Somerset Council: Funding and Governance

Jim McMahon Excerpts

Tuesday 30th January 2024 Westminster Hall

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Pritchard, and to respond to the debate secured by the hon. Member for Yeovil (Mr Fysh). Despite the clear localised political differences that have played out, we have heard quite a lot of commonalities in terms of the structure of local government finance and the issues that are driving demand pressures. That is important: we need at least a shared analysis of the issue before we try to find common ground on the potential solution. I welcome the exchanges today and congratulate the hon. Member on securing the debate. We perhaps need to talk about issues like this more than we do.

I hope very much that the offer of a meeting with the local council leader is taken up, because this matters to all our constituents. That is why we bring such debates to the House, but in the end, the solution lies in local partnerships and in Members of Parliament working in partnership with their local authorities, regardless of political affiliation, for the best outcome for their constituents. That is the only way to work, in the end, so I hope that is taken up and that the council enters into the spirit of partnership in return.

Let me be clear: we are here to talk about funding and governance in Somerset Council, and we have heard many of the arguments, but this issue affects councils of all political colours. I have met many council leaders up and down the country. The one thing they have in common, and the one thing they continually raise, is that they often feel that they are standing alone in dealing with the pressures of rocketing demand while trying their hardest to prioritise services for their local communities. We have heard about some of those issues today: the number of children who need child protection; older people living longer but needing care in older age; the homelessness crisis and people staying in temporary accommodation—all those things have a significant impact on council budgets at a time when central Government funding has been reduced in real terms. Those were political choices made over 13 years of a Conservative Government. They have fundamentally changed the structure of council funding, and Somerset will feel that too.

We should not forget that in 2010 the coalition Government announced the closure of the Audit Commission. It is not just that money has been taken away; the infrastructure required to raise a red flag when there are concerns was taken away as well. What does that mean, 14 years later? The audit market is still dominated, by and large, by six firms, with very few new market entrants. The market size has not grown in comparison. As a result, there is real tension in the system. As one could predict, the closure of the Audit Commission and the limitations placed on the National Audit Office mean that there is a gap in local as well as national reporting. Councils are often left alone to inspect their own financial risk, rather than looking for value for money, or to use a broken audit market.

How does that manifest itself here today in 2024? There has been a sharp increase in the number of local authorities that have not had their accounts audited by the statutory deadline. In 2022-24, just five of the 467 councils delivered their audits on time. That means just 1% of English councils published their audited accounts by the deadline. When a council is in financial difficulty, the warning system which should escalate the matter is just not there. The Minister needs to consider how that might be improved.

We have talked a lot about the grant funding and, as such and in the interests of time, I will not go over old ground. However, it is a matter of fact that Somerset Council has £100 million less than it needs to provide services in its area, when compared with demand. Labour understands that councils like Somerset are funding the impossible balance between demand rocketing and budgets not keeping pace. When the austerity programme started, cuts were targeted at local government far more than at any other part of Government. We know that local government was always the prevention arm of Government. When we take away the prevention arm, all we have left is the reactive. We see that in the NHS and right across the board, but in the end it always comes right back to local government to pick up the pieces. That is what we have seen in social care, children’s services and homelessness. It is important that councils are given the tools to take the long-term decisions that are needed. Labour would commit to single pot, multi-year settlements to give the financial certainty that is needed, as well as funding that follows the need where it exists.

We often hear debates in this place about the difference between the north and the south, between our towns and our cities, and between counties and villages, but in the end, for a funding formula to be fair, surely it must follow need, wherever it is? It is not right that an older person in any part of England is denied the care they need, or a young person is placed at risk because they do not receive the care they need, or someone is not given the home they need. For a funding formula to be truly fair, it has to follow the need where it exists. That also requires a resetting of the partnership to be a partnership of equals. That is why Labour would introduce a take back control Act to reset the balance of power between central Government and local government.