PARLIAMENTARY DEBATE
Local Authority Funding - 28 October 2024 (Commons/Commons Chamber)

Councils across the country, of all political stripes, work hard to deliver vital public services in our country. We know that 14 years of mounting pressure is biting hard. We are committed to moving towards a multi-year funding settlement, ending wasteful bidding competitions that essentially set one council against another. Last week, I met political group leaders at the Local Government Association conference to understand what specific demand pressures they are facing, and we are committed to working together on those big issues. Members will know that we cannot pre-empt the Budget statement due later in the week, but we are of course fully engaged in that process. We stand ready to speak to any council experiencing financial difficulties, as I confirmed in my letter to MPs just over a week ago.

As the Minister knows—I have met him to discuss this subject—my local authority, Woking borough council, effectively went bankrupt last year. It has had to cut services that many consider essential, and it will have to consider cutting others. Does the Minister agree that it is time for Government and Parliament to review which services are classed as statutory and non-statutory?

I thank the hon. Member for meeting me at one of our regular drop-in sessions. His concern is reflected across the country. Local communities recognise that their council is being forced to choose vital neighbourhood services against targets for adult social care, children’s services and homelessness services. In the end, we need to rebuild the foundation from scratch, and that is exactly what we are committed to doing.

My constituency is largely rural and, as in many rural constituencies, parish councils play an important role in local government service delivery. Does the Minister agree about the importance of parish councils to rural communities, and what role does he see for parish councils as part of the Government’s devolution agenda?

We will of course publish a White Paper on the English devolution Bill. It will set out an ambitious programme for a power shift from this place and Whitehall to combined authorities, to local government and, of course, to communities. We are absolutely committed to that top-to-bottom power shift. We recognise that parish and town councils have a role to play.

Rising demand, rising costs and 14 years of Conservative public sector cuts mean that many local authorities and services are at breaking point. My own borough of Lambeth, a deprived inner-London area with higher demand for social housing and temporary accommodation, and for social, public and youth services, has been particularly affected, which has been quite challenging. Will the Minister commit to an emergency increase in funding to combat the immediate crisis for local authorities, and, in the long term, to a much-needed update of the funding formula to better reflect local need?

Like every Member of the House, my hon. Friend will know that those 14 years have taken their toll, and that it will take more than three months to repair that, but we are absolutely committed to repairing the foundations, and our multi-year financial settlements will give security. Of course, we recognise that the demand-led pressures in many places are the back-end of a bigger problem. Temporary accommodation relates to the housing crisis that needs fixing. The same applies to children’s services and adult social care.

The financial future of West Sussex county council is bleak: it faces a cumulative budget gap of over £200 million for 2029-30. At present, 64% of the council’s budget is being spent on adult and children’s social services, and that is set to rise. How will the Minister ensure that West Sussex county council and others do not have to close libraries, cut bus routes or reduce road repairs in order to meet the growing demand for the most vulnerable members of our community?

We always say that local government is paid for one way or the other: either we pay at the front-end through fair funding being fairly distributed across the country, or we pay at the back-end because eventually the system falls over and we must repair the damage. If we take ourselves back to the coalition years, when austerity first came in, the cruelty was that we did not reform public services, repairing them from the ground up, to get ahead of those system changes. That was a wasted opportunity.

This year, Hartlepool borough council is set to overspend on children’s social care by some £5 million, due in no small part to the outrageous charges levied by private sector children’s homes. What can the Minister do to cap those providers’ charges to ensure that local government can continue to deliver its statutory obligations?

I recognise that, in large part, children’s services are the funding pressures that are driving council budgets. We cannot forget, though, that behind every one of those numbers is a child who often is not getting the outcomes they need. Far too often what we are seeing in the system is that high costs are not just sending councils to the point of bankruptcy, but delivering worse outcomes for young people. We want to see far more resilience built back into the system, and there are examples today of councils that are building that public sector provision back into the marketplace.

The previous Government cut County Durham’s budget by 60%, and we have all seen the Royal Tunbridge Wells video in which the Leader of the Opposition boasted about that act. That is having a real impact on my constituents and the ability of Durham county council to deliver vital services, so will the Minister consider a discussion with Cabinet colleagues about revising those funding formulas to take account of social care costs and deprivation?

We did see the former Prime Minister taking great credit for essentially shifting money from primarily urban and deprived communities into rural shires in an overtly political way. I want to ensure that in the funding review we are carrying out, whether that is the initial rescue operation that will take place this year or the recovery operation through the multi-year settlement, we do not pit one council against another, but take an approach that genuinely understands the needs, cost demands and cost pressures faced by local authorities. In the end, though, we have to accept that there is no fair funding at all if funding does not reflect the deprivation in an area.

I call the shadow Secretary of State.

At the last oral questions, the Secretary of State assured me that she had no plans to increase council tax for anyone. However, when pressed by my right hon. Friend the Member for Beverley and Holderness (Graham Stuart), she would not give the same guarantee that the single occupant discount would be retained. Will Ministers take the opportunity to do so now?

I can see the shadow Secretary of State making that point repeatedly, because at this stage we are all waiting for the statement and the Budget that will contain that information, but I can say that the right decisions will be made in the interests of working people. We recognise the cost of living crisis that is being faced across the country. I am sure that she, like all Members of the House, is waiting with interest for Wednesday.

Local authorities employ 2 million people and commission services such as adult social care. The impact assessment for the Secretary of State’s Employment Rights Bill says that the Bill will increase costs. Those costs are likely to be passed on to councils, so has the Secretary of State assessed the impact of the Employment Rights Bill and an increase in employers’ national insurance specifically on local authorities? If costs do increase, will local councils be compensated?

Any decisions related to the Budget will be taken at the appropriate time, as will any decisions on the local government finance settlement. What I can say, though, is that this is a new partnership from this Government: we are not locking local government out, but standing shoulder to shoulder with it. Only last week at the Local Government Association conference in Harrogate, the Secretary of State launched the leaders’ council, a forum where central and local government will reset that relationship.

I call the Liberal Democrat spokesperson.

Again, I ask hon. Members to wait for the spending review on Wednesday, and for the provisional settlement in December. We are under no illusion about the pressures faced by councils on homelessness. In the end, we need to repair the system, which is about providing safe, secure and affordable housing for people to live in. We will do that, but we also recognise that there is a problem today. Further detail on that will follow.