Local Government Finance
Clive Betts Excerpts(2 weeks, 4 days ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Steve Reed
At core, what we are hearing from all parts of the House at the moment is people’s views on the fact that under the previous Government, the alignment between funding and deprivation was broken, and this Government are bringing it back. Because the previous Government did nothing about it for 14 years, funding became extremely detached from deprivation. We are putting that back in and making sure that funding goes where the need is greatest, so that stealing money from the poorest communities to pork barrel Tory areas—which the former Prime Minister bragged about—can no longer go on.
Mr Clive Betts (Sheffield South East) (Lab)
My right hon. Friend is being a little unfair to the Tories. The biggest cuts under austerity from 2010 to 2024 came from 2010 to 2015 when the Lib Dems were in coalition, so perhaps they should share some of the blame.
Steve Reed
I certainly agree that the Lib Dems should share the blame for austerity. I was a council leader while the Lib Dems and Tories were in coalition together. I think they cut our council by a third just over the first one or two years that they were in power. Now they have the chutzpah to stand up and complain that this Government are putting some of it back. I really think they should reflect on that.
David Simmonds
My right hon. Friend is absolutely correct. When Ministers talk about additional resources being provided to local government, we need to reflect on the fact that two thirds of the funding in this settlement comes from the maximum possible council tax rise across the country, and a large chunk of the rest comes from a huge rise in business rates.
Mr Betts
It is interesting to hear the hon. Member completely remove from his memory what happened in the 14 years of his Government. I ask him to remember back to when this began in 2010, when council tax generated about 20% of council funding, and how it has grown over the years under the Conservative and coalition Governments to deliver more than half of local government funding. How can he say that this is a problem when his Government originated that process?
David Simmonds
Madam Deputy Speaker, I am sure that you will be pleased to know that that prompts me to move on to the next part of what we need to say. Let us recall for those who cry austerity at Conservative Members that the last Labour Government spent on average 10% more in every year of its final decade in office than they raised in taxes, which left a colossal legacy of debt that we have scarcely begun to repay. Millions were squandered on projects such as building schools for the future that were cancelled at the tail end of the last Labour Government by Alistair Darling, as they ran out of money. When we look at the reports of what this means at constituency level, councils such as Surrey, which embraced this Labour Government’s devolution agenda, have now lost the opportunity for the mayor that they were promised. They report that they have been left £60 million a year short. Members will be ill-served by the consequences of the Budget.
Gideon Amos
I certainly agree with my hon. Friend, who champions Torbay on a regular basis in the Chamber. Councils are suffering reductions in their funding settlements across the country, which is one of the reasons we cannot support the amount of support they are getting from central Government.
Mr Betts
There is again memory loss on the Lib Dem Benches. It was the coalition Government who made the biggest cuts to local government funding and started passing funding responsibilities over to the council tax system—that all began with the Lib Dems in the coalition Government. Why does the hon. Gentleman not apologise to the Chamber and to people up and down the country for what the Lib Dems did to them when they were in government?
Gideon Amos
The hon. Gentleman is right that massive savings were made after the financial crash in 2008—some would say around £40 billion over the coalition years. He would be horrified to learn that the only people suggesting cuts greater than £41 billion were those in the Labour party in their 2010 manifesto, which proposed £56 billion in cuts. [Interruption.] If the hon. Gentleman does not believe me, he can look at the headlines of the time: “Alistair Darling: we will cut deeper than Margaret Thatcher”. That was Alistair Darling in his 2010 Budget. Who began austerity? Who began the cuts? It was the Labour Government, who were planning to go further, faster and deeper, according to Alistair Darling, than the Liberal Democrats or the coalition did.
Mr Clive Betts (Sheffield South East) (Lab)
I first congratulate my right hon. Friend the Secretary of State and my hon. Friend the Minister for Local Government on this settlement; it is a welcome change. I also thank the Minister’s predecessor, my hon. Friend the Member for Oldham West, Chadderton and Royton (Jim McMahon), for his work in both opposition and government to get us to this better place.
I am now the deputy Chair of the Public Accounts Committee, and we recently produced a report on local government funding. I want to read out our cross-party conclusions:
“Local government finance is in a perilous state…Funding has not kept pace with population growth, demand for services, complexity of need, or the rising costs of delivering services. As demand for targeted services such as social care, special educational needs, and temporary accommodation has grown, there has been a significant reduction in spending on commonly used discretionary services, such as street cleaning and lighting, parks and gardens, and leisure services.”
That is a truth that councils up and down the country have experienced and dealt with for many years.
I congratulate councillors of all parties, in all councils across the country, for how they have performed during the years of austerity—they have continued to work, and to deliver efficiencies that some central Government Departments, as the PAC can testify, would do well to emulate.
Peter Dowd (Bootle) (Lab)
I thank the Secretary of State and his ministerial team for listening to my representations and those of my council. My experience of Tory Secretaries of State is that having them listen, let alone act, is about as rare as rocking-horse dung. The Opposition, who did not properly fund local government for 14 years, are now complaining and whinging about the position we are in. Does my hon. Friend agree that this is their responsibility, not the responsibility of this Government?
Mr Betts
Absolutely. I think that goes for both the Conservatives and the Liberal Democrats, as my hon. Friend will understand.
This Government clearly face a serious situation, and we must say that they have got some things very right indeed. First, we have the multi-year settlement, which has been called for, cross-party, for many years—it was certainly something that we called for when I was on the Housing, Communities and Local Government Committee, and the Committee is again calling for it now. It is good that we have one; it gives councils a degree of certainty, so that they can look to the future and plan ahead.
Fair funding has always been a subjective term; one side will say that something is fair funding, and the other will say that it is not. I just point out to the Opposition that Greg Clark, when he was Housing Secretary 10 years ago, promised a fair funding review on behalf of the then Conservative Government. However, we are still waiting for that review in 2024. The Opposition had their chance, but they did not take it. We now have a review to deal with the simple matter of some figures and data in the funding settlement being at least 20 years old.
Natasha Irons
I join colleagues in thanking the Secretary of State and the Minister for Local Government for their work on this matter. We talk about outdated data; places like my Croydon East constituency, in an outer-London borough, have been treated as though we have an endless pot of cash, or are endlessly wealthy. However, my constituency has pockets of some of the highest deprivation in the country—an issue that this funding formula seeks to address. Does my hon. Friend agree that this fresh approach, which brings an end to Tory austerity, is exactly what our councils need?
Mr Betts
I certainly do. My next point was going to be that deprivation is properly recognised in the funding settlement. The problem is that councils that have deprivation either across their area, or in part of it, have borne the burden of the cuts over many years. Under previous Governments, both coalition and Conservative, councils with the greatest need—which previously had the largest grants to reflect that need—faced the biggest cuts. This funding settlement gives the biggest increases to councils that faced the biggest cuts under the last Government; we are getting some restitution for the funding reductions that we suffered. The recovery grant is right, because councils need recovery when their funding base has been decimated, after grants that they needed were taken away from them. My one challenge to my hon. Friend the Minister is that the recovery grant lasts for three years, so there is a danger of a cliff edge in 2029, when those councils that now get it may suddenly lose it. The Minister is obviously trying to think ahead, which makes a change from previous Ministers, so let us start to think about that problem before it hits us.
I welcome the settlement for Sheffield. I think the comments made by the leader of the council—which is a cross-party council—were about the council’s concerns and the challenges it faced prior to this funding settlement. The finance director of Sheffield council has said that
“The figures announced in the LGFS back up the Government’s commitment to redressing the unequal cuts seen during the austerity years of the previous Government, and its aim to deliver more funding to deprived areas of the country.”
I think that is a fair statement from the officer responsible for the council’s finances. In this funding settlement, Sheffield has got about £55 billion more over three years than was anticipated under the previous proposals, which sort of fills the hole. In the past, we have been making cuts to essential services, but for the first time in 15 years, we can start a budget process without immediately looking at cuts to those services. Year after year of cuts—that has been the situation. Now, the budget can be balanced without those cuts, which is a fundamental change. We can start to look at some improvements and preventive measures for the future that will bring about the sort of change we all want. I say well done to the Government for getting us to that position.
I also say well done to the Government for dealing with the ringfences—not just in the Minister’s Department but across Government, whether they be in transport, health or education. There are ringfences all around that restrict local councillors’ ability to do the right thing for their communities, so it is good that the Government have moved in the right direction. The current Select Committee and previous Select Committees have called for that change, and the Government have listened. To be fair, when Michael Gove was Secretary of State, there was an agreement that this needed to happen, but not much evidence that it did happen. I think we have moved in the direction that everyone wanted us to take.
This settlement is a good start. It steadies the ship after the cuts that councils with higher levels of deprivation have had to suffer, and it brings in a strong element of fairness. Now, I am going to challenge the Minister—I know she would not expect me to be completely complimentary. I come back to the point that the Chair of the Select Committee, my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi), made about the need for change. This is a good start, but there is a need for radical change. We came in with a manifesto of change; we have a large majority, and with willingness, we can deliver on it.
There are major issues in social care. I am still disappointed that we will not make changes to social care funding until 2029, after the review. I think we could make them more quickly. We are clearly moving on special educational needs and disabilities, but we need to move on children’s social care as well. There are things that some councils can do to help themselves; for example, Warrington council has started to build its own children’s home, so that it does not have to send children to very expensive private homes.
Gideon Amos
We may not agree on the cuts, which began in 2009, but the hon. Member has not yet touched on the removal of the remoteness uplift. Does he agree, in a cross-party spirit, that including a remoteness uplift just for adult social care, but not for children’s services or any other services, is contrary to common sense, and affects remote rural authorities more than others across the country?
Mr Betts
I will not go through every detail of this settlement. There is always a balance to be struck in local government settlements, and Ministers have to make their own judgments about that. It is the overall impact that I want to judge the settlement by. For me, this is a fairer settlement for those authorities with high levels of deprivation and some of the worst cuts in the years of austerity.
Mr Snowden
It is all very well to say that this is a fair settlement. On balance, councils that have Labour constituencies benefit from it, and councils that are represented by Conservative Members do not. The fairness can be derived from that.
Danny Beales
I am an MP with a Conservative council, and a colleague from the Conservative Croydon council area—[Interruption.] Conservative Members cheer; unfortunately, it is a bankrupt Tory council, but luckily this Government are stepping in, have followed the deprivation and the need, and are properly funding that council, regardless of its political colour.
Mr Betts
Absolutely. Councils should be funded according to need, not according to political representation. [Interruption.] Before Conservative Members start, I do not know whether they are old enough to remember Dame Shirley Porter and Westminster council, and how they were stuffed with money over visitor nights, just to ensure Conservative victory at the local elections. But we will move on from that. That was a long time ago.
I say to the Minister that these are big challenges that need to be addressed. We have to get to grips with them. We also have a local government finance system that is fundamentally broken. The Chair of the Housing, Communities and Local Government Committee commented on that in her excellent speech. Moreover, the Select Committee in the previous Parliament made the same recommendations as her Committee did. In the modern age, how can we continue to fund local authorities using a council tax system based on valuations from 1991? It is nonsensical. It is not sustainable. Imagine asking someone how the value of their new house had been arrived at, and them saying, “Well, this is a guess at what it would have been worth in 1991, had it been built then.” This is ridiculous, and we must change it. It is also regressive. Michael Gove, the former Secretary of State, said that the system was regressive, and it is. Poorer households pay disproportionately more in council tax. It simply is not fair.
In every year since 2010, council tax has taken a higher and higher share of local government funding, placing a greater and greater burden on that part of the funding settlement, which is regressive. When the Chancellor made commitments during the election campaign not to increase certain taxes, council tax was omitted. Therefore council tax has been going up disproportionately. It is an unfair, regressive tax that hits the poorest hardest. We simply have to do something about that.
This comes back to the democracy point that the Chair of the Select Committee made. While this is going on, poor families have to pay disproportionately more, but in terms of local government spending, more is going on social care, homelessness and special education needs—the things that are really important, but which most people do not receive. That means that most people, particularly those on lower incomes, are paying more tax every year and getting less in services, because of the cuts to other services, as the Public Accounts Committee recognised. That is not sustainable. It undermines trust in local authorities. People say to me, “The council has put up my council tax, but I am getting less for it.” This really has to change.
Mr Brash
In Hartlepool, 70% of every penny the council spends is on social care, and my constituents pay, as a proportion of their property value and as a proportion of their income, far, far more than the more affluent areas of the country. As my hon. Friend has said, they do not receive the services that they need. Is it not time to abolish the council tax system?
Mr Betts
The reform needed is so fundamental that the system would not be recognisable from what we have now. That is how we have to try to move forward.
We were promised business rates reform, but what we have had so far is not reform, but some minor changes. Yes, we have had good changes to try to help pubs and leisure facilities, but it is not fundamental reform. We could look at what Denmark and Australia have done to reform their whole system of council finances based on land values. That is one alternative. Let us at least have a look at it. Let us at least accept the need for change, even if we cannot agree at this point on precisely what that change should be.
In bringing about that change, I say to my hon. Friend the Minister that we should look at giving local authorities more power to determine their own levels of taxation. We are an outlier in Europe in how centralised our local government finance system is. That is another challenge. It partly comes from the great inequalities we have between different parts of the country, which are much greater than in most other European countries. I welcome the ability for councils to introduce a tourism tax, but that is a minute step towards more say for local councils about the money they can raise. It is a welcome but very small step.
I congratulate the Minister on the reforms and improvements to the existing system. Those are welcome, and my city and my constituents welcome them. However, big challenges lie ahead in making more fundamental reform to the system and giving more powers back to local councils to determine what money they can raise. The Minister will probably not stand at the Dispatch Box today and say, “We completely agree. We are going to get on with it,” but the Government should at least start thinking about it.
Commonhold and Leasehold Reform
Clive Betts Excerpts(1 month ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Matthew Pennycook
It is clear that this draft Bill cannot do absolutely everything, and it is the Government’s considered opinion that we do not need provisions on service charges in this Bill—not least because, for the reasons I have set out, we do not intend to implement a service charge cap—and that the provisions in the 2024 Act will do the job. Help is on the way, though, and I want to ensure that those provisions are switched on at the earliest possible opportunity.
Mr Clive Betts (Sheffield South East) (Lab)
First, I congratulate my hon. Friend the Minister on the magnificent job he has done with this legislation, as well as the Chair of the Housing, Communities and Local Government Committee, my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi), who has pushed him and bothered him all the way down the corridors for months on end!
It is now eight years since the previous Committee looked at this matter and recommended radical reform of leasehold. One of the challenges in my constituency—still—concerns individual householders who try to buy their freehold and find that the freeholders will not even respond to their requests, and then push them through complicated and expensive procedures before they can get their entitlements. Can the Minister give us an assurance that that procedure will now be simplified and cheapened?
Matthew Pennycook
I thank my hon. Friend for his kind words on my role in developing the draft Bill. I can say to him very plainly: yes. If he looks at the consultation on service charge protections that we released last summer, he will see proposals that specifically address non-litigation costs and other measures. However, as I said, it is our intention to ensure that in the enfranchisement process, it is not only cheaper but easier for leaseholders to make use of their new rights and protections if they intend to buy their freehold or extend their lease.
Local Government Finance
Clive Betts Excerpts(2 months, 1 week ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Alison McGovern
I am glad that the hon. Gentleman was listening when I gave my earlier answer on rurality. We have recognised where there are extra cost pressures, and I will happily discuss this in detail with him if he wishes. This is recognised in the statement and in the data that we have taken account of. The new deprivation statistics are much more fine-grained, and they can find poverty wherever it is, whether it is in a town, a city, a village, a rural area or wherever.
Mr Clive Betts (Sheffield South East) (Lab)
I do not know whether my hon. Friend is as surprised as I am that the official Opposition could not even bear to mention the word “austerity” when they responded. Before we move on, there was a case of amnesia from the Lib Dems, who forget their role, under the coalition Government, in some of the worse cuts of all that local government experienced. I therefore welcome the Minister’s comments about deprivation. The poorest councils got hit hardest during austerity by the Conservatives. I thank her for putting tackling deprivation at the heart of this settlement.
I have two challenges. The Chair of the Select Committee, my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi), reiterated what we said in the Select Committee in the last Parliament: council tax is regressive and has to be reformed. The Minister mentioned the need for long-term changes to the whole way in which social care is funded. Would she at least begin a conversation across parties to try to get long-term agreement about how this should be done? It has failed over and over again through parties squabbling over the details. We need a long-term settlement. Can we at least start those conversations now?
Alison McGovern
My hon. Friend is extremely experienced in these matters and remembers, as I do, the impossible situation that councils, particularly in the poorest areas, were put in under the Tory Government. He is right to point out that the Lib Dems did play a small role in that, too. On his questions, I always read in detail the Select Committee’s reports, and I will do that with the ones he mentions. The Government have set out the pathway, making the immediate change that I said on social care and asking Baroness Casey to drive us towards that long-term vision that he points out. That is exactly what we need to do; we need to fix this for the long term.
Planning Reform
Clive Betts Excerpts(2 months, 1 week ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Matthew Pennycook
There is a lot in the hon. Lady’s question, but let me say a couple of things. First, we have been clear as a Government that when new housing comes forward, it must be matched with new amenities and infrastructure. We strengthened the policies in the previous framework last year to provide for community infrastructure, but today’s draft framework consolidates and strengthens that even further. She will be interested in the new vision-led transport measures in the framework, again strengthening those provided for last year. We want the appropriate amenities and infrastructure to come with housing, because we want to create not just housing units, but thriving places and neighbourhoods for people to live.
Mr Clive Betts (Sheffield South East) (Lab)
I congratulate my hon. Friend on his efforts to get the homes built that the country needs, particularly for young people, who face the prospect of never being able to afford a home of their own. I have two questions. First, does he think that where a site is earmarked in a local plan for development, the local planning authority should give permission for that development automatically? Of course, the details will have to be considered at the time, but there should be a presumption that such sites will be given planning permission when an application is made. Secondly, the draft local plan in Sheffield, as he knows, is mainly geared up to building on brownfield sites, but there are some proposals to build on greenfield sites to create the additional number of homes. He has laid out the golden rules for infrastructure development that will go alongside house building, but will he give the assurance that if a site in the local plan is on green belt, the planning authority has the right to turn down an application, if infrastructure will not be provided alongside the development?
Matthew Pennycook
My hon. Friend tempts me, I think deliberately, to comment on his local plan, which, for reasons that he will appreciate, I cannot do. On the general principles, there are many factors that need to be considered when planning committees, officers or elected members consider particular application, but we want to see greater weight given to applications on sites that are allocated in the development plan. This goes to the question from the hon. Member for Chippenham (Sarah Gibson). We want plan-led development. Local plans are the cornerstone of our planning system. That is why it is such a problem that we inherited a planning system where the coverage of up-to-date local plans is only a third. We are determined to drive up coverage of local plans, and to drive plans to adoption as quickly as possible.
When it comes to the green belt, through the changes that we made last year, we have set out a very clear sequential test for what local planning authorities need to do when they have exhausted brownfield development, densification, cross-boundary planning and co-operation with local authorities. When they do need to review green belt, they should start with the poorer-quality green belt—grey belt—in the first instance, if that is required to meet their housing need.
Electoral Resilience
Clive Betts Excerpts(2 months, 1 week ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Steve Reed
The hon. Member is absolutely right to raise concerns about cryptocurrency. There is no way of knowing for certain what the origins of that financing might be. It appears to be potentially a back door for malign foreign actors or states to seek to influence British democracy, and we cannot allow that. It will be up to the independent reviewer to choose where he wishes to go with the investigation, but I am sure that the hon. Member and other members of his party will make clear the points he has just made and that they will be fully considered.
Mr Clive Betts (Sheffield South East) (Lab)
I would like to follow up on the question raised by my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders) about social media. This is really important. If a foreign Government are funding third parties to post false comments on social media in order to mislead people exercising their democratic rights, surely that must come within the terms of the Rycroft review. Could the Secretary of State confirm that that is up to Philip Rycroft and that he has the capacity to bring it within the terms of the review, given that particular issue?
Steve Reed
Yes, that is correct. What my hon. Friend has just described are foreign financial attempts to influence our democracy, and that will be in scope for the review.
Oral Answers to Questions
Clive Betts Excerpts(11 months, 3 weeks ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Angela Rayner
Again, I sympathise with the hon. Gentleman. As I have said, this Government are absolutely committed to ensuring that we get that infrastructure and that development is a truly plan-led system. The policy framework is meant to do that, and we intend to consult on future policy changes—including a set of national policies for decision making—this spring.
Mr Clive Betts (Sheffield South East) (Lab)
Last week, the Government produced new guidance about building on green-belt sites, particularly the golden rules about having sufficient infrastructure in place for health, education and transport. At the request of the Planning Inspectorate, Sheffield now has to provide sites in the green belt to hit its housing targets. Will the Secretary of State make arrangements for the Housing Minister to meet the leader of the council and local MPs to discuss how those arrangements can be delivered, and liaise with her colleagues in other Departments to ensure that: the resources are available to enable that to happen?
Angela Rayner
I can do better than that: the Housing Minister is going on Thursday.
Grenfell Tower Inquiry: Phase 2 Report
Clive Betts Excerpts(1 year ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Angela Rayner
Let me expand my invitation: I am sure that the safety Minister would be happy to meet the hon. Lady. We will legislate to make it a mandatory requirement that fire risk assessors are competent to perform their critical role, and are certified against approved standards by a certification body accredited by the United Kingdom Accreditation Service. The Government are supporting an industry-led British standard for fire risk assessors; that standard is currently being drafted, and once it is completed, that will create a single, clear definition of competence against which certification and qualification should be mapped.
Mr Clive Betts (Sheffield South East) (Lab)
Our thoughts today are obviously with the Grenfell survivors, and the family and friends of those who died. I thank my right hon. Friend for her comprehensive response to the inquiry report. I think I agree with everything she said, but I seek one point of clarification, and there is one area in which I will push her to go a little further, if I may.
First, as my right hon. Friend said, it is really important that we respect and value social housing tenants and treat them equally. Will she give social housing tenants access to the building safety fund on equal terms with private leaseholders? Secondly, the testing of products by construction manufacturers has been a disgrace for many years. They have gone from one testing house to another until they have found one that passes their products. Those products could come on the market, having had several failures and one pass. Will my right hon. Friend pick up a cross-party recommendation made by the Select Committee in the last Parliament—the recommendation that the results of every test done on a construction product be made public, whether the result was failure or a pass, so that we can all see the real strength of products, and whether they are fit for purpose, before they are put on buildings?
Angela Rayner
I thank my hon. Friend for his comments, and I am certainly happy to look at that recommendation. We accepted in full all the recommendations that the phase 2 report came out with; that is an important baseline, but I am happy to look at what more we can do.
Turning to social housing, we will set out plans in the autumn Budget to give councils and housing associations the rent stability that they need in order to borrow and invest in new and existing homes, while also ensuring appropriate protections for existing and future housing tenants. We will bring forward details of future Government investment in the forthcoming spending review, and we will keep that issue under review.
English Devolution and Local Government
Clive Betts Excerpts(1 year ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Angela Rayner
I am disappointed when things are on social media first. I respect this House, Madam Deputy Speaker, and I have come here at the earliest opportunity to update the House.
On the cancelled elections, councillors in those areas are elected, and we have delayed for reorganisation only under exceptional circumstances, where councils have come forward. As I have made absolutely clear, the delay is for a year, from May 2025 to May 2026. As I stated earlier, I turned down many more councils because I believe that democracy is crucial. There is an active role for district councils. We are working with districts and local authorities to ensure that the consultation period and reorganisation are being done with them, not being done to them. It is incredibly important to stress that.
Mr Clive Betts (Sheffield South East) (Lab)
May I follow up on two issues? First, following the comments made by the Chair of the Levelling Up, Housing and Communities Committee, while devolution arrangements are being put in place, there is still pressure on councils to deliver existing services. Will the Secretary of State look at some additional short-term funding to help council officials with that process? Secondly, in the longer term, we will need a lot of very good councillors to deliver the new authorities. Will she look once again at reinstating the right of councillors to become part of the local government pension scheme, so that people who often give up financially in order to be councillors do not have to do so in the long term, with reduced pensions?
Angela Rayner
We recognise the pressures on councils. We are delivering a real cash increase to councils, with £5 billion more in the settlement. The Minister for Local Government and English Devolution will be leading a debate on that later today. We recognise that councils had it difficult under the previous Administration, which is why we are working with them. We are giving them real-terms increases to their budgets and we want to see reorganisation that focuses on the delivery of service for the people who desperately need it.
Local Government Finance
Clive Betts Excerpts(1 year ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Jim McMahon
I think that that is true up to a point, but we need to take a couple of factors into account. First, the payment relating to employer national insurance contributions goes straight to the council. Secondly, this needs to be taken in the round. For the right hon. Gentleman’s own council, the social care grant is £48 million, the social care change grant is £6.7 million, and when it comes to third-party providers, the market sustainability and improvement fund is £10 million. We are trying to meet the demand in a very complex environment, but, as I have said, there is no pretending that this will fix a broken system in one fell swoop. The reform will take time.
Mr Clive Betts (Sheffield South East) (Lab)
My hon. Friend has done an excellent job on behalf of local government with this settlement, in very difficult circumstances, and I think the sector recognises that. However, I have one caveat. In response to the questions about council tax, he said that there would not be unanimity, but I think there will be a great deal of consensus that if the former Secretary of State, Michael Gove, thinks the system is regressive, it is probably very regressive. I hope my hon. Friend is keeping his mind open—I think he did leave the door a little ajar—about the fact that at some point we will have to have a review of a system that is based on valuations that are more than 30 years old. This is simply not sustainable for the long term.
Jim McMahon
I take my hon. Friend’s points entirely. I credit him for much of the work that was done when he chaired the Select Committee, which he did for a long time, and I attribute to his intervention the credibility that it is due. We are focusing today on our immediate fiscal response to support councils over the current financial year, but we accept that to bring about long-term structural reform, such matters as addressing a council’s ability to raise local tax through business rates and council tax must be taken into account, alongside, of course, the cost of delivering public services, including the cost of rural service delivery. We are absolutely committed to taking all those factors into account.
Kevin Hollinrake
I will come on to that, but we do have a different perspective. The point that I am making principally right now is that there are rising costs on councils, both in direct costs through national insurance and through indirect costs, which are not fully covered by this settlement, and I think the Minister accepted that fact earlier in his remarks.
The reality is that rural areas will face higher council tax increases to make up for reduced central funding, despite the cost increases of providing services in rural areas. To give the House an easy example of this, my local authority, North Yorkshire council, spends more on school transport than it does on the whole of children’s social care. That is the cost of delivering services in rural areas. Despite that, the Labour Government have chosen to scrap the rural services delivery grant. They have said that they are repurposing it, but it is now clear that this has not been repurposed to support rural areas in the way that the delivery grant used to do, despite the higher cost of service delivery in those areas.
The chairman of the County Councils Network, Tim Oliver, has warned that rural areas will lose hundreds of millions of pounds due to Labour prioritising urban areas over rural ones in the way that it distributes funds. The Government are moving distribution away from a needs-based formula to one based on deprivation. He has warned that Labour’s funding formula will mean that rural councils would lose an estimated £190 million in a single year. He has also stated that, when taking into account the moneys needed to cover the costs of the national insurance increases, this is the worst settlement for county councils in four years.
Mr Betts
Can the shadow Secretary of State just explain his comments? I agree with my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) that the hon. Gentleman one of the more reasonable Members on the Conservative Benches. He said that the Government are switching money away from a needs-based formula to one based on deprivation. Is not deprivation very clear evidence of needs in the community? What is the difference?
Kevin Hollinrake
Of course there are some needs around deprivation, but that is not the entirety. The major cost drivers for local authorities are the things that I outlined earlier: adult social care, special educational needs and temporary accommodation. There may be some crossover, but the reality is that simply basing that on deprivation will not work for all authorities; some will be worse off as a result of moving from need to deprivation.
Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)
I welcome the real-terms funding increase in the settlement, in the context of a decade of cuts and financial mismanagement. The Minister outlined the additional funding for the children’s social care prevention grant, which will help provide vital services for children in their formative years, which is really important. There is the £660 million recovery grant for places with greater need and demand for services. It is important that we continue to focus on prevention, to stop us getting to a situation where many councils are asking for a bail-out later on.
I would like to remind Members of the consequences of the situation that our councils face up and down the country. For some councils, it means the end of community programmes that keep people active, or that mean people can go out and speak to others. I hosted an event last week on loneliness. Many of our constituents report feeling lonely, and those vital community services keep them active. Because of the situation that councils face, some children who are in need of an education, health and care plan are not getting that support, and we see some parents and carers having to quit work just to get adequate provision for their young people. It means that more and more families are ending up in completely unsustainable temporary accommodation, and we hear stories of families having to travel three to four hours every day just to get to school or work. No one should have to go to bed at night and be unable to sleep because they fear that the accommodation they are in could harm their family. Seventy-four children have had their deaths linked to temporary accommodation in the last five years. We are one of the richest countries in the world. This should not be happening.
People rely on our council services for their wellbeing, and we need to end the chronic underfunding of those vital services. We must remember that what we see today is the result of a false economy of underfunding local government for over a decade. For years we have had to see councils cut vital prevention services just to make ends meet. The result is that more and more people are in dire need of those services, which are far more costly not just to the local authority, but to the livelihoods of the people who need them. We see that in private rented sector inspections, in maintaining and repairing our housing stock, and in providing the vital youth services that my hon. Friend the Member for Croydon East (Natasha Irons) referenced, which boost the life chances of teenagers and young adults. If we are honest, the tragedy of the last 14 years is that it has seen more costly services for our local residents.
This settlement is a welcome step in the right direction to help councils meet some of the pressures they face, but again, if we are all honest, many of our councils will still struggle to provide the vital services that residents need and deserve. I am sure that many Members eagerly anticipate the start of the Housing, Communities and Local Government Committee’s inquiry on local government finances. As Chair, I do not want to pre-empt what we will discuss over the next few months, but I want to raise a few specific points with the Minister today.
The Minister knows—he has received representations on it and Members have raised it—that because large councils are big employers, they will be impacted by the rise in national insurance contributions, as the shadow Minister, the hon. Member for Thirsk and Malton (Kevin Hollinrake), referenced. He also referenced the LGA data, which indicates that even with the additional generous funding outlined by the Minister, councils will still be short by over £100 million to cover the extra cost for directly employed staff. The Minister touched on the service expenditure cost, but there is still a gap that needs to be filled. Is the Minister considering the impact that will have on staffing pressures in our councils, and have the Government considered the effect of indirect costs through the commissioned providers? Our councils do not exist in a bubble. The impact of other Government spending areas, such as health and welfare, will have a drastic effect on the costs that our councils face.
I come back to an issue that I have raised multiple times, as the Minister knows. I remain concerned about the impact of freezing local housing allowance at a time when private rents have gone up by nearly 10%. That could create extra and significant burdens on the vital and well thought-out homelessness prevention work that our councils do. Will the Government finally confirm what work they have done to assess that risk; whether freezing LHA will impact on families who are struggling with rising rents; and what pressures—unintended, maybe—that could place on homelessness services across the country?
Mr Betts
My hon. Friend raises an important point on local housing allowance. When we considered that issue in the Public Accounts Committee, it was pretty obvious that officials had not done any proper assessment of the impact that freezing the allowance would have on homelessness. Something ought to be done. If the Government take the major step of freezing an important allowance, they ought to know what impact that will have on other services.
Florence Eshalomi
I thank the former Chair of the Housing, Communities and Local Government Committee —I know of the work that his Committee did on this issue. The reality is that we need to build more homes. The Government have an ambitious target, but our residents need somewhere to live in the interim. That will mean more strain on the private rented sector and on rents. I hope that the Minister is considering that impact in his work with officials from other Departments, including the Department for Work and Pensions.
Will the Minister inform the House about the details of the public health grant for 2025-26? That will play such a vital role in addressing major health inequalities, which we all want to see reduced in our respective areas. We are talking about treatment for drug and alcohol services and smoking prevention, for example. I declare an interest as a co-chair of the all-party parliamentary group on HIV, AIDS and sexual health. Vital sexual health services help to address health inequalities, so it is vital that councils get funding—and certainty about it.
Extra money is only part of the solution. Some residents will yet again face higher council tax bills next year. They have the right to scrutinise, ask and ensure that every penny of that is spent in the right places, but the reality is that accountability in local government is far too often not fit for purpose. As the Minister knows—he referred to it—the situation got so bad that the National Audit Office refused to sign off the whole of Government accounts for the first time ever in November last year. Only one in 10 councils submitted reliable data for 2022-23, and over 40% did not submit any data at all. The Minister outlined the mess that he inherited, and the measures that the Government are taking to deal with the backlog, but we must ensure that we do not find ourselves in this position again.
The Minister also referred to the local audit office. Will he confirm what additional long-term steps the Government will take to address local government auditing? The consultation closed recently, on 29 January, and I would be grateful if he would outline a timeline for updating the House on that. I know that he shares my desire to give councils the support and flexibility they need. The first step in that is to fix council finances. We welcome the Government’s commitment to multi-year settlements from 2026-27 to give our councils the certainty that they have lacked for so long. I hope that he and the Government will remain open-minded to some of the reforms that our Committee will look at, so that we can all see councils up and down the country delivering the effective services that our residents need and deserve.
Mr Will Forster (Woking) (LD)
Local government should be the bedrock of our communities. Councils should be empowered to deliver local services and invest in infrastructure, and they should be planning to make sure their communities prosper. Instead, years of Conservative mismanagement have left councils across the country on the brink of financial collapse.
Nowhere is this clearer than in my constituency of Woking. Woking borough council faces debts of over £2 billion. That debt is a direct result of reckless local decisions made by the Conservatives, enabled by a former Conservative Government who refused to step in until it was too late. This catastrophic black hole has had devastating consequences for my constituents, and because of this crisis and that Conservative legacy, public services have been—and continue to be—stripped back. Community projects are now a second thought, and council tax has gone up. As Woking’s new Member of Parliament—elected seven months ago, mind you—I have regularly raised the plight of my council’s finances and those of the whole local government system with the Minister and the Department, and I will continue to do so.
Mr Betts
On these occasions, I always sit and wait for the Lib Dems to accept some responsibility for the financial mess they created in local government. There was a 50% cut in grants to local government during the 14 years, and the biggest part of that cut came during the coalition Government. Is it not time that the hon. Member stood up on behalf of his party and apologised for his role in austerity, which created this crisis?
Mr Forster
I was about to be nice to the Minister and the team before the hon. Member intervened, which is quite ironic.
I am very grateful that the Government have listened to the concerns of distressed councils, including mine. Unlike the previous Government, who imposed higher council tax rises and higher interest rates as a punishment for bankruptcy, this Government have listened, and I am grateful to the Minister for doing so. That has saved my council alone millions of pounds. What I found very surprising was the brass neck of the shadow Secretary of State, the hon. Member for Thirsk and Malton (Kevin Hollinrake), when he criticised this Government for their tax rises; the previous Government punished my council with a 10% council tax rise because it dared to go bankrupt as a result of Conservative decisions. I have urged the Minister to not impose the same level of council tax rises as the previous Government, and I hope he will not do so.
Thanks to the work of the Liberal Democrats who now run Woking council and the amazing council staff, Woking is turning a corner, but I really worry for its future and that of councils like them, and the District Councils’ Network worries as well. The Minister has highlighted that there is no reduction in any local authority’s funding this year, but the DCN says that 0.3% is the average cash increase in core spending power for boroughs and districts. That is not good enough. Those councils shape their areas—they protect homeless people—and a 0.3% increase in core spending power is just not acceptable.
Turning to county councils, the County Council Network says that four in 10 of its members say that they are in a worse position than before the autumn Budget and the financial settlement, and one third say that their service reductions next year will now be severe. Considering that there is very little fat left to cut, I really worry about those services.
Mr Clive Betts (Sheffield South East) (Lab)
I am pleased to say that this is one of the first occasions for many years when in speaking in this debate, I do not have to stand up and say how badly Sheffield is being treated, because we have got a fair settlement for the first time in 14 years. Sheffield is a well-run council, and I congratulate Councillor Tom Hunt, the leader of the council, and Kate Josephs, who is the chief exec. We are not at a financial cliff edge. This settlement will not resolve all the problems and difficulties that the council has, but it does mean that the cliff edge is a bit further away, and the council has a bit of room to look at and take serious decisions about resource allocation and trying to continue with—and in some cases hopefully improve—some of the services.
In this settlement, Sheffield council has received £16.5 million from the recovery grant, which is right. We have lost out in so many settlements, because we are a deprived community, and deprived communities had the biggest cuts of all during the years of austerity. That is the reality. Some 60% of our properties are in band A. Putting council tax up does not bring in the same amounts of money as it does in more affluent areas, and it is right that the Government have recognised that.
We have an increase in the grants for social care and homelessness provision, and that is welcome, though I have to add a caveat. The council is saying to me that those grants still do not cover the increased costs it is facing in those two areas. Indeed, the national insurance increase has not been totally compensated for by Government. There are some challenges and issues in the settlement. It is not 100%, but it is an awful lot better than where we have been previously, and that is what we must remember.
I am sure the Minister recognises that this is the easy year. We come to the real challenges next year with the longer-term settlement. A three-year settlement is absolutely right. Fair funding will be looked at, and that is absolutely right. It cannot carry on. The previous Government were going to do a fair funding deal 10 years ago, but they never got around to implementing it. Clearly that review is needed; it is just a question now of getting on and doing it. We recognise that is a massive challenge.
If we are going to get that settlement right for the three years, we have got to address children’s social care, SEND provision, homelessness and the fight for temporary accommodation between different Government Departments, which drives costs up. Those issues need resolution. We also need a resolution to adult social care, although I understand that may not come until a couple of years afterwards. If we can at least sort the other issues out, it will be a significant step forward.
I will raise three other issues briefly, because I appreciate the shortage of time. I can see the Chairman of the Public Accounts Committee, the hon. Member for North Cotswolds (Sir Geoffrey Clifton-Brown) on the Opposition Benches, and he will probably recognise this point. We have been told clearly by the Treasury that from next year, Departments must not spend money allocated for capital projects on revenue. The way that local Government has had to be bailed out in the past few years is by capitalising revenue expenditure. What happens if the Treasury locks down that activity? Has any thought been given to that? It clearly needs some thinking about.
The Chair of the Levelling Up, Housing and Communities Committee, my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi) mentioned public health. Why is the grant late once again? I accept that is probably not the Minister’s responsibility, but he referred to prevention being important, and it is, and that is exactly what public health is about. From next year at least, can we get the public health grant at the same time as the local government grant?
Finally, I echo the comments about the hard work of local government staff and councillors in particular. Many councillors lose money, and there is a real challenge about getting younger people to become councillors. I asked the Secretary of State earlier about that, but she did not respond directly to my question. When will the Government look at reinstating the right for councillors to join the local government pension scheme? For many younger councillors, that is a real difficulty. They come in, they lose money, but they also lose their pension in the longer term, too.
Florence Eshalomi
I declare an interest as I served as a local councillor, like many colleagues in this House. It is about not just the pension; the additional costs that younger councillors face now to go in and serve their local community may be off-putting. On top of that there is the level of abuse that local councillors face for carrying out their public duty. Does my hon. Friend agree that the Government should look at that?
Mr Betts
I do. I welcome arrangements being put in place for the police to give more protection to councillors in that space. Recognising the financial strains, particularly for younger councillors, does not take a lot of money. I ask the Minister to allow that to happen.
I forgot at the beginning to declare my interest as vice-president of the Local Government Association. I am sure that it is pleased with the settlement. The Minister recognises the challenges that have been outlined—they are to be faced in future years, but I thank him for this settlement today.
Oral Answers to Questions
Clive Betts Excerpts(1 year, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Alex Norris
I have no doubt that the Opposition will have all the information they need to scrutinise the Government of the day—we always provide that with full transparency. What I will not accept is that the sand our economy was built on after the past four years, under the Conservative Government of the shadow Minister and the shadow Secretary of State, is somehow this Government’s failure. In reality, the hon. Gentlemen knows, exactly as we do, that we are fixing the mess that they left. Of course, they will have the chance to oppose us along the way, but we will get on with delivering for the British people, and they will get on with carping from the sidelines. I know where I would rather be.
Mr Clive Betts (Sheffield South East) (Lab)
The Minister for Housing and Planning (Matthew Pennycook)
I recognise that social housing providers need support to build their capacity and make a greater contribution to affordable housing supply, including via section 106. To assist in that, we have proposed a new five-year social housing rent settlement and permitted councils to keep all their right-to-buy receipts.
Mr Betts
I know that my hon. Friend is committed to increasing the provision of social housing. In the past few years, most social housing has been provided through section 106 agreements. According to the National Housing Federation, thousands of houses around the country are available but cannot be purchased under section 106 agreements because registered social landlords simply do not have the resources. I am sure that he is aware of that problem, but does he have any plans to deal with it and bring those houses, which are badly needed, back into use?
Matthew Pennycook
The Government certainly recognise the ongoing challenge posed by the reduced appetite of registered providers of social housing to buy affordable homes delivered under section 106 agreements. As I hope my hon. Friend is aware, the Homes England section 106 affordable housing clearing service was launched back in December alongside the revised national planning policy framework, with the aim of supporting buyers and sellers of section 106 homes to find each other more effectively. We are calling on all developers with uncontracted section 106 affordable homes, as well as providers and local planning authorities, to engage proactively with that new service. We will consider what further measures may be necessary to address the problem, informed by data from that service.