Local Councils: 2023-24 Budgets

Baroness Scott of Bybrook Excerpts

Wednesday 25th January 2023 Lords Chamber

[Baroness Taylor of Stevenage]

To ask His Majesty’s Government, given the impact of current levels of inflation on budget planning for local councils for 2023–24, what support they are providing to councils in setting balanced budgets and ensuring that local services are delivered.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)]

We recognise that councils are facing pressures, which is why, taking 2023 and 2024 together, we have increased the funding available to local government in England in real terms. The provisional local government finance settlement for 2023-24 makes available up to £59.5 billion for local government in England—an increase of up to £5 billion, or 9%, in cash terms on 2022-23—and includes a £2 billion additional grant fund for social care. We consulted on these proposals until 16 January, and will consider the responses prior to publishing the final settlement in early February.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I thank the Minister for her Answer. Those standing as councillors do not do so to cut services for their residents. The Local Government Association estimates a gap in funding of £3.2 billion this year, rising to £5.2 billion next year. Across the country, local councillors are taking awful decisions on closing libraries, swimming pools, children’s centres, domestic abuse services, nurseries, transport services for disabled children and more. Even Tory Hertfordshire says that it has exhausted all options for service cuts. Do His Majesty’s Government recognise that cutting local services puts pressure on other public services? Why has the fair funding review for local government ground to a halt?

[Baroness Scott of Bybrook (Con)]

My Lords, as I said, we recognise that councils are facing pressures but the 9% announced in the Autumn Statement is, in real terms, an increase in funding. Local government is having to meet pressures in the same way as every resident in this country is under pressure. As I said in answer to a question yesterday, we will look further at funding issues for local government in future—probably not in this Parliament but in the next.

[Lord Laming (CB)]

My Lords, the Minister will know that, in the decade from 2011, there was an estimated 22% real-terms reduction in local authorities’ purchasing power, despite that being a decade of considerable increase in demand for services. Does the Minister accept that it will be some years before local government will get back to the spending power that it had in 2011?

[Baroness Scott of Bybrook (Con)]

My Lords, local authorities across this country are doing some very creative things to make their money go further. They are working closely with others in their local areas to deliver the services that their residents deserve. I think that this will go on. Through the levelling-up Bill that has come here, we will see different ways in which local government can join together to make itself far more financially viable.

[Lord Young of Cookham (Con)]

My Lords, allowing local authority expenditure to increase by 9.2% in cash terms seems reasonable to me against the background of the current economic challenges. However, if, pursuant to my noble friend the Minister’s reply, a local authority thinks that that is wrong for its area, it is free to spend more if it can persuade the local electorate to vote for that in a referendum. Is that not a more democratic way of approaching local government finance than the crude rate-capping that we had before?

[Baroness Scott of Bybrook (Con)]

I absolutely agree with my noble friend, not only on that point but that councils can look to a referendum. It is important that, if they look for a referendum, they say what they are going to spend the money on so that local people have a choice.

[Baroness Andrews (Lab)]

My Lords, is the Minister aware that, in the first few months of last year, 2.2 million hours of adult social care were lost? This year, we have half a million people waiting for a care assessment, a care package or to have some care sorted out. Does she agree that adult social care and the community basis for adult social care should be a priority in the Budget? The Health Secretary believed this when he was chair of the Health and Social Care Committee in the Commons. Will she remind him of his promise to increase funding and will she engage with her Treasury officials and her Ministers to make that happen?

[Baroness Scott of Bybrook (Con)]

My Lords, adult social care has been an issue to be solved for not just this Government but many Governments before them. The Government are putting more money into adult social care. They put £2 billion more into local authority funding this year for it, and we will continue to look for better ways of delivering adult social care, working with the NHS as well.

[Baroness Thornhill (LD)]

My Lords, according to LGA evidence, without further government intervention 74% of council areas are at risk of losing their local swimming pool or reducing leisure services due to rising fuel costs, and that is this year. Can the Minister explain why the Government’s energy bills discount scheme includes museums and libraries, which is very welcome, but surprisingly excludes public leisure facilities? Can she please check whether the Government were aware of this evidence when they drew up the recent scheme? Will they seriously reconsider classifying pools and leisure centres as energy intensive, as they surely are?

[Baroness Scott of Bybrook (Con)]

My Lords, the energy bill relief scheme this winter provides a discount on energy for councils whose bills have been significantly inflated. This scheme was to run until 2023, and in January the Government announced that the energy bills discount scheme would run for a further year, until March 2024. But the noble Baroness opposite is right; I have already asked that question, and when I get an answer, I will come back to her.

[Baroness Buscombe (Con)]

My Lords, on average, how much of all local authority expenditure is spent on public sector pensions?

[Baroness Scott of Bybrook (Con)]

I am very sorry that I cannot give my noble friend that answer from the Dispatch Box. I will look into it and come back to her.

[Lord Sahota (Lab)]

My Lords, councils up and down the country had to reduce just about every service to make ends meet. Because of the Government’s cuts for the last 13 years, many councils are on the edge of a financial cliff and have even considered a Section 114 notice. Can the Minister tell me when this nightmare will end for our local communities?

[Baroness Scott of Bybrook (Con)]

My Lords, there are also some councils doing extremely well in keeping services running. We continue to monitor the sector’s finances and stand ready to speak to any council and support it if it has concerns about its ability to manage its finances or faces pressures that it has not planned for. We are working with local authorities to do that so that they do not get to the point of an S114.

[Lord Shipley (LD)]

My Lords, when will the review of business rates take place?

[Baroness Scott of Bybrook (Con)]

I do not have a date for that.

[Lord Watts (Lab)]

My Lords, can the Minister tell the House what inflation figure was used when the local government settlement was made?

[Baroness Scott of Bybrook (Con)]

I cannot tell the noble Lord what inflation figure was used, but I think that 9% is a very reasonable figure in the economic situation that we are in at the moment, due to many things, such as Covid and the Ukrainian war.

[Lord Brooke of Alverthorpe (Lab)]

Does the Minister agree that one of our problems is that the current council tax structure is well past its sell-by date and needs changing? In those circumstances, and building on the noble Lord’s suggestion about a referendum, would they permit a council to run a referendum for a restructuring of its council tax?

--- Later in debate ---

[Baroness Scott of Bybrook (Con)]

I do not think that there is anything in the rules that allows them to do that. As I said yesterday, we are looking at updating the local government finance system. It has been an issue to get right for a long time, under many different Governments. We have said that we will continue to look at it, carry out a review—particularly on relative needs and resources—and reset the cumulative business rates growth as well.

[The Lord Bishop of Durham]

My Lords, can I take the Minister back to social care? Yesterday, the archbishops’ report on re-imagining care was published. It suggested that we need a major rethink on how the whole care system works, not just with local authorities—though it notes that not enough is being put in. The noble Baroness, Lady Andrews, has welcomed the report and produced a fantastic report on this with her committee. Might this be an opportunity to completely rethink how we do social care in the future?

[Baroness Scott of Bybrook (Con)]

My Lords, as I have said, successive Governments have looked at the issue of social care. With an ageing population, it is something that we have to do; we have to change the way we deliver social care and the way it is funded. This Government are looking at this, and will continue to do so until we have a solution.