Included in the new funding formula is an assumption that the local authority will increase council tax by 4.99% each year, for the next three years.
Levy said the council has now, in effect, lost the ability to set this amount itself, describing it as “both financially difficult and hard to square with local accountability and choice”.
The county council will now look at ways to cover the deficit for the next financial year, including the potential of £1.5m cuts to services, options to use council reserves and reducing the money it puts aside for annual pay inflation.
Alison McGovern, Minister for Local Government, said: “It’s simply wrong that where you live determines the quality of services you get and ultimately determines your life – from birth to old age.
“These reforms end that injustice. By using up-to-date data and targeting funding to areas with greatest need, we’re reversing years of unfairness and unlocking opportunity in every part of the country.”