Local Authority Financial Sustainability: NAO Report

Debate between Emma Hardy and Jo Platt

Tuesday 20th March 2018 Westminster Hall

[Jo Platt (Leigh) (Lab/Co-op)]

I thank my hon. Friend the Member for Weaver Vale (Mike Amesbury) for securing this vital debate. Local authorities across the country are at a tipping point. Eight years of Tory austerity have decimated our local councils, with my local authority of Wigan facing an additional 30% cut to its budget, which will mean £160 million taken out of its budget by 2020.

Prior to coming to the House, I was a local councillor. I saw at first hand the impact of the cuts inflicted to services, particularly on the most vulnerable. It is really important to note that cuts to local authorities are not just cuts to their services—the cuts to support services are just as barbaric. For example, in my area there has been a 20% rise in domestic violence, which is little wonder when local registered charities also lose their funding due to the financial pressures on local authorities via commissioning streams. The same can be said for homelessness, in which we have seen a huge surge nationally. Local cuts to early intervention and prevention grants have only exacerbated the problem. I urge the Minister to take that into consideration when she next thinks about the causes of homelessness.

Councils should have the resources to provide emergency accommodation and council housing to those most in need and to offer the support to transform people’s lives. However, the Government have time and again shifted the responsibility on to local authorities while dramatically cutting their budgets. Quite simply, our local councils are unable to cope any further with the increased responsibility placed on them by central Government without the means to deliver.

Without the resources to deliver, where do councils turn? As my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy) mentioned, they turn to their reserves. However, reserves are not pots of money that councils sit on for fun, as they are often characterised by the Government. Local authorities rely on these reserves to transform their services, as has been the case in my local authority. They are also called on in emergencies to ensure that councils remain operational.

[Emma Hardy]

My hon. Friend is absolutely right about reserves. In 2007, Hull was hit by terrible flooding, which caused a lot of damage. One thing reserves are used for is for emergencies like that—to deal with unforeseen disasters. What will happen if we have a similar flood situation again and the council has spent all its reserves?

[Jo Platt]

I completely agree. We could all mention many instances where the reserves have come into play.

The scale of cuts faced by councils has meant that many have been forced to eat into the reserves to provide the everyday essential services that we all rely on. That is not only unsustainable, but reckless—we cannot play Catch-22 with the fate of our vital local councils. Doing so has led to the frankly astonishing reality of the National Audit Office warning that 10% of councils will exhaust their reserves within three years.

For me, there is another elephant in the room: Brexit. As the Brexit process continues, local authorities are still unaware of the impact that leaving the EU will have on their finances—business rates retention, for example. They also have to deal with the loss of EU structural funding: both areas on which the Government have not given sufficient assurances.

Our councils face the greatest crisis in living memory: an assault on their funding while also adopting ever more responsibility. Put simply, they have been passed the buck without the bucks. The Government’s unsustainable position must come to an end. If they are serious about delivering on housing, about social mobility and about giving powers to local communities, they need to provide the funding that our councils deserve.