Local Government Finance

Debate between Clive Betts and Natasha Irons

Wednesday 11th February 2026 Commons Chamber

[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 We talk about outdated data; places like my Croydon East constituency, in an outer-London borough, have been treated as though we have an endless pot of cash, or are endlessly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.