The Secretary of State for Housing, Communities and Local Government (Robert Jenrick)
I beg to move,
That the Local Government Finance Report (England) 2021-22 (HC 1200), which was laid before this House on 4 February, be approved.
Madam Deputy Speaker (Dame Eleanor Laing)
With this it will be convenient to consider the following motions:
That the Referendums relating to Council Tax Increases (Alternative Notional Amounts) (England) Report 2021-22 (HC 1201), which was laid before this House on 4 February, be approved.
That the Referendums relating to Council Tax Increases (Principles) (England) Report 2021-22 (HC 1202), which was laid before this House on 4 February, be approved.
Robert Jenrick
Among the many acts of heroism that we have seen over the past year, the quiet dedication, hard work and compassion shown by all who serve their communities in local government has truly shone through. I am sincerely thankful for their efforts. I am grateful to them for protecting the most vulnerable, including those who are shielding from the pandemic, and providing unprecedented levels of support through Everyone In to reduce rough sleeping, bringing it to the lowest levels that we have seen for many years. I am grateful to councils for their support for local businesses, enterprises and entrepreneurs; for keeping essential public services going against the odds; and for the part that they are now playing in the success of our national vaccine programme, ensuring that it reaches all communities and paving the way for our recovery as a nation later this year.
From the outset of the pandemic, we promised to do everything within our power to support local authorities during this most unusual and difficult time. Our local government financial settlement shows that we have kept that promise, with a real-terms increase in core spending power and a guarantee that no council anywhere in the land will receive less funding than it did last year. That stands alongside an unprecedented package of covid-19 support this year and next year, totalling more than £11 billion directly to councils and £30 billion in additional help for local councils and their businesses and communities.
The settlement strengthens social care, with councils able to access an additional £1 billion, comprising £300 million from the social care grant and a 3% adult social care council tax precept. It also supports children’s social care, helping councils to provide better services for the most vulnerable children in society, children in care and children with disabilities. Those vital services have experienced severe disruption over the last few months and will no doubt experience further demand as we ease lockdown and move forward as a country.
Balancing the contributions of national and local taxpayers, this settlement gives councils increased flexibility, with a 2% council tax referendum limit for most authorities and an extra 3% for social care authorities, which councils may choose to defer until 2022-23. I can inform the House that many councils, particularly Conservative ones, are indeed doing so. The council tax referendum principles are not a cap, nor do they force councils to set taxes at the threshold level. Councils should and must consider the financial concerns of local residents at this most challenging time, alongside the public’s support for action on keeping our streets safe and providing essential services.
Recognising the vital door-to-door services that councils deliver day in, day out to the most isolated, our settlement provides an extra £4 million to authorities in remote rural areas through the rural services delivery grant, taking the total to £85 million—the highest contribution to the delivery of public services in our rural areas to date. Lower- tier local councils will also receive a new £111 million lower-tier services grant, with main funding allocations for the full range of council services rising in line with inflation.
Finally, we know that the new homes bonus accounts for a considerable part of funding for many councils. We are therefore implementing a further round of the bonus allocations, with the same 0.4% funding baseline as last year and no new legacy payments on the new round. We will reform it over the course of next year to ensure that this significant amount of money is focused on the councils that are keenest to build, build, build and get the homes this country needs under way.
While these measures are providing confidence and stability, we know that councils will continue to face very unusual challenges as a result of covid-19 for quite some time, despite all the success of the vaccine roll-out, so today I am setting out further details of nearly £3 billion in additional covid-19 support for councils next year. We were able to provide certainty to local councils in December on allocations for £1.55 billion of unring-fenced funding, and I am now very pleased to confirm, on top of the funding already provided in the settlement, the final allocations for £670 million of grant funding for local council tax support. This helps local authorities to continue reducing council tax bills for those who are finding it hardest to pay.
We have also provided our published final position on the extension of the sales, fees and charges scheme from April to June 2021, a vital safety net for councils facing lost income as a result of covid-19, ensuring that everything—from the local car parks to our theatres, heritage attractions and all the things that local councils provide and which demand income to keep going—will have that guarantee of certainty and confidence to move forward until at least the mid-point of this calendar year. They will soon receive grant funding reflecting 75% of irrecoverable losses in their council tax and business rates income from 2020-21, with an up-front payment early in the financial year to aid cash flow. In both respects, we have listened to the sector, acted and provided them with the certainty and the resources they need. We made promises and we have kept them, and we are making sure that local councils can continue to deliver for their citizens.
We know that a handful of councils face serious financial challenges—some, it has to be said, due to very poor management, but others due to the exceptional events of the past year. There is quite a broad range, and today we are publishing details of the targeted support that we are providing to four councils unable to balance their budgets without some additional recourse to Government. This aid is provided on an exceptional basis, with these councils being subject to rigorous reviews of their financial positions, their governance and their ability to meet some or all of their budget gaps for the next year without Government funding. Taxpayer support of this kind is never provided lightly, and in return for the increased flexibility afforded to councils next year, we expect sound financial management, with residents shielded from unaffordable increases.
I wish I could say that here, in our nation’s great capital, the Greater London Authority is blazing a trail that others might wish to follow, but, sadly, the opposite is true. I have reluctantly placed before the House today a principle to allow for the Mayor of London’s request to increase council tax by £15 on band D properties without holding a referendum in order to fund transport concessions above the level available elsewhere. This brings the total increase in precept he is seeking from Londoners to nearly 10%. While the final decision on the increases rests with the Mayor, and with the Mayor alone, I would urge him to abandon this ill-judged pursuit of tax hikes and to behave responsibly at a time of great difficulty for Londoners.
We want to unite and level up our councils, as we do the whole of the country, and to build back better from this pandemic and stronger than before. That starts with holding local polls in May this year. We said that further delaying elections would require a high bar, and the huge success of our vaccine programme gives us confidence that we can and should now move forwards. More than ever, people deserve their say on issues ranging from safer streets to the level of council tax, and we are providing £15 million to ensure that our polls are made covid- secure. My Department and the Cabinet Office will do all we can to support local council officers and the brilliant staff and volunteers of polling stations the length and breadth of England with the hard work and challenges that lie ahead. We want to ensure that the process is as smooth as possible and, in particular, that as many schools as possible can remain open.
We know that there are challenges posed by the pandemic, of course there are, and we also know that the scars are likely to take time to heal, but we are not cowed by them. We want to work together to learn from our experiences and to solve long-term problems in local government, because councils will be the thread running through our response to each and every one of these issues. We will empower them to reboot and restart vital public services on which communities depend, from health to justice: making sure that vulnerable children get the care that they need; helping schools to see children returned safely and address lost learning, particularly in our most deprived communities; and increasing funding for social care to help tackle the backlog in assessments while laying the foundations for future reforms and a sustainable future for the sector for decades to come.
As we tackle those issues, we will help councils to grapple with the sharp drops in footfall that we have seen on our high streets, and the knock-on effects for local businesses. Our £3.6 billion towns fund and the urban centre recovery taskforce will ensure that our towns and city centres are renewed and become once again the vibrant places that we love and that we want to see people living, working and shopping in again, and attracting tourists from home and abroad.
Our £900 million getting building fund is integral to this work, kickstarting local recoveries and delivering the next generation of roads, bridges, 5G networks and full-fibre broadband, with more than 50% of the shovel-ready projects already started, creating thousands of jobs all over the country. Our £4 billion new levelling up fund will invest in high-value local projects, regenerating eyesores, upgrading town centres, breathing new life into local arts and culture and, above all, creating and sustaining jobs. We will be setting out more details on that shortly through my right hon Friend the Chancellor.
In each and every one of these endeavours, we see a very strong role for local councils, knowing their communities best and being at the heart of their future economic recovery. We do this while helping councils to seize new opportunities, particularly in technology. We do not intend to return to the way that things were done before by default. As we leave the pandemic, we want to ensure that councils build back better, build better public services and embrace some of the good things that have come out of this unusual period. Councils have rightly embraced meeting and working remotely, and we will build on reforms to digitise our planning system, utilise our local digital fund and ensure that local authorities fully embrace moving more meetings, services and processes online, transforming how they deliver for residents, for their staff and for the country.
We will work with councils to build back better from the pandemic, becoming a more prosperous, greener, safer and more neighbourly country. Local councillors will be a golden thread woven through the fabric of that better country. The settlement that we are debating today provides local councils with the resources that they need to plan for the future. It recognises the role that councils have played every day at the forefront of our response to covid-19, and we thank and salute them for the hard work that they have done on our behalf. This settlement places them at the heart of our national recovery. I commend this motion to the House.
Madam Deputy Speaker (Dame Eleanor Laing)
I should inform the House that the Order Paper notes that these instruments have not yet been considered by the Select Committee on Statutory Instruments. I have now just been informed that the Committee has in fact considered the instruments and has not drawn them to the attention of the House. The Committee’s report will be published on Friday.
The Minister for Regional Growth and Local Government (Luke Hall)
May I begin, like so many Members, by expressing my huge appreciation for the incredible work that councils across the country have been doing to lead the response to the pandemic? Social workers, refuse collectors, carers, teachers, council officers and so many more have been on the frontline of our response to covid-19, and they have been unwavering in their determination to deliver the essential services we all rely on every day. That is why this Government have backed councils with the funding and resources they need to support our communities, businesses and local economies in this local government finance settlement.
This settlement delivers a 4.6% cash-terms increase in core spending power next year, an increase in real terms, guaranteeing that no council in England will have less funding available than last year. That comes on top of the settlement for this current financial year, which was a 4.5% rise in core spending power. That in itself was the best settlement for a decade and it was supported by every Member of this House. Alongside this settlement, in recognition of the fact that the pandemic is not yet over, we are providing a further at least £3 billion in covid-19 funding next year to support councils’ income and expenditure. That takes the total support already committed to covid-19 income and expenditure pressures to more than £11 billion.
May I thank a number of my hon. Friends for their contributions today? My hon. Friends the Members for South East Cornwall (Mrs Murray) and for St Austell and Newquay (Steve Double) both highlighted the increase in resource going to Cornwall Council, with that 4.7% rise in core spending power in cash terms. My hon. Friend the Member for Burnley (Antony Higginbotham) welcomed the rise in core spending power. The hon. Member for Blackburn (Kate Hollern) questioned how much was going to Burnley; I can tell him that it is a 2.6% rise, alongside the 5.3% rise going to Lancashire County Council. My hon. Friend the Member for Darlington (Peter Gibson) welcomed the extra support and swift provision of funds for Darlington Borough Council, with a 4.8% rise in core spending allowing, as he described, the council to deliver for local residents. May I put on record my thanks to Darlington Borough Council for the excellent work it is doing to restore the council to its rightful place?
I was slightly confused by the contribution from the hon. Member for Salford and Eccles (Rebecca Long Bailey) when she said that there was no commitment in this settlement to increase funding in Salford. The opposite is true; in the current financial year there has been a 7.8% increase in core spending power; and the settlement we have published and are debating today sees an increase of 4.7% in core spending power for her council. I am afraid that she is incorrect in her statements.
A number of Members today raised covid support for their councils and talked about what they saw as the gap in funding between what councils spend and what we are providing them with. Councils’ self-reported figures project that covid cost pressures this year will be £6.9 billion. We have already allocated £8 billion to councils, which is over £1 billion more than they are spending in responding to the pandemic. On top of that, we have provided a business rates holiday worth around £10 billion to local retail, hospitality and leisure industries. We have given councils over £17 billion to provide grants to thousands of businesses up and down our country, and they have done an incredible job in distributing those efficiently and speedily to ensure that businesses are getting the support they need. We have also introduced a sales, fees and charges scheme to help councils manage losses in income. We are backing local government all the way with the necessary funding, both now and into the future.
One of the recurring themes of the debate was the issue of social care, which was raised by the hon. Member for Wirral West (Margaret Greenwood), by the Chairman of the Housing, Communities and Local Government Committee, the hon. Member for Sheffield South East (Mr Betts), and by my hon. Friend the Member for Milton Keynes North (Ben Everitt). This settlement helps to support the most vulnerable people in our society, especially in social care. We are providing access to an additional £1 billion in funding for adult social care in the coming financial year, which includes £300 million in grant funding for both adult and children’s social care. We are also providing an additional adult social care tax flexibility of 3% to give councils the tools to make the best decisions for their residents, giving councils access to an extra £790 million. That is all on top of the £1 billion social care grant announced last year, which is being maintained in line with our manifesto commitment. We have responded to the pressures facing councils to ensure that they have the resources they need to provide the best quality care for residents across the country.
A number of Members raised the point about the varying ability to raise resources to pay for the increasing costs of social care, and it is a very valid point. It is indisputable. It is a fact that some local authorities can raise more than others, but I am afraid that those Members have completely missed a key component of this settlement, which is that we have chosen to help councils to bridge that gap through equalisation. We are taking specific action to level the playing field between different councils in different circumstances. Through this settlement, we will redistribute £390 million of social care grant, recognising this exact point that some councils can raise more than others through locally raised tax.
We make this commitment of £240 million this year, on top of the £150 million that is continuing from last year, so that funding is distributed fairly to those who need it most. Liverpool is receiving an extra £10.4 million, Manchester £9.2 million and Sheffield £6.9 million. We are determined to level up every part of the country using all the tools we have, and this is a clear, concrete example of us doing just that. The hon. Member for Kingston upon Hull North (Dame Diana Johnson) made this very point—she talked about the fact that it is more difficult to raise funds in Hull, but if she looks at the detail of the settlement, she will see that Hull is receiving £5.2 million through this equalisation mechanism to support its delivery of services and to ensure that people in her constituency receive access to first-class care.
A number of Members also raised points about council tax. Of course it is right that individual local authorities should make decisions on council tax levels themselves.
Adam Afriyie
Could I just ask the Minister to keep an open mind towards the idea of some local authorities being able to have another, higher council tax band—band I? This would be raised locally, which I hope local people would be comfortable with, rather than being reliant on central Government.
Luke Hall
I thank my hon. Friend for his question. I will come on to talk about funding reform in a minute and perhaps try to address that point.
Importantly, we are giving councils the flexibility to defer rises using the adult social care precept to next year if they think that local circumstances dictate that that should be the case. That is of course a decision for them. Vitally, as my hon. Friend the Member for Waveney (Peter Aldous) pointed out, we are providing councils with up to £670 million of new funding to help them to reduce council tax bills for those who are least able to pay.
The referendum threshold that we have set strikes the right balance between allowing councils to raise income to deliver the services they need and making sure that residents have the final say over any excessive council tax rises. We trust councils to make the right decisions on council tax. I am afraid the Labour party cannot even persuade its own councils of that—they are constantly writing to the Secretary of State and me to ask for the caps to be removed completely. The long-standing policy of the Labour group on the LGA is to see the caps scrapped altogether.
My hon. Friend the Member for North Norfolk (Duncan Baker) made the fair point, raised by councils with particularly seasonal economies during the consultation on the settlement, that they could have lost out because of the proposed structure of the sales, fees and charges scheme for the first quarter of next year, as it might not best account for the impacts of the pandemic on their income from April through to the end of June because usually they receive a large proportion of their annual income in that period, perhaps because of car parking and their having seasonal or coastal economies. We have listened to that point, and I thank my hon. Friend for raising it and the many councils that raised it during the consultation. We will allow them to use their seasonal profile so that they are able to claim a larger proportion of their losses in the April to June quarter of this coming financial year and are therefore better protected from the income losses because of covid-19. That is one of the many ways in which we are trying to support councils as we ensure that they have the resources they need to deliver first-class funding services.
A number of Members, including my hon. Friends the Members for Milton Keynes North, for Sedgefield (Paul Howell), for Waveney and for Windsor (Adam Afriyie), raised the possibility of future funding reform. I can confirm to them that we on the Government Benches still believe that we need an updated and fairer method of distributing funds among local government. This year, of course, we have had to concentrate on supporting councils through the pandemic—we did not think it was right to use this time to engage in detailed conversation about local government finance reform—but I absolutely reassure them that we are committed to the principles of reform and to making sure that we put money where it is needed most. Once we get through this pandemic, we will return to the priorities for financial reform. I am happy to have conversations with councils such as Windsor and others and to listen to their concerns if they have tried, historically, to do the right thing by keeping taxes low and want to understand their options for the future.
My hon. Friend the Member for Sedgefield talked about the fact that he wants to make sure that in any funding reform, rural funding is received in areas that have a large urban population centre but rural fringes. He is right to raise that issue and I am happy to discuss it with him.
Several colleagues raised rural services, and they are right that we have increased the rural services delivery grant this year from £81 million to £85 million, which its highest ever level. We absolutely recognise that there are cost pressures—whether that is the need to drive long distances for refuse collection or to service more hubs across a larger geographic area—on the delivery of services in rural communities.
My hon. Friend the Member for Isle of Wight (Bob Seely) raised the individual circumstances that his constituents face. I am delighted that we are finding a way forward to work with his local authority to ensure that it can help to build the evidence case on the relative challenges facing the Island because of its separation from the mainland, with a particular focus on the impact of the local government finance system.
We are backing local government all the way with the necessary funding, both now and into the future, with a 4.6% rise in core spending power, £3 billion to help councils fight and recover from covid-19 and flexibility for councils to raise revenue, while also giving people the final say on excessive council tax increases. From our future high streets fund to our towns fund, the troubled families programme and increased funding to tackle domestic abuse and support rough sleepers and get them off the streets, we are backing councils, which are at the forefront of our shared recovery. I hope Members from all parties recognise the critical importance of passing the settlement and giving local government the support and confidence they need to plan for the brighter days ahead. I commend the settlement to the House.
Question put and agreed to.
Resolved,
That the Local Government Finance Report (England) 2021-22 (HC 1200), which was laid before this House on 4 February, be approved.
Resolved,
That the Referendums relating to Council Tax Increases (Alternative Notional Amounts) (England) Report 2021-22 (HC 1201), which was laid before this House on 4 February, be approved.—(Michael Tomlinson.)
Resolved,
That the Referendums relating to Council Tax Increases (Principles) (England) Report 2021-22 (HC 1202), which was laid before this House on 4 February, be approved.—(Michael Tomlinson.)