Local Government Finances: London

Debate between Dan Tomlinson and Danny Beales

Wednesday 26th March 2025 Westminster Hall

[Danny Beales (Uxbridge and South Ruislip) (Lab)]

Last, but not least. It is a pleasure—less of a pleasure now, but it was a pleasure—to serve under your chairmanship, Ms Lewell. I echo the points my colleagues have made about the unprecedented financial pressures on London councils. While we need to tackle temporary accommodation, the SEND crisis and much more—that is as true in Hillingdon as in any other borough—we also need to ensure the very best financial governance for local authorities.

Unfortunately, in Hillingdon, on top of those long-term pressures, we have seen short-termism and poor governance. A salami-slice approach to budgeting—taking off an extra per cent each year—and the failure to transform services and build the financial base of the council long term have all come home to roost, with the council now in financial crisis. We have seen that if we do not invest in new homes, we get temporary accommodation pressures. If we do not invest in early years and youth services, and close them instead, we get more pressures later in the education system. That is what has happened in Hillingdon.

We have the lowest reserves among our nearest neighbours. The Chartered Institute of Public Finance and Accountancy reported that we ran them down from £62 million in 2021 to £20 million in 2025.

[Dan Tomlinson]

In Barnet, we have around 85 care homes. Inner London boroughs such as Camden and Islington have around 20, yet the grant that inner London boroughs receive is around £3 million, whereas Barnet council and other outer London boroughs only get around £2 million. Does my hon. Friend think that that injustice in the funding formula is also causing issues for councils such as the one in the area he represents?

[Danny Beales]

I do—we have to consider the costs that outer London boroughs face, as well as London more generally. As has been said excellently by my hon. Friend the Member for Leyton and Wanstead (Mr Bailey), London is special; it is different, and it faces extra costs and pressures. That is the case right across London.

This very year, Hillingdon’s own financial officer wrote a damning cover report to the council’s budget, making it clear that the road is fast running out. They pointed to governance issues within the council and an inability to meet its own, less ambitious savings targets in previous years, compared with the projected future targets. My constituents have paid the price for that mismanagement—they are paying substantially more every single year, with fees and charges going up exponentially, and getting fewer services as a result.

I welcome the calls for extra long-term financial support for local government, which is much needed; however, we have to ensure as a Government that when we agree that extra long-term financial settlement, which hopefully we will, governance improvements are in place. This money should not be used to fix the cracks in the short term again, but should be used to fundamentally transform services, including the SEND system, the housing system, the social care system and many others. In some authorities, when times were slightly easier than they are today, that did not happen.

To sum up and echo my colleagues’ points, London councils are on their knees financially. As a Government, it is vital that we intervene, because local government is key—it is everyone’s front door to government and their community. We need to invest and we need long-term reform of services, including our education and housing systems, to provide the mixed, successful and financially sustainable communities we all want to see.