Financial Distress in Local Authorities

Debate between Clive Betts and Richard Burgon

Thursday 1st February 2024 Commons Chamber

[Mr Betts]

I completely agree that it should be made fairer. The only caveat I would add is that one authority’s system of fair funding is another authority’s unfair funding, which is always a challenge. Everyone accepts that the funding system must be brought up to date. The current funding system has data in it that goes back to the last century, which is not a reasonable way to allocate money in the current age, so yes, it needs to be revised.

On the funding cuts and the council tax increases, the biggest funding cuts have tended to be made to those councils that used to receive the most grant, which tend to be the poorer councils. The council tax increases have disadvantaged councils with a low council tax base, which tend to be those councils who received the biggest cuts. We have not gone into that in detail in this report, but I know we have had evidence to that effect in the past.

[Richard Burgon (Leeds East) (Lab)]

I thank the Chair of the Select Committee for this important report, which makes sobering reading for Members across the House. Does he agree that the reason his measures are so necessary in Leeds is that Government funding to Leeds City Council has been cut by the Conservative Government by £2.5 billion since 2010? That has left Leeds City Council, an excellent Labour-run council, with a shortfall of £65 million for the 2024-25 financial year. The £2.5 billion of cuts to Government funding since 2010 equate to about £75 million per ward, leaving the council struggling to deliver essential services for some of the most vulnerable people in our city. Is that not why everyone here, regardless of their political party, needs to support the measures set out in this report?

[Mr Betts]

I thank my hon. Friend for his question. We clearly set out that the problem is due to a cut in funding. That is the result of a reduction in the central Government grant, with council tax increases only partly, but not wholly, replacing the funds. That issue needs addressing if we want councils to continue not only performing social care functions, but doing everything else that our communities rely on. We need fundamental reform; that is what we are calling for in the longer term. That is a challenge for any Government—I look at both Front Benches here—because if we reform local finance, some people will have to pay more and some will have to pay less. I always say that those people who pay more never forget about it and continue to blame the Government for years to come. Those who pay less will thank the Government and then forget about it next year. There is always a challenge when it comes to spreading the tax take around differently. But we will have to do it differently, because these council services—not just social care, but the parks, the buses, the libraries, the roads, the environmental services, the planning, and the economic development, which has almost fallen off the scale in some councils—are really important.