedicated schools grant.
Councils oppose suggestions from government that the£200m councils
spend on schools over and above the schools formula spending share should be locked into the grant at the expense of other under-pressure services.
The working group is expected to produce a consultation paper on formula reform next month.
>> Government pushing for formula spending share to be scrapped
>> Less weight given to density, more to ethnicity, in children's PSS block
>> Waste management could emerge as a separate block
>> Area cost adjustment could be extended or calculated differently
>> Calls for greater account to be taken of sparsity appear to be falling on deaf ears.