The Area Based Grant is a general grant allocated directly to local authorities as additional revenue funding to areas. The grant was first introduced in 2008-09, and has increased in scale since then. The Supporting People services grant transfers to the ABG in 2010-11.

Like the Formula Grant, the ABG can be used as local authorities see fit, and is accounted for as a source of funding "below the line" rather than as income netted off the budgets for specific services. However, unlike Formula Grant, it is allocated according to specific policy criteria rather than general formulae. Local authorities are free to use all of this non-ringfenced funding as they see fit to support the delivery of local, regional and national priorities in their areas.

The ABG was formed by the merger of several specific grants, and the methods used to allocate those predecessor grants still drives the allocation of ABG. It remains to be seen whether this approach will be maintained in the 2011 Spending Review.

Information about ABG allocations can be found on the Communities & Local Government web-site.