Local Government Finance

Graham Stuart Excerpts

Wednesday 11th February 2026 Commons Chamber

[Steve Reed]

The settlement follows a funding formula and takes account of the costs of delivering food waste recycling in the way that the hon. Gentleman described earlier.

[Graham Stuart (Beverley and Holderness) (Con)]

Will the Secretary of State give way?

[Steve Reed]

Let me return to my theme for a moment before I take any more interventions.

The right hon. Member for Beverley and Holderness (Graham Stuart) and colleagues across the House will remember that the Tories used to belittle local councillors as part-time volunteers and took away their pension rights to deter people from risking a career on the frontline of local government. Today, it falls to this Government to fix the foundations that the Tories smashed apart.

We are rebuilding local government so that councils can rebuild their communities. We are making good on our promise to introduce multi-year funding settlements so that councils can plan for the future with certainty. We are reconnecting funding with need so that we can take off the Tory shackles that have held back so many of our towns and communities for so long. We are ending wasteful bidding wars for funding, freeing councils to focus on filling in potholes, not forms. We are putting fairness back into a system that the Tories bragged about breaking. We reject the decline that ripped the heart out of towns and communities up and down this country. We choose change.

--- Later in debate ---

[Steve Reed]

I thank my hon. Friend for his intervention. What he is seeing is the realignment of funding with deprivation, and that is as it should be.

[Graham Stuart]

rose—

[Steve Reed]

I will take one more intervention and then make progress.

--- Later in debate ---

[Graham Stuart]

The Secretary of State has been tremendously generous in giving way. He has also been making his usual barnstorming political knockabout speech, but perhaps he should start to act more like a Secretary of State, because low-income residents of the East Riding, of whom there are many in Beverley and Holderness, are going to have a £200 council tax bombshell. The smallest house is going to be paying £200 more in three years’ time and will have reduced overall funding to support public services after the increase in costs imposed by the Government. That is the reality. The Secretary of State said he wants to focus on need; why has rurality been removed from the category of need, when it is such a real issue?

[Steve Reed]

Well, the easy answer to that is that it has not been; it is still there.

Above all, this settlement is about fairness, because this Government reject the Tory belief that our poorest communities should be left to sink with less funding and worse public services than other parts of the country. That approach pulled our country apart; and, in doing so, was profoundly unpatriotic. Our settlement reflects a council’s ability to raise income locally, and it reflects the fact that it costs more to deliver services in different parts of the country, retaining rurality funding for social care, because we recognise that workers in those areas have to travel longer distances. We have used the most up-to-date data on deprivation to make sure funding accurately follows need.

We are introducing changes gradually over the period of the settlement so councils have time to adapt, and we are protecting councils’ income, including from business rates growth. Today’s settlement is a milestone in returning councils to a sustainable financial footing, and in restoring fairness to local government funding.

--- Later in debate ---

[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.

--- Later in debate ---

[Florence Eshalomi]

I agree. I think many residents are feeling the pinch. Yes, we have seen fantastic initiatives and new legislation from this Government, but that is not trickling down quickly enough. Many residents will be seeing their council tax bills in the next few months, and for a number of them, those bills will be going up. It is important that we look at that democratic link.

[Graham Stuart]

A £200,000 house in the East Riding of Yorkshire will be paying between £3,000 and £4,000 in council tax, depending on its 1991 valuation. A £2 million flat in Westminster will be paying £2,000. There is an opportunity to put that right. I know that the hon. Lady is from London and the Secretary of State is from London—it feels to a lot of us out in the provinces that everybody in charge is from London—but this system is so egregious and wrong. Does the Chairman of the Committee not agree that something needs to be done about this? We did not do it in our years in office, but this Government said they would have a fairer system, but it is not fair yet.

[Florence Eshalomi]

I think it is fair to say that successive Governments have put the issue of council tax in the “too difficult” box. I hope that it will fall on this Government to finally address that and bring an end to this regressive form of taxation.

--- Later in debate ---

[Graham Stuart (Beverley and Holderness) (Con)]

It is a pleasure to take part in this debate, which has had a number of distinguished contributions, not least from the hon. Member for Knowsley (Anneliese Midgley). As she rightly said, at a time when the cost of living is biting so much on so many, people really need to feel better off.

The hon. Lady also highlighted the regressive nature of council tax, which is why it is so regrettable that this settlement is built on the basis of putting up council tax on everyone. It is exactly what the previous Labour Government did, too; they doubled the level of council tax over their 13 years in office. In contrast, over the 14 years of the Conservative Government, council tax grew only a little more than inflation, as it was held down for many years, although it did go up and down over time. That is the history: Labour puts up council tax. Its spokespeople speak about how terrible and regressive it is, and then in government it visits that on people in constituencies across the country.

The Government have used the expected 4.99% annual rise in council tax in all their figures to claim that there will be increased spending power. That is based on sticking up tax by 5%, and then another 5%, and then another 5%—it is compounding.

[Mr Brash]

Will the right hon. Gentleman give way?

[Graham Stuart]

I will come to the hon. Gentleman in a while.

The impact for those in the cheapest or lowest-value homes in the East Riding—very often people in rural areas, with poorly insulated homes, costly transport and low income—will, by year three, be £200 a year out of already taxed income. That is the reality of what this Labour Government are visiting on poor people in my constituency and other constituencies around the country, while they crow about it being fair. There is nothing fair about it.

The local government finance settlement will mean only one thing for families in Beverley and Holderness: higher council tax bills, at a time when every other bill is soaring—thanks, again, to this Government. The Secretary of State for Energy Security and Net Zero is signing up for the most expensive deals imaginable and putting up the price of energy, while the jobs tax—one of the most economically irrational taxes imaginable—taxes jobs and brings in no money, because employers simply employ fewer people. That is what that £26 billion hit on the economy comes down to.

[Mr Brash]

Will the right hon. Gentleman give way?

[Graham Stuart]

I will come to the hon. Gentleman, but I will make a little more progress first.

I know the reality from talking to my constituents. Jenny in Cherry Burton says that she cannot really afford to shop for healthy food as half her money is gone before she even gets home, forcing her to make choices that no family should have to make simply to get through the week. Andrew in Beverley faces rising energy bills, which I have touched on, and rising food prices, all while supporting his two children, who are at university and cannot find part-time work; previously, they would have done, but now they cannot find part-time work because those jobs have tended to disappear. There are fewer and fewer opportunities for young people to get on the jobs ladder and, for those at university, to supplement their income while they pile on student debt, which will only go up even more as time goes on.

These are not abstract pressures but lived realities, and this settlement will pour on yet more misery. The Prime Minister says that every minute not spent talking about the cost of living is a minute wasted, but warm words do not warm homes.

[Mr Brash]

The right hon. Member made a point about core spending power. I share his irritation at the use of core spending power, because such a large percentage of it is in council tax, but it was introduced in 2016 by the last Conservative Administration. The concept of core spending power including council tax was introduced by the Conservatives. What did he say about it at the time?

[Graham Stuart]

I do not remember the specifics of that, but I can say that, whereas the last Labour Government doubled council tax despite it being regressive, that did not happen under the Conservatives, whatever introductions there were. Those taxes were held down, because that is what conservatives do. They recognise that it is better to leave money in the pockets of people to make their own decisions, not take it away from them.

Families across the East Riding are now asking a very simple question, because they know that promises do not pay bills. How will this local government finance settlement, and the £200 council tax bombshell that follows it, help them cope? Let us be clear about what is happening: the Chancellor underfunds, councils are squeezed, council tax rises, and families pay. Council tax is, as many Labour Members have said, regressive. The lower the income, the heavier the burden. The smaller the home, the sharper the hit. At the very moment that household budgets are tightest, this Government tighten them further.

Nowhere is that clearer than in social care. In the first Budget since Labour came into office, the Chancellor allocated over £20 billion to health. Why did they not recognise that so many of the problems in the NHS actually come from the failure of funding in social care? It could so easily within the same spending envelope have eased the pressure on the NHS by better funding social care so that to keep those who are ready to leave hospital from occupying the beds that they do—they have for the past few years, and they do today.

The Government did not put sufficient additional money into social care, and in Beverley and Holderness, with an ageing population and rising adult care needs, that imbalance matters. Instead of funding care properly at source, Ministers shift the cost on to council tax payers—and then they claim that they have fixed it.

I saw the real-world cost of squeezed council budgets when I visited Sunk Island last month. On Sunk Island Road and Brick Road, residents endure patch upon patch of repairs that are never truly repaired. They are paying more yet still waiting for lasting fixes. This is the pattern: more tax, less certainty, higher bills, patchwork results.

Government should strengthen communities, not squeeze them, so I ask the Minister: when families are stretched to breaking point, why is this Government’s answer yet another bills hike? In Beverley and Holderness, the only change that this Government appear to deliver is the small change left in people’s pockets after the Chancellor has emptied them.

[Ms Rimmer]

What can councillors do to fund the statutory duties? People were given much better in the past, but we have to ration the services. They are quality services, and the integrated health has helped us with our social care. I do not want to go into party things, but the fact is that, under the Conservatives, St Helens lost £127 million a year from the support grant. We were left with something like £9 million or £11 million from the Government—that is all it was.

The only way councils can get the funds to provide services is from the Government and income to the councils. Where should we get the funds from? We have no assets to sell, and we get very little. Yes, we have low-paid jobs, so it is a hike, but what we should be doing is taking it from the broadest shoulders; they should be bearing the burden. It is inappropriate and incompatible that the people on the lowest pay the biggest proportion of their incomes on the necessities of life, while others have mansions—some people have a cottage and nothing else. We do not all have a mansion in London, so we need to look at wealth.

[Graham Stuart]

I thank the hon. Lady, who always speaks passionately and with deep knowledge of her community. As she says, she does not make unnecessary party political points.

The one thing that unites the House, including the Government Front Bench, is a recognition that the funding system is broken. I spent many years campaigning, across different funding pots, on the distribution. Everyone looks at the quantum, but they do not look at the distribution. It is easy to get into a world of complexity, and the number of people who turn up for meetings on distribution gets very small, but it is actually critical. We need a new funding settlement, and how we deliver that, given the political realities, is to go in early and hard. Unfortunately, this Government have not done that. They are delaying and delaying, and as their political potency weakens, it becomes harder and harder to deliver. It is a bit like the police reorganisation we touched on earlier today. It is unlikely to happen in the dribs and drabs of a Government who are struggling.

We need a long-term settlement that is based on need. There is no perfect assessment of that, but what we have is complexity, as we heard in the brilliant speech from the hon. Member for North Norfolk (Steff Aquarone) on the Lib Dem Benches earlier. The system has elements about how many pubs there are and what some level of cost was in 1991 and all sorts of other things. The truth is that, in this most fundamental set of services—my hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds) rightly identified 800 of them—for the constituents in the deprived areas of the hon. Member for St Helens South and Whiston (Ms Rimmer) and in mine, nobody can see the transparency. Perhaps we should look on the Back Benches initially for a cross-party view on building a fairer funding system.

There is one more thing, and I do not know why no one has talked about it very much in my 21 years in this place. The fact that a £200,000 house in Beverley pays a lot more council tax than a £2 million flat in central London is absurd, and very rarely does anybody mention it. We need to fix things, but if we cannot fix something as absolutely inexcusable as that—and, collectively, we have not—it is no wonder the public are looking at us so askance.

I would be happy to talk to the hon. Members for St Helens South and Whiston and for Hartlepool (Mr Brash) and others to see where we can make some common ground on having a more rational system, because at the end of all this, the complexity and lack of transparency end up in social failure. As the hon. Lady rightly and passionately says, it is those who are the most vulnerable and the least able who pay the highest price, and whether that is in her part of the world or in mine, that is not acceptable. We have all come here to make it a better place, and one of the things we need to fix is this.

--- Later in debate ---

[The Minister for Local Government and Homelessness (Alison McGovern)]

It is my pleasure to close this debate, despite the fact that I must apologise to the House. Many Members will know that I suffer from chronic migraine, and I have been having an attack over the past couple of days, so my contribution might not be as long as it might otherwise have been. In show business and in politics, the show must go on, albeit my speech might be slightly shorter than it would have otherwise been, but I think that will be a cause of joy for many Members—[Interruption.] Calm down.

The Secretary of State and I know what a difference the hard work of councillors, frontline staff and all our mayors makes, and we pay tribute to them for everything they do for their communities, as many Members across the House have done. But we also know the consequences of the unfairness of the funding system. The last decade and a half of austerity was felt by the most deprived local authorities, because the link between funding and deprivation was broken.

The shadow Minister seemed to imply in his remarks that he thought that the link ought to simply be with statutory duties, rather than any consideration at all being taken of the impact of deprivation. I would just say to him that those communities that suffered most, that were left out for far too long and that have struggled with the consequences of deprivation will wholeheartedly disagree with him. That is why today we are restoring the link with deprivation and ending the irrational inequality of the previous funding system. We are, as many have said, providing the first multi-year settlement in a decade, we are investing in changing our public services, and we are simplifying funding for local government.

[Graham Stuart]

Will the Minister give way?

[Alison McGovern]

The right hon. Gentleman has had ample time to contribute, and while I would normally give way with gusto and have a bit of political knockabout with him, today is not the day for that.

I would like to take this opportunity to thank the right hon. Gentleman and everybody else who has contributed today and also to thank those who contributed to the consultation on the provisional settlement and the Members who made representations to me directly. There could be no quick fixes. We cannot undo over a decade of damage overnight, but the settlement we are discussing today is our most significant move yet to make English local government more sustainable, and I am committed to going further in coming years to fix the pressures our councils are facing. The Secretary of State set out the various mechanisms that we are employing to do that in his opening speech. This Labour Government have backed local governments through action, and since coming to power we have made available a nearly 25% increase in core spending power in ’28-29, worth £16.6 billion.

I shall briefly turn to the points Members made. The hon. Member for Taunton and Wellington (Gideon Amos) relayed the situation with regard to flooding on the Somerset levels. I send my support to his constituents and will work with the Flooding Minister, my hon. Friend the Member for Kingston upon Hull West and Haltemprice (Emma Hardy), as required. The Chair of the Select Committee, my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi), and the former Chair, my hon. Friend the Member for Sheffield South East (Mr Betts), told me to be bold and I will try, but I look forward to their support in persuading all our colleagues in this place to vote for whatever bold solutions we come up with. Members including my hon. Friends the Members for Hartlepool (Mr Brash) and for Croydon East (Natasha Irons) and the hon. Member for Fylde (Mr Snowden) talked about failures in children’s care, and I feel sure that we will work together on that.

Many Members talked about their experiences of councils struggling yet often achieving, despite that struggle, to provide great innovative services on lean budgets, and we applaud them all for that.