Local Government Finance

David Simmonds Excerpts

Wednesday 11th February 2026 Commons Chamber

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

The Secretary of State and I will have had long experience of working with Morgan McSweeney during the many days he spent as head of the Labour group at the Local Government Association. I think that influence is reflected in the very political speech we have just heard from the Secretary of State. Despite its political excellence, I am struggling to reconcile his speech with what is actually in the finance statement he has laid before the House to agree this afternoon. We have a high level of agreement that local government touches all our lives in our communities. We recognise its huge potential to develop our economy, improve public health and give children a great start in life, and we know that the average local authority in this country delivers over 800 different services. They are there for us literally from cradle to grave, and are led by democratically elected councillors who run budgets that are bigger than those of many Government Departments, in organisations that are more complex than many a FTSE 100 business.

However, having served—like the Secretary of State—as a councillor under the last Labour Government, we see a swift reversion to type. Announcements of funding for social housing may arrive towards the end of the decade; funding for schools from VAT on fees for private education amounts to a real-terms cut in state school funding; and at the heart of what the Secretary of State has set out is a massive diversion of funding away from the legally enforceable statutory duties placed on councils by this Parliament and towards generalised poverty as a driver of those allocations.

[Sir Ashley Fox (Bridgwater) (Con)]

Does my hon. Friend acknowledge that the Labour Government have abolished the rural services delivery grant, a decision that has cost Somerset council £4.1 million and has cost other rural counties many millions of pounds—rural counties in which it is more expensive to provide services? Does he agree that this is Labour diverting money from rural areas that are desperately in need to Labour strongholds in the north?

[David Simmonds]

My hon. Friend is absolutely spot on. The analysis produced by the County Councils Network makes a comparison between the funding pressure on statutory services facing the urban councils that are the beneficiaries of the Government’s largesse, which totals £180 million a year, and the budget gap facing rural areas as a result of this Government’s decision, which is a £2.7 billion black hole.

[Sir Desmond Swayne (New Forest West) (Con)]

That is nothing new. In every one of the last 29 years, people who are lucky enough to have a modest property in the New Forest and a mansion in the city have come to me to complain about how much more their modest property in the forest costs them in council tax. I have told them that the one is subsidising the other, but people who are not in that fortunate position—young families in my parliamentary constituency with only one property—are subsidising the north and the cities, and they cannot afford it.

[David Simmonds]

I hesitate to disagree with my right hon. Friend, but it was not ever thus. The rural services grant referred to by my hon. Friend the Member for Bridgwater (Sir Ashley Fox) was a measure to address those additional cost burdens, including direct costs arising from statutory duties. It was a funding stream that is being removed by this Labour Government.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

rose—

[Natasha Irons (Croydon East) (Lab)]

rose—

[David Simmonds]

I will give way to my constituency neighbour.

[Gareth Thomas]

The shadow Minister will remember that when the Conservative party took control of Harrow council four years ago, it did so on a promise of freezing council tax, which he presumably campaigned on. Instead, council tax has risen by 20% over the past four years. Will the shadow Minister take the opportunity to apologise to the people of Pinner—indeed, of Harrow more generally—for his party saying one thing when it was campaigning and then doing exactly the reverse, increasing the cost of living for his constituents and mine?

[David Simmonds]

Without wishing to be parochial, I am sure the hon. Member would also like to join in the apologies for the appalling level of corruption that had taken place under Labour in the London borough of Harrow. As has been covered extensively in the local and national media, it left an astonishing legacy of cost overruns in the local authority’s highways department, which has taken a good deal to recover from. I am sure we would not want the House to be inadvertently misled about the impact of those cost overruns.

[Graham Stuart]

It is far from my typical habit to get involved in political knockabout, but following that astonishing intervention that showed a total lack of self-awareness, does my hon. Friend remember the now Prime Minister saying that council tax would go up by “not a penny”? This settlement assumes an increase of 5% a year on low-income people in rural East Yorkshire at the same time that core funding is cut. That is a £200 hit for the smallest house in our area, while—as my right hon. Friend the Member for New Forest West (Sir Desmond Swayne) said—very valuable homes in central London seem to pay a fraction of the amount.

[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.

[Mr Jonathan Brash (Hartlepool) (Lab)]

I am sure the hon. Member did not mean to inadvertently mislead the House, but as I was a councillor in Hartlepool in 2010, I can tell him with absolute surety that it was the Conservatives who cancelled the building schools for the future programme. I think he should take the opportunity to correct the record. You cancelled it; we initiated it.

[Mr Brash]

Sorry, they cancelled it; we initiated it.

[David Simmonds]

One of my tasks in the world of local government was to engage with that last Labour Government and the disastrous consequences of their overspending. They were completely clear with authorities such as mine that stopped work on BSF that they did not have the money to see through the promises that they were making to the public. We were told that by the Department for Education. I am very confident that my constituents understand the consequences that a Labour Government have on their politics.

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

rose—

[David Simmonds]

I will give way to my constituency neighbour.

[Danny Beales]

The hon. Member is very generous with his time. I always have a lot of time for him. He is talking about our constituents in Hillingdon. Is it not the case that the financial settlement of the previous Tory Government, which also included council tax, had a 7% cut to core spending power for our constituents in Hillingdon? This spending settlement has almost a 40% increase in core spending power for our constituents. [Interruption.] hon. Member seems rather depressed about this announcement. Surely that is fantastic news for our constituents. Does he not agree with me that thank God we have a Labour Government for Hillingdon?

--- Later in debate ---

[David Simmonds]

I appreciate that he knows rather more about Camden council than he does about Hillingdon council, but let us reflect a little further on the history. Our constituents last had a Labour council in 1998. I went to that budget meeting at which our constituents were faced with an 18.7% council tax rise—£60 million of unfunded efficiency savings by a Labour council. I think they understand where their political priorities lie and who has their interests at heart.

[Several hon. Members rose—]

[David Simmonds]

I will make a little progress, because I know that Madam Deputy Speaker will want others to have time.

History is repeating itself. Let us not forget that this is a statement that leaves two thirds of councils in England worse off, from the analysis that has been done by the Local Government Association. That piles additional costs on top of things such as last year’s national insurance contributions rise, which left councils £1.5 billion net worse off. This settlement tightens ringfencing, removing the ability of local leaders to deploy homelessness funding flexibly to meet local needs, for example. It also comes at a time when this botched reorganisation of local government has created chaos across the sector, with a hokey-cokey of elections promised and then cancelled, sometimes within 24 hours, from that Dispatch Box.

[Rebecca Smith (South West Devon) (Con)]

Does my hon. Friend agree that one of the problems with the current process for local government reorganisation is that there has been no direction on how the funding will work out? We have some proposals on the table that would leave enormously vast rural communities in constituencies such as mine neighbouring towns and urban centres that will see this as an opportunity to get what they want. This settlement does not give those rural councils any confidence that they will get the money they need once local government reorganisation has taken place.

[David Simmonds]

My hon. Friend draws attention to another significant issue facing local authorities: the level of uncertainty. Money has been promised, then withdrawn. Budgets have been allocated, then reduced. In that context, I am sure that her constituents will be as concerned as I am that so much of this money is simply built into massive tax rises across the country.

I will turn briefly to business rates. We know, including from the question that the hon. Member for Stourbridge (Cat Eccles) asked at Prime Minister’s questions, the pressure being felt acutely on our high streets, especially in hospitality and retail. A business owner in my constituency told me yesterday that across his food franchise, the business rates rise alone is an additional £100,000 a year. That is a lot of entry level jobs at risk. It means price rises for consumers, fuelling inflation. The rise is a barrier to investments in our high streets, and that situation is replicated across the country.

Let us not forget that under the previous Government—this is one of the things of which we are most proud—an average of 800 new jobs were created every single day we were in office. Let us never cease to remind those on the Government Benches that unemployment has risen in every single month of this Labour Government. They are a Government who clearly do not respect our local colleagues. They refer to leaders as mere community convenors. They seek to reduce our councillors’ level of discretion. They create uncertainty through a lack of clarity on reorganisation, on special educational needs and disabilities deficits and on whether mayoral elections are going ahead. That comes at a time when thousands of voters are being denied a say by this Government through the cancelling of elections. That situation is caused solely by the Secretary of State’s abject failure to deliver the Government’s devolution plans to the proposed timetable. It is one thing to cancel elections in a council that is about to be abolished, so that voters can instead choose its replacement. It is very much another thing to defer elections indefinitely while we wait for the Secretary of State to get his act together. Our councils and our communities deserve a better settlement than this.

I will conclude with some points that I hope the Minister will address in the summing up. One of the most striking things about this settlement is that the Secretary of State has come to the Chamber and said that the key priority for this Government is addressing poverty and deprivation. Poverty and deprivation do not feature in this local government funding settlement. They are not part of this formula that the Secretary of State is asking us to agree. What is striking is the things that he says are important. He talked about vulnerable children in education, but it is cash flat, same as last year. Virtual schools are cash flat. The revenue support grant for local authorities is cash flat. Personal advisers to care leavers are cash flat. Money for supporting local authorities with social care, which was specifically described as a priority, is cash flat. Buy one, get one free campaigns intended to reduce obesity in the public health environment have a 50% reduction. Even Awaab’s law, which was championed at the Dispatch Box just a short time ago by the Minister for Housing and Planning sees a cut of £26,000 from its paltry beginnings.

Perhaps the Secretary of State will reflect that what he is announcing is essentially a massive shift of funding away from the statutory duties and obligations that this Parliament has placed on our local authorities to those favoured political areas that the Government see as their priorities for the future.

--- Later in debate ---

[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.

[David Simmonds]

I just want to ask the hon. Gentleman whether he agrees with the Labour leader of Sheffield council, who says:

“Cost pressures continue to outstrip increases in funding, both specific inflationary pressures in major service areas, particularly for care, accommodation and construction, and the increasing volume of demand in housing and care.”

Is the Labour leader in Sheffield correct?

[Gideon Amos]

I hesitate to get too involved in the politics of Sheffield.

I am concerned that we are seeing reductions in Government funding for councils across the country, particularly in the case of rural authorities, which are especially hard hit by this settlement. Rural authorities find delivering social care and other services far more costly than in tightly drawn urban areas; Somerset’s 4,000-mile road network, for instance, is a massively more onerous proposition than a network in a tightly drawn urban area.

It is inexplicable that despite a consultation that considered maintaining the remoteness funding uplift across the country and across all funding heads of local government, it has been taken away from all funding heads apart from adult social care. Why would it be less costly to provide children’s services than adult’s services in a remote, rural area? Why would it be less costly to provide flood relief and flood protection than adult services in a rural area? A whole range of really remote authorities are affected, including Westmorland and Furness, Somerset, Devon and Cornwall, all of which are particularly badly hit.

Remote authorities have much greater areas to protect from flooding. I have spent recent days with families in Stathe and Burrowbridge on the Somerset levels in my constituency, where I have seen how heartrending it is for families to watch the water coming closer and closer to their homes. Some people are going to bed with the water 200 metres away, but by the time they wake up the next morning and look out of their window, it is only 20 metres away. In some of the places I visited, the water is lapping up against the houses themselves.

When Conservative Prime Minister David Cameron came down in 2013-14—the last time we had severe flooding—he promised Somerset that money would be no object. It turned out that he meant that Somerset residents’ money would be no object, because Somerset’s new rivers authority became the only one in the country not to be funded by central Government and to have to rely on local taxpayers.

When the Flooding Minister, the hon. Member for Kingston upon Hull West and Haltemprice (Emma Hardy), came down to Somerset yesterday, she said that Somerset will not be forgotten. I ask the Local Government Minister what extra support the Government are providing to Somerset council to deal with this flooding major incident, which could easily become a national emergency if effective measures are not taken now—and I mean in the next few days. Water levels are still rising, Minister.

Finally, we need an end to the massive expense of all this top-down reorganisation of local government where people do not want it. Forcing change on the structures of the natural communities that people know and love can only distract from the important work of reducing flooding, delivering care and all the other priorities that councils put first. No one I have met in Taunton and Wellington, in Somerset or on the levels has told me that what they really want to see is a metro-style mayor for their area coming down the road. Is spending almost half a billion on mayors really going to help any of our constituencies in the way that known, understood and strengthened local councils would?

While we welcome the limited extra funding, the settlement leaves too many questions unanswered on how SEND costs will be met. It is still going to lead to big cuts in services for rural and remote authorities, and on social care it leaves council tax payers bailing out a broken system. For all these reasons, we cannot at this stage support the settlement.

--- Later in debate ---

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

The Prime Minister said that there would be no tax rises on working people. I imagine that the working people who are about to receive a £500-a-year increase in their council tax, the working people in Westminster expecting an 82% rise in their council tax, and those in Wandsworth expecting an 87% rise in their council tax as a result of this settlement will wonder if “working people” was a phrase that applied to them. Those in our business community who heard the Prime Minister say to them that a Labour Government would introduce “permanently lower business rates” will wonder where the massive rise in their business rates bill has come from.

There are things in the reports before us that give us the opportunity to make tweaks and changes, and make progress. I am grateful to the Minister for the interest that she has shown, for example, in the way that the local growth fund—the method of distribution of which is having a huge impact, particularly on colleagues in Northern Ireland—offers scope for some adjustment. However, it is very clear that the recovery grant that the Secretary of State spoke about still bears little or no relation to the pressures arising from the statutory duties on local authorities. As we have heard from Member from across the House, it leaves councils tens of millions of pounds short of the money that they need to do the minimum required of them by this Government, and that is before addressing some of the broader, more general issues.

We have two motions before us. One of them is on the report on local government finance, and the other is on the report on the referendum limit. I am sure that we have all noted the complete absence of any Reform Members in the Chamber. I pay tribute to the champions of Worcestershire, my hon. Friends the Members for Bromsgrove (Bradley Thomas) and for Wyre Forest (Mark Garnier), who spoke up for residents against an authority that, having been part of a party that promised no rises in council tax and cuts in office, is now looking to top the league table with the largest council tax rises in the country this year. It should be ashamed of its misinformation to residents during election campaigns.

Let me mention some of the things that I hope the Minister will address in her summing up. The first is what the measures in the report do to support housing delivery. We know from the recent report by Savills that 23 of London’s 33 boroughs report that the net figure for new homes being commenced this quarter is zero. Lambeth council has been very public about that, and has reported net zero new social homes. The Secretary of State and the Chair of the Housing, Communities and Local Government Committee, the hon. Member for Vauxhall and Camberwell Green (Florence Eshalomi), are particularly familiar with that. It is clear that housing delivery is collapsing at a time when lofty ambitions are being set, and at a time when the grants for homelessness are cash-flat, as are care costs, and costs relating to vulnerable children and care leavers.

It is clear that for all the bluster, the smoke is clearing, and the mirror is not particularly shiny. The impact of the relentless rises in national insurance contributions and business rates, as well as an additional £750 million of costs to local authorities from changes to the emissions trading scheme, will put huge pressure on the ability of local authorities to deliver.

It having been said that the Secretary of State wanted to move away from a bidding process, we now hear that the funding that has been announced, without any detail, for special educational needs deficits will be the subject of a bidding process to the Department for Education, and there will be a requirement for a reform plan. It will be interesting to hear how that plan differs from the safety valve agreements that many authorities already have in place, which are reducing SEND deficits year on year.

What is clear in this settlement is that the Government are not meeting even their own standards on local government. Local democracy is paying the price, with elections cancelled and taxes relentlessly rising. This statement must be seen for what it is: it is a council tax bombshell; it is a business rates bombshell; it is part of a picture of a Labour Government who simply cannot manage the money.