Draft Combined Authorities (Finance) (Amendment) Regulations 2024
Jim McMahon Excerpts(2 weeks, 4 days ago)
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Jim McMahon (Oldham West and Royton) (Lab/Co-op)
It is a pleasure to serve under your chairmanship today, Ms Nokes. I will start by confirming that we do not intend to divide the Committee on this statutory instrument. We agree that there is a financial and democratic need for transparency in the funding of combined authorities and in granting equal powers to mayoral combined authorities and combined county authorities in this regard.
The regulations are intended to extend the existing provisions for the funding of mayoral combined authorities to those of county combined authorities. The new model of county combined authorities, we accept, is more appropriate for non-metropolitan areas where two-tier governance is in place, and this model recognises the geographically specific issues that non-urban areas face, and that local governments then must reflect that different identity and accommodate it where possible.
Can the Minister answer, though, why it has taken so long for the Government to address this difference? There has been a great deal of frustration from our counties, which feel very strongly that they have been required—demanded, in fact—to mirror the model in urban areas, when it just did not fit their geography or their political structures. It would be interesting to know why it has taken so long to reconcile that.
Combined county authorities have shown great progress for English devolution, but there are legitimate concerns over the process and the way in which the SI has been handled. Therefore, can the Minister answer how this change would be communicated with the combined authorities, and their component councils, as this is rolled out?
Labour supports devolution and believes that having the right powers in the right places is important, and that precepts are an important way of achieving that. However, the Secretary of State for Levelling Up, Housing and Communities made a point in the Chamber, during oral questions only last week, of criticising the use of precepts in some areas. We heard some of that today, where the political argument is used that Labour Mayors choose to exercise their powers of precepts in a way that Conservative ones do not.
I think that we need to accept that there is no free ride on this—a Mayor is not free; the money comes from somewhere. It comes from a subscription that local authorities pay, from a levy that is required of the local authority, or is done via a precept. Surely the most transparent way is that Mayors of county combined authorities say to the public, on their council tax bills, “This is how much this particular function costs.”
Mr Bacon
The hon. Gentleman looks at me in a slightly accusatory way, as if I might disagree with anything he is saying. I do not think you get a free Mayor either. I believe that it is good that it is transparent. I believe that it is good that it is broken up on a bill, so we can see what council tax payers are having to pay for this. On these matters, we are in violent agreement. The only question I had—and I think my right hon. Friend had—was, “What is the upper limit, and how is it imposed?” We know that district councils, if they wish to put up council tax above a certain amount, have to go to a referendum. I am asking—and I think my right hon. Friend is—“What, if any, limits are there here?”
Jim McMahon
I will avoid answering the Minister’s question for him, but we need to accept that different Mayors have different powers. Some are police and crime commissioners, while some do not have those powers, and some take on the fire authority powers, the powers of the transport authority, and the rest of it. Therefore, their funding models, and their precept and levelling-up funding, are very different.
However, in each of those circumstances, it will be for the Secretary of State to determine, by legislation, what the upper limit for any increase will be, whether that is a percentage applied to the council tax, or even a cash limit —£5, £10 or whatever—applied to mayoral combined authorities. That is in the gift of the Secretary of State. There is no precept increase in England that has been done without the explicit consent of the Secretary of State, and I think that that is an important point to make here.
We know that councils are facing a perfect storm of rocketing demand in adult and children’s services, adult social care and temporary accommodation, and a rise in borrowing costs, but, at the same time, the core grant has decreased alongside neighbourhood services. The sticking-plaster approach to devolution is part of the problem.
Local growth plans will be made in conjunction with businesses and local authorities to ensure that precepts will be adequately funded, planned and supported, therefore maximising economic potential across the whole region under consideration. More needs to be done, however, because local authorities are, in the end, the foundation of combined authorities. Combined authorities do not exist in isolation, and if the foundation on which they rest is not secure or firm, that will have an impact on them.
Labour is the party of devolution: it created the Scottish Parliament, the devolved Parliament in Wales, the Northern Ireland Assembly and the office of the Mayor of London, and it introduced the Localism Act 2011. Labour Mayors and Labour councillors are leading the charge across the country and, together, have made the case for further devolution.
We propose more stable, longer-term, single-pot settlements across all our combined authorities to reward those who make good progress and are good custodians of public money. It is a fact that, under the Government, working people are paying more and more for less and less, so it is time for a fresh start, which can be achieved only with a Labour Government.
Jacob Young
I understand my right hon. Friend’s point. I am happy to take that away and look at whether something similar could be established for mayoral precepts. It is not currently the Government’s intention to do so, but he makes a valid point.
On the point made by the hon. Member for Oldham West and Royton, combined county authorities are a direct result of the Levelling-up and Regeneration Act 2023. This statutory instrument is required by that Act. He asked why it has taken so long, but the Act was passed only at the back end of last year in direct response to the request of counties to have a devolution model that fitted them, so I would say that his frustration at the time that it has taken to get to this point is misplaced.
Jim McMahon
I do not particularly disagree, but I would ask for an acceptance that there is a natural tension in the devolution programme between the need to have devolution for a purpose, such as jobs, housing, the economy or transport, and the need to represent local identity. The Government have struggled in the past where there have been conflicting identities—for example, where counties with distinct identities have been forced to merge to create a combined county authority with a Mayor who did not fit. Part of the delay that we have seen comes from trying to get that through but it not working.
Jacob Young
As the hon. Gentleman says, we have been flexible in our approach. We have the traditional combined authority model that previous combined authorities have adopted. On Thursday, we will see a new Mayor for York and North Yorkshire elected using the traditional combined authority model, as well as a new Mayor for the East Midlands being elected using the new combined county authority model. We have listened, we have been flexible, and we have met local needs as and when they have arisen.
In conclusion, the regulations are essential to ensure a robust legislative framework for combined county authority mayoral finances for budget-setting, precepting and the mayoral fund. I commend them to the Committee.
Question put and agreed to.
Oral Answers to Questions
Jim McMahon Excerpts(3 weeks, 4 days ago)
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Jim McMahon (Oldham West and Royton) (Lab/Co-op)
Working people are paying the price of the cost of living crisis, but is it not the truth that the Liz Truss mini-Budget did not occur in a vacuum? There is a pattern of the Tories shifting the tax burden on to hard-pressed households. Council tax bills have rocketed by almost £500 since the Tories came to power, on top of which Conservative councils charge residents almost £280 more than their Labour counterparts. As voters go to the polls on 2 May, does the Minister hope that they will somehow forget the council tax bombshell facing them? Or does he expect that more candidates will follow the lead of the west midlands campaign and ditch the toxic Tory brand completely?
Simon Hoare
The hon. Gentleman wins first prize in the brass neck of the afternoon competition; I remind him gently and politely about the situation in Birmingham. It is well known by residents up and down the land that Conservative-led councils are more efficient, deliver greater improvement at pace and are far more focused on delivering for their residents. Colleagues and I will take that proud record to the voters during this local election campaign, and I have every confidence we will triumph in it.
Draft Combined Authorities (Overview and Scrutiny Committees, Access to Information and Audit Committees) (Amendment) Regulations 2024
Jim McMahon Excerpts(2 months ago)
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Jim McMahon (Oldham West and Royton) (Lab/Co-op)
It is a pleasure to serve on the Committee under your chairmanship, Ms Rees. The Opposition do not intend to divide the Committee on the regulations, and I welcome the opportunity to address them on behalf of the Opposition.
The instrument makes provision for the membership and proceedings of overview and scrutiny committees and audit committees of combined county authorities, and for the payment of allowances to members of constituent councils of combined authorities and combined county authorities who are appointed to those committees. The Minister went into some detail about what the instrument is intended to do and what it covers, but I want to explore some other aspects of it, while obviously staying in scope, Ms Rees.
My first point, on which I know there will be quite different views, relates to the provision made for overview and scrutiny members to receive allowances. I am guessing that that provision focuses primarily on co-opted members with specialisms, who may be brought in to add value to the scrutiny process. However, notwithstanding the Minister’s comments about councillor pensions—and I accept the strong argument that being a councillor is a vocation, a call and a public service—the Minister must recognise that the more someone does, the less time they have. There are only so many hours in the day, and if a ward councillor, cabinet member or council leader sits on a combined authority, they may now be giving evidence to an overview and scrutiny committee on top of that. That is a full-time job with full-time responsibilities, and it must not be that working-class people who do not have an independent income are not allowed to build up a pension fund for their retirement for that service. This is a point of principle. I do not want to reopen the whole pension debate, but I place that challenge on the table. This is not black and white, and a degree of realism is required.
The measures essentially mirror powers given to local authorities and current combined authorities, so can the Minister confirm that overview and scrutiny committees will have call-in powers? When executive decisions are made by the combined authority, will overview and scrutiny members have the power to call in that decision? Also—this is important in the light of the recent controversy in Teesside—will their remit cover trading companies and joint venture companies that are undertaking work and contracts on behalf of the combined authority?
Can the Minister confirm that the overview and scrutiny committees will have the power to conduct a best value review? Outside of the work programme that the combined authority will be undertaking, would they have the power to self-organise a work programme of their own and undertake deep-dive reviews as they see fit, whether those are about regeneration projects, transport infrastructure or matters the Government might be imposing, such as clean air zones or spatial development frameworks? Can the Minister confirm that the scrutiny committee will have the power to co-opt expert members and, if so, that the scheme of allowances will be varied to reflect the different costs that that might attract? The cost of populating an overview and scrutiny committee with lay members to get a wider resident perspective might be quite different from the cost of getting a specialised accountancy perspective, which may attract a higher price.
We are 13 years on from the establishment of the Greater Manchester Combined Authority, and the scrutiny functions put in place then have not really been reviewed in their totality since. We have just expanded them to cover more combined authorities and more county combined authorities. Do the Government see the regulations as an opportunity to review the effectiveness of overview and scrutiny to ensure that the relevant checks and balances are in place, as more and more is devolved down to local level? The public rightly expect that, with more taxpayer’s money—public money—involved, the checks and balances will be robust and fit for purpose. I would welcome a response on that.
My final point is more about the long-established principle of new burdens, which ensures that, whenever Parliament passes new legislation that requires councils or combined authorities to do something in addition to their existing powers, the cost of that new responsibility is borne by Parliament and the Government, not the component councils. I am not saying that we need a money resolution or a proposal to give grant support to combined authorities, but we need to be careful that we do not create legislation that allows combined authorities to create overview and scrutiny, and audit, functions, if they do not have the specialist teams they need to support them properly. We all know that when local government excels in scrutiny, it is because it has a well-resourced team that enables it to do proper, deep-dive reviews and investigations, to call in expert witnesses and to really go through things. I am not seeing that provision of finance in these regulations, so I would welcome a response on that.
Labour is fully supportive of devolution. We also recognise that, the more powers we give out, the more robust the checks and balances need to be. We are concerned that 14 years of Conservative economic management, compounded by spiralling inflation and the failure to grow our economy, have hit councils hard. We are keen to ensure that locals are supported where the Government have failed. We will not expect councils to live hand to mouth, with short-term financial settlements year on year—I think we are now on our sixth single-year financial settlement, which makes it difficult for councils to plan. Labour will give councils long-term, multi-year funding settlements so that they can plan ahead, as well as the tools they need to get on with the job.
Draft North East Mayoral Combined Authority (Establishment and Functions) Order 2024
Jim McMahon Excerpts(2 months ago)
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Jim McMahon (Oldham West and Royton) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Stringer. I can confirm that we do not intend to divide the Committee on this statutory instrument today.
The order provides for the establishment of, and the governance arrangements for, the north-east mayoral combined authority, which comprises the seven local authorities across the north-east. I congratulate the leaders of the component councils for the significant groundwork they have done in preparation for today.
Mary Glindon (North Tyneside) (Lab)
Will my hon. Friend further congratulate those leaders on ensuring that the Government delivered on the trailblazer funding, which the Minister referred to? Will he also wish the best of luck to our candidate, Kim McGuinness, who would be an excellent Mayor for the north-east mayoral combined authority?
Jim McMahon
Absolutely; the trailblazer deals are important because, in the end, not many members of the public are calling for more layers of government or more politicians, but people are calling for more power in their communities, and the trailblazer deal is part of that move towards greater localism. That is to be welcomed. Of course, Kim will be a fantastic champion, if she were to be successful in the election. We wish her well in that.
Margaret Greenwood (Wirral West) (Lab)
Metro Mayor Steve Rotheram in the Liverpool city region has introduced new trains that are fully accessible to wheelchair users and are publicly owned. Does my hon. Friend agree that that is an example of how we can really deliver on the ground for our communities?
Jim McMahon
I am a strong believer in the idea that politics can be won on the buses, and I think we underestimate which mode of transport the vast majority of people take when they use public transport. We talk a lot about aeroplanes and trains, but actually more people’s lives are connected to the bus services in their local community. It is no surprise, then, that Mayors such as Steve Rotheram are using that as a foundation of their success.
Margaret Greenwood
I apologise: I should clarify that he introduced fully accessible trains.
Jim McMahon
Of course, the trains. In Greater Manchester, we are doing bus devolution; I know that Tracy Brabin in West Yorkshire is doing the same; and I know that Steve Rotheram is doing a significant amount on the train service and, like Greater Manchester, is looking for further devolution, particularly around the stations, and the potential development that could be attracted there.
As has been said, the deal creates a new combined authority that will have functions to grow the whole north-east economy, and we are hopeful that our candidate, Kim McGuinness, will soon be the Mayor of the north-east. Kim, like many others, will be keen to grow the local area and the local economy for all the people who live there and who have businesses there. The north-east requires dedication, commitment and focus. We hope that this measure is the start of that, because the area has significant challenges.
Current Government data for 2023 shows that youth homelessness is higher in the north-east than anywhere else in the UK. Almost one in five of the individuals who applied for and were due homelessness support were aged 18 to 24. Last week, at the Convention of the North, the Institute for Public Policy Research revealed that the healthy life expectancy data is stark. It found that the north-east is the worst performing region in England by that measure. In addition, in 2023, there was a record attainment gap between schools in the north-east and those in the south. More than 28% of entries by pupils in London were awarded grade 7 or higher, equivalent to A or A*, compared with just 18% of entries by pupils in the north-east.
There is a great deal to do to make sure that every person in the north-east realises their full potential. Action is required. So far, devolution under the current Government has been fragmented and piecemeal and has not gone far enough or fast enough. The powers and resources do not touch the sides of what is required for communities to have control over their areas and their own futures. Labour will push power out of Westminster with a take back control Act that gives communities a direct say in their future.
Sir Simon Clarke (Middlesbrough South and East Cleveland) (Con)
As a former Secretary of State, albeit briefly, I owe it to the Committee to point out that the reason we do not have a Mayor of the north-east already is because the Labour councils in the north-east could not agree on establishing one sooner.
Jim McMahon
Thank you. In the end, there is frustration and concern from local government leaders that, when we talk about devolution in this place, what we are really talking about is taking powers away from councils and giving them to a Mayor, but then no additional powers coming back down. The challenge was always whether the Government could convince local government leaders that the prize is big enough for them to give something away, because the Government will meet them halfway. That is what we are seeing today. The purpose of the trailblazer deals was to demonstrate to council leaders that there was enough there that was worth working together for. That is why we are where we are.
In a way, what this shows is that, regardless of party politics, whether Labour or Conservative, if national Government work hand in hand with local government, we can make progress. We should see this for the success that it is. On Labour’s offer, we will start by giving all Mayors the powers and flexibility to turbocharge growth in their areas. That will include powers over planning and housing, transport, net zero and adult education. We will offer all places the right to negotiate with the Government for powers that have been devolved elsewhere. That will be the foundation of Labour’s plan to rebuild Britain and give it its future back.
Oral Answers to Questions
Jim McMahon Excerpts(2 months, 2 weeks ago)
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Jim McMahon (Oldham West and Royton) (Lab/Co-op)
The Government talk about levelling up, but local councils and communities are on the brink due to policies made in Downing Street that affect every single local authority in the country. Funding has been slashed, the fair funding review delayed, and the business rate reset postponed, while reserves are depleted, community assets have been sold, accounts go unsubmitted, and more and more councils are lining up for emergency support. Is it not time to end the sticking-plaster politics and have a long-term plan for all our communities’ sake, or are the Government doing what the country is doing: waiting for a Labour Government?
Jacob Young
I am sorry that the hon. Gentleman failed to mention the long-term plan for Oldham, which is in his constituency and where we are investing £20 million over the next 10 years. Since 2019, we have invested £15 billion of levelling-up funding across the country. We are committed to levelling up right across the country.
Draft Non-Domestic Rating (Rates Retention: Miscellaneous Amendments) Regulations 2024
Jim McMahon Excerpts(2 months, 2 weeks ago)
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Jim McMahon (Oldham West and Royton) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Vickers, and to attend the Committee this morning. I am happy to confirm that the Opposition do not wish to divide the Committee on this matter, which we believe to be technical. Very much in the spirit of the Minister, I do not propose to go into a lot of detail, but it is important to say that business rates retention is a fundamental foundation stone of many devolution deals that have been agreed. The thrust towards devolution is not just about devolving power; it is also about devolving fiscal responsibility, and enabling areas to benefit from growth in that local area. However, any system of course needs floors and ceilings, to ensure that councils can afford to run their services. That is what this technical instrument is about.
As the Minister says, there has been a delay in tabling. I accept that stray brackets and commas and zeroes play some part in this—we have all had that experience in the past—but it is a matter of fact that we are now four months on from when we expected the instrument to be tabled, so it is legitimate to ask, have there been any financial winners or losers during that time, and will the Government compensate on that basis?
Simon Hoare
I can assure the hon. Gentleman that no one has disproportionately won or disproportionately lost. This is timely. It was a singular bracket that was misplaced, rather than a pluralised bracket; I can assure him of that. Every comma was in the right place, ditto semi-colons. Nobody has had extra money that now has to be clawed back, and nobody has had less money which we then have to dole out.
Jim McMahon
That is a fundamental point and I am grateful for that early clarification. In that spirit I do not want to give advice—indeed, I am not strictly qualified to give advice to others—but I will say, in the spirit of statutory instruments of this nature, that perhaps not allowing the good to be the enemy of the perfect means that we can get through some of this process a bit more quickly and give local authorities the certainty that they need in order to ascertain their financial position.
Simon Hoare
I know this sounds bonkers, but if we had proceeded with the SI with the bracket in the wrong place, it would have led to miscalculations of the sums that we are talking about. So we made a judgment that this was not an arcane case of the perfect defeating the good; this was a rather important decision to take. We did not take it lightly, but we thought it better from local authorities’ perspective to get it right, rather than having to come back and ask for extra money, or dole out extra money, thereby sowing the seeds of confusion.
Jim McMahon
My final question for the Minister in his winding-up speech will be to ask where the Government are up to on the wider reset of business rates that the sector is waiting for.
Draft East Midlands Combined County Authority Regulations 2024
Jim McMahon Excerpts(3 months, 1 week ago)
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Jim McMahon (Oldham West and Royton) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Robertson. I confirm that the Opposition do not intend to divide the Committee on this statutory instrument.
The regulations establish the east midlands combined authority and are required in advance of the first planned combined authority mayoral elections in May 2024. We consider them to be important for the economic and social development of the region and its population. Indeed, we are excited and hopeful that our candidate, Claire Ward, will be the first east midlands mayor elected and, as mayors do up and down the country, will make a difference to communities.
However, it cannot be ignored that the financial pressures facing local government are profound, particularly in the east midlands region. The combined authority will only be as successful as the component local authorities beneath it. The Government really need to address the financial uncertainty in local government. We look forward to the statement on that matter in the Chamber later. It is a fact that devolution under this Government has been fragmented, piecemeal and has not gone far enough or fast enough. The powers and resources do not touch the sides of what is required for communities to have real control over their areas and their futures. Like much else, it continues the very siloed nature and begging-bowl culture of the Government’s funding allocations.
Labour would push power out of Westminster with a take back control Act that gives communities a direct say in their future. It will start by giving all mayors the powers and flexibility to turbocharge growth in their areas on matters such as planning, housing, transport, net zero and adult education. We will offer all places the right to negotiate with the Government for powers that have been devolved elsewhere. The principle will be this: no area will be left out, but equally no area will be held back. Areas that can move faster will be supported to do so. Only by doing this can we begin to give Britain its future back.
Local Government Finance
Jim McMahon Excerpts(3 months, 1 week ago)
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Jim McMahon (Oldham West and Royton) (Lab/Co-op)
Today should and could have been the day when the Government, after 14 years in power, finally fixed the crisis in local government. After a lost decade, they could and should have used today to turn the tide on the unsustainable and growing crisis in adult social care, children’s services and homelessness services, and finally to end the postcode lottery for those vital services that create the clean, green and safe communities in which working people deserve to live in return for the now record taxes that they pay under this Conservative Government.
After six years of single-year settlements, which started well before covid, today could and should have been the day when the Government brought forward a sustained multi-year settlement, but the Government have failed on every test. Councils of all political stripes up and down the country, covering cities, towns and counties, are being forced to the edge of survival. We know that councils are the first responder, and often the last line of defence for our communities. That they have managed to keep things going for so long is testament to their duty and public service.
I thank each and every one, every councillor of every party and every council worker, for the work they do for millions of people up and down the country. We owe them a debt of gratitude. From waste management to maintaining roads and parks, from providing housing assistance to supporting local businesses, councils are at the forefront of ensuring that communities can thrive and realise their full potential. Contrast that civic responsibility with a Government who seem happier treating local government as a political scapegoat than as an equal partner.
What support are councils receiving in this settlement? Six hundred million pounds recycled from elsewhere, and a continuation of the begging-bowl culture that continues on a never-ending loop, like groundhog day. In one of the worst cost of living crises for generations, it is a shameful indictment that the council tax bill is set to top £57 billion under the Conservatives, which is more than twice than under the last Labour Government. It stands as a matter of fact that people are paying more and more for less and less. Alongside the biggest tax burden in peacetime, that adds to the struggles households already feel when managing mortgages, food and energy bills. On top of that, working people will be slapped with yet another Tory bombshell. In fact, council tax bills under the Tories are set to rise by £13 billion over the next five years. It is clear as day that councils have been hollowed out, and they are now being told once again that the only solution is to raise council tax more and more.
The Institute for Government shows that core spending power will still be 10% lower, even after today’s uplift, than before the Tories came to power. That does not even take into account the rocketing demand in social care, children’s services and homelessness services. Ad hoc injections of cash, while perhaps offering modest relief, are a painful repeat of the sticking plaster politics that have left the country, our politics, and our public services much weaker. The Government’s reckless approach is undermining the fundamentals of local public services. Stability is needed to ensure that older people get the high-quality care they deserve and that councils are in the best place to give children the protection they need, to help put an end to the crisis in homelessness that the Government are perpetuating, and to keep our public services running where this Government have hollowed them out elsewhere in the system.
This Government’s approach is short-term and reckless, and it saves nothing. In the end the cost is huge, and we can see the consequences today. It cannot be right that there were more section 114 notices last year than in the previous 30 years combined. That is not a coincidence; it is the result of a toxic mixture of the Government’s financial mismanagement, and a deep and worrying lack of accountability. To make matters worse, the early warning system that could have raised the red flag earlier has been dismantled. In 2010, the coalition Government announced the closure of the Audit Commission. It was not without its faults and certainly was not universally well received, but removing the early warning system in its entirety was clearly going to set up problems for the future. Councils were left to inspect financial risk themselves, rather than seek value for money or even address issues of what is now clearly a broken audit market. The facts speak for themselves: in 2022-23, just five of the 467 councils delivered their audited accounts on time. That is just 1% of councils submitting audited accounts before the deadline.
Chris Loder (West Dorset) (Con)
The hon. Gentleman mentions audited accounts. Does he have an opinion on the audit of Plymouth City Council’s accounts? I was delighted to go to Plymouth on Friday, and debated the matter with the Labour leader of the council. It is clear that the Labour council’s accounts have not been able to be audited, because there is a question mark over £70 million being moved from capital spend to a pension pot. Does he have a view to share on his party’s situation in Plymouth?
Jim McMahon
I thank the hon. Member for inviting me to celebrate the success of Labour in Plymouth, and the work that our councillors are doing, after taking back control, to show leadership to the city. Plymouth is a proud place, and the Labour party there is making a huge difference. He may want to consult those on his party’s Front Bench when it comes to the submission of audited accounts, because there is an issue to reconcile here. Only 1% of councils have submitted accounts; how do we break through that bottleneck, given that the market is not responding? The Government will have to respond to that sooner rather than later. I politely advise him, if I may, to withhold his criticism, and to wait to see what his Government’s approach will be. I suspect he may be slightly embarrassed.
Mr Clive Betts (Sheffield South East) (Lab)
The Select Committee has written a report recently on local authority audit, which is a complete mess, with only 1% of accounts done on time. This is not a party political matter, as councils right across the country are struggling with this issue. One factor is low audit fees. Another is the complication of pension fund valuations, which is holding many accounts up. The likelihood is that the only way to get through that will be to agree accounts that are qualified because it has not been possible to confirm pension fund valuations. I hope that party political points are not made about councils and the qualification of accounts.
Jim McMahon
First, I thank the Select Committee for the work that it has done in this area. Last week, we received the report “Financial distress in local authorities”, and a great deal of work has been done to understand the detail and the contributing factors. There is no doubt that the accountancy regime for pension funds is a contributory factor to the delay in some cases. We need to know that councils are financially resilient, and that the financial settlement is robust. Where there are issues, an early warning system should allow them to be picked up earlier, so that if an intervention is required, it is made at the right time and in the right way, whereas now, section 114 notices are being issued at a rate not seen for the past three decades. That cannot stand, and it is not sustainable. We look forward to the Government’s response on that.
On the wider point about cross-party agreement, I think all of us and the Local Government Association, which is cross-party, would welcome with open arms the day when party politics was taken out of local government finance, and when there was consensus on how to fund local public services. I sincerely hope that after the next election, when those on the Government Front Bench are in opposition, they join us in that call, but let us wait and see.
The Government will know, as we do, that because of the financial fragility of local councils and the lack of an early warning system, it now takes only a small shock to send town halls into financial meltdown; the resilience just is not there. The Local Government Association has done a fantastic job in leading from the front and ensuring that adequate support is supplied when needed, but it cannot be expected to lead the charge on its own, nor should it be expected to. Councils need certainty and stability. They need to have the fear and anxiety of financial bankruptcy removed, so that they can continue to deliver for local communities. Councils need to be given adequate time to plan ahead for the fiscal year. Labour would support local councils where the Government have failed.
Single-year settlements do not provide the certainty or stability needed for planning ahead. We recognise that councils need something more than that to end this disjointed approach. Labour will embed transparency in the relationship between local and national Government, and move towards multi-year funding settlements for councils that allow them to plan well ahead. We will give towns and cities the tools that they need to foster local growth and deliver better public services. Should we be privileged enough to form the Government after the next election, Labour will empower councils to get on with the job that they have been elected to do.
Finally, we will see a radical transfer of power away from Westminster and into the hands of the British people through the landmark take back control Act, but we will not wait; where we can accelerate improvement, we will. We want a new relationship between central and local government as genuine partners in power. We want to see the right powers in the right places. Our communities are resilient, and so are our councils, but we need to do far more to work, hand in hand, as true partners going forward.
Financial Distress in Local Authorities
Jim McMahon Excerpts(3 months, 2 weeks ago)
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Mr Betts
I thank my hon. Friend for his question. The report says that not every section 144 notice can be blamed on the Government. There will be circumstances in which councils get themselves into difficulty, but what we have said is that there are general problems coming down for councils, which have been created by a shortage of funding. We did make reference to Bradford. Bradford’s problem is the young age of its population—the number of children. Children services are run by trustees appointed by the Secretary of State for Education. That body has demanded from the council an amount equivalent to about 50% of its council budget. We could get the ridiculous situation in which the Secretary of State for Levelling Up, Housing and Communities sends in commissioners to run services to try to find the money to pay the trustees who are appointed by the Secretary of State for Education. That does not seem a great way for local government to operate.
Jim McMahon (Oldham West and Royton) (Lab/Co-op)
I thank the Chair of the Select Committee for what I think is a very important report. I also thank the Committee members who have spent a significant amount of time getting under the skin of the issue. First, does he agree that, ahead of the scheduled finance settlement next Wednesday, the Government need to finally take responsibility for the financial crisis in local government? Secondly, does he share my concern that the breakdown in local government audit is contributing to the removal of the early warning system?
Mr Betts
I thank my hon. Friend for that question. Yes, it certainly is doing so. I have just produced a report about local government audit. There is a real problem there. If accounts have not been audited for three years, as in most cases, but probably longer in other cases, how on earth do we know what is happening in local council finances? Certainly, getting local audit on an even keel by the end of this year is very important, but where accounts are qualified, as they will be, councils should not be blamed for that; it is the problem of the local audit system, and we really must sort that out.
Mr Deputy Speaker (Mr Nigel Evans)
It is a very high bar. I should quit now. Thank you very much everybody.
Draft Combined Authorities (Mayoral Elections) Order 2017 (Amendment) Regulations 2024
Draft Combined Authorities (Mayors) Filling of Vacancies Order 2017 (Amendment) Regulations 2024
Jim McMahon Excerpts(3 months, 2 weeks ago)
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Jim McMahon (Oldham West and Royton) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Davies. I confirm on behalf of the official Opposition that we do not intend to divide the Committee on this matter.
The Levelling-up and Regeneration Act 2023 provided for the establishment of combined county authorities. The Secretary of State may provide for there to be a mayor for those areas, and the draft regulations continue that work. Labour supported the passage of the original 2017 orders and all the statutory instruments that have followed since. These regulations are required in advance of the first planned combined county authority mayoral elections, for the east midlands in May 2024. One purpose for establishing combined authorities is to improve service delivery in local areas. We are immensely proud of the work that our Metro Mayors and their combined authorities are doing up and down the country to change the lives of millions of people. It would be remiss of me not to say that I hope Claire Ward in the east midlands will be soon to join that rank.
I have a vital question for the Government. In respect of the composition of county combined authorities, the role of the district council has been one of contention. We know from recent experiences in Lancashire that there can be fragmentation if there is not a shared endeavour or collective political leadership in a place. There is a danger, in that fragmentation, that changes on the ground end up being piecemeal and do not go far enough or fast enough.
In conclusion, Labour will push power out of Westminster with a take back control Act that gives communities a direct say in their future. We will start by giving all mayors and combined authorities the powers and flexibility to turbocharge growth in their areas, including over planning, housing, transport, net zero and adult education, creating genuine partners in power.