Oral Answers to Questions

Jim McMahon Excerpts

Monday 14th July 2025 Commons Chamber

[Wera Hobhouse (Bath) (LD)]

4. What assessment she has made of the potential impact of reductions in council tax revenue from student houses in multiple occupation on local authorities.

[The Minister for Local Government and English Devolution (Jim McMahon)]

The Government believe it is right that students are disregarded for council tax. If the only residents of a household are full-time students, the dwelling will be exempt. In the recently published fair funding review 2.0, the Government proposed to fully account for the impact of student exemptions in the distribution of the settlement.

[Wera Hobhouse]

In 2013, my Bath council received £31 million through the revenue support grant. This year, it is just around £1 million. Students, who are exempt from council tax, are not being counted. Will the Minister ensure that, through the fair funding review, the issue is urgently addressed, and that councils such as Bath and North East Somerset are not missing out entirely on central Government support?

[Jim McMahon]

The fair funding review will do what it says on the tin: it will make sure that, for the first time ever, all component pressures that councils face in delivering public services, and in raising money locally, are taken into account. It is wrong that while this Parliament can decide on national exemptions that councils have to apply, which limit their ability to raise council tax locally, we do not account for that in the distribution of funding that follows. For the first time, we will do that.

[Kim Johnson (Liverpool Riverside) (Lab)]

Liverpool is a university city, and I have three universities in my constituency. Liverpool city council is estimated to lose £9 million in council tax revenue each year due to student exemptions. Will the Minister explain when and how those anomalies will be dealt with, so that the council does not lose that amount of funding every year?

[Jim McMahon]

The fair funding review 2.0 is out to consultation. We welcome contributions to the consultation from Members, local authorities and others. At heart, we want to fully account for the ability of an area to raise income locally. Nationally, there are 245,000 student exempt dwellings and 77,000 halls of residence. It is quite right that we take that into account when we assess how much council tax can be raised locally. In some cities and towns, that will make quite a material difference.

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[Dr Marie Tidball (Penistone and Stocksbridge) (Lab)]

18. What steps her Department is taking to ensure that areas with higher levels of deprivation receive adequate funding.

[The Minister for Local Government and English Devolution (Jim McMahon)]

We are committed to improving how we assess need to ensure that central Government funding is distributed fairly to the places that need it most. We began at the last settlement with the £600 million recovery grant, and subject to the fair funding review 2.0 consultation, our proposed reforms mean that the most relatively deprived places will see larger increases in income than the least deprived places.

[Adam Jogee]

Newcastle-under-Lyme is at the heart of our industrial heartlands. In communities such as Silverdale, Knutton and Cross Heath, we see higher levels of health inequality and lower levels of life expectancy than in many wealthier areas. These communities were let down by those who went before us and were left behind. Will the Minister meet me to discuss how best to support industrial communities like mine in Newcastle-under-Lyme, so that we can finally tackle this entrenched inequality?

[Jim McMahon]

My hon. Friend makes a very fair point. There are two aspects to this. First, we must make sure that places get the investment they need to realise their full potential. We are working on that with our plan for communities, which the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for Nottingham North and Kimberley (Alex Norris) is engaged in. But that has to be built on fair funding at the base of what the local authority does. There was nothing fair at all about the previous Government impoverishing councils in the most deprived communities, sending many to the wire. We are putting that right.

[Dr Tidball]

I am grateful to the Minister, who has named Barnsley’s local authority in the £1.5 billion plan for neighbourhoods. The spending review has confirmed neighbourhood-level investment for 350 deprived communities. However, Chapeltown and High Green in my constituency have communities in the bottom 10% nationally in the indices of multiple deprivation, while Dodworth has a community within the bottom 20% nationally. These areas would benefit significantly from neighbourhood-level investment to build a sense of pride in place for my constituents. Will the Minister consider including these three communities among the 275 areas that are yet to be announced?

[Jim McMahon]

I am sure that the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for Nottingham North and Kimberley has heard those diligent representations. It is true that many parts of our country have talent and potential that are not being met by opportunity. This fund is about making sure that every area has seed investment to begin to rebuild, supported by fair funding for the local authority. We cannot underestimate the effect of the 14 years of constant hits and attacks from the previous Government. There is a reason why many communities have the resilience to stand up for themselves regardless of all that: the power of their unity. Finally, they now have a Government on their side.

[Simon Hoare (North Dorset) (Con)]

It is often harder to see because it is more sparsely spread across larger rural areas, but I remind the Minister of what I know he knows: deprivation exists in our rural areas. Can I urge him to ensure that this does not become an issue of north versus south or urban versus rural, but that the Government use taxes to address deprivation wherever and whenever it arises, including in my constituency?

[Jim McMahon]

I thank the former Minister for those representations. On the point about fair funding and unpicking where money is needed, there is a lot of commonality on this issue in the Chamber. We absolutely accept that in rural areas the cost of service delivery is higher in some cases, such as for refuse collection and adult social care. It is common sense that if people have to travel further to pick up bins or make a home care visit, it will cost more money as a result.

However, that is not the only thing we need to take into account. We must take into account deprivation and the ability of a council to raise money at a local level. Daytime visitor numbers are also a factor, where a council is not getting a tax take from those visitors but there is a public service take on the other side. Importantly, we must consider the ability of a local authority to raise tax at a local level to meet the demand. It is the Government’s job to act as an equaliser in the system.

[Munira Wilson (Twickenham) (LD)]

It is absolutely right that funding follows need, but may I gently urge the Minister to look at how the proposed new funding formula for local authorities affects boroughs across London, given that it does not consider housing costs, which we know are the biggest driver of poverty and deprivation in London?

[Jim McMahon]

We are in a consultation now, so we are willing and ready to hear representations, but many people—I am not accusing the hon. Member of this—have jumped to conclusions based on headlines that are not supported by the evidence when we track where money ultimately goes. All the matters that she rightly said need to be taken into account are taken into account. In the consultation, we have included the cost of temporary accommodation in the base formula for the first time ever, so she will find that outer-London boroughs in particular will benefit from that. So far, they have been underappreciated for the cost of that pressure.

[Harriet Cross (Gordon and Buchan) (Con)]

12. What plans she has to increase community involvement in the planning process.

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[Matt Vickers (Stockton West) (Con)]

Hard-working traders at Stockton’s historic Shambles shopping centre were shocked to receive letters from Stockton’s Labour council telling them that they were to be evicted and inviting them to a meeting with less than 24 hours’ notice. I have been along to meet them and they are devastated, fearful for their futures and for their livelihoods. Does the Minister agree that councils should be backing small independent businesses, not making them homeless without alternatives?

[The Minister for Local Government and English Devolution (Jim McMahon)]

The hon. Gentleman will know that it is Labour councils that are leading the charge at a local level to regenerate local communities and invest in local businesses—the evidence is there. They are supported by the plan for communities and the community right to buy; there is a real effort in this area. He did not give prior notice of his intention to raise the particular issue that he mentioned, but if he wants to follow up in writing, we will certainly look into it.

[Mr Speaker]

I call the Chair of the Housing, Communities and Local Government Committee.

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[Josh Babarinde (Eastbourne) (LD)]

Eastbourne’s streets are being blighted by severely overgrown grass verges that attract litter, antisocial behaviour and crime. Will the Minister join me in urging Conservative-run East Sussex county council to urgently get a grip on verge maintenance in Eastbourne in order to help make our grass great again?

[Jim McMahon]

The real issue for most councils is that the Liberal Democrats did not make hay when the sun was shining in their coalition years. Let nobody in local government forget that the seeds of the erosion of local neighbourhood services started in those coalition years, when the Liberal Democrats more than ably abetted the Conservative Government at the time.

[Mr Speaker]

I call Perran Moon.

[Perran Moon (Camborne and Redruth) (Lab)]

Meur ras, Mr Speaker. Cornwall is desperate to access the highest level of devolution, but because of our national minority status, Cornwall cannot and will not join a mayoral combined authority. Before this House is asked to vote on a devolution Bill that discriminates against the people of Cornwall, will the Secretary of State meet me and colleagues to discuss a Cornwall-only devolution deal?

[Jim McMahon]

My hon. Friend will know that, for the right reasons, we have put a significant amount of energy and time into meeting parliamentarians from across the House to discuss those local issues. Absolutely, we will meet; that will probably be the sixth meeting that we have had with Cornish MPs on this issue. We understand, respect and are investing in the Cornish identity, but we also need to ensure that the devolution agenda moves on at pace and that every part of England can realise its full potential. I am more than happy to meet on that basis.

[Shockat Adam (Leicester South) (Ind)]

A new report by Crisis shows that only 2.6% of rental properties in my area of Leicester South are affordable to those on local housing allowance. That is a real-terms cut as rents soar, because the Government have frozen housing benefit until 2026. Will the Secretary of State explain how that freeze aligns with the Government’s aim of reducing homelessness, and will the Government urgently review the cap so that people can afford to keep a roof over their heads?

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[Rebecca Smith (South West Devon) (Con)]

It is my understanding that South Hams district council is in an arguably more sound fiscal position than the neighbouring Plymouth city council. What can the Secretary of State say to reassure me that local government reorganisation will not mimic either a forced marriage or a bad marriage where the fiscally prudent one bails out the other?

[Jim McMahon]

We are now in a statutory process for local government reorganisation, and Devon will submit its final proposals to us by the end of November. We do not want to pre-empt those or say anything that will direct them, but I assure the hon. Member that there will be a consultation on the proposals that meet the threshold, and we will hear from that what local people say.

[Dan Tomlinson (Chipping Barnet) (Lab)]

I know that reducing deprivation is a cause close to the hearts of all Ministers. What view do they have on the extent to which high housing costs contribute to deprivation and should be taken into account when we consider funding for our local councils?

[Jim McMahon]

We are in the consultation period for the fair funding review 2.0 until 15 August. The issue of housing costs being taken into account when we judge deprivation has been raised by Members previously, but I encourage all Members of the House and people beyond it to submit their responses to the consultation.

[Nick Timothy (West Suffolk) (Con)]

Can the Deputy Prime Minister guarantee that no Muslim Brotherhood affiliates will participate in the consultation on the definition of Islamophobia?

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[Rachael Maskell (York Central) (Lab/Co-op)]

City of York council is the lowest funded unitary authority, but under the fair funding review we do not fare any better. Can the Minister extend the consultation guidelines? These are complex issues. Will he meet our council to look at the impact of the review?

[Jim McMahon]

I thank my hon. Friend for the work she has done to champion fair funding across local government, particularly for York. I absolutely understand the issues. The fair funding review is meant to do two things. It takes into account the need—the cost pressures driving local authorities—set against the resource, which is how much local authorities can raise in council tax at a local level. It is the Government’s role to be the equaliser to ensure that every local authority can afford decent local services, but I absolutely take into account her representations.

[Martin Vickers (Brigg and Immingham) (Con)]

In reply to an earlier question, the Planning Minister said that he wanted to increase the number of people who engage in the preparation of local plans. He will know that even if that number was doubled, it would still be a small proportion of the local community. When applications are being considered, local communities want them to be decided and determined by local authorities with minimal central input. Will the Minister guarantee that local authorities will continue to have that power?