Covid-19: Funding for Local Authorities

David Simmonds Excerpts

Tuesday 24th November 2020 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Hollobone. It is clear that the countries that went local early are the ones that have had the most positive feedback about the way they responded to covid. My two local authorities, Hillingdon Council and Harrow Council, are no exception to that: they have redeployed huge numbers of staff from roles as diverse as working in our libraries and the councils’ contact centres to tasks such as delivering meals on wheels to vulnerable residents and back-filling other staff to enable them to be released—for example, to set up and run emergency mortuaries to serve London. There is no question but that council staff are on the frontline of the response to covid.

We have to consider the question of financing and what it means for local authorities in the future. Before this year of covid, local authority budgeted expenditure in England stood at about £99.2 billion. Within that, the official returns from local authorities show reserves of just over £25 billion, of which £23.6 is non-ring-fenced. I dare say that colleagues over at the Department of Health and Social Care will be looking enviously at MHCLG, because whereas DHSC has to bail out NHS authorities every year for the work they do, MHCLG is in a situation that many businesses would frankly be enormously envious of.

The challenge, however, is that we uniquely require local authorities to balance their budgets in year. Unlike central Government, they are not able to borrow to finance revenue expenditure. They have to make sure that those budgets balance every year, so if there is excess expenditure, cuts need to be made. When we begin to drill down into the national financial position, we find that revenue balances to cover the additional costs are not necessarily found in the authorities that have the biggest financial challenges.

The point made by my hon. Friend the Member for Waveney (Peter Aldous) goes to the heart of the issue. Social care authorities face a lot of demand. Certain London boroughs and county councils have the largest number of vulnerable people to support, but a significant proportion of the balance is in other types of local authorities that do not face the same day-to-day costs. I add my voice to the pleas to the Minister that we need to look at how the funding in the system is distributed if we are to do this better. When we drill down even further and look at the response of individual local authorities, it becomes clear that the covid impact is very different from place to place. Around two thirds of the average council’s expenditure is on social care for adults and children, which concerns less than one in five of the population.

The response to covid has brought all manner of new and additional costs, the vast majority of which—according to feedback from Hillingdon and Harrow councils—has been covered by the forthcoming additional funding from MHCLG. I might not be expected to say this as a serving vice-president and former Conservative group leader at the Local Government Association, but MHCLG has rightly been coming forward with that funding. With respect to the points about how expenditure has changed over time, it is important to recognise that many authorities have, of course, not historically benefited from additional funding based on deprivation. Many of the authorities that have been criticised never had the extra money to cut in the first place.