Provisional Local Government Finance Settlement

David Simmonds Excerpts

Wednesday 18th December 2024 Commons Chamber

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

It is Christmas. The two wise men and the wise woman on the Government Front Bench have arrived bearing their gifts for local councils, but on closer inspection, while the goal is beautifully packaged, the box is somewhat emptier than people had been expecting.

It has been a challenging few weeks for local government. We have heard the Government’s plans to take as much of the local as they can out of local government, and it is clear that this statement will leave our local authorities facing further challenges in doing their day jobs and significant uncertainty as we go into the new year. All that comes from a Government who promised just a short time ago that they would end the bidding war, as they called it, among councils. They then promptly started a new bidding war for homelessness funding, rather than addressing it through the settlement given that it is a core statutory duty of local authorities. The consequence of the Government’s approach is that localism, on central Government terms only, represents just in London a £700 million net cut in the funding that councils will have available to deal with homelessness at a time when rough sleeping is at 27%.

Councils face uncertainty about the cost of funding elections. The Minister told us just a few days ago that he would be considering whether to cancel local elections in places facing local government reorganisation. Up and down the country in all those local authorities, our returning officers are booking and paying for the polling stations, hiring the staff and carrying out the canvassing. They need certainty as we go into the new year.

Of course, our councils face additional and uncertain challenges that were announced in the Children’s Wellbeing and Schools Bill, as well as from various statements made by other Ministers, that clearly imply a significant increase in the cost of new statutory duties coming the way of our local authorities, with no clarity about how those may be funded. All of that is on top of bringing forward local government reorganisation proposals to a deadline early in the new year. It is not clear whose interests that serves, but for all those local authorities that may be considering that, it represents a significant additional cost pressure.

As many of our councillors go away for their Christmas break and try to digest the detail of the settlement over their Christmas lunch, they will face rumbling indigestion as they realise that their budget pressures will grow significantly, especially in rural local authorities, which face huge losses from the cancellation of funding that supported the additional and quantified costs of local government services in a rural environment.

I will be fair to the Minister: the £2.7 billion black hole that we spotted at the time of the Budget announcement has shrunk by around £700 million, but when it comes to council tax increases that will be announced by our local authorities in February, how much will they have to put up council tax to meet the shortfalls? How much will they have to put up council tax to cover the Government’s new approach to asylum, which is driving up the cost of temporary accommodation? When will the Government provide clarity on the dedicated schools grant override, given the impact it has on our local authority budgets? When will they provide clarity on the election preparation costs? Given that the Local Government Association has identified a £1.766 billion shortfall just from the Government’s national insurance contributions measure, when will they announce further funding to cover those costs?

Let us consider this: the cancellation of the new homes bonus means £3 million lost by Birmingham, £3.7 million lost by Buckinghamshire, £4 million from Central Bedfordshire, £5.3 million each from Ealing and Milton Keynes, £3.7 million from North Yorkshire alone, £9.5 million from Lincolnshire, £14.3 million from the rural services grant and an £18 million cut for a rural local authority in this Budget. It is clear there are tough times ahead for local authorities as they begin to look at the detail. The new homes bonus, in particular, means the places that have built the most homes are the ones that lose the benefit. If this is fixing the foundations, I would not want to stay in the tent which is the only thing they would hold up in our local authorities.

[Jim McMahon]

Here we go again. I would think that after 14 years of councils being on year-to-year watch to find out what position they would be in, the Conservatives would at least welcome the preparation now for multiyear settlements. They had 14 years to get their house in order, and they could not even line up to give councils more than 12 months’ certainty about what was coming. The one thing councils were absolutely certain about was that it was only going to be bad news after bad news. When there were crises in adult social care and children’s services and when homelessness was rising at a rate of knots, the last Government were completely missing in action—that was what councils were facing. How many councils went bust on their watch? Councils were lining up saying to the Government that they could not afford—