Ministry of Housing, Communities and Local Government
(1 day, 19 hours ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
Madam Deputy Speaker (Ms Nusrat Ghani)
The debate will be opened by the Chair of the Housing, Communities and Local Government Committee.
Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)
I thank the Backbench Business Committee for finding time for this important and urgent debate. The Ministry of Housing, Communities and Local Government is responsible for some of the biggest areas that impact all of us every single day, and I welcome the ambitious drive of the Deputy Prime Minister and her Ministers to deliver in those areas.
For too long, we have simply failed to build the homes that people need: the affordable homes for young people stuck at home or in the unaffordable private rented sector; the family homes for people whose kids have outgrown sleeping in the same room; and the social rent homes to get people off the social housing waiting lists and give the 164,000 homeless children a safe and permanent roof over their head.
I welcome that the Department is addressing head-on the financial distress that many local authorities are in. Last year, a record 30 local authorities received so-called exceptional financial support, which allows them to sell long-term assets or take out loans just to pay for their day-to-day costs. Due to the pressures they are under, some councils now have no choice but to hollow out their services in order to deliver vital services for residents. How can that be sustainable in 2025? How can it be fair that local people ultimately pay the price when their councils cannot fix up their town centres and have to cut vital services like bin collections just to make ends meet?
If the Department is going to get to grips with these dual crises and deliver on its ambitions, its plans to address them must be fully funded. When we look at the estimate and the recent spending review, there is good news for affordable housing and social housing, although I do have some questions for the Minister, which I will come to. On local authority finances, however, the Select Committee remains concerned that no new money is on the way. The spending review promises
“an average overall real terms increase in local authority core spending power”,
but only if local authorities increase council tax by the maximum allowable under legislation, passing the buck on to councils and raising the taxes we all pay in our local area.
If the Department is serious about ensuring everyone has access to an affordable home, we must end the decades of failure to build the homes we desperately need. That is why I welcome the Government’s ambition and commitment to deliver 1.5 million new homes during this Parliament, but evidence to our Select Committee from the sector has been clear: if the Government want to increase house building towards delivering more than 300,000 homes a year and reaching their target, social housing must be a substantial part of that mix. Ministers have said that the 1.5 million target is “stretching”, and the message we have heard from the sector is clear. In November, the Minister for Housing and Planning told us that, rather than a target of 300,000 homes per year over five years,
“The trajectory is an upward one”.
He said:
“The precise curve of that trajectory is dependent on factors like… the spending review settlement”.
We therefore warmly welcome the announcement in the spending review that the next affordable homes programme for 2026 onwards will be worth £39 billion. The estimate provides almost £400 million of uplift for the current affordable homes programme, which runs from 2021 to 2026. It is important that we continue to fund that if we are to reach the aim of 1.5 million new homes, but we need to start the building now, not towards the end of the decade. That is why I would be grateful to get some clarity from the Minister and the Department. Ministers have said they will publish a long-term housing strategy later this year, to set out how they will meet the 1.5 million target.
Chris Vince (Harlow) (Lab/Co-op)
This morning I met one of my constituents who is a care leaver, and she spoke of the huge challenges she faced in getting housing, partly because of the lack of affordable housing. Does my hon. Friend agree that supporting care leavers needs to be part of the housing strategy?
Florence Eshalomi
I thank my hon. Friend for that really important intervention. It is clear that so many people desperately want to get their foot on the housing ladder and are worried about the precarious nature of private renting, which is why we welcome the Government’s ambition to end no-fault evictions, but there is much more we can do, and it starts with building the homes.
It is important that the Government set out their plan for reaching their target, instead of leaving it too late, so I have three questions for the Minister. First, when will the House have clarity on how much funding will be coming forward in each year of the 10-year affordable homes programme? The Government have said that spending will reach £4 billion a year in 2029-30. What does that mean until then? While the £400 million uplift accounted for the affordable homes programme is welcome, it is not clear that that is a sufficient rise for the Government to achieve their goal of 1.5 million new homes.
Secondly, when will we see the long-term housing strategy? The Government have said that the strategy will be published “later this year”. Now that we have the long-term certainty of 10 years’ worth of funding, housing associations are calling out for clarity—they want to get building the homes that we need.
Thirdly, what discussions is the Department having with Homes England about the design of the new affordable homes programme? What is the Minister’s view on how much of that funding should go to shared ownership or right to buy? My Committee has consistently called on the Department to set out how that target will be achieved by tenure, including the important target of social rented homes.
My Committee has been undertaking an inquiry into local government funding and we have heard that local government continues to be under severe financial strain. Local authorities across the country are being asked to deliver ever more, but simply have not been given adequate funding to do so. I welcome the Department’s day-to-day spending in respect of local government and the uplift of 22%—£2.5 billion overall—according to the proposed estimate.
However, the financial strain councils are facing is almost entirely driven by high-cost, demand-led services, over which councils have little control. Those services, which include the provision of social care and homelessness support, are vital and often relied on by some of the most vulnerable people in our respective areas. The cost of social care has soared over recent years. In 2023-24, local authorities in England spent £20.5 billion on adult social care—19% of the total service net expenditure. If children’s social care is included in that figure, it is over 30% of the total budget.
A significant proportion of the 22% uplift in the estimate comes from new money—over £850 million—for adult social care grants. I welcome that much-needed injection of funding. There is also an uplift of £684 million for children’s social care, but that figure appears to be somewhat inflated by a budget transfer from the Department for Education. While that uplift for the Ministry is welcome, it still may not be enough.
I want to touch briefly on homelessness and temporary accommodation again. Our first inquiry as a Select Committee in this Parliament deliberately chose to look at the sharp end of the housing crisis, and we published reports on children in temporary accommodation and rough sleeping. We found that at the heart of the crisis are over 165,000 homeless children and their families, who are often voiceless, out of sight and stuck in completely unsuitable temporary accommodation. That is also damaging council finances. I have repeated the figure before and I will repeat it again: councils spent £2.29 billion on temporary accommodation in 2023-24, which amounts to London boroughs spending a combined total of £4 million per day on temporary accommodation. That is not sustainable.
The estimate includes over £260 million in funding for the rough sleeping prevention grant, and an uplift of £194 million in the homelessness prevention grant. Again, while these uplifts are a positive step in the right direction, my Committee heard that the restrictions placed on the homelessness prevention grant are quite troubling for some London councils. The new ringfencing introduced for 2025-26 requires almost 50% of that grant to be spent on that specifically. The homelessness situation in the capital is not deceasing and boroughs are spending almost 80% of that funding on temporary accommodation. The Committee urges the Government to engage with councils to solve the issue, to ensure that we do not see a reduction in provision and to address homelessness levels.
The current system also has small, short-term pots of funding. We urge the Department to reform those funding streams to ensure that there is long-term sustainable funding, instead of multiple, short-term funding pots.
My Committee is concerned that there is slow progress on the inter-ministerial group that is developing the strategy. We know that the Department plans to publish that “later this year”. This area may not be in the Minister’s direct remit, but will he be more specific about when we will get that strategy? Given that we cannot end homelessness without building the social homes we need, could the homelessness strategy be published at the same time as the long-term housing strategy?
There is so much to welcome in the estimate for 2025-26. The Government are moving in the right steps and the right directions, but we need to hear the detail of the affordable homes programme funding, especially if we are to deliver a boost to housing before the end of this Parliament. We need to ensure that our local authorities are on a stable footing to provide for the most vulnerable in our society, whether it is those who need adult social care, people sleeping rough or families at risk of homelessness. I welcome the funding commitments outlined in this estimate, but I urge the Government to go further and be more ambitious in their funding and financial support for these priority areas. I look forward to hearing the Minister’s response to my questions.
Several hon. Members rose—
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. We have far too many speakers, because this debate must conclude at 7 pm. We will have a hard speaking limit of three minutes. Interventions are up to the lead speaker, but if they are not made or taken, I could get everybody in. That is something to keep you going for a bit. [Interruption.] Yes, the hon. Member for Harlow (Chris Vince) remaining quiet will help enormously.
Wendy Morton (Aldridge-Brownhills) (Con)
I rise to the three-minute challenge. We hear that this is the biggest investment in social and affordable housing in a generation. I am sure we all remember the day when we got the keys to our first home and how that felt. We are told there will be £39 billion over 10 years, but the real test is whether it reaches the councils and communities that need it the most. As ever, we need detail and clarity, and once again it is lacking from this Government and these estimates—I fear that is because of their pursuit of their ideologically driven utopia.
Will the Government commit to publishing the regional allocation of local authority housing and affordable homes programme funds, which is critical to understanding the impact on our own communities? We must ensure that funding flows to not just city regions, but towns such as Walsall and the Walsall borough, where my constituency sits. Local authorities must have fair access to the affordable homes programme and to infrastructure support.
I have previously expressed my concerns in a debate on the Planning and Infrastructure Bill about the lack of democratic accountability that this Government will create in their approach to planning. A further point, which has been expressed by the National Association of Local Councils, is that the Minister’s Department is not proceeding with commissioning new neighbourhood planning support services from 2025. I feel that that is just another kick in the teeth for local parish and town councils.
I know that the Minister is a good man and brings loads of experience to this place from his time in local government, but I do not believe that his Government are interested in local communities, preferring to drive a coach and horses over our precious green spaces. I look at how Birmingham’s housing targets are being slashed, yet ours across the Walsall borough are being hiked up. Maybe it is because Birmingham is incompetent and cannot empty its bins, but I will leave that for another day.
These are arbitrary, Whitehall-driven and centralised targets. I have long campaigned for development to happen on brownfield first, but that needs real funding for remediation, infrastructure and up-front costs. Under Andy Street’s leadership and a Conservative Government, we showed in the west midlands that we can remediate brownfield sites—look at the Caparo and Harvestime sites—and deliver for local people, but we need funding, which is lacking in this estimate. A failure to remediate is a failure to regenerate our towns, cities, communities and local economies. I have done it in less than three minutes, Madam Deputy Speaker.
Julia Buckley (Shrewsbury) (Lab)
I take this opportunity to thank the Minister for launching last week’s consultation on the fair funding review 2.0. It was a beautiful moment for those of us who represent rural constituencies such as mine in Shrewsbury, because the consultation will ask councils to put forward evidence that explains the additional costs of delivering services across a rural area—the all-important rural sparsity. What does it mean? It means that in Shropshire, we have to travel distances of up to 40 miles. Imagine every person driving for social care and every school transport driving to a special needs school. That can cost up to eight times more than under an urban council.
We must think about our demographics. On average, we are nine years older than the rest of the country. The pressure that that puts on social care means that more than 80% of our budget is already spent just on social care. I worked in local government for 25 years. My job was in local government funding at the regional and local levels, and I can say that everybody who worked with me—from every party and in every rural council—has been lobbying for 20 years for this kind of fairer funding for rurality. My plea goes out to those who are listening that they will engage with their local councils and ask them to send the evidence to this consultation, because this Labour Government are listening to rural areas and delivering for them.
Calum Miller (Bicester and Woodstock) (LD)
I welcome the opportunity to contribute on the important matter of how we spend money on local government, given the huge range of services it provides to each of our constituencies. The residents of Bicester and Woodstock share the pressures that many areas face when it comes to housing and homelessness. Like so many Members of this House, my surgeries are dominated by those who are unable to access the social housing that they wish—those who are living in inappropriate accommodation, often trying to look after their children in environments in which no child can advance their education. As such, I very much welcome the Government’s words about their ambition in this area.
However, I regret the fact that during the debate on the Planning and Infrastructure Bill, the Government resisted the request from our party that they make a firm commitment to make 150,000 social homes available each year. I very much hope that the Minister will look for a way to implement that goal in practice, even though he resisted the legislative request. I also welcome the fact that the Government have committed to the abolition of the Vagrancy Act 1824. That campaign, which my hon. Friend the Member for Oxford West and Abingdon (Layla Moran) has run for many years, is coming to fruition. It is so important that we do not criminalise those who are unable to access housing.
I will now turn to the broader issue of financial predictability that our local authorities face. The Minister will know the importance of financial management—indeed, I am sure he is caught up in it almost every day of his working life—but for local authorities to plan, the Government must give them time. As such, could the Minister give us two undertakings: first, that the local government finance settlement will be multi-year, in line with the spending review, and will be set for three years; and secondly, that the draft local government financial settlement on which councils start to plan will be announced much earlier than 18 December as it was last year? That announcement was one of the latest in any year.
In common with many Members, the other theme of my surgeries is the plight of many families who are coping with a child with special educational needs and disabilities who cannot access the services they need. Whether it is a lack of places in special schools or an inability to get the assessments they need to estimate their educational potential, too many young people are being let down. As such, given the huge deficits that have been accumulated in high needs blocks—in Oxfordshire, for example, the figure is £137 million—does the Minister recognise that councils simply cannot wait for an education or schools White Paper in the autumn to begin to understand how they will manage those figures in the future? Can he give some guidance to councils about the Government’s intentions for the next financial year, so that they can start to plan for what could otherwise be deeply destabilising cuts?
Finally, one highlight of local government is how it touches many aspects of our constituents’ lives and provides many diverse services. I call on the Minister to look at the public health grant and its role in providing for preventive healthcare, working closely with the other branches of the health system. We have figures out to 2026, I believe, but predictability about the future of that budget is a matter of huge importance.
Kim Johnson (Liverpool Riverside) (Lab)
It is a pleasure to contribute to today’s estimates debate. I am really pleased that early progress has been made under this Labour Government, particularly the renewed commitment to invest in our communities, with a focus on addressing the housing crisis and fairer funding for local authorities. I commend Ministers on the shift in direction; however, while this Government are certainly doing more than their predecessors, I would like them to go much further.
I welcome the Chancellor’s confirmation that £39 billion will be invested in a new 10-year affordable homes programme, which provides the opportunity for long-term planning rather than short-term fixes. However, Shelter and the National Housing Federation estimate that we will need to build at least 90,000 new social rent homes every year to meet demand, and while the Government have set a target of 1.5 million homes over the course of this Parliament, they have yet to clarify how many of those homes will be social rent properties. As such, it is vital that the long-term housing strategy—which is expected later this year—provides more detail.
Shelter’s “Brick by Brick” report highlights that people earning up to £30,000 are failing affordability checks for so-called affordable rented properties. We urgently need to redefine affordability and recognise the potential of social housing. I welcome Liverpool city council’s recent housing strategy, which includes a target of 8,000 new homes by 2027, with 20% designated as affordable housing. However, in my constituency, the housing crisis is both acute and immediate. We face a severe shortage of genuinely affordable homes. Too many families are trapped in poor-quality housing, waiting lists are growing, and rent levels are simply unaffordable for those on average incomes. I place on record the ongoing campaign by residents in the Welsh streets against unjustifiable rent hikes imposed by Placefirst. Residents recorded their first major victory with a rent cap of 6%. That was a significant reduction from the 30% that was proposed. I thank the Association of Community Organisations for Reform Now and the local councillor, Rahima Farah, for their great campaigning.
Housing delivery does not happen in a vacuum. Local government is the engine room of our communities, and it has been running on empty for far too long. I welcome proposals to redistribute £2 billion in funding from wealthier councils. That is a vital step towards a fairer settlement for local authorities, but its success will depend on swift implementation, transparency and an assurance that no local authority will be worse off. After years of damage, we are beginning to see the rebuilding of local services and investment in our housing stock, but let us not mistake a good start for a job done. The foundations have been laid, and it is encouraging to see progress and further plans are in place. Now, let us build with urgency, with ambition and with the determination that our communities deserve.
Mr Gagan Mohindra (South West Hertfordshire) (Con)
I commend the Chair of the Select Committee, the hon. Member for Vauxhall and Camberwell Green (Florence Eshalomi) for bringing forward this estimates day debate. It is a pleasure to serve under her stewardship on that Committee.
This country continues to feel the impact of Labour’s disastrous and anti-growth policies. The day-to-day spending of this Department is increasing by more than £2.4 billion—an increase of 22%—which is welcome, but it is clear that Labour’s plans to save on our planning system and the cost of local government are once again a false promise. The £2.3 billion extra being given in local government resources grants will not help our communities and local people, as £500 million of it is just to fund Labour’s detrimental increase in employer national insurance. That tax is hurting every business up and down this country, and it is placing unsustainable pressure on key sectors, such as the care industry and those who provide early years care.
Labour continues to U-turn on its commitments and policies. The impact of its changes to personal independence payments and its cruel cuts to winter fuel payments can be seen in the £800 million increase in costs for adult social care. That is yet another example of Labour’s headline mistakes costing money. An additional £399 million has already been allocated for the affordable homes programme, and continual rises for that are unsustainable. Labour will not deliver its target of 1.5 million new homes, with Savills recently predicting that as few as 840,000 homes could be built. That is significantly less than the 2.5 million homes and 750,000 affordable homes built under the last Conservative Government.
Joe Robertson (Isle of Wight East) (Con)
Does my hon. Friend agree that the problem with the Government’s housing policy is that they are failing to identify the right places to build the right homes? Until they do that, they will not deliver these eyewatering numbers, especially if they are relying on greenfield rural sites.
Mr Mohindra
I agree with my hon. Friend. We are fortunate that the Minister has a background in local government, so he understands those pressures. I look forward to further clarification on grey belt and building on brownfield first, which every constituency MP wishes to see, but it is not yet transposed on to local plans and the growth ambitions of this Government.
I was about to come on to green belt and the changes to the national planning policy framework. Those changes will not solve the problems that we all have identified as the bottleneck in increasing development on non-green-belt land. Labour’s policies unfortunately simply cause damage.
In the spring statement, the Chancellor claimed that the planning reforms would be the main driver of the reduction in borrowing that she has promised. However, there is no obvious reduction yet in the money given to local authorities, with the amount estimated for the day-to-day spending of local government up 22% from the main estimate last year. Although the Treasury might celebrate that as being 3% less than budgeted at the spending review, this dramatic increase, along with the increases of 30% in communities day-to-day spending and 27% to the communities capital fund, is simply unsustainable.
Labour continues to show how it prioritises areas where it has support to the detriment of rural areas, such as in my constituency, and areas in need of support around the United Kingdom. The cuts of £101 million in the levelling-up fund and £183 million in the UK shared prosperity fund are disappointing, and the non-delivery of the services grant and the rural services delivery grant will place pressure on services that are already struggling in rural and semi-rural areas such as my constituency, including bus services.
Instead, Labour is rewarding poor financial management by Labour-run councils and mayoralties across the UK, with £823 million being used for a recovery grant and a funding floor and the Labour-controlled Greater Manchester and West Midlands authorities receiving the first integrated settlements, which could cause an increase of over £400 million in spending.
Labour says that it is cutting local government costs by creating unitary authorities, but that is just placing greater control in their hands at the expense of local democracy. This estimate shows how little control Labour has over local government spending—and I will have to finish on that point. I look forward to hearing from the Minister how he will deal with these matters.
Chris Curtis (Milton Keynes North) (Lab)
I thank the Chair of the Select Committee for calling this important debate. Let me start with what I think should be seen as positive news and welcomed across the Chamber: the once-in-a-generation increase in funding for social housing. We in the Select Committee have heard about some of the dire consequences of the housing crisis that was left to this Government, especially its effect on the thousands of children growing up in temporary accommodation. The extra funding will mean that, finally, the dial will start to move.
I hope that I am not breaking any confidences in saying that the Committee Chair and I were at a dinner with many representatives of the industry on the evening that the spending review was announced. It is, I think, very rare in politics to sit in a room with people who are pretty unconditionally happy with a policy that has been announced—and, in this instance, happy about not just the extra money but the 10-year funding settlement, which I do not think has been mentioned yet, and also the access to remediation funds, which will make a real difference to the number of homes that are built.
This is important for the entire housing sector. The model that we have for building homes in Britain nowadays means that housing funded by section 106 contributions is struggling to be purchased, because the amount provided for social housing has not been good enough. There is real confidence that this funding will start to fix that problem and move us closer to the 1.5 million target, but, while the money is good, I think it important to urge the Government to go as far and as fast as possible with planning reform, and not to row back on the commitments we have made to ensure that the money is spent effectively and efficiently and we can unlock the homes that the country needs. It is also important for us to start to have a conversation about the Building Safety Regulator, which is clearly not working at present and is holding up projects. We will hear back from the new towns taskforce shortly; I hope that the Government will put the necessary funds behind that programme.
It is great news that we have the extra money in the multi-year funding settlement, but most councils will acknowledge that they are still concerned about stretched resources, and, again, it is important for us to go as far and as fast as possible in reforming special educational needs and social care services to ensure that they are fit for the future.
Let me end by saying—because the Minister for Local Government and English Devolution is present—that it is notable that the spending review provides for an increase in the funding pots that are available specifically to combined authorities. We in Milton Keynes feel that the Department has acted rather like Lucy pulling the ball away from Charlie Brown, so please will the Department redouble its efforts to create combined authorities, not just in Milton Keynes but across the country, so that areas that currently do not have them are not left behind?
Mr Lee Dillon (Newbury) (LD)
I congratulate the Chair of the Select Committee on securing the debate, and on the robustness of her speech holding the Government to account.
The Department covers many areas and councils themselves cover more than 700 services, but I shall concentrate on housing, hopefully in the spirit of constructive opposition. Like many others who are in the Chamber today, I support the Government’s headline ambition to build 1.5 million homes—it is a goal that I share, as do many in the housing sector—but I remain concerned that the Government are still unwilling, or unable, to answer my question about how many of those homes will be genuinely affordable. Far too many people across the country are priced out of home ownership, with house prices rising at an unsustainable rate.
Rachel Gilmour (Tiverton and Minehead) (LD)
My observation is that there is simply no such thing as affordable housing in my constituency. If someone is earning £12 an hour and £20,000 a year, a house that costs £30,000 is not affordable. Does my hon. Friend agree that the only sort of housing that people can afford in my constituency is social housing?
Mr Dillon
My hon. Friend will know the needs of her constituency better than I do, but as someone who worked in social housing for 14 years, I will always advocate for the delivery of more social housing units.
In my constituency of Newbury, the average house price in April was £398,000—up by 6.2% on the previous year. Owning a home is fast becoming a distant dream not just in west Berkshire, but across the country. Although I welcome the target for new homes, I urge the Government to make affordability central to their plans.
The homes we build must reflect the needs of real people, not just developers or investors. I was pleased to see the allocation of £39 billion over a 10-year period in the recent spending review—one of the most ambitious long-term investments in affordable housing for decades. I hope that it kick-starts the generational step change that we need to deliver affordable homes, but it must include council homes and social rented homes.
We Liberal Democrats have been clear that we need 150,000 social homes built every year—homes that people can genuinely afford and that are linked to local infrastructure and services. Sadly, with the reduction of neighbourhood planning, that will now be less likely to happen. I challenge the Government to match their ambition by setting their own target for social housing delivery. Without that, our housing mix will be dictated by the private market, and that is simply not a viable solution to the housing crisis we face.
I also welcome the £13.2 billion commitment to the warm homes plan. The decision by the Conservatives to scrap our home installation policies have had a real cost, and an estimated 1.6 million homes have been built with lower energy efficiency and higher bills as a result—a Conservative legacy. With 6.1 million households now in fuel poverty, we must act urgently to fix Britain’s cold and leaky housing stock.
As the hon. Member for Milton Keynes North (Chris Curtis) said, the spending review included a 10-year social rent settlement at CPI plus 1%, which I again welcome. Housing associations have long been calling for that, and I am grateful that the Government have listened. That is a positive move, but we must ensure that rents remain affordable and that social landlords are held to account. We cannot allow social rents to drift higher and tenants to be priced out once again, and let us not forget the 1.5 million people who are still waiting for social housing.
As the Member of Parliament for Newbury and a member of the Housing, Communities and Local Government Committee, I will continue to hold this Government to account—not just on how many homes they build, but on how many people they help.
Daniel Francis (Bexleyheath and Crayford) (Lab)
I start by paying tribute to officers and councillors in the London borough of Bexley for all they do. I thank my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi) for securing today’s debate. For the record, my wife is employed by our local authority as a special educational needs co-ordinator in a local authority school.
I will briefly touch on three things. First, I welcome the record investment in housing, but I remain deeply disappointed that my Conservative-controlled council sold off its housing stock 26 years ago, has no housing revenue account and, through its own development company, has built 126 homes on three sites and has not supplied a single affordable home on any of those sites. The council has used viability assessments to argue that it cannot build affordable homes. In the housing plans that come forward, I hope we can find ways for my local authority to begin to deliver the affordable homes that we desperately need. Hopefully, that will be through the election of a Labour council next year, but we will wait and see—it has been a long time since we have had one in my patch. My local authority is complaining about the ever-dwindling stock of private rented properties that it can purchase, but it needs to turn its attention to the moneys coming forward so that it can finally deliver affordable homes.
Secondly, on local government funding, my council cut 15% of its staff in 2021. It had to sell a building in order to issue redundancy notices and, at the same time, had to come to the previous Government for a capitalisation order. We hear fantasy economics from the Opposition, but let us be clear: the cuts that were made to local authorities happened under a Conservative council and a Conservative Government in my patch. I hope that the fair funding review will lead to some investment, and I know that my council is lobbying hard. There have been demographic changes in my patch, and I hope that we begin to see some investment in local services.
Lastly, as I mentioned in the education debate—and, again, we have heard it before—we need guarantees about the safety valve that will be ending next March. My council did sign a safety valve agreement, but it continues to overspend, despite the commitments my Conservative council made to the previous Conservative Government, and that is a ticking time bomb for my council. On those points of how we can invest in housing, begin to have a fair funding review and look at the safety valve hanging over my council, I would welcome the Minister’s comments.
Lewis Cocking (Broxbourne) (Con)
I commend the Chair of the Select Committee, the hon. Member for Vauxhall and Camberwell Green (Florence Eshalomi), for securing this important debate. I congratulate her on her fair and robust approach to leading the Committee, and every now and again she allows me to ask some difficult questions of Government Ministers, for which I am very grateful. All of us on the Committee have taken very seriously our duty of scrutinising the Ministry of Housing, Communities and Local Government over the past year, recognising its widespread responsibilities and the deep impact its decisions have on our constituents right across the country. I wish to mention a couple of those responsibilities.
One of the biggest drivers of the financial difficulties facing councils has been the catastrophic rise in the amount of money spent on children with special educational needs. This is very close to my heart, as I have seen it from both sides. I grew up with a brother and sister who both benefited from SEND provision, and I have also been a local councillor in Hertfordshire. In just 10 years, the number of children in the county with education, health and care plans has grown by a staggering 223%, which is even higher than the 140% national rise. The funding has not kept up. Incredibly, Hertfordshire receives the third lowest funding per head out of every authority in the country. If it was funded at the national average, an extra £47 million would be available for children with the most complex needs across Hertfordshire.
I hope the Minister agrees that it should not matter where in this country someone is born, because the system should have the resources to meet their educational needs. Removing this historical funding formula would be the first step in creating such a system. The Minister will of course point out that the total reorganisation of local government in this country is the answer to these problems, and that the efficiencies promised by huge unitary councils will solve the funding crisis. However, residents of my constituency of Broxbourne already feel that they are getting a bad deal from the county council, so exactly how will forcing them into a much larger council, which will have a much longer list of responsibilities for an even bigger area, help this situation?
As with everything the Government touch, one of the inevitable consequences of this reorganisation will be higher taxes for my constituents. It will be constituents living under Conservative-controlled Broxbourne council who will feel this the most, as they will go from paying the lowest non-parish council tax in the country to, inevitably, a higher charge under a merged authority.
There is no way that efficiencies will cover the extra spending of these bloated authorities. Reorganisation itself is not cost-free, and I am yet to see councils that have gone through a reorganisation come out saying they are awash with cash. I hope the Minister is genuinely listening to the concerns raised in this debate, and will come back with the Department of Education in the near future with genuine solutions to the SEND funding crisis, and ensure that all our constituents have a fair say when local government reorganisation is forced upon them in our areas.
Andrew Lewin (Welwyn Hatfield) (Lab)
As the newest member of the Housing, Communities and Local Government Committee, I want to start with my own thank you to my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi), who has been such a welcoming Chair and who drives forward our business with passion and conviction.
I will focus my brief remarks on the settlement for social housing, which has the potential to be transformative in our mission to build social and affordable homes at scale. To understand why the challenge is so stark and why the funding is so badly needed, it is right to reflect on recent history. The Conservative-Liberal Democrat coalition and the subsequent Conservative Governments made an ideological decision not to build homes for social rent, and their lamentable record stands in contrast to what went before. In the last two years of the previous Labour Administration, 2009-10 and 2010-11, the Government built 73,053 homes for social rent, but in the last two years of the Conservative Government, 2022-23 and 2023-24—and those were the best two years—only 19,365 homes were completed, which is a reduction of nearly 75%.
We had 14 wasted years, in which the crisis deepened for the 1.5 million people on social housing waiting lists, for the 164,000 children living in temporary accommodation, and for the countless more living in overcrowded and inadequate homes in the private rented sector. It is a source of pride in Welwyn Hatfield that we have retained significantly more council housing than the national average—just over one in four people in my constituency lives in a social home, and in Peartree ward in Welwyn Garden City that rises to 44%—but that still is not sufficient to meet demand. We have more than 3,000 people on our waiting list and growing numbers living in temporary accommodation—a story familiar to Members representing communities all across the country.
In the spending review, the commitment to investing £39 billion over 10 years in the affordable homes programme was a statement of intent. This is the best financial settlement for social housing in a generation, but its ultimate success will be measured by the homes delivered and the lives changed. As a member of the Select Committee, I want to continue to hear from people on the frontline about what else is needed to act as a catalyst for activity. Do developers have access to the skilled workforce they need to scale up development? Is the priority to bring forward stalled sites, and how quicky can that be done? Do people in the sector share my experience that demand for homes for social rent is greater than for any other tenure type?
Planning and building homes takes time. There is inevitably a lag between a major funding announcement like this and seeing the impact in the communities we represent, but we have to move as fast as we can. Time is short and the stakes are high. I commend the Government for making this investment. Now, we are all invested in making sure that it delivers results.
Mr Will Forster (Woking) (LD)
When the Chancellor gave her spending review statement, I was very disappointed that she did not use the words “local authority” or “council” once. Worse still, she granted the Ministry of Housing, Communities and Local Government a tiny increase that we all know does not meet the challenge. It is an unfair deal to those who need housing and those who rely on council services. I know that as the MP for Woking. Sadly, I am the MP for the most indebted bankrupt council in the country. I fear that more councils will follow suit; 25 have said that they may soon issue a section 114 notice, which effectively means bankruptcy. Local government needs investment, so that we can shape our local places and our constituencies to ensure that vulnerable people are protected. I do not want more councils to follow Woking borough council’s route.
The Local Government Association says that there will be an £8 billion funding gap by the end of this Parliament as a result of that financial settlement. That is unacceptable. The Government’s answer to that is to put up council tax by 5% every year for this Parliament. That is unreasonable. We know that council tax is not fair. It is an out-of-date system for funding our local authorities. The fact that it is based on early 1990s property values is not acceptable. Buckingham Palace has a smaller council tax bill than the average three-bedroom semi-detached in Blackpool.
I will ask the Minister three questions. Will he commit to reforming the council tax system to ensure that local government is properly funded, and to ensure that funding is not based on that unfair system? Local government is struggling because of social care. Will he agree to lobby the Government to bring forward their social care review, so that it does not report in three years’ time? It urgently needs to report much sooner, so that we can tackle the social care crisis, which is causing a problem for our NHS, and particularly for local government. Finally, on special educational needs, we MPs hear from so many families that the system is not working. We hear from councils that it is putting them on the brink of insolvency. Does the Minister agree that the Government White Paper and the reforms in the autumn should come with a proper funding solution that supports our vulnerable children and ensures that councils will be financially solvent?
Joe Powell (Kensington and Bayswater) (Lab)
I thank my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi), the Chair of the Select Committee, for securing the debate.
It is such a relief that we now have a Government who acknowledge the scale of the housing challenge, and are prepared to put serious investment and policy change behind it. In my constituency, there are 3,000 families on the social housing waiting list, and more than 2,000 people in temporary accommodation. It is those people I think of when we look at these numbers. There are no quick fixes, and we should be honest about that. However, the package in this spending review—the biggest investment in social and genuinely affordable homes for 50 years—is hugely welcome; there is the £39 billion for the affordable homes programme, which has been mentioned, the 10-year rent deal, and the new low-interest loans.
There is also something that I have been advocating for: equal access to the building safety fund for housing associations, so that money can go towards improving homes, not just remediating buildings. I strongly believe that the legacy of Grenfell cannot be that it is harder for people to get a safe and healthy home. I have been clear to the housing associations in my constituency that we expect radical improvements in their services—on repairs, on damp and mould, and on communications. My message to them was that this Government will get them the support that they need to get on a sounder financial footing, but that must be accompanied by a commitment to addressing those failings. We have kept our side of the bargain, so can the Minister outline his expectation that housing associations will invest in their homes following the spending review? Can he also give an update on opening up access to the building safety fund? On building safety, I hope that the Government will take seriously the need to support the Building Safety Regulator in doing its job effectively, and the need to avoid a false choice between building safety and achieving the 1.5 million homes target.
The local government funding formula will have a major impact on our ability to secure safe and healthy homes. The consultation has just opened. I absolutely support the objective of tackling regional inequality in Britain, so I urge the Minister to ensure that any decisions made use accurate, up-to-date data that fairly reflects the reality.
Joe Powell
I am sorry; I do not have much time left.
That means including housing costs when analysing deprivation, ensuring that the daytime population is included, and ensuring that the huge pressure on temporary accommodation is factored in. We all want to reduce the need for temporary accommodation, but in the short term, we must not balance the temporary accommodation budget on the back of the everyday services on which our constituents rely; that would be another false choice. The package is a huge step forward, and I congratulate all Ministers on securing it; now is the time to deliver.
Andrew George (St Ives) (LD)
I warmly congratulate the hon. Member for Vauxhall and Camberwell Green (Florence Eshalomi) on the way in which she introduced the debate, and I strongly support everything she said. Indeed, I support the sentiment and ambition of the Government’s announcement of £39 billion in investment. However, the Government must listen to local areas and, if they are intent on delivering their housing targets, must allow those areas to vary the way in which the targets are met.
I will cite the example of my area of Cornwall. It is one of the fastest-growing places in the United Kingdom, almost trebling its housing stock over the past 60 years, but the housing problems of local people have got significantly worse over that period. That does not mean that the answer is building fewer homes; it simply means that the target-setting process is not in itself the solution to the housing problems that such places face. These targets are often based on the delusion that the private market will collude with the Government in driving down the price of its finished product, which is clearly not the case. The Government need to allow that in some places, areas can set targets to meet need. That would mean that planning applicants had to demonstrate how they would meet need, rather than simply building homes that people cannot afford. That is a method that the Government need to consider.
Far too much of what goes into the planning system is about land value speculators taking far too much out of the development process. Setting high housing targets creates high hope value on all the land adjoining all our communities. It is like applying the rural exceptions policy, but around all our areas. We need to address the issues more effectively. The Government need to recognise that many shovel-ready projects are currently unviable, so when money is being considered for future housing projects, they need to look carefully at how they can get things moving very quickly.
In Cornwall, over the past decade, £500 million of taxpayers’ money has gone into the pockets of second and holiday homeowners, because tax incentives and loopholes support that. I urge the Government to look again at wider questions of housing injustice, and at the way that houses are being misdelivered in areas like mine, and to try to work with local communities and the council to ensure that we meet need, rather than developers’ greed.
Chris Hinchliff (North East Hertfordshire) (Lab)
For millions, the affordable housing crisis is the clearest sign that Britain is broken. That is why I welcome the Government’s announcement of £39 billion for the affordable homes programme in the spending review. That is a significant investment, but getting the 160,000 homeless children out of temporary accommodation is a national emergency, and it demands urgent action. I ask Ministers to comment, in their response to this debate, on reports that much of this funding is back-loaded until after the next general election, with only relatively modest increases over the next three years.
We cannot ignore the human cost of delay. This is not a static problem, or a building waiting to be repaired. Childhood does not pause. We need to prove to the public that we are tackling the housing crisis now. When we fail to provide the basics of shelter and stability, we undermine the talents and contributions of the next generation. That failure not only harms those children, but diminishes our collective future. I urge Ministers to consider Shelter’s proposal that two thirds of the announced funding be spent in the first five years. Matching this would show true commitment to change, and offer real hope for the future.
We must also ensure that this funding is used to deliver the genuinely affordable homes needed to bring down spiralling waiting lists. My constituents are understandably hugely cynical; they are promised affordable housing, but so often what gets delivered is anything but. All the evidence shows that it is council housing that is desperately needed by families at the sharp end of the housing crisis. The affordable homes programme should deliver an end to decades of under-investment in housing for working-class communities—and I know that is what Ministers intended. The way to get there is with a clear public commitment that 80% of this investment will be for social rent.
To conclude, I welcome the fact that the headline figures are ambitious and encouraging, but the details must be refined to deliver the homes that workers need. Yes, that means more up-front investment, but there are solutions. Housing developers fuelled this crisis by building at rates that maximised profit while families waited, and by prioritising luxury builds while key workers struggled to find affordable homes. Just as the Government rightly used a windfall tax on oil and gas giants to lower energy bills, we should consider a windfall tax on the supernormal profits of the biggest housing developers. The major developers put profit before the public good, raking in billions while failing to deliver the homes that we need. They should help pay to fix the mess that they helped create.
Dr Jeevun Sandher (Loughborough) (Lab)
Thank you, Madam Deputy Speaker, for allowing me to speak. I thank, too, my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi) for bringing forward this debate, and for her excellent chairmanship of the Housing, Communities and Local Government Committee, which is evident from the contributions from across the House.
I am here to speak not only about how construction and building homes will help to create hundreds of thousands of good jobs, but about how we need to create millions more if we want everyone here to live a decent life. I am an economist, and I came to this place to ensure that everybody could earn a decent living and have enough money to pay the bills, but we are so far from that today. The average salary for a non-graduate is around £30,000. For two earners to raise two kids, they need to earn £35,000 each, but around 40% of full-time jobs pay less than that. That is 10 million workers who cannot afford a decent life, and those who cannot earn enough are turning away from Labour Members, as they have turned away from Conservative Members.
If we want everyone to have a decent job, the Government must help to create them. We are making a good start with house building. I welcome the £500 million that is going into affordable house building this year, and the £40 billion for the 10 years to come, because construction jobs are good non-graduate jobs. Building those 1.5 million homes means creating good jobs. A skilled construction worker earns £35,000. Around 300,000 of those jobs will be created when we build 1.5 million homes, and another 300,000 more jobs will be created in decarbonising buildings.
That is welcome, but we need to create a lot more good jobs if we want everyone to live a decent life. We need millions more—a lot more than the 600,000 jobs that will be created in the construction of homes and insulation. This is a job far bigger than housing and local government alone. Good jobs in healthcare, childcare and social care are all needed.
That is the path we should follow—the Government should create good jobs. We should not simply wish that enough good jobs will be created—that is the path we should not follow. In our technological era, growth alone does not automatically create enough good jobs where we need them, either for the people or places that require them. We came to this place to create a better life for all, but that is not possible for almost half of all workers because there are not enough good jobs. We can create hundreds of thousands of good jobs through construction, but we need to create millions more if we want everyone in this country to live a good life.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the Liberal Democrat spokesperson.
Vikki Slade (Mid Dorset and North Poole) (LD)
I refer Members to my entry in the Register of Members’ Financial Interests, as I am a councillor on Bournemouth, Christchurch and Poole council.
Local government funding is in crisis, from social care to special needs, homelessness to high streets. Our councils—whose work impacts us all and who are the backbone of local service delivery—are being pushed to the brink. While the estimate sounds positive, it is way more complicated, just like the work that councils do. The lack of funding is not a new problem. The hollowing-out of local government has been happening for a decade. In my home councils of BCP and Dorset, central funding through the revenue support grant was slashed by between 95% and 98% over that time. The Government’s announcement that central funding for councils with low tax bases will be weighted sort of misses the point. Many councils in the south receive no revenue support grant and are already raising their council tax by the maximum 5% each year. The Government need to talk to the councils they are targeting and review this proposal before they create a new problem.
Local areas are dealing with ageing populations and soaring house prices, and councils risk having no choice but to take money directly from services for the poorest, sickest and most vulnerable. The three-year settlements are welcome to help planning, and the headline £13.5 billion increase in Department funding by 2028-29 sounds positive, but measured against 2025-26 it is actually a real-terms cut of 0.6%. While MHCLG’s day-to-day spending will rise by £2.5 billion, much of this comes through transfers. For example, much of the £857 million for adult social care is reallocated from children’s social care, and the £515 million to cover increased national insurance contributions does not cover the demand.
Adult social care is now the largest spending area for upper-tier authorities. Meanwhile, tensions between the NHS and councils over who funds the sick and elderly are growing, leaving families stuck in the middle. Carers bear the brunt, often being forced to choose between caring and working, which has knock-on effects on the wider economy and carers’ wellbeing. The situation is made worse because independent providers are not covered for the NICs increase. The Nuffield Trust estimates that the increase in national insurance will cost independent social care employers £940 million this year. Many are handing back contracts, unable to make the numbers add up, which is piling pressures on to councils. I urge the Minister to look closely at the impact of this change. The Liberal Democrats want a social care workforce plan, a royal college of care workers to improve recognition, and a higher carer’s minimum wage. We call on the Government to complete the Casey review within one year instead of three. The elderly, disabled and our NHS deserve better than further delay.
The crisis extends beyond adult care, affecting our youngest children too. SEND provision is, as we know, inconsistent and underfunded. Parents are exhausted, teachers are overwhelmed, and children are being left behind. We are relieved, rather than happy, that the statutory override will continue for another two years, because many councils would face insolvency within months without it, but this merely defers the inevitable. As debts outgrow reserves, councils cannot invest in their communities or drive local growth.
The upcoming White Paper must guarantee every child with an EHCP the support that works for them, make mainstream education more inclusive so that children can stay close to home with their peers, and urgently reform the funding formula. The funding formula does not work. In some areas, the annual base funding per pupil is £2,500 less than in others. Schools have to fund the first £6,000 for any special educational support, but some schools do not get £6,000 a year for a pupil’s whole education. The Liberal Democrats really are begging for that to be resolved. In specialist provision, I have seen independent settings charge more than £100,000 to educate children with moderate needs when a state-maintained special school is doing the same for £20,000; but, without alternatives, councils are forced to pay.
The loss of the £100 million rural services delivery grant was a huge blow to rural councils, so I welcome the consultation on reviewing that, but those councils face not just higher delivery costs but recruitment challenges. It was wrong for the Government to suggest that rural communities do not face the same deprivation—tell that to some of my constituents who have no mains gas and no sewerage, no job opportunities and are miles from anything.
The Liberal Democrats welcome the £267 million for rough sleeping and £194 million for homelessness prevention, and we are pleased that that has been ringfenced, but without a target for social house building, councils remain burdened with the costs of temporary accommodation. It is not just about money: the Housing, Communities and Local Government Committee’s recent report revealed that temporary housing is detrimental to our children’s health, with it being a factor in the deaths of 74 children, including 58 infants, in the last five years. It also damages the developmental, mental health and life chances of every child in that situation. We therefore welcome the £39 billion investment in affordable housing, but we are disappointed to see how backloaded it is, meaning that many families will wait up to 10 years finally to get a roof over their heads.
Finally, I want to address devolution. The Liberal Democrats support genuine devolution, so we are disappointed that the Government have cancelled funding for neighbourhood plans and are discouraging the formation of new town and parish councils where there is local government reorganisation. Instead, we are seeing top-down area committees with no statutory powers. The spending review mentions funding for mayoral areas, but that benefits only those areas that are ready to go. What about the areas outside wave one such as Kent and Medway, or Wessex? Where is their support in the meantime? Our local councils deliver every day, but they cannot do it alone, so I urge the Government please to provide fair funding and real devolution for those areas.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
It has been a wide-ranging debate. I add my congratulations to the Chair of the Select Committee, the hon. Member for Vauxhall and Camberwell Green (Florence Eshalomi), for securing it and introducing it so well. I pay tribute to my Conservative colleagues—my right hon. Friend the Member for Aldridge-Brownhills (Wendy Morton) and my hon. Friends the Members for South West Hertfordshire (Mr Mohindra) and for Broxbourne (Lewis Cocking)—for sharing both their views, brought from their long experience in local government, and their great passion for their constituencies.
I will start with the striking speech by the hon. Member for Shrewsbury (Julia Buckley), who set out many of the challenges around local government finance in her constituency. I came away from that speech thinking, “Just wait until she finds out which party in government slashed the £8.8 million of rural delivery grant from her local authority, which has led it to say it is having to consult on reducing bin collections further—to just once every three weeks—and to literally turning the lights off in Shrewsbury to save the money necessary to balance the books following this local government finance settlement.”
When we come to the Chamber to debate the resource departmental expenditure limit and the capital departmental expenditure limit, it is really important, as hon. Members have done, that we set out the story behind that: what it means in our constituencies for our local authorities. When we started the debate, we knew that it was against a backdrop of a Budget last year that left councils net £1.5 billion worse off because of the rise in national insurance contributions. That alone took £1.5 billion out of local authorities’ capacity. Since then, we have seen a developing backdrop of rising inflation, which is now pushing 3.5%, and deteriorating economic conditions —in particular, rising Government borrowing—which may be one of the reasons why the Government are seeking to push back borrowing the capital that funds the housing programme in the hope that costs will come down in due course. But all these things are imposing rising costs on our local authorities.
I have enormous sympathy for the Minister, who I know has huge experience in local government. However, as Members from across the House have demonstrated in their contributions, the impact of the Department for Education’s decisions on SEND, the impact of the Home Office’s decisions on asylum funding—for Hillingdon, which serves about two-thirds of my constituency, that is, on its own, an additional £5 million per annum cost pressure—and the impact of Department of Health and Social Care decisions on public health, which have a significant impact on the costs local authorities face, are all accumulating.
That leaves the Minister and the Government with a series of difficult questions that they need to address. Having set out the existence of that substantial black hole in council budgets, and the black hole that a number of Members on all sides have referred to in housing delivery, the fact that the visible symptoms of council services, such as rough sleeping, are racing up—according to St Mungo’s charity, rough sleeping has risen by 27% in London alone—means we know that our local authorities face a significant challenge.
The questions that I hope the Minister will begin to address in his summing up are around the underlying financial assumptions behind the figures that are set out in the report. We know that there is always a tendency in Whitehall to see local government finance as an opportunity to centralise credit by announcing the positive things that we want to see money spent on and localising the blame by forcing councils to fund that through rising fees and charges or increases to council tax. When it comes to ensuring that the 1.5 million homes in our country that already have planning permission are delivered, there needs to be a relentless focus on getting that money out of the door and into the hands of local authorities and others to ensure that those homes can be delivered. The Opposition will scrutinise relentlessly, in search of the evidence that that is happening.
Our councils face this challenge against the backdrop of a potentially costly and disruptive reorganisation. We know that many councils have come forward with their own proposals for local government reorganisation. [Interruption.] The Minister says “All councils” from a sedentary position. All councils were asked, invited or, perhaps, required to put forward their proposals for reorganisation. However, we know that asking, for example, all the planning officers in the country to reapply for their jobs is unlikely to aid that focus on housing delivery.
Will the Minister clarify the following points in his response? First, will he set out the Department’s underlying assumptions on council tax rises, fees and charges, and discounts? It seems clear from the analysis being done by local authority finance officers that the underlying assumption is that all those things will rise in every council to the maximum possible extent, simply in order to stand still. What are the Government’s underlying assumptions about business rate rises, discounts and redistribution? I note, for example, that North West Leicestershire district council, because of the business rates reset, expects to lose 67% of its spending power in one go as a result of the Budget. What are the underlying assumptions about the housing revenue account, parking revenue account and other ringfenced council budgets, so our constituents know what is coming, not just in their council tax bill but in what they may pay for parking, permits, waste services and other essential day-to-day services?
Let us consider the individual cases coming in. I made reference to the impact on Shropshire of the loss of £8.8 million in rural services delivery grant, and South Holland, West Lindsey and Staffordshire Moorlands will see a 40% cut in their funding needs assessment as a result of the Budget. There are also authorities, such as Boston, that are seeing more than 40% of their budget driven to cover the costs of drainage boards. East Cambridgeshire district council sees a cut of £125,000 a year, and Fylde district council sees a rise of nil despite a headline announcement by the Government of 6.8%, once those calculations are taken into account. I know the hon. Member for Harlow (Chris Vince) was here earlier on, and Harlow reports that as a consequence, the core funding—the revenue support grant—is cut by 25% this year alone. All that has a huge impact on local Government funding and what our constituents will see.
I know that there are many in this Chamber with experience in local government. Our councils remain the most efficient part of our public sector, but it is clear from the many constituency-level issues and the insights we have gained in this debate that they deserve better from this Government in a much more transparent and open funding settlement, so that we know the underlying assumptions of Government and our constituents can understand what will happen to their council tax bills and their household budgets.
The Minister for Local Government and English Devolution (Jim McMahon)
I begin by thanking my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi), the Chair of the Select Committee, for opening the debate with her usual diligence and, rightfully, her challenge. I also pay tribute to all the other members of the Committee who were in the Chamber today for the work that they do throughout the year. It is often unseen, and maybe even unsung, but it is appreciated and it makes a huge difference to the functioning of a good Government.
The wide range of contributions today demonstrates the significant interest in the vital work that the Department does in driving positive change to the lives of many working people. On behalf of the Deputy Prime Minister and my fellow Ministers, I also thank departmental officials for their tireless work and dedication over the last year. They are working solidly to ensure that we get these reforms through, that we sort out the funding foundation and that we deliver the ambitious plan that we set out for this Government.
Turning to this debate, the Chancellor took decisive steps to stabilise the country’s financing, to back growth and to rebuild every region across the country, repairing the damage felt by working people, communities and businesses after a decade and a half of stagnation. The Government must now use every tool at their disposal to ensure that we turn that tide. The new investment rule is a bold but important tool, a move that has freed up an extra £113 billion of investment over the next five years, including for schools, hospitals, roads, green energy and, of course, housing. This will deliver good jobs, as highlighted by my hon. Friend the Member for Loughborough (Dr Sandher), because housing is at the very heart of this Government’s commitment.
I am delighted that we have increased the budget for the affordable homes programme by £400 million this year. Indeed, 2025-26 has the biggest annual budget for affordable housing in over a decade. This shows what can be achieved, but our efforts will not stop there. The spending review announced a new 10-year affordable homes programme with £39 billion of new investment, alongside a 10-year rent settlement and £2.5 billion in low-interest loans for social housing providers. This will address many of the concerns raised by my hon. Friend the Member for North East Hertfordshire (Chris Hinchliff). This is a generational intervention, but do not just take my word for it. The National Housing Federation was clear that this is
“a transformational package for social housing and will deliver the right conditions for a decade of renewal and growth.”
We have heard from many friends across the Chamber, including my hon. Friend the Member for Milton Keynes North (Chris Curtis). He echoed the Deputy Prime Minister, who has long argued that social and affordable housing is a bedrock of opportunity. The homes that we build now will house families for many generations to come, giving them a safe, decent and affordable place to call home, keeping communities together and investing in the most fundamental right that the people of Britain rightly expect. That is why this is so central to the Government’s work and one of our defining missions.
Alongside building new homes that are safe and decent, this Government are taking real steps to ensure that all existing homes are safe, too. In response to the final report of the Grenfell Tower inquiry, we made firm commitments to accelerate the pace of building remediation and we are backing our words with action. We have increased funding for building remediation by £553 million in 2025-26, and we are taking our annual funding to over £1 billion for the first time. We are also making over £1 billion available for new remediation funding. Over the coming years, social housing landlords will see the benefit and this will bring to an end the unfair two-tier system that has treated social housing tenants as second-class citizens for far too long, as highlighted by my hon. Friend the Member for Kensington and Bayswater (Joe Powell).
Supporting the most vulnerable in our society is at the heart of our Department’s work, so we are pleased that we are making record investments into our homelessness system this year, including a £233 million uplift that will take homelessness funding to over £1 billion in 2025-26. Alongside this, we have increased funding for the local authority housing fund by £100 million this year, allowing councils to invest in the long term by increasing their stock of temporary accommodation. This will allow us to begin to bring to an end the use of unsuitable and expensive bed and breakfasts to house families.
It is a matter of national shame that over 165,000 children live in temporary accommodation. Many of those kids are away from school and their friends and are often in accommodation that none of us would choose for our own families, as my hon. Friend the Member for Welwyn Hatfield (Andrew Lewin) rightly said. I say to the House that if it is not good enough for our own children, it is not good enough for any child, and we will address this scandal head on.
I assure the House that the Government are under no illusions of the scale of the financial challenge that our councils face. I know the difference that councils can make, having had the honour of serving as a councillor over many years. That is why we are absolutely committed to working in partnership with the sector to rebuild local government from the ground up so that it is fit, legal and decent, getting ahead of the crisis management and delivering better outcomes for the people we were all sent here to represent.
The recent spending review provides an extra £5 billion of new grant funding in the next three years, including £3.4 billion of new grant funding to be delivered through the local government finance settlement. We are going even further by fundamentally reforming the local government finance system. The current system is an outdated model that means some places face neighbourhood decline. It hits at the heart of what it means to live a decent life in a good place. To add to that, the escalating cost crisis in adult social care, children’s services and temporary accommodation makes matters even worse. It is not fair for outcomes or for councils either. Although the previous Government said they understood this, they failed to take the action needed to address it—we will not make the same mistake.
The fair funding review 2.0 consultation, launched last week, sets out the heart of the matter. We will take into account the real cost pressures being felt in key areas, as highlighted by my hon. Friend the Member for Bexleyheath and Crayford (Daniel Francis). We will also take into account remoteness, as rightly identified by my hon. Friend the Member for Shrewsbury (Julia Buckley), as well as deprivation, the ability to raise council tax locally, daytime visitor numbers, temporary accommodation cost pressures, and much more. Coming to the point rightly made by the Liberal Democrat spokesperson, the hon. Member for Mid Dorset and North Poole (Vikki Slade), the cost of labour in areas will also be taken into account. When Members see the fair funding review, I hope they will see that we have taken into account those cost pressures being felt in every local authority, and that we have done this with integrity, because it means a lot to ensure that we finally get a system right that for too long has, frankly, been broken.
All these measures are being supported by the first multi-year settlement in a decade. The importance of that was set out by many Members, but in particular by the hon. Member for Bicester and Woodstock (Calum Miller), who spoke about the stability needed and ensuring that councils have that firm foundation. A fair funding formula needs to do just that, and this is a promise delivered.
This Government have made choices, and we are open about those choices because they have allowed us to make the record investments that I set out earlier. One of those choices was to reform the inefficient, ineffective and outdated local growth funding landscape. As such, we are continuing the UK shared prosperity fund at a reduced level of £900 million for one financial year for transition, before we move to a model of targeted long-term local growth funding, as confirmed at the spending review. Deprived communities and mayoral regions will see the benefit. The north and the midlands will also benefit—their potential has been untapped for too long. Overall investment in Scotland, Wales and Northern Ireland will be protected, and communities will have genuine control of where funding goes for their areas for the first time in a long time.
We are making significant investments in the things that matter to local people—in social and affordable housing, in building safety, in homelessness and in local government. For far too long, we have seen the erosion of the things that make places safe, clean and decent and that give pride of place, because the previous Government did not take on the challenge in the way that was needed. We are not willing to do that. We are not willing to stand by idly while the system falls over, outcomes get worse and, in the end, costs escalate to the point of crisis. We are fixing the foundations, getting on with the job and finally giving our councils and communities the justice that they deserve.
Florence Eshalomi
I thank the Minister and the 15 Members from across the country who have taken part in the debate, which shows the value we place on our local authorities. For far too long, our local councils have not always got the recognition they deserve, but they are the first line of defence for all our constituents, and it is right that they are properly funded to carry out this vital work.
The Minister outlined some of the key areas where the Government are making big changes, and it is important that we continue to press him on those key areas and ask these difficult questions—not because we want to, but because we see this day in, day out in our inboxes, and it is vital that we address it. We do not want any more councils declaring bankruptcy, we do not want any more section 114 notices being issued, and we do not want any more young people tragically losing their life because of the temporary accommodation they are living in.
It is important that we help the Government in their ambition to build the homes we need. The £39 billion outlined is a step in the right direction. Our cross-party Select Committee will continue to ask the Government these questions, because we believe that every single person across the country deserves a safe, secure home that they can call their own.
Question deferred until tomorrow at Seven o’clock (Standing Order No. 54).