Local Government Finance

Geoffrey Clifton-Brown Excerpts

Wednesday 5th February 2025 Commons Chamber

[Sir Geoffrey Clifton-Brown (North Cotswolds) (Con)]

I am pleased to follow my very hard-working, excellent deputy on the Public Accounts Committee, the hon. Member for Sheffield South East (Mr Betts), who has huge knowledge on local government matters. In fact, whenever we come to local government matters in the Committee, we always defer to him.

I echo the opening remarks by my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) about our hard-working councillors up and down the country, whatever their political persuasion. Often, they work many hours and do not get much pay for it. They do it because they want to improve the lot of their local communities, so I warmly welcome that. I even echo his opening remarks to the Local Government Minister, who I always think is a fair and reasonable man. He has dealt with this matter in a knowledgeable and professional way, and I pay tribute to him.

I want to pick up on a couple of things from the excellent speech by the Chair of the Levelling Up, Housing and Communities Committee, the hon. Member for Vauxhall and Camberwell Green (Florence Eshalomi). She is very knowledgeable on this whole matter. First, the local health grant, which has been picked up by others, is peanuts in comparison with the total health budget, but if we can keep the population more healthy through the things that she said and other preventive measures, it would be far better for them and far cheaper for the country in the longer run. I do not know why Governments of all colours have not paid more attention to that.

Secondly, I want to pick up on local housing allowances, which the hon. Member for Sheffield South East also mentioned. As he said, the impact on homelessness has not really been calculated, which our PAC report made perfectly clear. The Minister needs to look at that relationship and how we can get a closer, more targeted local housing allowance or another allowance to alleviate the problem of some of the poorest in our society who cannot afford the houses that they live in, and who have to be subsidised to a considerable extent by the local authority, putting even more pressure on it.

Often, local government is not understood by our constituents, but they certainly know when they are not getting the services they pay for from their council. Council tax bills are increasing up and down the country. I was shocked to read that some people’s council tax is going up by as much as 10%, as the Secretary of State has given permission to override the legislation in place for a referendum to be called if council tax is raised by more than 5%. I remind the House, as my hon. Friend the Member for Thirsk and Malton did, that the Prime Minister stated in Bristol that he would freeze council tax bills for all. Clearly, that is not the case. I would love it if he was able to, but clearly when he said it, it was not realistic.

The Public Accounts Committee, which I have the great honour to chair on behalf of this House to try to expose how the taxpayer’s pound is spent—well or not, as the case may be—has taken a strong interest in local government. We will shine a light on the areas needed, as will the Chair of the Levelling Up, Housing and Communities Committee. Together, hopefully we can make a real positive difference in the way that services are delivered for people up and down this country.

It is clear that local government finances have increasingly become more dependent on council tax rather than central Government grants. I listened to the speech by the Liberal Democrat spokesman, the hon. Member for Woking (Mr Forster) about his local council, but it cannot be denied that some councils have managed their budgets better than others.

I welcome the multi-year settlements that this Government have introduced. We often criticise the Government, but I think these settlements will be warmly welcomed by councils, and would, I think, be welcomed in other areas of Government spending, too. Like a business, local authorities will be able to plan, investing taxpayers’ money into longer-term projects with more certainty, and therefore hopefully using money more efficiently.

I urge the Government in their review of the funding formula to keep in mind the rural-urban divide, which we have had quite a lot of discussion about this evening. In what I am going to say, I do not to wish pit one council against another in any way—that is not the object of what I am saying. I simply say that if we put the emphasis more on one facet and less on the other, we will benefit some councils and disadvantage others. The problem with rural councils is that in many cases it costs more for them to deliver services, which is not properly reflected in the grant. Even the House of Commons Library says that scrapping the rural service grant and replacing it with a recovery grant already demonstrates a divide. According to the Library, which is supposed to be independent, the change in methodology for allocating money has meant that rural areas are losing out to urban areas and city centres.

Now, I do not want to get into deep water, but a need is a need. Adult and children’s social services, which have been mentioned today, are both high-consuming, voluntary parts of the budget, and are increasing. If the Government take away the needs basis and put it into deprivation basis, they will benefit some councils and disadvantage others. I repeat: a need is a need. That includes adult social services and children’s social services; it also includes SEND—our Committee produced a report on SEND, which said the system is broken—which is a hugely consuming part of the budget, and is consuming a greater and greater percentage.

[Gareth Snell]

Will the hon. Gentleman give way?

[Sir Geoffrey Clifton-Brown]

Just a second. Another part of the budget that is consuming more and more is temporary housing accommodation; this, again, needs a fix in some way or another. Structurally, we cannot let these areas of spending go on unreformed, so that they continue to put huge pressure on the finances of all councils.

I give way to a former member of the Public Accounts Committee.

[Gareth Snell]

I thank the hon. Gentleman for giving way—I did enjoy my time on the Public Accounts Committee.

For two years, I led a small shire district council. We were often told that there would be money for county councils, because that is where the greatest need was in terms of adult and children’s social care, and various other demand-led services. I do not even think the divide is urban-rural; it can sometimes be between county and district, in the same locality. Is this the hon. Gentleman’s quiet way of telling us that when the Government bring forward the orders for reorganisation, his party will be supporting that, to take out that one element of potential divide in our funding systems?

[Sir Geoffrey Clifton-Brown]

I am really pleased that the hon. Gentleman has raised the whole business of devolution, because I am going to come on to that at the end of my speech. What I think we should do is build it from the bottom up, as we did, and let local people have a real say in what they want for the future of the delivery of their local services. I am going to say a little bit more about that and ask the Local Government Minister some quiet questions about it at the end.

I turn to a matter that is bread and butter for the Public Accounts Committee, which the hon. Member for Vauxhall and Camberwell Green, the Chair of the Housing, Communities and Local Government Committee, also raised, which is the whole business of local auditing. Without proper auditing, there is no guarantee that all the money—I say “all the money”, but I just mean “the money”—that councils get from both council tax and local government grants, in one form or another, is being spent wisely and providing value for money. The shocking position that we find ourselves in with local auditing at the moment is not, I think, helping the whole system.

The Public Accounts Committee recently held an evidence session on the whole of Government accounts, as the hon. Lady referred to, where we found that 44% of councils did not submit any data at all to those whole of Government accounts, and that 46% of accounts had not been audited for nearly five years, in some councils’ cases. The Local Government Minister has laid before the House measures to ameliorate the timing of producing local audits. Hopefully, we can get to a situation where we can start those local audits and get a set of figures we can begin to rely on. The next year, once we have started with an established set of figures, we hopefully ought to be able to get a properly audited set of accounts.

[Jim McMahon]

Will the hon. Gentleman give way?

[Sir Geoffrey Clifton-Brown]

I will in just a second, but I want to make a really important point to the Minister about why all this matters.

Why does it matter? If we do not have a set of properly audited accounts, we do not have a sound basis on which to know what we are spending money on. As the Local Government Minister knows only too well, it is not only the audited accounts that are important but the assurance that goes with them, so that council officers, councillors and the public—the council tax payers—can begin to get an idea of whether something is going wrong with their council. I say to him gently that if more councils knew that, we might not run into a situation where they issue section 114 notices. However we cut the cake, when a section 114 notice comes into effect and the Government send in officials to run the council, it always ends up with local people getting a poorer service—they have their services cut—that is more expensive in council tax. It is really bad when a council gets into that situation, and that is why we need proper audited accounts.

[Jim McMahon]

I am only intervening given the hon. Gentleman’s position as Chair of the Public Accounts Committee. I think that this is a common interest for the PAC, Parliament and the Government. I do not want to labour the points about the past; the question now is how we move forward. From our perspective, it is not acceptable at all that the whole of Government accounts cannot be reconciled because of local government audit backlogs, so we want to address that. More importantly—this is definitely where there is a common interest—we must rebuild the early warning system, because what we cannot pick up effectively enough is whether there are systemic problems, which are more than just one council beginning to wobble, that we should be aware of and take action on.

[Sir Geoffrey Clifton-Brown]

The Local Government Minister must be clairvoyant—or he must be reading my notes.

I warmly welcome the Government’s consultation on local audit reform, which would establish a statutory and independent local audit office. It would be responsible for the co-ordination of the system to provide the quality oversight and reporting that is currently missing. There is even talk about setting up some form of backstop public auditing system. A lot of reforms are being consulted on, which is to be warmly welcomed, and the Government are to be congratulated on tackling this subject. I really hope, as Chairman of the Public Accounts Committee, that the Local Government Minister and the Government succeed in that quest, because if we do it, we will begin to make local government much more efficient. We have not talked much about efficiency, but it is common across public services that if we improve efficiency, we make taxpayers’ money go further.

The consultation document—this is the core of the matter—states that

“just one per cent of councils and other local bodies publishing audited accounts on time last year and a backlog of nearly 1,000 outstanding audits dating back to 2015/16”.

That demonstrates that real reform is needed, and quickly. We are in total agreement, and we will go on examining the matter and pushing the Government to see how we can do that.

I will move on and make some remarks of my own on Gloucestershire county council. First, I pay tribute to the chief executive, Pete Bungard, who has run the council for 27 years—as I will say in a minute, it has been pretty well run financially—and to the retiring council leader, Councillor Mark Hawthorne, who has led the council so well. They will both be sorely missed. It is because it has had such constant leadership that I believe Gloucestershire county council is in a strong financial position today. As a Conservative-led council, it is one of the few that is not raising council tax to the full 5%. It is raising it by only 2.99%. That means, based on a band D property, that residents will pay only an additional £6.65 each month. That is a very creditable performance.

I am pleased that Gloucestershire is on track to invest an additional £32.7 million in local services in critical areas for its residents. That includes £10 million towards road improvements, with a focus on rural roads, as part of a £100 million four-year programme in Gloucestershire. The Public Accounts Committee recently focused on the condition of local roads. Over £1 billion a year is spent on that, but the Department for Transport admitted—this is something we really need to concentrate on—that it did not know exactly how local authorities spent that money, as it is not ringfenced. As with a lot of areas of government, we need better data on how councils are spending money to make sure we get better maintenance of our roads and avoid potholes. I am sure that all Members of Parliament find, whether they are looking through their postbags or knocking on doors, that everyone raises the issue of potholes.

I am pleased that the county council will be investing £12.8 million in a 200-place special school for Gloucestershire. Sending special needs children out of county is one of the most expensive actions that any council has to undertake, and I think that, in the long term, building our own facility in Gloucestershire will be good value for money. As I have said, the Public Accounts Committee carried out an inquiry into special needs, and we reported that the system was broken. This comes back to my earlier point: just spending more and more money when the structure needs to change is not the answer. It does not matter whether we are talking about special needs, children’s social services, mental health services or adult social services; it is just not the answer. We need longer-term structural reform, and I hope we may see some proposals for that from the Government. As the Committee discovered, in the last 10 years the cost of SEND services has doubled, but we are not getting double the service. That demonstrates that the system is well and truly broken.

Let me now say something about a point raised by the hon. Member for Stoke-on-Trent Central (Gareth Snell), my former colleague on the PAC. During the exchanges on the statement this afternoon, I said to the Secretary of State and Deputy Prime Minister that people in Gloucestershire would be pleased that they now have certainty that our elections will take place this year, which means that a new county council will be elected. Can the Minister give any indication—I asked his boss this question—of a timetable for when he expects my council to move towards devolution? I am not against devolution at all, but what I will say loud and clear is that I would like adequate time to be provided for a wide consultation to take place in Gloucestershire so that we can have the wholesale backing of its people and know what they really want the structures for the delivery of local government services to be in the future. If they have bought into it, they will be much happier with any change that may take place.

I should be grateful if we could have that timetable either tonight or in the relatively near future, and if the Minister could explain how a transition might work in Gloucestershire. Will the new council stay in place for four years, albeit perhaps towards the end of those four years shadowing a new unitary authority, so that we do not have elections again within the four-year cycle? That would be very helpful information.

[Jim McMahon]

On the timetable point, all councils in the 21 two-tier areas for reorganisation will receive their statutory elections. Individual councils will need to decide whether to apply for the process or not. If they choose to apply, we would expect their proposals to be submitted to the Government by November. That is quite a short period for them to work up the proposals, but there will be support in terms of capacity along the route. As for how that unlocks devolution a bit further down the line, we are obviously concentrating on the devolution priority programme at the moment and getting the mayors in place, but the door is always open to areas that want to talk about mayoral devolution.

[Sir Geoffrey Clifton-Brown]

The Minister has partly answered the question, but he did say that it was a very short timeframe. I understand that we will receive the letter very soon and that is great, but how long will there be after that for the county council to work up a proposal that might be acceptable to the Government? That is what it will want to know. I request earnestly that we have enough time to consult people as widely as possible, for the reasons that I have just given. [Interruption.] The Minister is indicating that he will write to me; that would be very helpful. Perhaps he will put a copy in the Library so that everyone else can benefit, and also respond to the question about whether the newly elected council will be in place for four years or not.

This has been a very constructive debate, as is often the case when there are relatively few Members present. When Members on both sides of the House can get our teeth into a subject like this and come up with constructive proposals on behalf of our constituents, which is what we are here for, we really are achieving something. Thank you, Madam Deputy Speaker, for allowing me to catch your eye.

--- Later in debate ---

[Rushanara Ali]

Thank you, Madam Deputy Speaker.

Once again, I thank hon. Members for their valuable contributions, even if we do not always agree. The point is that we can all agree that there is much work that needs to be done.

[Sir Geoffrey Clifton-Brown]

I am grateful to the Minister for giving way, because I am about to raise a really important point that has not yet been addressed. A lot of councils are seeing their reserves diminished hugely, and I worry that there are a lot more councils in the pipeline that might well come under a section 114 agreement. Will she commit tonight to her Department working ever more closely with councils to try to prevent them from getting into that situation? As I said in my speech, once we get into that situation it is always more expensive for council tax payers, and they get cuts in their services.

[Rushanara Ali]

An exemplar contribution. The hon. Gentleman is absolutely right about ensuring that local authorities receive expertise and support, which is why the local audit office is so important. I know my hon. Friend the Minister for Local Government and English Devolution will work with him and his Committee to ensure we get it right, so that local authorities get the right support to ensure their finances are carefully managed.

I thank hon. Members once again for their valuable contributions. As I hope has been clear throughout the course of the debate, the Government are under no illusion about the scale of the challenges before us. There is no silver bullet to solve them. After 14 years, the idea that within the space of seven months all the underlying issues can be resolved is for the birds. I hope hon. Members, including the shadow Minister, recognise that we have to take the issues seriously. Just turning up and scoring points will not do the job. We have to recognise that there are serious issues and challenges. Where we can work together, we must.

I am conscious that I did not give way to the shadow Minister. If he wants to work with us, I am very happy to give way.