Angela Rayner is reportedly to set out plans for council tax funds collected in the south to be funnelled to the north under a “progressive” redistribution of local authority funding. The Deputy Prime Minister will outline a new formula which aims to allocate money depending on local needs.

Ms Rayner will reportedly point to discrepancies in council tax levies between wealthier and less well-off parts of the country. However, a senior figure in local government has said such a move would be “polarising”.

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A spokesman for the Ministry of Housing, Communities and Local Government said the current system had led to “perverse outcomes” where some councils struggle to provide basic services while others are better off.

He added: “Individual councils remain responsible for setting their own council tax levels each year and the Government is clear they should put taxpayers first.”

David Phillips from the Institute for Fiscal Studies told The Times that reform was overdue.

He said it has been 20 years since we’ve had an effective system to allocate funding between councils.

Mr Phillips added: “So it is out of whack and the changes are going to be big.”