Local Government: Funding

Baroness Eaton Excerpts

Monday 27th January 2025 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

My noble friend is absolutely right. The review that we are undertaking as part of the spending review in the spring will do just that. We made some steps forward in this year’s settlement; we need to take further steps in that regard, and the local government funding formula will be reset to take account of need.

[Baroness Eaton (Con)]

My Lords, I declare my interest as a vice-president of the Local Government Association. With Labour’s increase in employer national insurance contributions, LGA analysis confirms that the cost to local government will be around £1.7 billion next year. The provisional local government finance settlement confirms that councils will be compensated to the tune of £515 million for 2025-26, well short of the £1.7 billion. Can the Minister confirm from the Dispatch Box whether this compensation funding is a one-off, or will it be continued in future financial settlements? How does she expect local authorities to compensate for the shortfall?

[Baroness Taylor of Stevenage (Lab)]

As I said, the decision that we took around national insurance contributions was to fill the gap from the £22 billion black hole that was left by the Government of the Benches opposite. We continue to work on fixing those foundations and making the economy stronger. The noble Baroness asked specifically about the £515 million of support that we have provided to local government. That is in addition to other sources of funding that we gave to local government. Whether that will continue into future years will be the subject of the spending review in the spring. We will look at all aspects of local government funding so that we continue to fix and sort out the mess that we were left with.