Council Tax: Government’s Proposed Increase

Jeff Smith Excerpts

Monday 25th January 2021 Commons Chamber

[Jeff Smith (Manchester, Withington) (Lab) [V]]

The Secretary of State’s speech was really one of the most disingenuous that I have heard for a long time. He knows full well that Labour councils do not want to raise council tax; they have been forced to raise council tax because, for the 10 years before the pandemic hit, Tory-led Governments cut funding disproportionately hard for deprived areas and Labour councils. For almost a decade, the toughest decisions and the most painful Government cuts have been handed down—effectively outsourced—to local authorities, which have to pass them on to communities such as mine in Manchester, Withington.

I was a councillor having to try to make some of those awful decisions. The cuts forced on us by the Government since 2011 would have been impossible to mitigate by cost savings alone. Councils had to increase their income. In Manchester, the council sold part of its share in the airport to guarantee an annual dividend in order to help make up the income shortfalls. That was innovative and successful, with the council doing the right thing to protect services for its residents. But this Government lockdown has had an impact. The flights stopped and the airport dividend was hit—£71 million-worth of impact. Manchester, like many others, has been doubly hit: by the spending pressures necessary to combat covid; and by the revenue that has been lost as a direct consequence of Government restrictions.

In the midst of the greatest crisis that we have had in generations, a massive share of the burden continues to fall on councils. The financial impact of the pandemic in Manchester, like the impact in town and cities across the country, has been catastrophic: £152 million this year. With only £108 million of Government funding available, we have a shortfall of £44 million. Even with the maximum permitted council tax rise—a rise that no one wants to introduce—Manchester faces £50 million-worth of cuts. Last March, the Government promised to give councils what they need to deal with the pandemic. They must come through on that promise, take into account loss of revenue and fund councils properly so that this council tax is not forced on local people.

In addition, councils need from central Government the ability to carry out financial planning for the long term. The biggest chunk of local authority spending is on social care for adults and young people. We all know that the cost of social care will rise as the population continues to age, yet the Government’s long-promised plan to tackle the social care crisis has failed to materialise. Councils need an improved settlement for social care, and they need it to be built into funding settlements, not just as annual grants, because, although the Better Care grant is important, councils need to know that the funding will be there for years to come. On such a fundamental issue, they need to be able to plan for the long term.

Our councils do a great job in difficult circumstances. I join my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane) in congratulating Manchester City Council on its response to the flood alerts in south Manchester last week. It needs proper funding to do that great job. It is past time that the Government stopped treating local authorities as a vehicle for outsourcing cuts and blame, and funded them to be the crucial parts of our civic life that they really are.