PARLIAMENTARY DEBATE
Local Government Finance - 17 December 2025 (Commons/Commons Chamber)

On 20 November, my Department published a policy statement setting out our approach to the first multi-year local government finance settlement in a decade. Today, we publish the provisional settlement itself and launch our formal consultation on the proposals. It represents the choices we are making as a Government. Unlike the Tories, we will not look the other way as poverty gets worse. We will not ignore the economic and social costs of deprivation. The spending review announced over £5 billion of new grant funding for local services over the multi-year settlement period. That includes £3.4 billion of new grant funding being delivered through this settlement.

Before I give more details, I want to make this point. For 14 years, the Tories decimated local government, asking local leaders to do more with less, and that had consequences. Local high streets are always changing, but deprived towns saw more empty shops, more vape shops and more pawnbrokers than other places. Their councils did not have the resources to do anything about it. In 2019, the Chartered Institute of Public Finance and Accountancy found that nearly 800 libraries had closed since 2010. In 2022, The Guardian newspaper uncovered a real-terms annual cut of nearly £330 million to the upkeep of our local parks, with the biggest cuts in the poorest parts of the country. The last decade and a half of austerity impacted every community, but the very worst effects were felt by people living in the most deprived areas—and that was a choice.

By breaking the link between funding and deprivation, the Tories punished poorer councils. Year after year, they exacerbated inequality. As a result, too many places in this country feel forgotten and left to fend for themselves. The answer is not Reform’s return to austerity or the Tories’ carping from the sidelines; it is to use the best data we have available to redesign the funding system so that deprivation is recognised and addressed within the settlement. That is why the figures we are publishing today are derived using the very latest data from the 2025 index of multiple deprivation released at the end of October this year. It is why, according to our analysis, whereas under the old system deprivation scores could account for only 25% of variation in per capita funding applications, under this settlement it is up to 75%, with other important factors such as coastline, miles of road or visitor numbers making up the rest.

In addition, we are giving councils more certainty with the first multi-year settlement in a decade, allowing local leaders to focus on long-term investment and change. We are addressing the damage of austerity by maintaining the £600 million recovery grant allocations from 2025-26, targeted towards those most impacted by the cuts, and introducing a recovery grant guarantee, providing an above-real-terms increase to social care authorities that received the grant last year.

We are supporting local authorities through change by providing funding floors and phasing in new allocations across the multi-year settlement. We are improving efficiency and value for money by simplifying an unprecedented 36 funding streams, worth more than £56 billion over the multi-year settlement. We are resetting the business rates retention system to restore the balance between aligning funding with need and rewarding local growth, and unlocking the dream of home ownership for more people by boosting real incentives for councils to build new homes. We know that councils are concerned about what will happen at the next spending review, so we will keep working closely with them to avoid cliff edges in funding.

This settlement is our most significant move yet to make English local government sustainable at last. It will take overall core spending power for local government to over £84.6 billion by ’28-29—equivalent to a 15% cash-terms increase compared with ’25-26. The Labour Government have made it clear that we back local government through action. Since coming into power, we have made available a 23.6% increase in core spending power in ’28-29 compared with ’24-25.

However, we have to do more, because the previous Government’s funding system left local government in chaos. Social care costs were soaring out of control, with very little focus on prevention. Children’s social care, the impact of a failing special educational needs and disabilities system, and the spiralling costs of homelessness and temporary accommodation have destabilised council funding, even where councils have acted judiciously to protect the public pound through this difficult era. That is why we need national change to empower local councils to maximise the benefit of this announcement.

The Government are building a national care service based on higher quality of care, greater choice and control and better integration. This is backed by around £4.5 billion of additional funding made available for adult social care in ’28-29, compared with ’25-26. We are changing children’s social care through the families first partnership, funded with £2.5 billion over the next three years, because all children deserve good parenting and a loving home environment—and we know that costs less in the long run, too.

The children’s social care residential market is broken, and we are taking action. Using powers in the Children’s Wellbeing and Schools Bill, the Housing and Education Secretaries will explore how we might implement a profit cap in the children’s social care placement market, which would be a crucial step in ensuring that public money delivers value and care, not profiteering. We will set out further information on our approach in 2026.

On special educational needs and disabilities, in the new year the Government will bring forward the schools White Paper, which will set out ambitious plans to reform special educational needs provision. But we recognise the impacts of the dedicated schools grant deficits on local authorities’ accounts. In future, special educational needs provision will be funded by central Government; local authorities will not be expected to fund costs from general funds once the statutory override ends in March 2028. We will provide further details on our plans to support local authorities with those deficits later in the settlement process.

On homelessness, Members have already heard me acknowledge that temporary accommodation is another growing financial pressure on councils, with spend reaching nearly £3 billion in ’24-25. Last week, we published the national plan to end homelessness—our strategy to prevent homelessness before it occurs. We have set clear objectives to get our children out of costly B&Bs and to help councils to balance the books.

The Government intend to maintain a core 3% council tax referendum principle and a 2% adult social care precept for the vast majority of councils. We are committed to ensuring that the funding system is fair for taxpayers throughout the country. In some areas, council tax levels are radically lower than others. Council tax bills for £10 million houses in some of the wealthiest parts of the country can be less than what an ordinary working family pays in places like Blackpool or Darlington.

The Government plan to lift referendum principles in ’27-28 and ’28-29 for Wandsworth, Westminster, Hammersmith and Fulham, City of London, Kensington and Chelsea and Windsor and Maidenhead. This change will improve fairness, as taxpayers in those councils have the lowest bills in the country, and this year paid up to £1,280 less than the average council taxpayer. It will enable the Government to allocate more than £250 million of funding in the system more fairly, instead of subsidising bills for the half a million households in those council areas. It will also provide greater flexibility for those authorities in deciding how to manage their finances following our reforms. The councils will decide on the level of council tax increase to set and whether to draw on the relatively high alternative sources of income from which a number of them benefit.

We know that adapting to our reforms will take time. We will therefore continue to have a support framework in place next year to help authorities in challenging positions. Following precedent set by previous Governments, councils in significant financial difficulty can request additional flexibility from the Government. In making that decision the Government have been clear, unlike the Tories, that they will not agree to increases where the council has above-average council tax. In recognition of cost of living pressures, each application will be considered on a case-by-case basis, and decisions will reflect the support offered to low-income and vulnerable residents.

In closing, I go back to the libraries that have been closed and the parks that have been neglected. Under this Labour Government not only is our Chancellor of the Exchequer making sure that our schools have libraries, but we are making sure through this funding that councils can ensure that parks are good for our children to play in. We can never turn the clock back—we cannot undo all the past damage to councils—but we can change town hall finances so that councillors battling the consequences of poverty have a Government who are on their side for once.

We said we would restore the link between funding and deprivation, and today we are doing exactly that. There will be no more forgotten people left to fend for themselves and no more forgotten places sneered at by Conservative Members, but a fighting chance for every place in this country. I commend this statement to the House.

I call the shadow Minister.

It is no surprise that the Government sought to sneak this consultation out with the minimum level of attention, proposed, as it was, for simply a written ministerial statement at the last possible second. We can all see that poverty is rising, driven by a shrinking economy and rising unemployment, combined with inflation running at 3.6% and higher energy bills. Rising business rates are crippling our businesses, and local communities everywhere are feeling the pressure created by this Government’s choices.

How does the settlement help our councils to deal with all that? First, it assumes that working people—all people—will pay higher taxes everywhere. We should not misunderstand the Minister’s words on core spending power. The settlement enshrines an assumption that taxes will rise to the maximum possible extent everywhere, with fees and charges for parking, libraries and everything else following the same trajectory. Even if the inflation target of 2% is reached—which seems unlikely given that it is currently at 3.6%—the increase represents a 1% uplift for local government during the whole life of this Parliament, and that sector was left £1.5 billion worse off by the rise in national insurance contributions alone.

Resources at a local level are going backwards. This is a settlement that punishes efficiency, with those councils that deliver the best value for money being raided to bail out the more spendthrift—and I am sure we can guess which parties tend to run those councils. It is a settlement that introduces new, higher taxes on hospitality—voted for by every party in this Chamber besides the Conservatives—bearing down on investment and opportunity. It brings in a homes tax on more expensive homes—money that goes to the Treasury, not councils. In the Red Book, that is estimated to cost the Government a net £335 million due to the damage it does to the housing market. Only this hapless Labour Government could bring in new taxes that actually cost the Treasury money—and here they go again.

This settlement repeats the fallacy that poverty is the only driver of council costs. The average English local authority delivers more than 800 different services. Our rural coastal areas, and anywhere else with lots of retirees, face the high costs of adult social care but do not necessarily score highly on indices of deprivation, despite the costs being driven by statutory duties. The undertaker Prime Minister is ushering many councils towards their financial doom. As this Government hammer Wychavon and Stratford-on-Avon, they are also hammering Ashfield, Dartford, Burnley, Cambridge, Hyndburn, Lichfield and Bolsover, which are among the places worst hit by this financial settlement.

The Government’s detachment from the consequences of their actions is striking, and all while the Prime Minister and the Chancellor dodge the new high-value council tax in their grace and favour accommodation. All this is behind the smoke and mirrors that disguise from our local authorities the financial impact. They have been required to carry out their public budget consultations without having had sight of the impact of this settlement.

Let me conclude with some straightforward questions. Will the Minister tell the House when our locally elected brethren will learn the net impact of this settlement on their council tax budgets? When will we debate the impact of the Government’s cuts to SEND capital funding? When will the House have the opportunity to scrutinise their decision to impose exceptional financial support or higher council tax rises to bail out the consequences of their decisions? When will they provide clarity on the impact of their SEND proposals on council budgets? How will the Government use the budgets allocated to the new devolution areas and now snatched back to mitigate the impact of their decisions?

Will the Minister admit to the House that this is a tax-raising, job-destroying, housing-hobbling, rate-raising, service-slashing, community-crippling, election-cancelling settlement that fails even on its intended purpose of shunting resources to politically favoured areas?

I can hardly wonder at getting that purely political response when I made the perfectly legitimate political point that under the Tories a lot of councils were dealt very bad funding settlements indeed. We do not need to trade political insults to see the libraries closed, the parks left unmaintained and the damage done to councils, but I look forward to discussing this issue with the hon. Member across the Dispatch Box as we move forward, once he has talked to his own councils about the funding settlement they will be receiving.

The hon. Member asked some slightly more important questions, particularly on SEND. He will know that this is primarily a matter of getting the absolute best outcome for our children. The Department for Education will bring forward plans in the new year, and I am working closely with Ministers in that Department to ensure that we get it right. I mentioned some of the details in my statement.

I do not recognise the picture described by the hon. Member on devolution, and I feel confident in saying that nor would the Minister for devolution, my hon. Friend the Member for Peckham (Miatta Fahnbulleh), who is in her place. She announced significant investment for the places affected, and we all look forward to working with areas up and down the country to ensure that our country grows as we wish it to.

I call the Chair of the Housing, Communities and Local Government Committee.

I thank the Minister for her statement. I know she has been working really hard on this issue since she took on the role a few months ago. She is aware of the many pressing issues facing councils up and down the country—from SEND to temporary accommodation, housing and adult social care—and 14 years of under-investment will not be reversed by one funding settlement. It is therefore important that we continue to work with councils.

This is the first multi-year settlement in a decade, which will help our local leaders in planning for the future and, most importantly, planning for their local residents. I welcome the inclusion of local housing costs in the new funding formula, but ultimately it does not take in local housing allowance, which the Minister knows has been frozen for many years and is still causing a lot of pressure for councils.

The Minister mentioned that the Government will be looking at the council tax freeze in some areas, and at lifting referendum principles. She knows there is growing consensus on wholescale council tax reform instead of us tweaking it. It is the most regressive form of taxation and there is inequality across the country. Will the Minister look at what the Committee’s report says about a wholescale review of council tax banding, so that local leaders can have funding to spend on their local areas, and make sure that other areas see that funding come through?

I thank the Chair of the Select Committee for that comprehensive run through all the issues. She is right that we need not just funding but policy change to get councils to financial sustainability. I look forward to discussing that with my hon. Friend and her Committee. She also asked about council tax reform, which was not the subject of my statement, but I have no doubt that she will be asking me about it again in the near future.

I call the Liberal Democrat spokesperson.

I thank the Minister for advance sight of her statement. The Liberal Democrats welcome the fact that this is a multi-year settlement, which gives councils a greater degree of certainty and the ability to plan ahead. We have long called for that. However, a longer settlement on its own does not resolve the deep financial instability facing local government. The Minister is right to say that social care, SEND and homelessness costs are destabilising council finances—a direct result of years of Conservative neglect—but recognising the problem is not the same as resolving it.

It will take us and council teams time to review the detail of the settlement and understand what it means in reality for local government. However, early conversations with local government colleagues have highlighted a concerning lack of clarity on the SEND debt. The settlement provides minimal information on how councils are to manage SEND costs until 2028, or how existing deficits will be resolved. Can the Minister provide a clear timeline for when councils will receive certainty on the SEND deficit? Without one, responsible financial planning is simply not possible.

I also seek clarity on the issue of social care. Although the statement includes various measures to try to address the social care crisis, the reality is that that will be swept away by the rising scale of need and the costs of social care. When will the Government finally bring forward a fully funded, long-term plan for adult social care reform that ensures that local authority funding settlements are not undermined by the escalating costs of a social care system that is bankrupting councils and placing unsustainable pressure on the NHS?

The hon. Lady mentions multi-year settlements alone not being the answer—no, but they do help. That relates to her two other points on SEND and social care, because multi-year settlements allow councils to plan properly and undertake commissioning activities over a longer period of time. That was our objective, which we have achieved with this. She asked for more details on SEND. I mentioned in my statement that local authorities will not be expected to fund costs from general funds once the statutory override ends in 2028. We will have more to say on that throughout this settlement process.

The hon. Lady asked about adult social care. Significant reform is needed there, but I do not think that anybody could say that we have not done anything. We are building a national care service, backed by about £4.5 billion of additional funding for adult social care in 2028-29, compared with 2025-26, including £500 million for the first ever fair pay agreement. I will never forget visiting care homes after they had got through the hell of covid. All that we do on social care has to back those people who did the most when our country needed them.

Members will have seen that many want to speak, so I make a plea to help one another out and keep questions and answers concise.

I thank the Minister for her statement. I particularly welcome the restoration of the link between funding for local government and deprivation, and the inclusion of housing costs within the measure of deprivation. It makes no sense to do anything other than that.

Even with the funding settlement, the financial situation will continue to be very challenging for my local authorities of Lambeth and Southwark without meaningful support from the Government with the costs of temporary accommodation. When does the Minister expect to be able to set out more detail on how councils will be supported to reduce the need for temporary accommodation and to bring the costs down?

My hon. Friend, who chairs the Education Committee, will know that it is not just the cost of temporary accommodation to councils; it is also the cost of children’s schooling. Last week I set out our strategy to counteract that terrible phenomenon and I will talk in detail to councils in the weeks and months to come to do exactly as she asks.

I thank the Minister and her officials for their work—it is the most painful task to have to pull all this together and they are all to be commended. I agree with her that multi-year settlements should lead to smarter commissioning, which should then deliver greater return on the money. She will know that the cost of delivering services in rural areas is higher—everyone across the House recognises that—so can she say what this proposed settlement will do specifically to address that and allow equity of opportunity in access to services, whether one is an urban or rural resident?

The hon. Gentleman is absolutely right to highlight how we have to do things differently in rural areas, and we have tried to take account of that need. That is why we are including a journey times adjustment in our assessment of cost for all services. We are also increasing the cap in the home-to-school transport formula from 20 miles to 50 miles, in recognition of the fact that the original distance cap would penalise local authorities that have no choice but to place children further from home. We are also including a remoteness adjustment in the adult social care formula to address the point that he mentions. Overall, the point cannot be made enough that we have to do things differently in rural areas, and we all need to take account of that.

The fair funding review is significant. It is the first multi-year settlement for a decade, and the first real attempt at fairly distributing resources based on need, cost and the ability to raise revenue locally. It represents a serious piece of work by decent public servants, and I pay tribute to the finance team in my hon. Friend’s Department. The consultation asked councils to make their case for adjustments. London councils asked for housing to be included in the measure of deprivation, and we can see that in some of the changes that have been made, but that sees a significant shift towards London. The recovery grant has made a significant difference and I am pleased to see it continue, but it shows that fundamentally the formula is not yet picking up the real cost pressures being felt by local government as a result of the previous Government.

Much has been said about council tax, but the inequality goes much further, as the Minister knows: our car parking income is £2 million, but Westminster city council alone generates £90 million. That is more than the entire recovery grant for Manchester, Liverpool, Newcastle, Sheffield and Leeds combined, so there are much wider structural issues that need to be addressed. My hon. Friend will also know that, despite best endeavours, councils will still find this settlement very challenging and that bigger reforms are needed, so can she make the case—I know she will—to her colleagues in the Treasury that, if the Government want the benefit to be felt on every street in every community, in the end local government will need more money put into the pot more generally?

First, I must pay tribute to my hon. Friend for his work on this. I might be putting the ball in the net today, but he was the midfielder who created the goal. It is his work to reconnect deprivation and council funding that we are delivering today, and I pay massive tribute to him. He asked whether we might go further to persuade our Treasury colleagues to invest in local government. I think that the best way to do that—I will welcome his support in this—is to show the results that councils get when they are properly invested in. We see that nowhere more than in his home city region of Greater Manchester and his council of Oldham, which show time and again that they provide value for money and they are growing our economy.

The Minister said in her statement that she did not want to look the other way, but in reality this Government are looking the other way when it comes to rural communities. I listened carefully to the answers she gave to my hon. Friend the Member for North Dorset (Simon Hoare), but the fact is that, with the exception of adult social care, rurality has been taken out of formula decisions. Can she come to the Dispatch Box and say how areas such as Buckinghamshire, which I am lucky enough to represent, are going to be properly funded, given our rural nature?

I am glad that the hon. Gentleman was listening when I gave my earlier answer on rurality. We have recognised where there are extra cost pressures, and I will happily discuss this in detail with him if he wishes. This is recognised in the statement and in the data that we have taken account of. The new deprivation statistics are much more fine-grained, and they can find poverty wherever it is, whether it is in a town, a city, a village, a rural area or wherever.

I do not know whether my hon. Friend is as surprised as I am that the official Opposition could not even bear to mention the word “austerity” when they responded. Before we move on, there was a case of amnesia from the Lib Dems, who forget their role, under the coalition Government, in some of the worse cuts of all that local government experienced. I therefore welcome the Minister’s comments about deprivation. The poorest councils got hit hardest during austerity by the Conservatives. I thank her for putting tackling deprivation at the heart of this settlement.

I have two challenges. The Chair of the Select Committee, my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi), reiterated what we said in the Select Committee in the last Parliament: council tax is regressive and has to be reformed. The Minister mentioned the need for long-term changes to the whole way in which social care is funded. Would she at least begin a conversation across parties to try to get long-term agreement about how this should be done? It has failed over and over again through parties squabbling over the details. We need a long-term settlement. Can we at least start those conversations now?

My hon. Friend is extremely experienced in these matters and remembers, as I do, the impossible situation that councils, particularly in the poorest areas, were put in under the Tory Government. He is right to point out that the Lib Dems did play a small role in that, too. On his questions, I always read in detail the Select Committee’s reports, and I will do that with the ones he mentions. The Government have set out the pathway, making the immediate change that I said on social care and asking Baroness Casey to drive us towards that long-term vision that he points out. That is exactly what we need to do; we need to fix this for the long term.

Westmorland and Furness is an extremely well-run council and an extremely unusual one as well. It is England’s most rural council. It is the council that accepts the highest number of visitors—non-resident population—as we support everybody else’s constituents, who make up the 15 million who come to our district every year. The council has some of the poorest wards in the country. It is the host of Barrow, which is the centre of the UK’s defence industry, and it has the highest percentage of people in social care. This formula will leave us unusually crippled. We think it will mean a 13% cut to our budgets over the next three years. Given that we are so unusual, will the Minister unusually agree to meet me, her hon. Friend the Member for Barrow and Furness (Michelle Scrogham) and local council leaders, so we can work out an unusual solution to this wonderful but unusual council’s problems?

I thank the hon. Gentleman for his question and his description of his unusual and wonderful area. I do not recognise the figures he mentioned just then, but I will happily meet him and any colleagues he wants to bring, and we will go through the numbers together in detail.

I thank the Minister for her statement and welcome her commitment to restoring fairness to the heart of the local government financial settlement, giving our councils the long-term certainty they have been crying out for. The Conservatives were a disaster for local government. In both Cheshire authorities, 70p in every pound is now spent on looking after vulnerable adults and children, leaving the remainder to fund every other essential service. That is to say nothing of the ballooning dedicated schools grant deficit. The Conservatives left our communities struggling with deteriorating infrastructure and under-resourced essential services. Can she say more about what this settlement means for my constituents in Northwich, Winsford and Middlewich? Can she possibility provide us with an indication of when councils will get some certainty over what the future holds for the statutory override, so that we can see those dedicated schools grant deficits cleared?

It is extremely important that we properly fund authorities in Cheshire to help support those communities. I can confirm that that is what we are doing today, with significant increases in spending power for those authorities. I look forward to working with my hon. Friend and colleagues across the county to ensure that we do as he says and get social care back on a firmer footing as we move forward through the years.

I represent a constituency with two district councils with prudently created reserves and a unitary council with high levels of debt. Understandably, residents in the district council areas are concerned that local government reorganisation will see their reserves usurped by any new unitary council areas—if they have not already had to spend that reserve due to decreased funding under the settlement. Can the Minister reassure my constituents that their prudence is not being penalised and that, under the local government reorganisation, any reserves from a council will be ringfenced specifically for the communities that they come from, rather than being used to reduce the debt of the new council?

I thank the hon. Lady for her question; she values the prudence and good decision making of local authorities. At their best, that is what we see and it is what I hope to achieve through the local government reorganisation process.

There is fierce pride in Hatfield, Welwyn Garden City and our villages, but we are a community of contrasts: the gap in life expectancy a few miles down the road is 13 years. I have had an initial look, and it seems that Welwyn Hatfield will benefit to the tune of about £9 million. That is wonderful news for our community.

I thank the Minister for looking at need after housing costs, but will she give me a guarantee that that will continue to be a key part of how our Government look at need? In communities such as Hertfordshire, housing is often such a barrier to people getting on.

I thank my hon. Friend, who is an impressive champion for his constituency; the people of Welwyn Hatfield should be proud of him. When we are thinking about deprivation, we are determined for it not to be a question of one part of the country against another. It is simply about being led by the evidence: identifying poverty and deprivation wherever it exists—including its cause, which, as my hon. Friend says, can be housing costs. We will keep doing that and take decisions on that basis.

As an ex-council leader, I welcome the multi-year settlement and am glad that the Government have listened; I have campaigned for it for many years, so thank you.

I welcome the remoteness element. In my constituency of North Devon, we have North Devon council and also the wider Devon county council. Could the Minister describe what percentage the remoteness allocation will represent for places such as Devon and North Devon district council?

I thank the hon. Gentleman and former council leader for his question. It is nice to have a bit of agreement at Christmas, Madam Deputy Speaker—if it is over multi-year settlements, then then so be it. I will write to him with the specific details about his area and how the remoteness formula affects the council's funding.

I welcome the Government’s investment in Birmingham through today’s fair funding settlement and the £160 million of Pride in Place funding for nine areas, including Bartley Green in my constituency. That stands in stark contrast to the Conservatives’ austerity agenda, which cut £1 billion from Birmingham city council’s budget and placed severe pressure on the public services that my constituents rely on. I have been fighting for eight years in this place for fair funding for Birmingham. Does the Minister agree that only Labour can be trusted to invest in our city?

I thank my hon. Friend for that question on behalf of the people of Birmingham. We know that they deserve better. Birmingham is a great city; I was there only recently and always feel welcome and at home. It is right for us to invest in our cities. I am sick to the back teeth of people having a go at places like Birmingham and where I am from in Merseyside. It is time we backed our cities, including Birmingham.

I always like to start on a positive note, so let me add to the cross-party Christmas cheer by welcoming the shift to multi-year funding settlements. I agree with the Minister: local authority funding was decimated under the Conservatives for 14 years and local leaders were asked to do more with less. But I am worried that that might continue for some authorities like mine.

North Herefordshire and Herefordshire council have been facing millions of pounds of funding reductions under the proposals put forward by the Government. We must recognise that a fair funding settlement has to mean fair recognition that providing services in rural areas incurs extra costs, and not just for social care—there needs to be a remoteness adjustment for all the services that we provide. Will the Minister go away, consider that and come back with proposals that fairly recognise the needs of rural authorities like Herefordshire?

I thank the hon. Lady for speaking up on behalf of rural areas. In addition to what I have said to a number of hon. Members, I would add that it is not just in adult social care that we recognise the difference that rurality makes. Overturning 14 years of Tory misrule of councils will take time. We will engage with all councils, including her council, and it is my objective to get local authorities back on a sustainable footing.

The reality is that for years the Tory Government relied on formulas that decimated local government and services for the poorest, while giving funding to affluent Tory suburbs, so clearly the Tories will not like the formula set out by the Minister. Today must be a turning point that corrects the grave wrong carried out by the previous Government for 14 years. Will the Minister confirm that the new formula, which I welcome, will mean that places like Bradford, which have some of the highest levels of poverty and deprivation, will finally begin to see their fair share in the settlement?

My hon. Friend is right to describe the serious and challenging situations that lots of parts of the country face. I am anxious to ensure that we make progress in Bradford, not only because Bradford and places like it suffer from the consequences of poverty, but because Bradford has one of the youngest populations in the country. It is part of our future: we must back our young people, and I want to see Bradford grow and its people do well.

People have accused me of many things, but being in cahoots with Reform is not one of them. I am very, very definitely not in cahoots with Reform. I have heard what the hon. Gentleman has said. I made some remarks in my speech about the steps that we will take, particularly if people are already paying an average amount of council tax. I am more than aware about the situation that people are facing with the cost of living, so if he wants to write to me with some more details about what he has read in The Times, I will happily respond to him formally.

The Minister mentioned Hammersmith and Fulham council in her statement, so I hope she will not mind my reminding her that it is one of the most efficiently run councils in the country. Despite having had 50% of its funding cut under the Tories, it has made £138 million in savings since 2014. It has pulled most of the levers that it has had available, such as the second homes premium, to deal with that, and it has some of the most deprived areas in the country within it. I invite her to come and visit Hammersmith and Fulham to see how a well-run council works, particularly when it has high levels of need and high-cost areas.

I would be more than happy to do that.

I am sure that the Minister will join me in congratulating Anna Coles, the director of adult and community services at Torbay council, and her team on achieving a “good” rating from the Care Quality Commission this week. The fly in the ointment is that despite Torbay being the most deprived local authority in south-west England, this settlement means that it is set to lose out on adult social care because of the higher than average number of people who are old. Will the Minister explain that?

It is excellent to hear that Anna Coles has done so well in providing local services. I do not recognise the figures mentioned by the hon. Gentleman and I would be happy to discuss them with him. Our objective is to get all councils back on their feet, particularly through the Pride in Place programme, in which Torbay is participating.

May I warmly welcome the announcement today of the linking between local government funding and deprivation and need? That marks an end to the cuts and austerity brought in under the Tory and Liberal Democrat coalition Government. Will the Minister outline how that will benefit the children and young people in my constituency and in Luton, who bore the brunt of Tory austerity?

Luton is an extremely important place, with great potential to grow our economy. Most importantly, we want to see those children in Luton thrive, because they are our future. Today’s announcement allocates significant investment in Luton, which I am really pleased to do, precisely because of that relinking to deprivation, and I have every faith in my hon. Friend and her colleagues in Luton to make that money work for our children’s future.

May I welcome the focus on reducing deprivation in this statement? How confident is the Minister that deprivation in rural areas will not be missed in the funding formula? I should refer Members to my entry in the Register of Members’ Financial Interests, because I am still a councillor on Central Bedfordshire council. That council is looking at having to find more than £20 million to balance its budget. That will be a real struggle in central Bedfordshire, which is a high-growth area with high needs and a lot of spending. Will the Minister commit to meet with me and local council leaders to discuss the unique circumstances in central Bedfordshire and what can be done to alleviate the financial pressures and to support them in balancing their budget?

I have a much greater level of confidence that we can find pockets of deprivation in rural areas, because the latest indices of multiple deprivation are much better-quality data. I will happily discuss that with the hon. Gentleman as we meet to talk about the finances in central Bedfordshire.

Changes to funding formulas can throw up huge anomalies. The Minister is well aware that Trafford council, which covers part of my constituency, is one of those anomalies. Will she commit to work with my Trafford parliamentary colleagues, Trafford council and me to see if we can iron out some of those issues?

Wherever there are challenges as we transition to this new funding formula, I will work really closely with colleagues. I will do that especially with my friends in Trafford, and I look forward to meeting with my hon. Friend again soon to discuss that.

I draw the attention of the House to my entry in the Register of Members’ Financial Interests; I am a sitting councillor in Teignbridge. Looking at the figures—which I have been desperately trying to do, although they are tiny—it looks to me like Teignbridge is getting a negative change in this year’s settlement of -0.07%, while Devon gets a small increase. I suspect that might not adequately make up for what Devon lost last year in the rural services grant. Does the Minister have any hope for our finding a way to solve the problem of delivering services in a rural area, even though we have areas of high deprivation? That is a common thing across the House, and it is clearly hitting everywhere.

I refer the hon. Gentleman to the answers I have already given on rural areas. We have built that into this settlement, and I will work with colleagues in all rural areas to ensure that we can get services improved and make this work.

Over 14 years of the Conservative Government, they cut Hartlepool’s budget in real terms by 40%. That is £50 million missing from that budget every single year. It meant libraries and parks being left behind and child poverty being up by 10% over those 14 years. While some of the Conservatives come here to criticise and others jump ship to Reform, including in Hartlepool, does the Minister agree that they should be ashamed of themselves for their record on local government? This is the start of putting right what they got so wrong.

I most certainly agree. Having visited Hartlepool before—I hope to do so again—I know not just what it has been through, but what it has to offer. It has a fine champion in my hon. Friend as its MP, and I look forward to working with him and all my friends in Hartlepool to make good on the promise of the next generation in Hartlepool.

I am really concerned that the Government’s fair funding formula sells many London councils short, such as Richmond and Kingston in the area that I represent. The majority of London boroughs already have lower core spending power per capita than the England average, and several are among the lowest funded councils per capita in the country; additional cuts will impact those councils significantly. London has the highest rate of poverty in the country once housing costs are factored in. According to the Department for Work and Pensions, one in four Londoners lives in poverty, and rising council tax bills will impact those who are struggling the most. With that in mind, what assessment has the Minister made of the impact that rising council tax bills and cuts to services will have on those already living in poverty in London?

I thank the hon. Lady for her question. I might be a proud northerner, but I was once a councillor in a London borough, so I do not need to be told what poverty in London looks like. In my statement, I mentioned the possibilities for raising income that some councils have access to, and we want to work with local authorities on that. I am determined that we will not make this about geographical division in our country; we will make it a journey for all councils back towards financial sustainability. That is the objective, and I will happily work with the hon. Lady on that if that is what she wants to do.

I thank the Minister for her statement. I refer the House to my entry in the Register of Members’ Financial Interests and my officership of an all-party parliamentary group.

In past years, protection uplift funding for Greater Manchester fire and rescue service has been calculated based on inaccurate data, meaning that Greater Manchester receives significantly less money than regions with far fewer buildings. Will the Minister correct this error, so that GMFRS has the necessary resources to carry out essential inspection and enforcement activity across Stockport and Greater Manchester?

I hear what my hon. Friend says, and I will happily discuss it with him and with my colleague the fire Minister, my hon. Friend the Member for Chester North and Neston (Samantha Dixon). If my hon. Friend thinks there are errors, he can by all means send us more details, and we will work on that.

Wokingham is the lowest funded unitary authority in the UK and is struggling to find enough money for adult social care and children’s services. I have three quick questions for the Minister. First, has she protected tier 1 local authorities from real-terms cuts? Secondly, have the Government honoured their commitment to a new fair funding formula by removing the recovery grant that undermines it. Lastly, how does the Minister expect local authorities to afford the dedicated schools grant deficits accrued up to 31 March 2028?

I think those three questions have been answered in what I have already said, so I refer the hon. Gentleman to my earlier answers.

As a former deputy leader of Milton Keynes city council, I welcome this announcement. As a reminder, Milton Keynes city council faced £200 million-worth of cuts—55% of our grant—while Buckinghamshire and Northamptonshire were protected and got bail-outs. This settlement is, for once, going to give us the funding we need to protect Britain’s fastest-growing city, so I thank the Minister. Will she meet us to talk about some of the things we can do to encourage councils to build homes at the same rate as Milton Keynes?

My hon. Friend is not just a former deputy leader of Milton Keynes city council; she has become a fantastic champion of that great city since coming to this House. If she wants to meet to talk about fast-growing cities and building homes, I will be there all day.

One fifth of the UK population live in rural areas. They face unavoidable additional costs, including longer travel times, reduced provider competition and workforce recruitment. Those costs have an impact on every single aspect of local service delivery, but funding formulas fail to adequately recognise rurality, putting additional pressure on the vital services that residents in Glastonbury and Somerton rely on. Does the Minister accept that additional cost pressures are linked to geography and sparsity, and will she outline what steps are being taken to support large rural councils such as Somerset to manage these funding gaps?

The hon. Lady asked if I recognise that issue, and I have already said several times that I do, as well as setting out some of the steps that we are taking to address it. As I said, I will happily work with hon. Members on both sides of the House to take local authorities, wherever they are, on a journey towards sustainability.

I am always proud to be in this Chamber, but I am particularly proud to be here today as the Government bang a final nail in the coffin of Conservative austerity. I really welcome what I hope will be significant additional investment in my constituency of Colchester, because that investment will do so much to improve local services for local residents. Can the Minister give us a timeline for that funding—that is, when will we get the cash?

I feel like a bit of an old lady in the House these days, having been here in 2010 at the beginning of austerity. I saw the effects of it—

Well, you should see the level of debt that the Tories left us with. The global financial crisis was a tough time, but I never thought a Tory Government would leave us with a debt-to-GDP ratio of nearly 100%.

To return to the constituency of my hon. Friend the Member for Colchester (Pam Cox) and the important work that we are doing to rebuild local authorities after that awful period of austerity, we will be releasing information to councils today so that they can start the budgeting process. We will engage heavily with local authorities over the months to come so that they can set their budgets in the normal way in the spring. I encourage her local authority to be in direct contact with the Department, and I would be happy to meet her to talk about the impact on her constituency.

Stockport council, along with two other boroughs, missed out on the recovery grant. The grant was not mentioned in the fair funding review or consultation. Why was it not mentioned, and is the Minister concerned that that opens up the whole process to legal challenge?

I thank the hon. Gentleman for his question. I have every confidence in the details that we are publishing today. We will be working with local authorities, as I have said, to make sure that they can set their budgets in the normal way and move towards financial sustainability.

I thank the Government for delivering an early Christmas present to my constituents in Bedford and Kempston. The granting of planning permission for the Universal Studios theme park is a landmark moment not just for the eastern region but for the whole UK, as it will bring in around £50 billion of investment and tens of thousands of jobs. Does the Minister agree that Bedford borough council, which is already under significant financial pressure, will need additional Government investment to meet the extra demand on local public services, to support growth and to put our region firmly on the global map?

I have to agree with my hon. Friend that it is not just the people of Bedford who are excited about Universal Studios; the excitement can be felt across the United Kingdom. Today’s settlement hopefully helps us on that journey, but I will happily meet him to discuss the impacts on Bedford and the wider area.

I know the Minister is aware that Shropshire council ran out of road this year, having been caught in a perfect storm of 16 years of Conservative mismanagement of the council, surging demand for social care and the failure of the previous Government to recognise the reality of delivering services in a rural area. Can she reassure my constituents that she will not only help us to get through this difficult period with exceptional financial support, but work with me and the other Shropshire MPs to ensure that Shropshire council is put on a secure financial footing for the future?

I thank the hon. Member for meeting me recently to discuss that issue, which was really helpful. As I said in my statement, decisions about financial support will be taken in the usual way, and I will of course work with her and other Shropshire MPs to make sure that her area is on a journey towards sustainability.

When I knock on doors, one thing is said to me repeatedly: Kettering does not get its fair share. I do not have to tell my constituents that the Tories underfunded our local government. The parent taking their child to our rundown swimming pool sees it, the family waiting for a council house sees it, the child waiting for a space at a special school sees it, anyone who drives a car on our roads sees it, and the Tories saw it in 2018 when Northamptonshire county council went bankrupt under their leadership. Will the Minister confirm that this is a Labour Government sending the people of Kettering the message, “You matter, and you deserve your fair share”?

I would first say to the people of Kettering that their MP has done a cracking job in making sure that their needs are represented in this place and in the decisions that the Government take. Their MP has spoken up for their future, their children, their council and their needs, and we are doing our best to meet those needs.

I refer the House to my entry in the Register of Members’ Financial Interests.

I welcome the Government’s announcement of a cap on social care placements, but some special schools are making unreasonable charges. One school in my area that is offering places to neurodiverse children who are struggling in mainstream education but are otherwise without disabilities charges more than £100,000 a year in fees plus transport, while state-maintained alternatives are doing it for £25,000 for the same cohort. Will the Minister commit herself to working with the Department for Education to introduce a cap on charges and profits for specialist schools now? Councils will have collapsed by 2028 and taxpayers will lose out, so this really needs to be addressed before then.

The hon. Lady has made precisely the case that I was trying to make in my statement. We must fund councils properly, but if we do not get a grip on escalating costs it will do no good; we will still have unsustainable councils. I am already working with colleagues in the Department for Education, and if the hon. Lady would like to send me details of the case that she mentioned, I will be happy to investigate it.

Order. I am struggling to get every Member in, given the time, so I ask Members please to keep their questions short.

After 14 years, the Tories should be ashamed of their legacy in local government. I know that my council, Medway, will welcome the Minister’s announcement about linking deprivation to funding, but we still face other challenges. Will she set out what the changes mean for my local area, and will she agree to come to Medway to meet us and discuss how we can take on some of those other issues?

Places such as Medway deserve a lot better, and through her championing of her constituency in the House, my hon. Friend is ensuring that they will get it. We want to see councils invest in high streets, and we want to see those high streets thrive, along with other services. I would be happy to visit my hon. Friend’s constituency and see for myself what we can do to improve it.

The Minister constantly says that she does not recognise the figures when presented with what are expected to be the settlements for certain local authorities. That is possibly because we are fumbling in the dark today, as the figures simply are not available. I had to go to the Vote Office, and I have some of the papers here. The fact is that in my own area, the Government have proposed a bespoke arrangement for the Council of the Isles of Scilly, but there is no clarity about what it will mean in the forthcoming years, and in respect of the indices of deprivation, there is no clarity on what it means for Cornwall. Will the Minister meet me, and other local Members, to discuss these issues?

I will.

I declare my interest as an officer of the Special Interest Group of Municipal Authorities team, and as a recovering local government alumnus.

We inherited a system in which 40% of local authorities were at risk of going bust and issuing section 114 notices by March 2026, driven by a rising demand for adult and children’s services and SEND services. Communities such as mine in Calder Valley have faced those pressures every day. This settlement really matters; the new fair funding settlement gives more help to the places that need it most, and gives them long-term stability. However, more needs to be done, so can the Minister confirm that we will prioritise and value local government services and their importance to our economy?

Yes.

The Conservatives have some brass neck when they blame councils like mine for being poor, given that they oversaw 14 years of austerity, underfunding and cuts. The initial figures suggest that by 2028-29 Peterborough city council will be receiving £65 million more from this Government, which will be a life-changer for many people. Can the Minister explain how we can use that money to transform the communities that people like me represent in this House?

I thank my hon. Friend for his consistent championing of Peterborough in this House—and, frankly, in my ear—at all times. He always stands up for his constituents, and I have been pleased to visit Peterborough on a number of occasions. I want to see the significant investment that we are making in Peterborough help it to thrive. It has great potential and fantastic young people, and I look forward to being invited back to see exactly what is happening there.

I welcome the multi-year settlement, but I am deeply concerned that the statement made no reference to the particular pressures facing rural areas. Devon has the longest road network in England, so everything costs more—SEND, care, bus services and bin collections—and Dartmouth library is now facing a cut in hours because of funding cuts. Using deprivation as a way to calculate the funding formula does not take account of the older population, and my concern is that hidden pockets of deep deprivation, in an otherwise wealthy area, will not be recognised. Can the Minister reassure me that hidden pockets of deprivation will be recognised by the formula?

I have answered a number of questions on rural areas, so I refer the hon. Lady to the answers I have already given. I have real confidence in the latest indices of deprivation. The data quality is much better, so we are able to meet the challenge she sets.

I warmly welcome the settlement, which puts fairness at the heart of local government funding. I thank the Minister for the increased funding for Warwickshire, which will benefit people across the county and in Rugby. Would she care to comment on the fact that there is not a single Reform UK MP in the Chamber? Does that not indicate that Reform does not take local government seriously?

It certainly does. Our first duties as Members of Parliament are to listen to our constituents and to be in this House. My hon. Friend always stands up for his constituents, unlike others who are not here.

Like others, I warmly welcome the multi-year funding settlement. As a former local councillor, I know the impact it will have on local councils, which will be able to plan when they are tackling some of the thorniest issues that affect our most vulnerable constituents. We in this country are blessed to have remarkable people working in local government, and the best local councillors know their communities, stand up for them and mither their MPs to stand up for them.

At first glance, Stockport appears to be one of the areas that is worse off under this funding settlement, despite containing the most deprived part of Greater Manchester. We missed out on the recovery grant by 0.01%, and the initial indication is that we will be worse off. Will the Minister meet me, the hon. Member for Stockport (Navendu Mishra) and my hon. Friend the Member for Cheadle (Mr Morrison) so that we can go through this and work out how we will make sure that my most vulnerable constituents are not unduly impacted?

I will.

I welcome the multi-year settlement, and I thank the Minister and the Secretary of State for their engagement with me and Members from across the House as we make the case for our local areas. It looks like Devon county council will get a significant uplift over a period of years. If that is true, I am particularly keen to see the Lib Dem and Green-led Devon county council U-turn on its decision to cut 66% of its homelessness budget, get on top of the weeds that it has allowed to grow throughout our entire city, which are engulfing some communities, and go back on its current consultation to cut library hours. Will the Minister set out how she thinks the increase in funding to local authorities will have a positive impact on services and local people?

I thank my hon. Friend for all the work he has done, as part of our homelessness strategy, to draw attention to homelessness and rough sleeping in his city of Exeter, which is a wonderful place and deserves to have the county council and others look after it properly. This investment in local authorities will make sure that everyone in our country feels proud of the place where they live. We want to see all our places grow, and I expect all councils to do that work. I look forward to meeting him to discuss this issue further.

I welcome the Government’s funding formula, but I would like to bring to the Minister’s attention my conversation with my local council leader and its chief executive just last week. They are worried that the council cannot afford the spiralling cost of children’s services. For one particular child, the cost is £25,000 a week. Councils often have no choice but to rely on private providers at market rates. Will the Minister commit to tackle the cost of private provision, or look into introducing a cap?

I think I answered that question in my statement. I am just as concerned about the cost as the hon. Member is.

I thank the Minister for her statement. She is right to talk about play parks, homelessness and libraries. As a councillor, one of my proudest achievements was replacing five play parks, but I have seen how Tory-run Kent county council cut everything to the bone. I am grateful for the multi-year funding settlement; will the Minister share what this will mean and look like for Gravesham residents?

My hon. Friend is right to point out, as I did, the consequences of council cuts. They are not just theoretical on a spreadsheet—we all saw the effects in our parks and our town centres. We want to turn that around in Gravesham, and I look forward to working with my hon. Friend over the weeks and months to come to make that real for her residents.

Between 2015 and 2020, under the last multi-year settlement, the Conservative Government cut Bracknell Forest council’s funding by £500,000. I am delighted that this provisional settlement would see Bracknell Forest’s funding rise by almost £10 million—an increase of over 7%. Does my hon. Friend agree that this shows that Labour will always invest in our local services and the Conservatives will always choose austerity?

I thank my hon. Friend for the case he makes, which shows people in Bracknell that they have an effective MP who is prepared to stand up for them, champion them and make sure they get the services they need.

I welcome the Government’s taking into account deprivation in the multi-year funding settlement. If there was ever a demonstration of what a difference a Labour Government can make, it is this: investment in our poorest communities, not crippling Tory austerity. It looks like in Croydon we are set to get an extra £158 million over this Parliament, which is a game changer for us. Will the Minister outline the timetable for our getting this extra investment? I thank her again for her work.

I thank my hon. Friend for being a brilliant champion for Croydon. She has stood up for the people she represents. We know that poverty in London has changed, and areas such as Croydon have experienced an increase. This funding settlement is a recognition of that reality. We want Croydon to thrive, which is why, after publishing this information today, we will work with local authorities over the coming months so that they can set their budgets in the normal way in the spring. Croydon has a great future ahead and I want to work closely with my hon. Friend to make sure that happens.

I welcome the additional investment the Minister has announced, and what it will mean for my constituents in terms of local government funding. Firefighters, such as those based at Heywood fire station in my constituency, are attending a massively increased number of flooding and water-rescue incidents, which are up 40% over the last 10 years. Has any consideration been given to introducing a statutory duty on local fire and rescue services, along with commensurate funding to ensure that firefighters are properly resourced and equipped to respond to flooding and water rescues?

I thank my hon. Friend for raising that point, which is very apposite given the effects of climate change and other things. I am sure that the fire Minister, my hon. Friend the Member for Chester North and Neston (Samantha Dixon), will have heard what she said, and we will all work together to make sure it is addressed.

Five years ago, the Conservative-controlled council in the London borough of Bexley found itself in such a dire situation that it sought a capitalisation order, made 15% of staff redundant and had to sell a building because it could not even fund the redundancy notices. [Interruption.] For the Conservative Members chuntering, that is a real example of there being “no money left”. Will the Minister contrast the announcement she has made today with the approach taken by the previous Government?

I thank my hon. Friend for being such a champion for his constituents, and for making sure that their voice is heard in the decisions we are taking. The situation he describes was chaotic and, as he said, people paid the price for that in their job security and in the services we all rely on. The difference is that we are taking a long-term approach, with a multi-year settlement, and funding according to deprivation means that where the need is greatest, the money will follow.

On behalf of Nottinghamshire county council, I thank the Government for a £234 million—or 30%—increase over the course of this Parliament, which will make a huge difference, and for the 4.6% increase in core spending for my area, Rushcliffe. I previously raised with the Minister in writing the need to avoid cliff edges. The borough council was particularly concerned about the loss of the new homes bonus and similar mechanisms. Will the Minister expand on the decisions that have been taken? I also want to mention rurality, which really matters and drives up service costs; I hope she will meet me and other Nottinghamshire MPs to discuss that.

Members will be reassured to know that ample time is reserved in my diary to meet them in the new year, and I would love to meet my hon. Friend to discuss rurality and the other things he mentioned.

On new homes, we are making sure that councils get all the benefit for every new home they build. That is part of the settlement. We want to build 1.5 million new homes and we want councils to feel the benefit of that when they make the relevant decisions. I will happily talk my hon. Friend through the detail when we meet.

Black Country people are proud and resilient, but 50 years of deindustrialisation and 14 years of Tory austerity have left my borough of Sandwell the fifth most deprived in the country. Does the Minister agree with me that this Government can finally see deprived urban areas—post-industrial areas like mine—and is finally giving us back what we are due?

I very much agree. For those places that bore the costs of bad decisions many years ago and have never been able to get fully back on their feet, this is part of turning the corner. I look forward to working with my hon. Friend on that.

I am sure you would like to join me, Madam Deputy Speaker, in thanking the Minister for backing Bradford in her response to our hon. Friend the Member for Bradford East (Imran Hussain). This Government’s fair funding is finally turning a corner for councils like Bradford that have been at the sharp end of Tory cuts to local government. Does the Minister agree that, with elections in May next year, if residents in my Shipley constituency want to see improvements in local services, they will need a Labour council working with a Labour Government?

My announcement today is a massive vote of confidence in the people of Shipley and of Bradford, and I look forward to working with my hon. Friend to make sure that every penny piece of that investment improves her constituents’ lives.