Provisional Local Government Finance Settlement

Clive Betts Excerpts

Wednesday 18th December 2024 Commons Chamber

[Jim McMahon]

Given the hon. Gentleman’s background, I am surprised that he is displaying such ignorance of council finance. The Government’s role in local government finance is to be an equaliser. As he knows, everywhere has the ability to raise tax locally through council tax and business rates, but he also knows that some areas have the ability to raise far more than others because of their tax base. It is the job of the Government to equalise—to make sure that when it comes to demand for services, everywhere gets the service provision it needs. That requires the Government to provide more funding in some places to reconcile that lower tax base, so that everyone gets the services they are entitled to. The presentation that the hon. Gentleman has offered shows either ignorance or politics, but I think the country deserves better.

[Mr Clive Betts (Sheffield South East) (Lab)]

I very much welcome today’s statement and the extra funding that has been announced. I commend the Minister for repeatedly reminding the Conservative party of 14 years of austerity, during which local government saw bigger cuts to its budgets than any other part of the public sector. Of course, the Lib Dems were a party to the coalition Government when the worst of those cuts were made.

May I ask my hon. Friend two questions? First, when he comes to consider more fundamental reforms—which we accept will not be in place for another year—will he look at the council tax system as a whole? It is an unfair and regressive system that takes a disproportionate amount of money from the poorest people in the poorest houses. Secondly, can he confirm that the local audit office will be a stand-alone body that looks at public sector audit, not an add-on to the audit, reporting and governance authority—a previous proposal—which was basically to be a private sector body that looked at local government as an afterthought?

[Jim McMahon]

I thank the former Chair of the Housing, Communities and Local Government Committee for that question. I can confirm that the core spending power of that element in this settlement for Sheffield will be 8.5%, which is before the additional funds that will follow. Sheffield gets a good settlement from this, but we recognise that it is in a context of growing demand, so we hope councils see that we are meeting them on the challenge they face.

On whether we will review council tax, I think every Government recognise that there are huge limitations with council tax, and also huge geographical variations. It is regressive, which is the nature of a tax based on property values rather than the income of the people in them. However, council tax is understood, its collection rates are high and it is really the foundation—although not the total, as my hon. Friend knows—of the funding of council services. The urgent issue we need to face is that previous Governments moved away from their role as the equaliser in the system. Whereas the revenue support grant used to be in place to support councils by reconciling lower tax bases, recent Governments have been missing in action. We are saying to councils of all political stripes, across every type of authority and every part of the country, that we will reconcile that and work with them to equalise the situation.

On the local audit office, we are absolutely determined that this will not be a return to the Audit Commission. We are trying to do a number of things. First, we want to rebuild the early warning system to make sure that we see any systemic problems developing in the system. However, we also recognise that the cost of audit has increased by 150%, which is a direct cost to taxpayers, and that there is fragmentation in the market, and we need to look at the fall-back position as opposed to auditor supply. There is quite a lot that we need to deal with, but this is very much about the provision of audit and making sure the early warning system is rebuilt; it is certainly not a blow to the inspection regime.