Asked by
To ask His Majesty’s Government what assessment they have made of
the financial difficulties facing many local authorities.
The Parliamentary Under-Secretary of State, Department for
Levelling Up, Housing & Communities () (Con)
My Lords, we have listened carefully to local authorities about
the pressures they are facing. That is why, in January, we
announced additional measures worth over £600 million. Taking
into account the recently announced local government finance
settlement, that makes available up to £64.7 billion, an increase
of 7.5% in cash terms on last year. The department continually
monitors the sector, and we stand ready to talk to any council
with concerns about its finances.
(Lab)
My Lords, what the Minister said is of course welcome, but it is
still a drop in the ocean compared to the cutbacks local
authorities have faced since 2010. The Government keep talking
about cutting taxes in a forthcoming Budget, but is not the real
issue that council tax payers also pay taxes? Surely, council tax
increases will have to make up for cuts in income tax. This is
not honest.
(Con)
My Lords, for many years we have had a cap on council tax
increases. It remains at 2.99% for the general fund, with 2%
extra for councils that want more money for social care funding.
However, the department is establishing an expert panel to advise
local government and the department on local government financial
sustainability into the future. The panel will include the LGA
and the Office for Local Government, and we look forward to its
findings.
(Con)
My Lords, the local authorities that have so far gone bankrupt
and applied for Section 114 have, by and large, been the authors
of their own misfortune. Is my noble friend the Minister aware
that many well-run upper-tier authorities—controlled by all
parties—are now running out of road? Will not whoever wins the
next election have to undertake a major review of local
government finance? The current regime of overreliance on
government grants, rate capping and an out-of-date council tax is
simply unsustainable.
(Con)
I agree with much of what my noble friend said. In December 2022,
the Government ruled out reform of the local government finance
system in this Parliament in response to the sector calling for
stability and certainty from local government. However, this
Government are committed to reforming the local government
funding landscape in the next Parliament.
(CB)
My Lords, I stress the need to review the local government
financial settlements and support systems. In the case of a city
such as Birmingham, even if increasing the council tax were
realistic, a quarter of households—some 461,000 —are eligible for
council tax support, and of those, 75,000 pay no council tax at
all. Over the next two years, the city is facing a budget gap of
some £300 million. Does the Minister agree that the structure
needs to be reviewed and that individual circumstances have to be
taken into account?
(Con)
I repeat that we have said that we will look at funding in the
next Parliament. There is an 18% increase in budgets per dwelling
in the most deprived areas, compared to the least deprived.
Through the settlement, places such as Birmingham are getting a
lot more money.
(LD)
My Lords, councils have been receiving money from the
Government’s household support fund, which has provided many
thousands of families with essential sharp-end help with their
bills and food, for example. However, it is due to end at the end
of March. Will the Government seriously consider extending that
effective and targeted support for at least another year? Have
they taken into account the increase in child poverty they
anticipate will result from the withdrawal of this much-needed,
much-used fund?
(Con)
The noble Baroness is right to say that the current household
support fund runs out on 31 March. However, the Government
continue to keep all existing programmes under review in the
usual way.
(Lab)
My Lords, council tax banding for our 25 million homes in England
is based on their estimated market value in 1991. So, a
two-bedroom flat in London, where property values have gone
through the roof, falls in the same band as its equivalent in the
north of England; a £1 million home is charged 0.2% of its value;
and on average, one worth £250,000 is charged 0.6%. This year,
46% of households in England will receive a bigger council tax
bill than Buckingham Palace. Does the Minister think that our
council tax formula is regressive and needs reforming?
(Con)
As I said, in the next Government we will look at all these local
government financing issues. We agree that that is long overdue,
but the sector itself did not want that to happen in 2022.
(Con)
My Lords, does my noble friend recall that we promised we would
fix social care? The problem for local authorities is that the
vast majority of their funding goes on providing social care,
crowding out other vital services. Until we address the issue of
social care, this problem will get worse, and it is worst in
those local authorities where the tax base is lowest and the
demand is greatest. This is urgently needed, not least because
people are not getting the social care they need.
(Con)
I absolutely agree with my noble friend. We made changes to local
government financing in January, and we listened to local
government and its priorities: £500 million of the £600 million
extra that was given is going into social care.
(Lab)
My Lords, this weekend, the Local Government Association Labour
Group published its latest version of 101 Achievements of Labour
in Power, featuring a huge range of initiatives: street support
partnerships tackling homelessness in Leeds, Food On Our Doorstep
clubs in Mansfield, delivering over 83,000 square feet of lab
space to support life sciences in Stevenage, new models of
fostering in South Tyneside, and Plymouth City Council launching
the first ever national marine park to support conservation of
our seas. Remarkably, all this innovation has taken place against
the backdrop of a reduction in core spending power of 11%
compared with 2010-11. Is it not time the Government recognised
the huge value that people place on local services and worked
with the sector to deliver a sustainable funding model to support
them?
(Con)
The Government do appreciate what local government can do, and it
is not just Labour local government that is delivering this
innovation and great services for local people. At this point, I
should thank local government for everything it does. As I said
earlier, we listen to local authorities all the time, which is
why we put in £600 million more in January.
The Lord
My Lords, may I return to the issue of reforming the model? I
have recently been caught up in discussions with Suffolk County
Council about funding cuts it was making to its arts programmes.
That drew me into detailed discussions about what its priorities
were and the challenges it was facing. It said that two things
would make a huge difference. The first was knowing further in
advance what it might receive; it was looking for a three-year
projection. The second was for the groundwork for the reform to
which the Minister has been referring to be done now, rather than
in the future.
(Con)
The right reverend Prelate is absolutely right: local government
is asking for reform of the whole system, but it is also asking
for certainty for future years. Recognising the importance of
this, the Government intend to return to multi-year settlements
in the next Parliament when circumstances allow.
(CB)
My Lords, I am sure the Minister agrees that for 10 years, the
Government made very severe cuts and, as the noble Lord, Lord
Forsyth, said, there was increased demand for social care
services. The result is that the non-statutory services have
borne all the cuts. Services for young people, family support and
libraries—I could go on—have all been severely cut and continue
to be so. I lend my support, for what it is worth, to the
Minister. Local government finance really is in desperate need of
a fundamental review.
(Con)
I have already agreed that this will happen in the next
Parliament under a Conservative Government. However, as we have
heard from the noble Baroness opposite, not all councils have
stopped non-statutory services. Many of them are running their
businesses very efficiently and keeping all those services going.
