Local Government Finances: London

Alex Norris Excerpts

Wednesday 26th March 2025 Westminster Hall

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Alex Norris)]

It is a pleasure to serve with you in the Chair, Ms Lewell, and to speak for the Government in this debate. I congratulate my hon. Friend the Member for Leyton and Wanstead (Mr Bailey) on securing it. All the interest from Members shows how important it was. He made a very thoughtful case on behalf of his community and local authority, and of everybody living across the capital. The themes that my hon. Friend pulled out—homelessness, the importance of exceptional financial support in some areas and the long-standing issues with the formula—were important, and I will perhaps reflect on them as the structure for my own speech, and cover other Member’s contributions along the way, notwithstanding the time I must leave my hon. Friend at the end.

The debate has felt at some points like a bit of a recovering councillors’ convention, and I add myself to that number. I know, as we all do, how important it is for local authorities that their Members of Parliament go and raise their issues in Parliament. It would be reasonable to think that it would be axiomatic that we would do so, but, sometimes, there might be a temptation for a person to finish their time in local government and think they perhaps want to do other things. It is important that we advocate on behalf of our local authorities, and I think that that has been done excellently by colleagues across this place.

We should hold on to the common understanding, which I think was expressed by colleagues, of just how good a job councillors and officers are doing across the city to keep vital public services running. I want to add my thanks to them for their dedication and incredible work in the 800-plus ways in which they touch local people’ lives every day. One of the differences between my previous and current political lives is that there is so much interest in what we do in this place, and there never seems to be enough in what goes on in local government, when actually, that can be more fundamental to individuals’ daily lives.

I want to give some context about the financial settlement because it starts with a conversation about money, which has happened throughout the debate. The settlement for this year makes available a total core spending power for London, including the GLA, of up to £11.35 billion. That is a £726 million increase on last year, and it represents a 5.8% cash-terms increase. That is a start on fixing the foundations of local government and providing significant investment for those services and places that need it most.

My hon. Friend the Member for Dulwich and West Norwood (Helen Hayes) eloquently set out just how hard the challenges were in the previous decade, and how hard those decisions were; that was a common experience for me when I was in local government at that time. No single Budget or intervention can reverse the damage and the harm done then, but this debate is our starting place, and I am pleased that it is under way.

My hon. Friend the Member for Leyton and Wanstead mentioned the importance of homelessness and rough sleeping. My hon. Friend the Member for Croydon East (Natasha Irons) also made some thoughtful points about that. We are very well aware of the particular issues facing councils in London. We know that that is a symptom and an aspect of the homelessness crisis across the country, but that London is particularly affected, for obvious reasons. The crisis is a national disgrace, which I think we should be angry about. There has been a sharp increase in rough sleeping, families stuck in temporary accommodation—perhaps not as visible but just as pernicious—and children growing up without a stable place to call home. Those points were made by my hon. Friend the Member for Cities of London and Westminster (Rachel Blake). That is why we have taken action by allocating £233 million to councils directly for homelessness. That includes the largest ever investment in prevention services, enabling councils to intervene earlier with targeted support. The money available for that will be nearly £1 billion.

As it is an emergency, we have focused on getting money out of the door. However, there will be long-term fixes, and colleagues have talked about ways in which those fixes might happen. I point them towards the long-term housing strategy, which I think will be a huge opportunity to grip the issue. I encourage them to play their part in whatever way they can.

My hon. Friend the Member for Leyton and Wanstead also mentioned exceptional financial support. We have made it clear that while we continue to expect councils to do what they can to deliver for their residents, we do know—and we have heard it in the debate—that the sector is in a fragile state and that some London councils are really struggling. The hon. Member for Bromley and Biggin Hill (Peter Fortune) tried to tempt me back to 1997 in relation to where the origins of that might lie, and the shadow Minister, the hon. Member for Ruislip, Northwood and Pinner (David Simmonds), tried a little bit of that, too. I gently say that I was just about out of short trousers at that time, so they will struggle to make me take the blame. I also say to the shadow Minister that maybe we should stand at the Local Government Association conference and ask colleagues there whether they think that the last decade or the one before was better. I have a sense of what the answer might be, and I know he does too.

However, the exceptional financial support process will be there when councils need it. We have been clear that we want to reset how that works so that it is more collaborative and supportive—unlike the previous Government, which perhaps took a more punitive approach to it. One aspect of that is that when additional borrowing is needed to support recovery, we will not make that more expensive with the additional 1% premium, which the previous Government did. We will also take steps to prevent the disposal of community and heritage assets, when that is considered as a route to financing capitalisation support. We know how important that is to local communities.

As has been said, seven London councils have requested support this year and we are working with them to drive improvements. Exactly as my hon. Friend the Member for Uxbridge and South Ruislip (Danny Beales) said, those improvements must happen now, and I have been through the process in my own city. It is a moment to grapple with and grasp that transformation process, to take those difficult decisions, and to get local authorities on to a stronger footing.

I want to talk a bit about reform more generally. On the multi-year settlement, the year-by-year decisions are driven by settlement decisions, and we always used to get on Christmas eve. It used to drive us mad, because there was not much we could do on Christmas eve. We need to do much better, which is why we are committed to the first multi-year settlement in a decade to give councils time to plan.

We recognise that, as my hon. Friend the Member for Ilford South (Jas Athwal), the hon. Members for Hornchurch and Upminster (Julia Lopez) and for Romford (Andrew Rosindell), and my hon. Friends the Members for Bexleyheath and Crayford (Daniel Francis) and for Southgate and Wood Green (Bambos Charalambous) said, the formula has been out of date for years and years. That is a point of political consensus. Of course, under the previous Administration there was the fair funding review, but that was not delivered, so what we have today is a system that does not represent the best value for taxpayers and does not get money to where it is needed most. We are implementing a comprehensive and up-to-date assessment of needs and resources as part of the multi-year settlement from 2026-27, so it is coming soon.

I thank those who contributed to the recent consultation—I know London Councils will have done so. There will be more discussion when we consult in further detail later in the spring. I ask colleagues to engage with the consultation in the spirit in which this debate has been conducted, based on the cold, hard facts. We will be very clear about the formulas that we use and what the assumptions are based on. I hope we can have the consultation on that level. The hon. Member for Ruislip, Northwood and Pinner said we should steer away from the parochial, and I think that is probably right.

This is probably a good moment to address the point about the recovery grant. It went to places where, weighted by population, deprivation outweighs council tax recovery. That was emergency money to prop up the dangerous state of local authority funding. It was a difficult decision, but we have been very clear about why we took it and the formula is publicly available. I hope we can engage in those sorts of difficult decisions in that spirit, because the alternative is to have senior leaders of Governments boasting at party events about how they have been able to tilt formulas to get money intended for deprived communities to other places. That was a particularly discrediting experience for the previous Government, and we will not replicate it.

Hon. Members mentioned national insurance contributions. As part of the settlement, we announced an extra £550 million of support for local government, but we have needed to make difficult decisions to balance the nation’s finances. The challenge for the Opposition is that they can only say what they are against; they cannot say that they do not want money to go into the national health service, local government and the police. Until and unless they are able to address that fundamental balance—“If not this, then what?”—I fear it looks like their points are political rather than substantial.

I want to end on a positive note. I thank my hon. Friend the Member for Leyton and Wanstead for setting a great tone for the debate, and other hon. Members for populating it with their own thoughtful views and experiences. The Government are committed to resetting the relationship with local government; we want to work with it as partners. Similarly, I hope Members of Parliament of any political party or none, on their own behalf and on behalf of their communities and council, feel they can contribute to the policy process and have their say on what formulas we might use and what priorities we might have. We have a common goal: we want vibrant local authorities that deliver for their local communities day in, day out. That is what councillors, council officers and MPs want, and the Government certainly want the same.