Local Government Best Value

Jim McMahon Excerpts

Wednesday 22nd January 2025 Written Statements

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

All hon. Members will recognise the importance of having well-functioning local councils that provide essential statutory services that local residents rely upon. To ensure this, we need to get the basics right, resetting the framework to ensure the sector is fit, legal and decent. Government will continue to work directly with a small number of councils in difficulty, and this should be done in a way that is not punitive and is based on genuine partnership to secure improvements.

Today, I would like to update the House on the steps we are taking to improve governance and local accountability in the London borough of Tower Hamlets. On 12 November, I informed the House that I was satisfied, having considered the inspection report of Tower Hamlets council by lead inspector Kim Bromley-Derry CBE DL and assistant inspectors Suki Binjal, Sir John Jenkins and Philip Simpkins, that the council is failing to comply with its best value duty. They found insufficient evidence that the organisation is open and transparent, and values the constructive criticism required to drive improvement. I proposed a statutory support package to secure the council’s compliance with that duty, and gave the council until 25 November to make any representations it wished on the inspection report and my proposal for intervention.

I have now carefully considered the representations the council has made. I have also considered afresh the inspection report and have had appropriate regard to other representations that I have received about my proposed intervention. While I am grateful for the constructive engagement I have had with the council, who have accepted the inspection report’s findings and are committed to working in partnership with Government to deliver the change needed for local people, I remain satisfied that the council is failing to comply with its best value duty in relation to continuous improvement, governance, leadership, culture and partnerships. I have therefore concluded that it is both necessary and expedient for me to exercise intervention powers in the Local Government Act 1999 as I have proposed, with some minor amendments. Accordingly, I have today given the council the necessary directions under section 15(5) of the 1999 Act to implement the proposed statutory support package.

That support package, to be in place until 31 March 2028, is centred on putting in place a team of ministerial envoys to work comprehensively within the council, acting as advisors, mentors and monitors, to oversee its improvement work. I have nominated Kim Bromley-Derry CBE DL as ministerial envoy, and Pam Parkes and Shokat Lal as assistant envoys—all experienced and talented professionals who understand that transparency and accountability are vital to the functioning of local democracy. Enlarging the team to include two assistant envoys rather than one will bring greater diversity of thought to the team and ensure that their approach to the challenges and best practice for local authorities is current. The envoys will report on the council’s progress against its improvement agenda after the first four months, and then regularly as we agree is appropriate.

In summary, the directions I have issued today require the council to:

Work with the ministerial envoys to reconfigure the council’s existing transformation advisory board and draw on existing and additional members to appoint independent and external leads for leadership, governance, culture and partnerships.

Undertake recruitment of a permanent appointment to lead the improvement work in the council.

Prepare and agree with the board a fully costed continuous improvement plan, and report regularly and in public to the board on its delivery.

Co-operate with the ministerial envoys and board leads to prepare and implement comprehensive programmes of cultural change and political mentoring, and report regularly and in public to the board on its delivery.

Have regard to, and respond promptly and in public to, any recommendations from the board with respect to the continuous improvement plan and its implementation.

Work with the Local Government Association to agree a follow-up review visit to the 2023 corporate peer challenge.

Report to the Secretary of State on the delivery of these directions, with these reports having been considered by full council, at six-monthly intervals, or at such intervals as the Secretary of State may direct.

I have also directed the council to co-operate with the ministerial envoys, and to allow them all reasonable access to their premises, documents, employees or members in support of their work. The council is also required to pay the envoys’ reasonable expenses and such fees as I determine.

This support package acknowledges the political mandate the mayor holds, while recognising the need to tackle deeply rooted and persistent issues. It is designed to strengthen and expand the improvement work that the council has already begun, and demonstrates how this Government are committed to resetting the relationship between local and central Government through genuine collaboration and engagement.

This action is not undertaken lightly, and I remain committed to working in partnership with the London borough of Tower Hamlets to provide whatever support is needed to ensure its compliance with the best value duty. I hope that with focus and oversight, the necessary improvements will come at pace, but I have not ruled out the possibility of further action in the future, in the interests of Tower Hamlets residents, should this prove necessary.

I will deposit in the House Library copies of the documents I have referred to, which are also being published on gov.uk today. I will update the House in due course.

[HCWS378]

Draft Devon and Torbay Combined County Authority Regulations 2024 Draft Greater Lincolnshire Combined County Authority Regulations 2025 Draft Hull and East Yorkshire Combined Authority Order 2025 Draft Lancashire Combined County Authority Regulations 2024

Jim McMahon Excerpts

Tuesday 21st January 2025 General Committees

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

I beg to move,

That the Committee has considered the draft Devon and Torbay Combined County Authority Regulations 2024.

[The Chair]

With this it will be convenient to consider the draft Greater Lincolnshire Combined County Authority Regulations 2025, the draft Hull and East Yorkshire Combined Authority Order 2025 and the draft Lancashire Combined County Authority Regulations 2024.

[Jim McMahon]

It is a pleasure to serve under your chairmanship this morning, Mr Mundell. Regulations were laid before Parliament on 26 November 2024 for Lancashire and for Devon and Torbay. The Hull and East Yorkshire Combined Authority Order 2025 was laid before Parliament on 4 December 2024, and the Greater Lincolnshire regulations on 11 December 2024. Although I recognise that combined authorities and combined county authorities are distinct legal bodies with different enabling statutory instruments, I hope Members will be content for me simply to use the term “the combined authorities” hereafter, unless there is a specific reason to separate them out.

To deliver on our manifesto commitment, in December 2024 the Government published the “English Devolution” White Paper, which sets out how the Government will widen and deepen devolution across England as part of our central mission to drive economic growth and improve living standards. These instruments are part of fulfilling the mission to move power out of Westminster and back to those who know their areas best. They are significant milestones in the devolution journeys of these four areas. The instruments provide for the implementation of the devolution agreements confirmed on 19 September 2024 between the Government and upper-tier councils in each of the areas concerned. On 18 November 2024, all the respective constituent councils consented to the making of these instruments.

The combined authority order will be made, if Parliament approves, under the enabling provision in the Local Democracy, Economic Development and Construction Act 2009. The three sets of combined county authority regulations will be made, if they are approved, under the enabling provision in the Levelling-up and Regeneration Act 2023. All four authorities will be established on the day after these statutory instruments are made. The Greater Lincolnshire combined county authority and the Hull and East Yorkshire combined authority have chosen to adopt a mayor for their authorities, with the inaugural elections taking place on 1 May this year. The elected mayors will take up office on 6 May, with a four-year term, and will take up their seats on the Council of Nations and Regions.

The statutory instruments make provision for the Government’s arrangements for combined authorities. Each authority has specific arrangements, enabled by either the 2023 Act or the 2009 Act and set out in these establishing instruments. In each case, the constituent councils nominate one or more of their members to form the combined authority, sitting alongside the mayor where one is being adopted. District council representation and input into the combined county authorities is determined locally within the framework provide by the 2023 Act. I know from conversations with local leaders, and through commitments they have made, that district councils will play a key role in ensuring the success of devolution in those areas.

The instruments confer public authority and local authority functions on the respective combined authorities, as agreed in their devolution agreements and set out in each area’s proposals. To accompany the order, we have laid before Parliament a section 105B report, as required by the 2009 Act; and we have laid before the House a section 20(6) report for the regulations, as required by the 2023 Act. The reports provide details about the public authority functions that are being devolved to these authorities. They include powers over transport and Homes England concurrent regeneration functions, as well as mayoral development corporation functions for the mayoral combined authorities. Additional funding will be available to the areas through the adult skills fund, which will be devolved to the combined authorities from the ’26-’27 academic year, as well as education and skills functions.

The Department for Education will work with the combined authorities to support their preparations and ensure that they meet the necessary readiness criteria, and we will legislate in due course when the Secretary of State for Education is assured that they are operationally ready and is satisfied that the required statutory tests have been met in each area.

As provided for in the enabling Acts, the constituent councils consulted on the proposals to establish the combined authorities based on their devolution agreements. Those consultations took place between December 2023 and March 2024 for periods of either six or eight weeks. Councils promoted the consultations using social media, communications campaigns, dedicated websites, and online and in-person events with the public. The councils also undertook targeted stakeholder engagement with businesses, the voluntary sector and key institutions in their areas. Responses could be made online via their website or email, on paper via the post or at dedicated events or collection points such as local libraries.

I can report that the necessary statutory requirements under the 2023 and 2009 Acts have been considered, and that the authorities preparing the proposals have provided the Secretary of State with a summary of the consultation responses when submitting their proposals to the Government in spring 2024.

[Lewis Cocking (Broxbourne) (Con)]

I draw attention to my entry in the Register of Members’ Financial Interests. Some of the areas that we are looking at are still two-tier areas. Will the Minister outline the Government’s approach? Can two-tier areas create combined authorities, or is it the Government’s ambition that new combined authorities will be created only in areas that are wholly made up of unitary councils?

[Jim McMahon]

The hon. Gentleman makes a good point about how we manage the transition from where we are today to the situation under the English devolution Bill when it eventually becomes law. We have broad ambitions to widen and deepen devolution, which means that we do not wish to wait for the English devolution Bill to be in place. The expressions of interest that we had had by the deadline last week showed that there is significant interest among local areas that want both reorganisation and devolution. There will be a streamlining of the process between devolution and reorganisation, in which a two-tier area could apply to become a combined county authority today and go through reorganisation, and convert to a combined authority in a single-tier system when that reorganisation has taken place. Those arrangements are transitional. Ultimately, by the time the devolution programme has finished, we expect that in most areas, if not all, the two-tier system will come to an end, with unitary councils forming that combined arrangement.

In laying the draft instruments before Parliament, the Secretary of State is satisfied that the statutory tests under the 2009 and 2023 Acts are met, namely that the constituent councils have consented to the establishment of the combined authorities, that no further consultation is necessary and that making the instruments would be likely to improve the economic, social and environmental wellbeing of some or all of the people who live or work in the area; would be appropriate, in having regard to the need to reflect the identities of local communities and to secure effective and convenient local government; and, in establishing the combined authorities, will achieve the purposes specified in the constituent councils’ proposals. The making of the draft instruments will shift money from central Government to our regions, as set out in their devolution agreements. That includes capital funding for each area and mayoral investment funds for the areas that choose to adopt a mayor.

I personally thank the local leaders and their councils for their hard work and the vital role they play in making the Government’s critical mission to widen and deepen devolution a reality in their areas. I commend the draft instruments to the Committee.

--- Later in debate ---

[Jim McMahon]

I thank the hon. Member for his contribution and for his support for the measures. One thing that has stood out over quite a long period is that belief in devolution mostly rises far above party politics. It is about a structural change in how the country is governed and where power sits. There may be differences about pace, perhaps, and about focus, and there will always be a conversation about resourcing, but Members across the House absolutely support the direction of travel that we are embarking on to take power away from Westminster and put it into the hands of those who know their areas best.

We talk often about precepts. I believe strongly that a precept is the most transparent way for taxpayers to hold to account those who spend public money on their behalf. The reality is that mayoral functions cost money. It costs money to establish a mayoral office and carry out mayoral functions. The more responsibilities and duties we devolve down—there are significant areas of competence in the White Paper—the more mayors and combined authorities will need to marshal to provide the staffing support and resource to deliver them.

There are two ways of doing that. Either we do it through a levy provided to each local authority—through what I would call the back door—that does not appear on people’s council tax bills and is agreed from council to combined authority; or we do it through a precept. The benefit of a precept is that it increases transparency. It is published on everyone’s council tax bill, and they know exactly what they are paying for. In terms of democracy and accountability, it makes it a lot easier for people to hold the mayor to account for the money that is being spent in their name. I accept that in broaching any idea of new taxation, we must take into consideration the fact that people are reeling from the cost of living crisis and recognise the impact of tax, but we are clear that this is not a new tax in the overall sense. This is about transparency in the tax system so that people can see where their money is really going.

The shadow Minister rightly mentions borrowing limits. We have seen examples of local authorities that have borrowed far in excess of their revenue, to the point that they are now financially unviable. We all know the local authorities in scope for that. Combined authorities will agree with His Majesty’s Treasury what their borrowing cap will be, and they will only be able to borrow within that cap, providing they have the revenue to support that borrowing liability.

I have been a councillor in Greater Manchester, and I now represent it as Member of Parliament. We were able to align locally directed money, some of which was borrowing and some of which was local authority contributions, to extend the tram system. The benefit of the tram system was that it unlocked significant private sector investment, allowed central Government to align their capital programme with what we were doing locally and, importantly, had an earn-back mechanism that allowed the ticket sale revenue to be offset against loan liability. In that sense, it is a self-financing model that can grow and grow. Ultimately, the loan will be paid off, but we will always have a tram system that people will use and buy tickets for, and that will generate revenue, create jobs and be good for the economy. Providing that the HMT cap is in place, Members should be assured that it will not be excessive.

The measure is not being introduced in isolation. We are doing a huge amount on the reform of the local government pension scheme, which I and many Members believe has untapped potential for growth in this country. It is the largest pension scheme in the UK, with £400 billion, and the sixth largest in the world. I do not think we realise the benefit of it in our towns and cities for local investment as we should. If we can unlock even a small percentage of additional investment, that could be transformational. The English devolution Bill puts a duty on mayors and their combined authorities, and on pension schemes, to work together to create a pipeline of investable products.

[David Simmonds]

Previous Governments introduced pensions pooling. There is already a London pool, for example, where 33 London local authorities and the City of London have a pooled pension scheme. Two issues always arise from that. The pension fund trustees have a fiduciary duty in law to serve the best interests of the pensioners. Their obligation is not to seek the best investment from the Government’s point of view, but to do what generates a return so that people can rely on that income when they retire. Having been involved in changing some of the regulations to allow a greater share of the pool to be invested in infrastructure, I am aware that the Treasury has always had considerable concern about that that conflict with fiduciary duty. Ultimately, if there is a shortfall, it will fall back on taxpayers in another form because of the statutory nature of the schemes.

Another issue has to do with the profile of individual pension funds. We know that the London borough of Hillingdon, which serves about two thirds of my constituency, has a much younger workforce profile than the London borough of Ealing next door. The trustees’ investment intentions are therefore based on the need to serve the longer-term interests of a much larger pool of young people who will need those pensions for 50 or 60 years ahead. Ealing’s pensioners are, on the whole, older, and therefore the investment intentions are different.

I would be interested to know what regulatory change the Minister has in mind to address both the conflict between trustees’ fiduciary duties and the Government’s intention to see this as a sovereign wealth fund, which potentially it could be; and the fact that the different workforce profiles of individual pension funds may make their pooled investment choices more challenging.

[Jim McMahon]

I will be careful not to stray too far from the subject, but given that I raised it, I will say that we are out to consultation on pension funds. The exact construction of the requirement to invest via pools rather than via individual pension funds is still subject to discussion. We accept, of course, that pension fund members and boards will always have fiduciary duties. The English devolution Bill does not require blind investment regardless of the consequences; it requires an investable product to be created. That is the test. Is it safe and secure, and does it provide a return on investment that can hold water? That is a requirement.

The investment pot is £400 billion, so even 5% of that—unlocking £20 billion of investment to UK plc—would be significant and could be game-changing. We need to keep that in context, but it must be approached with caution, given that in the end, the fund must be there for pensioners and future pensioners.

The legislation delivers the commitment made in the devolution agreements with Devon and Torbay, Greater Lincolnshire and Lancashire to establish combined county authorities, and to establish a combined authority for Hull and East Yorkshire. I commend the regulations and the order to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Devon and Torbay Combined County Authority Regulations 2024.

Draft Greater Lincolnshire Combined County Authority Regulations 2025

Resolved,

That the Committee has considered the draft Greater Lincolnshire Combined County Authority Regulations 2025.—(Jim McMahon.)

Draft Hull and East Yorkshire Combined Authority Order 2025

Resolved,

That the Committee has considered the draft Hull and East Yorkshire Combined Authority Order 2025.—(Jim McMahon.)

Draft Lancashire Combined County Authority Regulations 2024

Resolved,

That the Committee has considered the draft Lancashire Combined County Authority Regulations 2024.—(Jim McMahon.)

Oral Answers to Questions

Jim McMahon Excerpts

Monday 20th January 2025 Commons Chamber

[Ian Roome (North Devon) (LD)]

16. What plans her Department has for local government reorganisation in Devon.

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

On 16 December, I wrote to all councils in two-tier areas and neighbouring smaller unitaries, including in Devon, to set out plans for a joint programme of devolution and local government reorganisation. Later this month, I intend to formally write out to those councils on the shortlist to ask for interim proposals by March and fuller proposals later in the year. We will confirm that as soon as possible, because we know it is important to have clarity.

[Ian Roome]

Obviously, any reorganisation will impact council finances. My constituency of North Devon has coastal towns with real pockets of remote deprivation, isolation and poverty. Now that the Minister’s Department has cut the rural services delivery grant, what methodology will be used to ensure that local government funding does not overlook those areas?

[Jim McMahon]

With respect, the hon. Gentleman is conflating two entirely separate issues. One is reorganisation, which will take money away from the back office and put it on the frontline where people can see the benefit of that investment, but to be absolutely clear on rural services, the provisional settlement that was laid out ensures that primarily rural councils get an average increase of 5%, and no council sees a net reduction in its income levels. That is our commitment to rural communities, and it is firm.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Vikki Slade (Mid Dorset and North Poole) (LD)]

I refer the House to my entry in the Register of Members’ Financial Interests as a serving councillor on Bournemouth, Christchurch and Poole Council.

Many councils have already undergone significant reorganisation, from moving to shared services right the way through to full unitarisation, and the costs of that have always been underestimated. Although transformation leads to lower long-term revenue costs, we know that councils everywhere are teetering on the edge, so finding funds to pay for reorganisation, transformation and redundancies will be problematic. The mayoral authorities add an extra complication, so can the Minister confirm that funding from central Government will be provided to fully cover both devolution and local government reorganisation, so that councils do not have to factor extra costs into their 2025-26 and 2026-27 budgets or risk reducing local services further?

[Jim McMahon]

The Government are not requiring any area to reorganise. What we did was write out and invite proposals to be submitted, and I pay tribute to councillors across the country for the leadership they have shown in putting those proposals forward. Investment to support LGR or devolution will follow a bit later, but to be clear, this is a bottom-up reorganisation being requested by local councils, and they have our full support in that process.

[Ruth Jones (Newport West and Islwyn) (Lab)]

17. What steps her Department is taking to work with the devolved Administrations to support people sleeping rough in winter 2024-25.

--- Later in debate ---

[Jodie Gosling (Nuneaton) (Lab)]

20. If she will make an assessment of the potential impact of the English devolution Bill on local public services.

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

The English devolution Bill will strengthen public services by delivering local government reorganisation and establishing more directly elected mayors, who will have the new power to convene public services. The Bill will also deliver a new health improvement duty for strategic authorities, and enable more mayors to take on responsibility for police and crime commissioner functions, and health functions as well, to co-ordinate better on local public services. Beyond mayors, the White Paper reasserts the role of local authorities as leaders of place and the delivery arm for the Government’s missions.

[Jen Craft]

The catastrophic impact of the level of debt left behind by the previous Conservative council is being felt all over Thurrock. Our services have been cut to the absolute quick, and delivery for residents is at an all-time low. Although I welcome the impact that devolution will have on growth and value for money, what reassurances can the Minister offer that devolution will finally give us the chance to turn the page and deliver where it matters for my constituents?

[Jim McMahon]

That is a shared ambition. The Government are determined to take power away from Westminster and put it into the hands of local communities. We know that driving better outcomes and better public services rests on fair funding, and for too long councils have been impoverished, while more expectations have been placed on them. The funding reforms we are consulting on will be part of rebuilding the foundations, but this is a very significant project to get power away from this place to local communities.

[Jodie Gosling]

English devolution provides a generational opportunity to unlock the potential of towns such as Nuneaton. I thank the Minister for his time and support in ensuring we get these options right. Will he continue to meet me and council representatives to discuss the best options for unlocking growth and opportunity in Nuneaton?

[Jim McMahon]

I thank my hon. Friend and the many other MPs with whom I have had meetings to talk about devolution—at the last tally, about 140 one-to-one meetings with MPs have taken place, such is the interest being shown in devolution for the right reasons. I am more than happy to continue those conversations and to welcome the local leadership being shown.

[Mr Peter Bedford (Mid Leicestershire) (Con)]

I draw the House’s attention to my entry in the Register of Members’ Financial Interests. Several Mid Leicestershire villages such as Glenfield, Birstall and Braunstone town are extremely anxious at the prospect of being forced into a large city unitary as a result of the English devolution Bill. Will the Minister agree to meet me to discuss this matter, and will he give my constituents the assurance that they will not be forced into a city unitary against their wishes?

[Jim McMahon]

It is important to say that any requests for local government reorganisation are proposed to Government by the local areas. It is for the Government to provide the process by which those applications are heard. Over at least the last four years, local authority elections have been postponed countless times to allow reorganisation to take place. To be clear, there is a bottom-up approach for both the postponement of elections and the boundaries that are drawn for the unitaries. Our job is to ensure that the process supports that approach.

[Mike Martin (Tunbridge Wells) (LD)]

I want to ask about the interaction between the planning reforms and devolution, which are two huge bits of legislation. In Tunbridge Wells we have a local plan, but we have been asked when we do our new local plan to have a 66% increase in houses. Except, we will not have a new local plan because Tunbridge Wells borough council will cease to exist—it will become part of the West Kent unitary authority. How will these two huge reforms interact and what will it mean for housing numbers in Tunbridge Wells?

[Jim McMahon]

In a sense, a council is only an organisation at a point in time, but there will always be a local authority responsible for the area. We want to ensure that the authority is strategic but also takes that wider view. Reorganisation is of course part of that, but, importantly, a strategic authority can also take wider responsibility for aligning public service reform with local growth. The hon. Gentleman talks about housing numbers and we can sometimes miss how important that is: housing targets are one thing, but we must not forget that for every one of those numbers there are people and families who currently do not have a safe and affordable place to live. This agenda is about tackling exactly that.

[Mary Glindon (Newcastle upon Tyne East and Wallsend) (Lab)]

21. What recent progress she has made on planning reform.

--- Later in debate ---

[John Glen (Salisbury) (Con)]

On Friday, I met the leader of Wiltshire council, who asserts that the way the Government have calculated the distribution of compensation between in-house and commissioned services means that Wiltshire has not fared well in the local government settlement that was announced on 18 December. Will the Minister meet me so that I can better understand the thinking and relay it back to the leader of my council?

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

We know that local government is feeling the pressures after 14 years that did not bode well for local and public services. We understand the pressures associated with national insurance, which is why the Treasury has committed £515 million to support councils in that endeavour. I am more than happy to meet the right hon. Gentleman about his particular circumstance.

[Brian Leishman (Alloa and Grangemouth) (Lab)]

Are the Government considering compensation schemes for homeowners who have suffered financial losses due to reinforced autoclaved aerated concrete in their properties? If so, I am especially interested in the Barnett impact for the Scottish Government of any such scheme, as I have constituents from Tillicoultry whose lives have been seriously impacted.

Non-Domestic Rating (Multipliers and Private Schools) Bill

Jim McMahon Excerpts

Report stage
Wednesday 15th January 2025 Commons Chamber

[David Simmonds]

Having served as a governor in three different state schools during my local government career, I know that many state schools have facilities that they are very happy to share—some have swimming pools, some have libraries, some have adult education facilities. The sharing of facilities among schools of all kinds is normal, but the Bill introduces additional pressure that will take away access to those facilities. Isolated communities in particular, which benefit most from that access, risk losing it.

The basic fact that schools will end up net worse off demonstrates that, contrary to what has been said, this policy fails the basic test of equity and efficiency. It harms some people in our country, with no corresponding benefit to anybody else. Let me address the argument proposed by a number of Members that the consequences are marginal. We heard a lot of evidence from different people. The hon. Member for Erewash (Adam Thompson) referred to an academic who has built a career writing tracts attacking the private education sector. That is not somebody I consider to be an expert. I will take the word of mums and dads, the Independent Schools Council, institutions that represent people across our country and the House of Commons Library over the word of a single left-wing academic.

The hon. Member for Wolverhampton North East (Mrs Brackenridge) said, “It’s not fair because schools in the state sector pay business rates.” She may not be aware that there is already an 80% mandatory business rate relief for voluntary aided, foundation and academy schools, and 100% of all state school business rates liability is paid for by central Government anyway, so no school budget is burdened by the cost of business rates, whereas the consequence of the Bill will be that every independent school is burdened by those costs.

Many of us in this Chamber will see the added value that independent education brings. Many of those experts whose opinion we value have spoken profoundly about the fact that so much of our special educational needs provision is in the private sector. I made reference in Committee to Gesher school in my constituency. I defy any Labour Member visiting Gesher to come away saying, “That is a private business that deserves to be taxed.” Such institutions have emerged—in many cases over a long time—to cater to very specific and profound special educational needs and disabilities, and they are looking aghast at the consequences of the Bill.

There are a number of reasons for that, some of which are technical. The Government’s solution is to introduce the “wholly or mainly” provision. Schools that wholly or mainly provide places for children with an education, health and care plan—by which the Government mean 50% or more—will be exempt from the provisions. The problem with that policy is that many children who have well-established, diagnosed special educational needs and disabilities do not have an education, health and care plan.

Indeed, beneath statementing, which was the term at the time, the previous Labour Government introduced a number of tiers: school action and school action plus. Children with moderate to severe special educational needs and disabilities could fall into those categories and be supported in a mainstream setting. The statementing and education, health and care plan process was only ever intended to make provision for children with the most significant and severe needs. That is already the case across the state sector. We know from the evidence of many parents up and down the land that they found provision in local independent schools, and at their own cost, for children who had not qualified or had not yet achieved an education, health and care plan. It is very clear that the Government’s solution underestimates, and falls well short of accounting for, the number of children with special educational needs and disabilities. This is a Government whose Secretary of State for Education stood at the Dispatch Box last week and talked about how much they believe in inclusion. Well, their actions in support of this Bill say otherwise.

The Bill also fails to address the needs of parents who wish to secure a place for their child at a school that has a special character. This is particularly important in rural areas, but it is an issue across the country. We all know that there are schools that have the ability to provide specialist training or coaching in a sport that a child excels in and wishes to pursue, and there are schools that have a faith or cultural identity that is incredibly important to the family.

By requiring all those types of school to pay these significantly hiked taxes, this Government are bearing down on choice in the education sector and pushing up costs for mums and dads. These are not wealthy families, but ordinary people in this country who are seeking to do the best for their child and who, in some cases, are willing to take on the responsibility of paying for their child’s education even if they could still pursue the opportunity of an education, health and care plan for them through the state system. They choose to do the right thing by their child, and this Government will be penalising them.

The amendments we have tabled seek to address the shortcomings I have described as best we can. We will also support some of the amendments tabled by other parties where they clearly fulfil our shared objectives, but as the speeches and other contributions to this debate by Conservative Members have shown, there could have been so many more amendments seeking to get this Bill right.

In conclusion, all of the hereditaments that are covered by this Bill are important to our economy and to growth, and in many cases they are vital to our communities. Since the Chancellor’s Budget, growth has flatlined, inflation has revived, borrowing costs are rising and employment opportunities are diminishing. It is not too late for this Government to choose a different path, and we invite them to do so this afternoon.

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

Before I speak to the amendments tabled by the hon. Members for Mid Dorset and North Poole (Vikki Slade), for Ruislip, Northwood and Pinner (David Simmonds) and for St Albans (Daisy Cooper), I thank Members from across the Chamber for their contributions and for the constructive spirit, by and large, in which they have engaged with the Bill since its introduction. Although they are not always seen, with evidence sessions and Committee stages not always being prime-time TV viewing—it is a curse, but that is the way it is—those deliberations are nevertheless essential. The contributions that were made by Members from all parts of the House in probing and scrutinising the Bill were valuable, and I hope that all Members found them interesting.

I will begin by speaking to the amendments concerning the impact of the new multipliers. New clause 1, tabled by the hon. Member for Mid Dorset and North Poole, would require the Secretary of State to review the impact of clauses 1 to 4 on businesses, high streets and economic growth within six months of those clauses coming into effect. The hon. Members for Ruislip, Northwood and Pinner and for St Albans have proposed two other new clauses. New clauses 2 and 3 would seek to impose in legislation a requirement for an analysis of the impact of the new business rate multipliers at varying points ahead of, or following, implementation of the Bill. New clause 3 also seeks to require an assessment of how the application of the new multipliers would differ between retail, hospitality and leisure businesses occupying different numbers of properties, and to compare that assessment with the impact of retail, hospitality and leisure relief from the 2020-21 financial year to the 2025-26 financial year.

We agree in principle with the points that hon. Members have raised through their new clauses. It is right that the Government consider the effects of their policies on businesses, on the high street and on economic growth, and indeed within different sectors. It is the policy of the Government that those businesses should feel a material benefit as a direct result of these measures, so let me set out how we propose to do that.

It states in the Bill that the two new retail, hospitality and leisure multipliers may not be set at more than 20p in the pound lower than the small business multiplier. The Bill also places appropriate restrictions on the higher multiplier: when it is set, it cannot be more than 10p in the pound above the standard multiplier, and cannot be applied to properties with a rateable value of less than £500,000. It is important to state that those are not the intended tax rates, but the maximum parameters to be introduced through the new business rate multipliers. As we explained during the Bill’s passage through the House, the actual tax rates will be set at the 2025 Budget, taking into account the effects of the 2026 business rate revaluation, as well as the broader economic and fiscal context at that time.

[Daisy Cooper]

The Minister has been here throughout the debate, and he will have heard a number of my interventions. I accept his point that those figures will not be published until Budget 2025. May I ask if he is in a position to give a cast-iron guarantee that small independents, with a small number of hereditaments, will not be subsidising organisations that have many, such as the big chains?

[Jim McMahon]

I did hear the hon. Lady, and I think we all accept the principle of needing to target or get support to those important small businesses, which we can all identify in our constituencies. With respect, I think there was a degree of conflation with the temporary reliefs brought in during covid, which the previous Government did not account for, that were always going to come to an end.

Our challenge was how to reconcile ongoing support for the high street with a permanent relief in law so that businesses know exactly where they are and can plan ahead with certainty. The choice we made was far fairer: to target higher-value properties of more than £500,000, which are generally—but, I accept, not entirely—the large-footprint warehouse and distribution premises used by the big online retailers.

The shadow Minister used the example of the stationery provider in my constituency. It is an online retailer, so it ought to be paying more. Why? Because for a long time—and we have all heard this from our constituents and industry—we have needed a rebalancing from online to on-street and from out-of-town to in-town, and that is exactly what this targeting does. It was never intended to be a continuation of the relief that was only temporary during covid. It is about rebuilding the foundations, and that is exactly what we have set out to do.

[Daisy Cooper]

I completely accept that point, and I am very sympathetic to the fact that the Minister inherited a sticking-plaster system from the previous Government. If during the course of this year his Government’s own analysis proves what I have discovered from the House of Commons Library research, will he ensure that the Government at least do not rule out introducing a new small business relief in a targeted way to support such small independent businesses?

[Jim McMahon]

As with all tax policies, we will keep this under review, and I say that in a very general sense. We absolutely believe that the businesses that are the backbone of our high streets, town centres and communities would, were it not for these measures, go bust. They would not be viable and they would feel the heat very quickly. However, because of the measures we are taking, businesses will be able to plan with certainty for the future, knowing that they have a Government acting in partnership with them in that enterprise.

[David Simmonds]

I appreciate the Minister’s point, but clearly no Parliament binds its successors, so every Parliament must make its own decisions. A lot of Members have asked about small business rate relief. It would be helpful to have some certainty from the Dispatch Box about the Government’s intentions on that. Can he give us that certainty tonight?

[Jim McMahon]

I can certainly give the certainty that we are providing in law for a permanent relief for retail, hospitality and leisure businesses, and we will fund that through a very targeted additional payment for properties of more than £500,000, which will primarily be the online retailers occupying big warehouses and distribution centres. It is a promise to shift from the online to the on-street, as I talked about.

Before we move on to vote on the amendment, I will make some progress. The House will know that tax policy and legislation are not subject to the same requirement for the impact assessments that accompany non-fiscal policy decisions. Nevertheless, the Treasury is committed to publishing an analysis of the effects of any multipliers at Budget 2025, which we hope will go some way to reassuring hon. Members that we will be considering the impacts of this policy carefully before the new rates are set.

The Government will continue to keep the policy and its effects under review as a matter of course, because we believe it is good practice to do that for all taxes. However, we want to make it clear to hon. Members that the Government have heard them, and we understand the importance of robustly understanding tax changes, which is something to which we have already committed. I hope this commitment to understanding the effects of the new tax rate when it is introduced will enable hon. Members not to press their proposed new clauses.

Amendment 9 would give local authorities discretion over whether the higher multipliers enabled by the Bill should be applied. The Bill would enable the Treasury, through regulations, to introduce permanently lower multipliers for qualifying retail, hospitality and leisure properties, and to fund this by introducing higher multipliers for properties with a rateable value of £500,000 or more. As we explained in Committee, we do not have any plans to narrow the scope of the higher multipliers as doing so would reduce the funding available for the very targeted support for lower multipliers for uses that everyone in the Chamber supports.

That does not mean that local authorities will be unable to apply local discretion to rate bills. As was set out in contributions, local authorities already have wide-ranging powers for discretionary rate relief as set out in section 47 of the Local Government Finance Act 1988 where the authority is satisfied that that would be reasonable, having regard to the interests of council tax payers. We assure the House that those discretionary powers are unaffected by the Bill and remain in place. Given that local authorities will be able to use those discretionary powers to provide relief, including for ratepayers subject to the higher multiplier, the amendment is not required. I hope that assures hon. Members.

I turn to amendments 1 to 6, which would widen the scope of the lower multipliers so that qualifying manufacturing properties would become eligible alongside retail, hospitality and leisure properties. In the Bill Committee, the hon. Member for Newton Abbot (Martin Wrigley) spoke of the vital importance of manufacturing to the British economy and of how providing them with a permanent cut to their business rates could help them to recover.

Let me reiterate the Government’s support for the manufacturing sector as a whole. It is said that Britain is a nation of shopkeepers, but it is also a nation of innovators, creators and entrepreneurs. Our manufacturing sector helps bring many of those ideas to life, and we understand its importance. But the Government must also support our high streets—the hoteliers, restaurateurs and publicans—and that is especially important with a property tax such as business rates as those sectors rely on good locations, which in the business rates system are often valuable locations. If they did not have that targeted support, they would feel the hit very strongly.

Through the Bill, we are delivering our manifesto pledge to protect valuable town centres and high streets by enabling the introduction of permanently lower taxes for qualifying retail, hospitality and leisure properties from 2026-27, ending the uncertainty of the annual retail, hospitality and leisure relief that has been rolled over year on year since the covid-19 pandemic. We have been clear throughout the process that this tax cut must be fully funded. Therefore, against the current fiscal backdrop, a widening of the scope of properties eligible for the lower multipliers might dilute the support that the Government were able to provide, or its impact might even require a higher tax rate for properties with values of more than £500,000 to fund such new multipliers. However, we respect hon. Members’ points of view and agree that our manufacturing sector should be recognised and supported.

Advanced manufacturing is one of the eight growth-driving sectors identified as part of the Government’s industrial strategy. At the autumn Budget, the Government announced £975 million for the aerospace sector over five years, over £2 billion for the automotive sector over the same period, and £520 million for the new life sciences innovative manufacturing fund. That is how the Government intend to support the innovators, creators and entrepreneurs mentioned earlier. Because we have this package in place to support manufacturing, we cannot accept the amendments, but I hope that I have been able to provide hon. Members with reassurance as to our commitment to support the sector, which I am sure the whole House recognises is vital.

I turn to amendments 7 and 8. While clause 5 will remove business rates charitable relief from private schools, the amendments would introduce new provisions or expand existing provisions in the Bill to ensure that certain private schools remain eligible for business rates charitable relief. Amendment 7 would result in a fee-paying school retaining its relief if it wholly or mainly catered for pupils with special educational needs as defined under section 20 of the Children and Families Act 2014, whether or not those pupils have an education, health and care plan. Amendment 8 would result in a private faith school or a private school with a special character maintaining its eligibility for charitable relief if there were no maintained or academy school of the same faith or special character within the statutory walking distance set out in the Education Act 1996. Although amendment 8 does not indicate what may constitute a special character, we understand from previous contributions in the House that that would include schools that follow a particular method of education. Amending the basis on which fee-paying schools are eligible to retain their charitable rates relief in the manner in which the amendment proposes would undermine the Government’s intention to remove tax breaks for private schools. As we have said, the removal of the tax break is necessary to fund school support for the over 90% of pupils who are educated in the state sector.

The Government have carefully considered their approach to minimising the impact on pupils with the most acute needs. The Bill provides that private schools that are charities and that wholly or mainly—by over 50%—provide education for pupils with an education, health and care plan will remain eligible for charitable relief. As hon. Members will be aware, most children with special educational needs, with or without an EHCP, have their needs met in mainstream state-funded schools. If an EHCP assessment concludes that a child can only be supported in a private school, the local authority directly funds that place.

Where an EHCP has not named a private school, the parents or carers of the child may choose to place that child in a private school, but that is a choice made by the parents and does not detract from the assessment that the pupil’s needs can be catered for in the mainstream state-funded sector. In instances where a child’s parents disagree with the local authority’s assessment that their needs can be met in the state sector, the EHCP system is the most appropriate channel to resolve such disagreements.

The Government are aware of the concerns raised by hon. Members and others that pupils with special educational needs in private schools may lose their charitable relief. The Government believe that most private special schools will not be affected at all by the Bill. In fact, we expect any private special schools losing eligibility for private relief to be the exception; according to our assessment, they could be in the single figures. It is important that we keep it in that context.

[Richard Tice (Boston and Skegness) (Reform)]

Will the Minister give way?

[Jim McMahon]

I do not have time for any more interventions.

Private schools that benefit from the existing rates exemption for properties that are wholly used for the training or welfare of disabled people will continue to do so. The majority of children in England with special educational needs, with or without an EHCP, have their needs met in the state sector already. The Government’s ambition is for all children and young people with special educational needs or a disability to receive the right support to succeed in their education as they move into adult life.

As Members know, all schools are required to follow the Equality Act 2010, which includes fostering and promoting an environment that encourages respect and tolerance of children and families of all faiths and of none. We have listened carefully to arguments relating to exempting faith schools from the Bill, and we have decided that a carve-out for faith schools or schools with other special characteristics cannot be justified. For those reasons, we are unable to accept amendment 8.

Finally, amendment 10 would delay the removal of charitable rates relief from private schools by one year to April 2026. To eliminate barriers to opportunity, we need to concentrate on the broader picture of the state sector, where most children are educated. Ending the tax breaks on VAT and business rates for private schools is a tough but, in the end, necessary decision that will secure additional funding to help deliver on the Government’s commitments to education and young people. Together, these policies are expected to raise over £1.8 billion a year by 2029-30—essential funding to improve the education of the vast majority of school-age children. Delaying their implementation would forgo about £140 million, which, frankly, cannot be justified.

The House has heard a good range of amendments to the Bill, and I hope that I have been able to address them all. Although we are not able to accept the amendments, I hope that the assurances that I have outlined are accepted and Members feel able to withdraw them. If not, the Government cannot support them.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Jim McMahon]

I beg to move, That the Bill be now read the Third time.

I take this opportunity to acknowledge all who have contributed to the Bill’s passage through this House, particularly my private office team, for the support that they have offered during this process, officials in my Department, for the outstanding work that they have done, and colleagues in the Department for Education and the Treasury, as well as Clerks of the House, for supporting the process of this Bill.

The Bill honours the Government’s manifesto pledge to end business rates charitable rate relief for private schools in England and to fundamentally reform the business rates system. We are kickstarting this endeavour through the introduction of lower tax rates for retail, hospitality, and leisure properties.

I thank all Members who contributed to the evidence sessions, the Committee stage and today’s debate. I hope, even though there were disagreements on parts of the new clauses and on the amendments, that there is at least an acknowledgment that we have gone a long way to ensure that we get to the heart of what this Bill is intended to do when it comes to the high street and our town centres. In the end, whatever the differences—and let us be honest there are plenty—we all know how important our small businesses are to the viability of our high streets. We all recognise that these are more than just places in which to do business; they are places that people look to as the heart of their community. They are always more than the sum of their parts. Hopefully, Members will see that these measures will really make a dent in this area.

I also place on the record our thanks to those who gave evidence to the Public Bill Committee, including: the Institute of Revenues, Rating and Valuation; the British Retail Consortium; the Co-op Group; M&S; the Shopkeepers’ Campaign; the British Property Federation; and the Independent Schools Council. They have enabled us to scrutinise the Bill properly and to get evidence from professionals who understand what things are like on the ground, and that, I believe, added value to the process.

I thank those who attended and gave evidence in Committee for their time and willingness to share their expertise. I also wish to extend my thanks to hon. Members who attended the Public Bill Committee to ask questions, to foster debate, and to contribute to discussions as we take these important first steps to transform the business rates system.

The Bill will help to secure additional funding to enable the Government to deliver their commitments to the majority of children who attend state schools, which is the second part of this Bill. Ending tax breaks for private schools is a tough but necessary decision. It will come as welcome news to most parents in England, as it represents the Government’s determination to break down the barriers to opportunity and ensure that all children get a high-quality education. Let us be absolutely clear: more than 90% of children in this country go to state schools and they deserve the best, too. Now they are going to get it.

Let me assure Members that the education system in England is prepared for the relatively small number of pupils who may move as a result of the measures in this Bill. Much of what we have heard about churn in the system is not supported by the evidence and, in the end, it runs the risk of scaremongering. We need to reflect on the fact that there has always been change in the system, even before these measures were introduced. Importantly, we are organising to make sure that parents and pupils receive support if they need it, but we believe that will be around the edges.

The Bill will also provide certainty to high streets by making provision to introduce a permanent tax cut for retail, hospitality and leisure properties. We have heard a lot about the change from the covid relief to the permanent, baked-in relief that we are providing through the Bill. The Opposition have said a number of times during the Bill’s passage that it represents a reduction, but a degree of honesty is required. The Opposition know, as do we, that there was no provision—not a single pound or penny—for the continuation of the temporary relief provided during covid on which retailers, hospitality providers and leisure providers were relying.

The Opposition know that that is a fact, as do we. The only difference is that while the Opposition were willing to political point score, while businesses were waiting for maturity and for an answer to the problem, we were getting on with the job of government, and providing the permanent support that businesses need. How will we pay for it? We have heard the Opposition say a lot that they do not support measures, but they always support the investment. They support the investment in state schools, but not the measures to generate the income. They support the measures to support high streets, but seem not to support the measures to ensure that premises with a value of £500,000 or more pay more into the pot.

The reality is that this has not just come out of the blue. The Conservatives had 14 years to address the imbalance from the online to the on-street, from the out-of-town to the in-town, and they did nothing, so it is, frankly, ridiculous for them to try to present themselves during the passage of the Bill as the champions of enterprise, of our town centres and of small businesses. They now have an opportunity. We have sorted out the amendments—they were nonsense, and most people would accept that—but on Third Reading we get to vote on the substance of the Bill. The Opposition could do the right thing. They could change course and back support for state schools to get them the money that they need. They could back measures to get money to the high street in our town centres and do the right thing. Now is the time to show that they will be the mature Opposition that they promised to be, but I expect that that will not be the path they choose. Luckily, the Government are getting on with the job. I commend the Bill to the House.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Secretary of State.

Local Government Reorganisation

Jim McMahon Excerpts

Wednesday 15th January 2025 Commons Chamber

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

(Urgent Question): To ask the Minister to make a statement on plans for local government reorganisation.

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

The English devolution White Paper sets out how this Government plan to deliver on our manifesto pledge to transfer power out of Westminster through devolution and to fix the foundations of local government. This Government’s long-term vision is for simpler structures, making it clearer for residents who they should look to on local issues, with more strategic decisions to unlock growth and to deliver better services for local communities.

On 16 December 2024, I wrote to all councils in the remaining two-tier areas and neighbouring small unitaries to set out plans for a joint programme of devolution coupled with local government reorganisation. We acknowledge that for some areas the timing of elections affects their planning for devolution, particularly alongside reorganisation. To help to manage these demands, we will consider requests to postpone local elections, as has been the case in previous rounds. Where local elections are postponed, we will work with local areas to move elections to a new shadow unitary council as soon as possible. This is a very high bar, and rightly so.

The deadline for such requests was Friday 10 January. Today, my Department has published a list of all county and unitary councils who have made requests, including those who want to delay elections from 2025 to 2026. For the avoidance of doubt, this is the list of requests; it is not the final list that will be approved. We will consider these requests carefully and postpone elections only where there is a clear commitment to delivering both reorganisation and devolution to the ambitious timetable set out. While not all areas listed will go forward to be part of the devolution priority programme, we are grateful for the local leadership shown in submitting these requests, and a decision will be made in due course as soon as possible.

We welcome the large number of areas that have come forward seeking to join the devolution priority programme, reflecting our own ambition for greater coverage across England. This Labour Government were elected on a manifesto to push power out of Westminster and to relight the fires of our regions, and I am delighted that local leaders across England are sharing that ambition.

[David Simmonds]

Although it was not a manifesto commitment, the Government published their agenda for reorganising council structures in England before Christmas, and we support our local government colleagues who are clearly required to respond to that call from Government. With local elections scheduled to take place in May this year and councils already incurring significant costs arranging polling stations and electoral canvassing, and preparing to receive nominations and issue postal ballots, it is not surprising that many councils have acceded to the Government’s expectation of a delay in these polls. After all, why incur millions in costs to local council tax payers for electing people to councils that are to be abolished shortly afterwards?

However, there remains significant uncertainty about where and if those elections will be delayed. With deadlines looming for key points in the organisation of those elections, that uncertainty risks some wasted costs for council tax payers, so we on the Conservative Benches have a series of questions. We know that many of those councils are Conservative-run, and with Conservative councils charging on average £80 less per household than Labour ones and £21 less on average than Lib Dem ones, voters will want to understand the impact of the Government’s reorganisation on their council tax and on their back pocket.

May I ask the Minister, first, what assessment has he made of the Boundary Commission’s capacity to undertake the necessary reviews to ensure equal distribution of electors across the new local authorities? Can he give an indication to the House of when he will make decisions, so that local authorities will know whether they are preparing to organise elections and are willing to incur those costs or not? We know that a number of other announcements are in train, particularly the indication from the Deputy Prime Minister that areas currently setting a low level of council tax will be punished through revisions to the funding formula, so when can local authorities expect to know what impact such revisions to the funding formula will have? I look forward to informative answers from the Minister.

[Jim McMahon]

I thank the hon. Gentleman for those questions, and I am genuinely grateful for the spirit of consensus around the broader issue. I accept that there may be differences of opinion on pace, but we do not shy away from our ambition to see devolution experienced by the whole of England. I give a degree of credit to the previous Government for building out devolution in the north of England and the midlands, but surely we have to demonstrate that this project is not reserved for the north of England and the midlands. This is a project for the whole of England, and we are on with that.

Our determination to ensure that we deal with these structural changes early in the Parliament is clear, but that is shared by local government. It is important to say that although of course we will set the timetable and provide support on both the devolution priority programme and local reorganisation, it is for local areas to self-organise and to agree to be part of the programme. We are not mandating this; we are not forcing it. All the requests that we have had since Friday have been from areas who share our ambition.

The hon. Gentleman will know that it is sensible to take the approach that, if reorganisation is a genuine proposal—and the bar has to be high for that test—it is nonsense to have elections to bodies that simply will not exist. It is far better that we move at pace and create the new unitary councils and then hold elections at the earliest opportunity.

I am not going to get into the subject of council tax, partly because it is outside the scope of the hon. Gentleman’s urgent question. Also, he was slightly mischievous in the way that he framed his remarks. On the point about capacity, however, it might be helpful if I lay out what the process will be. Local areas will make the request. We will issue statutory invitations at the end of the month, and areas will need to self-organise. It is not for the Boundary Commission or the Government to lay down which plans come forward. It is for local areas to submit proposals to us, and at that point the Government will decide on the right proposals among what could be a number of options that come forward from local areas. Again, it will be for local areas to self-organise and make those proposals to us.

[Madam Deputy Speaker (Caroline Nokes)]

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

[Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)]

I thank the shadow Minister for securing this important question; he has highlighted some key issues.

Sadly, we know that our councils are at breaking point. The Select Committee’s first major inquiry is to look at local government finances, and we look forward to engaging with the Minister on it. It was reported that local authorities in England were facing £77.5 billion-worth of debt by the end of last year. Much of that is debt to central Government or from borrowing. Sadly, because of that, vital frontline services such as housing and social care are at breaking point. Residents cannot afford to be caught up in buck-passing or discussions about accountability if this reorganisation goes through, so can the Minister assure the House that residents will still have the same level of power and scrutiny over vital services during the reorganisations?

[Jim McMahon]

I thank the Chair of the Select Committee for those questions. What I hear from residents and even from councillors in two-tier areas is that, more often than not, local residents have no idea which council to go to in order to get the answers they need on local services. Reorganisation will provide efficiency savings in organisational costs that can be directed towards frontline services, which we believe are the priority for taxpayers. There should not simply be the cost, in many cases, of such services existing. We also believe that it is right, from a democratic accountability point of view, that residents have a clearer line of sight on which body to hold to account for local decisions.

On the point about local government finance, which we absolutely understand and accept, we have worked hard and I would say we have been relatively successful on rebalancing the funding crisis in local government. We have done that by providing £5 billion of new money, taking the total allocation to £69 billion. We cannot undo 14 years of damage in six months—it has been damaging over the 14 years—but we are now bridging to that multi-year settlement where we can really begin to repair the foundations. I think we have made progress on that.

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

[Vikki Slade (Mid Dorset and North Poole) (LD)]

There is no doubt that local government needs significant reform, and Lib Dems are passionate about putting power into the hands of local communities, but we are concerned that rather than producing true devolution, these plans will end up as a top-down diktat from Whitehall. MPs and district councillors from areas including Devon, Surrey and the midlands have told me that submissions appear to have been made without their district councils being involved or consulted, and without the opportunity to undertake consultation with residents and businesses. What steps are the Government taking to ensure that they engage meaningfully with every level of councils?

Councils such as Bournemouth, Christchurch and Poole, which I used to lead, face Hobson’s choice. Tonight, councillors will be voting on whether to join proposals to their east or their west, neither of which reflect their urban needs or their distinct character. Or do they sit it out and hope for the best? What plans do the Government have to ensure that residents will have the democratic ability to decide on the right devolution plan for them? Can the Minister confirm, given that these plans will take more than a year to implement, that all the elections due in May 2025 will go ahead?

[Jim McMahon]

I do not want to disregard the good work of district councils in this conversation about reorganisation, and about redirecting money to operational costs on the frontline, so that taxpayers get better value for money and see the benefit in their local public services. I pay tribute to council officials, frontline workers and councillors, whether they are in unitaries, counties or districts, for their work. I just set out the view that the best way to achieve efficiency is by having more streamlined local government structures that enable money to go to the frontline.

On whether district councils will have a voice in the process, it is a fact that we have received requests for reorganisation, and statutory invitations go out at the end of the month, but it would be usual for the Government to be faced with a number of options for what those new boundaries might look like. The county might have a view about how many councils should be included in the reorganisation, and I suspect that districts might have a very different view.

It would be quite usual for a number of different proposals to come forward for a county. It is for the Government to try to strike a balance that takes into consideration identity, efficiency and having an anchor to the area that makes sense. We genuinely want this to be a collaborative process, so that we get the right outcome for local people.

[Mr Paul Foster (South Ribble) (Lab)]

As the Minister is aware, I was a district council leader in Lancashire until 5 July, when I got the Avanti train down to Westminster. As I have said for many years, the challenge we face is that the two-tier system does not work. It confuses our residents. The Local Government Association’s map of the different structures of local government in England is a mishmash, and it does not work. West Lancashire and South Ribble borough councils have put forward detailed proposals for local government reorganisation to the Minister, but the Conservative-run county council has not. My concern is that some elections will be cancelled and some will not. On the priority programme, will the Minister please consider enforcing the cancellation of all elections in places where he is moving forward quickly with reorganisation?

[Jim McMahon]

When my hon. Friend said he got the Avanti train down on 5 July, I think the Chamber was half expecting him to say that he had only just arrived, but he has been here for some time.

I know there are different views in Lancashire on what a good outcome looks like, and there are certainly different views on what a good process looks like, but I think there is a shared view that the time has come for devolution in Lancashire. When people look to Greater Manchester and the Liverpool city region, and see that Cumbria and Cheshire are organising to be part of the next stage, of course they want to be part of that. Lancashire is unique, in that we were already in discussions with it about its timetable and process. The level 2 agreement that is in place of course comes with investment, funding and other powers. Lancashire has agreed that by autumn, it will submit proposals to the Government that reconcile its organisational status; it will also bring forward a plan to move forward with a mayoral combined authority. Lancashire took the view that given that the timetable was already in place, it did not need to request that the election be cancelled.

To be clear, we absolutely see Lancashire as part of our priority work. It is critical. The prize for the north of England is completing the work on Cheshire, Lancashire and Cumbria, so that the whole north of England has mayoral devolution. That will be game-changing.

[Lewis Cocking (Broxbourne) (Con)]

I draw Members’ attention to my entry in the Register of Members’ Financial Interests.

In the devolution White Paper, the Government set half a million people as the appropriate size for these new councils. Can the Minister therefore rule out creating big super-councils that represent more than a million people? Will he meet me to discuss devolution and local government reorganisation in Hertfordshire?

[Jim McMahon]

It is important that the Government set out the framework. We were very directive in the White Paper about our view on reorganisation and devolution. In every conversation we had with the LGA, the County Councils Network, the District Councils Network and others, we heard that the worst outcome would be the White Paper speaking to an issue without going close to clarifying what outcome we want. The response to the priority programme has been reflective of that clear direction.

We were up front in saying that, for efficiency, new unitary authorities should have a population of around 500,000, but we also made it clear that if the reorganisation went hand in hand with devolution, a degree of flexibility would be needed to make sure we balanced strategic oversight of the combined or strategic authority with the local identity and sense of belonging that people need. I also make it clear that it does not matter whether we are talking about councils going through reorganisation, or about existing councils and metropolitan authorities, be they in London or the north of England. Wherever they are, we expect councils to organise their neighbourhoods and communities, local public services and democratic engagement so that people feel more power in the place where they live.

[Daniel Francis (Bexleyheath and Crayford) (Lab)]

My residents in Crayford, in the London borough of Bexley, have their services provided by one council, but in many cases, residents on the same road have their services provided by two councils—by Kent county council and Dartford borough council—which causes confusion, as the Minister said. Does he agree that the changes introduced in the English devolution Bill will make local government more effective and save money for those taxpayers?

[Jim McMahon]

That is exactly what this is about. This is the most ambitious reorganisation in England for at least 50 years, maybe longer. We need to avoid the sense that this is just rearranging the local government deckchairs. It is not about that. The devolution White Paper is ambitious, and that ambition is about wresting power from Westminster and Parliament and putting it in the hands of communities up and down the country. For far too long, power has been held in a very narrow way by a handful of people, at the exclusion of millions of people in this country. Frankly, people have had enough, so we have to find a different route.

[Kit Malthouse (North West Hampshire) (Con)]

I am fortunate to work with two local authorities, Basingstoke and Deane borough council and Test Valley borough council, which, after many decades of careful stewardship, are debt-free and have significant assets on their balance sheets, to the benefit of their residents. What will the Minister do in this local government reorganisation to protect that legacy? Would it not be profoundly unfair if those many years of careful stewardship were wiped out by amalgamation with more profligate neighbouring councils?

[Jim McMahon]

It is not my intention to set one council against another. When areas begin to look at what new unitary boundaries might look like, they will need a view on identity, scale and achieving efficiency, and, ultimately, what construct will deliver good public services, be it adult social care, children’s services or those neighbourhood services that, in many places, have been eroded to the point where people wonder if they exist at all.

We have to rebuild from the ground up. This process, regardless of a council’s debt or financial status, is part of that rebuilding. Let us be honest: nobody in this Chamber, or in this Government, can put a number or this. We do not know what the outcome will be. If this is genuinely about local areas self-organising and presenting to Government their view of what a good outcome would be, we need to be open about that.

[Alice Macdonald (Norwich North) (Lab/Co-op)]

Local government reorganisation and full devolution is long overdue, and I believe it will bring many benefits to Norfolk and Norwich. In Norwich North, just as my hon. Friend the Member for Bexleyheath and Crayford (Daniel Francis) said, one council might collect the bins on one side of the street, and another collects them on the other side. Building on the questions from Opposition Members, can the Minister reassure us that cities like Norwich will have a strong voice in this process, and will have their voices heard on the key economic drivers?

[Jim McMahon]

That is a very important point, and I pay tribute to MPs in Suffolk and Norfolk for the work that they have done in making the case for greater devolution of powers. I also pay tribute to county and district councils for the cross-party political leadership that they have shown in pursuit of devolution. Members will know that the original agreement for both Norfolk and Suffolk was not one to which the Government could agree, for a number of reasons that have been identified. However, the commitment from leaders in the area to finding a way through is appreciated and valued, and we will honour that in the next steps.

We absolutely believe that in large parts of the country—I see it in Exeter, Lincoln, Ipswich and Norwich—we have important economic anchors in cities that previously have not had a seat at the devolution table because they have been district councils. We have to deal with that as we go forward.

[Mr Lee Dillon (Newbury) (LD)]

Will the Minister update the House on the capacity in his Department to manage these reorganisations? He spoke about the deadline having passed, and having received expressions of interest. How many can his Department manage at any one time? What will be the determining factor in which ones are chosen to progress now?

[Jim McMahon]

The Department stands ready to support local areas, both on devolution and on local government reorganisation, and will make sure that there is a genuine partnership when it comes to ensuring that capacity. We will not just rely on local areas to find it; we will work together on that.

We will have to present the information the hon. Member refers to on another date, not today. Until we know what the final programme is, we will not know what is required to deliver it. There is no arbitrary upper limit. Nevertheless, we need to be realistic that there is a high bar on devolution and reorganisation, and we can only allow forward plans that have a credible proposal for devolution. If plans are less developed when it comes to devolution, then even if other parts of them are compelling, and do things that we would want to see come about, politically, I am afraid that cannot stand. They have to be credible plans that ultimately lead to fulfilling the ambition for devolution, and that will be the priority.

[Jen Craft (Thurrock) (Lab)]

The historical bankruptcy in Thurrock, from which my constituents are still suffering, is symptomatic of a system of local government that is letting people down badly. Devolution and reorganisation represent a once-in-a-generation opportunity to capitalise on growing opportunities in Essex, deliver better value and improve services. Does the Minister agree that reorganisation is the right step, and this is the right time? It will allow us to move on from the broken system and deliver more power and opportunities to communities in places such as Thurrock.

[Jim McMahon]

My hon. Friend will know that there are particular issues in Thurrock, relating to historical decisions taken in that local authority. We believe that efficiencies can be garnered through reorganisation, and that if we redirect money to neighbourhood services that people can see and feel, their satisfaction with local government and local public services will increase. We also accept, though, that some systemic problems are not addressed by reorganisation alone; in the end, the multi-year settlement and the funding reforms that are taking place will have to be the foundation for that.

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

The people of Gloucestershire are expecting elections this May to their county council. If that is not to happen, will the Minister tell us precisely when the date will be decided, for all the reasons so excellently set out by my hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds)?

[Jim McMahon]

The hon. Gentleman makes a fair point. Clarity is important for areas; they need to know whether they will go ahead with elections so that they can organise. We seek to give clarity by the end of the month, so in a couple of weeks at most.

[Andy MacNae (Rossendale and Darwen) (Lab)]

I associate myself with the excellent remarks of my Lancashire colleague, my hon. Friend the Member for South Ribble (Mr Foster), and I thank the Minister for recognising the massive opportunity that reorganisation and devolution presents for Lancashire. It has been held back for many years by our inability to come together and move forward. Given that we now have an ongoing devolution process, and genuine proposals for reorganisation that are supported by a majority of councils across the county and by MPs, and given the significant costs of holding local elections—£3 million in the case of Lancashire, which could fill an awful lot of potholes—it feels like Lancashire county council’s refusal to put forward a proposal to cancel the upcoming May elections is about self-interest and short-term political imperatives being put ahead of the needs of residents. Does the Minister agree that it is regrettable, to say the least, that the request has not come forward, and that we should not hold those elections, but put the needs of residents first?

[Jim McMahon]

I will be careful. When we came into government six months ago, I was clear that we needed to reset the relationship between central and local government. For many years in opposition, I observed Governments parading around instances of councils that were in disagreement in a very public way, and I thought that undermined the system as a whole. While it might not always be possible, where there are differences of views, they should probably be aired in private and not in Parliament, from a ministerial point of view.

Even though there are differences in Lancashire about pace, potentially, and about what a good outcome might be, there is at least agreement that devolution is the right thing for the county, and that having the same powers as Greater Manchester and the Liverpool city region could be game changing for Lancashire’s economy and local jobs. When I say “local jobs”, I mean skilled, decent work that gives people pride of place; that is absolutely central to this Government. Let us focus on agreement, and put some of the disagreements to one side. However, I take on board my hon. Friend’s local perspective entirely.

[Dame Karen Bradley (Staffordshire Moorlands) (Con)]

I am pleased to see that Staffordshire is not on the list and that we will have our county elections this May. The Minister will know, however, that my constituents do not want to be subsumed into greater Stoke-on-Trent. Will he give them some reassurance—any at all—that they will have the choice and can say no if they do not want to be part of greater Stoke-on-Trent?

--- Later in debate ---

[Jim McMahon]

I quite like Stoke-on-Trent; I am not sure what the local disputes are there. Maybe that is something not to go into. Focusing instead on process, that change would require consultation, and every area that has had a devolution agreement and eventually a mayoral election has had that consultation take place. There was some recent polling that said that the public were more likely to be supportive of the mayoral model of government if they had a mayor already in place, because they could see the benefit. In the end, how we reconcile the situation England will require compromise in some places. I say that because England is unique, it is diverse and, from an identity point of view, there is much that different areas have in common but there are some contradictions too. It is our job, through the course of building this out, to work at a local level to try and find the right solutions. That commitment is firm.

[Several hon. Members rose—]

[Louise Jones (North East Derbyshire) (Lab)]

The reason I am in this place and my absolute priority is to ensure that we deliver good public services to the people of North East Derbyshire, through well-run government with representatives who are invested in their local community and held to account. Will the Minister assure me that any discussions over reorganisation will include local boroughs and districts, and that any agreement reached will make sure that we reflect both those priorities?

[Jim McMahon]

The request can come in for reorganisation, but the Government’s role from the point at which we start the statutory invitation process becomes quasi-judicial. We therefore need to make sure we steer well clear of defining what outcome we want because we are, in effect, neutral in that process. It is our job to receive proposals as they come forward, and it could well be that the county and district councils put forward entirely different proposals. It is our job to make sure we consider both on an equal basis.

[Mr Will Forster (Woking) (LD)]

As the Minister knows, the former administration at Woking borough council racked up debts of £2.1 billion. That money will never be fully repaid to the Government, but surrounding local authorities are anxious that as part of reorganisation they might have to share that debt. Will the Minister confirm how the Government will handle debt in Woking, Surrey and elsewhere as part of the reorganisation? Also, will he agree to write off Woking’s unsustainable debts to ensure that reorganisation happens sensibly?

[Jim McMahon]

Agreeing to write off £2 billion of debt at the Dispatch Box would be quite career-limiting, I would say. I can say, however, that the scale of the financial challenge in some areas is absolutely understood and we will work to try and find a solution. We are not yet at the point of announcing that, however.

[Mr Jonathan Brash (Hartlepool) (Lab)]

In Hartlepool, 75% of every penny spent by the council is spent on social care. That is contributing to a burden on council taxpayers in Hartlepool that is far too high. Does the Minister agree that in the wider local government reorganisation, consideration needs to be given to regional collaboration on social care or, indeed, removing social care from local government altogether to ease the burden on council tax payers?

[Jim McMahon]

My hon. Friend will be aware that Dame Louise Casey is conducting a broader review of adult social care for reasons that are well understood by the House. On whether the matter should or should not sit with local government, I will say that where local government really excels is in being local and rooted in the community, in being the deliverer of a public service and in being able to organise at a place level. That does make a difference, and we should not underestimate the impact when done well. We need to make sure that social services are adequately funded for the work they have to do to provide a good level of service for local people.

[Mr Richard Holden (Basildon and Billericay) (Con)]

Across Basildon and Billericay, my residents are concerned about the idea of two years of delay while massive reorganisation goes on locally. Will the Minister provide reassurance that the local plan for 27,000 new houses across the area, which has just been consulted on, will not suddenly be rushed through by a local council that will not exist in future, with residents having to live with the consequences for years to come?

[Jim McMahon]

I would say that, given our housing crisis, 27,000 new homes seems like good news to me, and we need to see more of that. Councils need to operate in a business as usual way, making sure that they get their business done. The worst outcome would be for councils going through a reorganisation to press pause on important items of business. That would be a complete absence of leadership.

[Alex Mayer (Dunstable and Leighton Buzzard) (Lab)]

One effect of creating more strategic authorities appears to be the splitting of transport and highways powers in more areas. Will the Minister provide assurances that this will not slow down the delivery of capital projects that are necessary to achieve economic growth?

[Jim McMahon]

No, that is certainly right. Our ambition is for acceleration, not for lagging behind, and we will make sure that no schemes are delayed as a result of reorganisation.

[Bradley Thomas (Bromsgrove) (Con)]

The Minister has quite rightly pointed out that residents across the country expect councillors to take a more strategic approach to deliver better services. My residents across Bromsgrove and its villages share that ambition. However, the biggest elephant in the room is the role of adult social care in the local government sector. Can the Minister outline to the House what decisions and what conversations are taking place across Government to address this so that future new councils, post reform, get off on the very best foot to improve their areas?

[Jim McMahon]

I feel that we have gone a long way to doing that, although we do accept that this is a bridging position to get us to the multi-year settlement. None the less, £3.7 billion of new money for adult social care in the settlement is a commitment laid out in pounds and pence in the way that local government has been asking for. We accept that there is a long way to go, and that councils need more support, but the Government are absolutely committed to rebuilding the foundations of local government and putting it on an even keel.

[Chris Vince (Harlow) (Lab/Co-op)]

I thank the Minister for his statement. Many of us across the House will have campaigned in district elections, as I have in Harlow. The No.1 thing that comes up on the doorstep in district elections is potholes, even though they are not the responsibility of district councils. Does the Minister agree that this English devolution Bill will not just simplify local government but be more cost-effective and bring more value back to the taxpayer?

[Jim McMahon]

My hon. Friend makes a very good case for reorganisation, and I agree with him.

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

As the Minister will know, in Lincolnshire, where there are two unitaries as well as the county council, the three top-tier authorities have agreed on a package to go unitary. There are complications, because there is a ward boundary review going on in north-east Lincolnshire at the moment. Would the Minister consider cancelling that, as it seems a complete waste of resources? In the county council area, which covers roughly two thirds of the county, a mayoral election is taking place, and a new combined authority is being established this May. Given that, does he agree that it is important that elections go ahead to give the county a new mandate for what lies ahead?

[Jim McMahon]

From our perspective, we cannot allow the cancellation—or postponement, I would say—of elections to be driven by any political views. We are clear that this is an administrative process and it is about whether areas satisfy criteria that meet our devolution priority programme. Where areas are already in the programme because they have mayoral elections this year, it would be reasonable of me to say that we would need to see where the benefit is of elections being cancelled, given that devolution is taking place. But as I have said, we have only just received the proposals. We are taking time to review them, and we will make sure that is done in a fair way.

[Sean Woodcock (Banbury) (Lab)]

I refer the House to my entry in the Register of Members’ Financial Interests as a serving district councillor for 13 years.

I broadly welcome the thrust of this document. My question is on a matter that the Minister has already referred to—areas that are serviced by a number of different local authorities, which mine is. I have a county council, two district councils, any number of parish councils, and Banbury town council—Labour-run for the first time ever. In those areas, there will be a wide variety of views as to what a local government reorganisation should look like, because different communities have different views. Can the Minister assure me that the fast-tracking and the speed of this process, which I acknowledge the reason for, will not lead to rushed proposals that do not take into account what communities actually feel and look like?

--- Later in debate ---

[Jim McMahon]

I can absolutely assure my hon. Friend of that. Let me just say that in 2019, 11 district council elections were cancelled to allow reorganisations to take place, and so were seven in 2020. In 2021, the elections of three county councils and three district councils were cancelled to allow reorganisation. I say that because we cannot allow people to think that this is, in any sense, something new that has come out of nowhere. This is the day-to-day business of reorganisation done in the right place, in the right way, with full public consultation.

[Rupert Lowe (Great Yarmouth) (Reform)]

Given the abject failure of devolution in both Scotland and Wales and the fact that the Americans fought a war of independence on the slogan “No taxation without representation”, my constituents of Great Yarmouth would like an answer to two questions. First, why should they continue to pay their council tax beyond May, when they will not be represented by elected people? And secondly, by what name do they call these unelected councillors after May?

[Jim McMahon]

We need to be clear that the members who will discharge the functions of the council and the executive have been elected. The idea that they are not elected is not accurate, and we need to be careful about the language that we use. I believe—I am sure the hon. Member believes—that most councillors are good public servants and go into local government for the right reasons to represent their community, and we should not be targeting them unnecessarily. To be clear, they were elected, and we might take the view that, if they meet the criteria, their period of office should be extended to allow election to a new shadow unitary authority. On that basis, I hope that local people will support it.

[Steve Race (Exeter) (Lab)]

I thank the Minister for the level of engagement that he has given both me and my colleagues on this process since the English devolution White Paper was published. He will know that I have a high level of enthusiasm for local communities being given the ability to take more control of services in their area. Does he agree that devolution and reorganisation offers cities such as Exeter, Lincoln and elsewhere—the key economic drivers of this country—the opportunity to grow and invest sustainably in partnership with strategic authorities? Can he shed a bit more light on the process when a county council and a district council potentially disagree on the way forward?

[Jim McMahon]

It is quite usual for a county council and a district council to disagree on the way forward. From a Government point of view, we will consider proposals on an equal basis wherever they have come from—from a county council, a district council or a unitary authority that might change its boundaries. It is important that that is clear, because we want to make sure that, in the end, it is the right deal for local people, it is the right deal for taxpayers and it delivers good public services.

[Alison Bennett (Mid Sussex) (LD)]

I refer the House to my entry in the Register of Members’ Financial Interests.

How will the Minister avoid a fire sale of district and borough council assets once they are merged with county councils, which are crippled by the soaring cost of adult social care? Does he therefore agree with me that 2028 is too late?

[Jim McMahon]

We can only go as fast as the process allows. We can start the process early, and we have done that. We can give clarity early, and we are doing that. What we cannot do is to shortcut a legal process that requires adequate consultation, the development of proposals and a transfer of workforce and assets to a new unitary council. That must be done in the right way, which takes time. We absolutely understand the point about local community assets, which is why community asset protection and the community right to buy are so central to our agenda going forward.

[Adam Jogee (Newcastle-under-Lyme) (Lab)]

The Minister will recall, I hope, the concerns that I outlined the last time he was before the House. Efficiencies, as he put it, and improved services are of course important, but so too are local identities and existing communities. With that in mind—I have asked him this before—how will we ensure that local identities are protected? Will he meet me to discuss the impact that these proposals might have on the ancient and loyal borough of Newcastle-under-Lyme?

[Jim McMahon]

The point that my hon. Friend makes about balancing identity is as much about culture and approach as it is about where boundaries for councils are drawn. Sometimes, the identity of a council will match closely with the identity of a place, but often it does not. In urban, rural or coastal areas, many communities are far more nuanced or localised, and there can be some quite tense local neighbourhood disputes as a result. Any reorganisation has to respect the historic locally felt identity of every part of the new area, not just the area in which its headquarters might be based or that its council might be named after, and holding firm on that has to be part of the approach.

[James Wild (North West Norfolk) (Con)]

The Government’s timetable is wholly inadequate. Given that the previous deal that Norfolk negotiated was scrapped without any consultation, how will the public be consulted on any changes going forward, and does the Minister accept that a minimum population of half a million may not be appropriate in rural areas, to avoid councils being very remote from the people they serve?

[Jim McMahon]

We tackled that head on in the White Paper, which said that, for efficiency, the minimum population will be 500,000, but was clear in the same paragraph that—this is where devolution goes hand in hand with reorganisation—there needs to be some flexibility for the reasons that the hon. Member set out. That is our firm commitment.

[Mike Martin (Tunbridge Wells) (LD)]

Kent county council has opted to go on the priority programme and cancel elections this May; I guess turkeys do not vote for Christmas. The timetable going forward is a little confused. We will have mayorals in 2027, unitaries in 2028, and then it stands up later on. Could the Minister give some more detail on that? If the process is stretched out like that, Conservative Kent county councillors will be in power for seven years. Judging by my inbox, the people of Kent are absolutely appalled by that. I would be grateful for more details.

[Jim McMahon]

From the Government’s point of view, acting in a legal, quasi-judicial way, we have to take such decisions on the value of the evidence and the proposals. It is not our job to get involved in the politics of whether the Liberal Democrats want to see the back of the Tories but the Tories want to avoid an election, or vice versa. It is our job to play with a straight bat, and look at the benefits of the proposals. Kent has applied, but we are going through the process of screening applications to ensure that they are realistic proposals for devolution and LGR that hold together. If they meet those criteria, we will support them. If they do not, we will not.

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

Despite what senior county councillors are telling Ministers, there is absolutely no clamour in Essex for devolution—quite the reverse. Nor do the public support the Government’s proposal to cancel the local elections; that is anti-democratic. If the Government do press ahead, why do we not take the opportunity to have a county-wide referendum in Essex to see whether the public—the council tax payers—really support this? They can vote for massive change or to remain as they are. If there is such a referendum—I never thought these words would pass my lips—I will gladly vote remain.

[Jim McMahon]

I think the right hon. Member is getting at the fact that there will be a range of views on this issue, but it is the Government’s job to give direction, and we believe that efficiencies can be drawn out. When asked, I think local people would say that they would much rather that local neighbourhood services are maintained and grown, rather than bear the overhead costs of organisations that exist for the sake of it. It is for the consultation, and the proposals, to draw out the best outcome in the process.

[Caroline Voaden (South Devon) (LD)]

I welcome the theory of simplifying local government, but I am concerned about the pace at which the Government are trying to move. Devon has a very complicated landscape, with Labour-run cities, a Conservative-run county and many Liberal Democrat districts. Conflicting proposals have already been submitted to the Government by the districts and the county, so can the Minister explain how the Government will adjudicate between those conflicting proposals and decide which one will come out on top?

[Jim McMahon]

We will see what comes forward from local areas. In some areas, there may well be a general consensus on the number of unitary authorities, but varying views on the boundary lines. In other areas, we can perhaps expect there to be entire disagreement on both the number of councils that should follow from the proposals and the boundaries that would be drawn as a result. At this stage, all we can say is let us see what comes forward. We will try to make the right decision by balancing identity, efficiency and the relationship to devolution going forward.

[Neil O’Brien (Harborough, Oadby and Wigston) (Con)]

We already knew that the Government wanted to abolish our local district and borough councils in Leicestershire without consulting local people. We now know that the proposal will involve a significant expansion of the boundaries of the city of Leicester—something demanded by the Mayor of Leicester that would lead to significantly higher council tax for my residents. Within days, thousands of local people have signed a petition started by me and other local MPs who are against the proposal, including my hon. Friend the Member for Rutland and Stamford (Alicia Kearns), who cannot be here today. My local districts and boroughs are against it, so will the Government at least agree to hold a local referendum in Leicestershire before imposing this proposal from London that local people do not want?

[Jim McMahon]

A theme is developing of campaigning for elections to bodies that some wish will not exist in the future—that sounds familiar—and for referendums being the answer to some of this. It is about local leaders showing leadership. I understand completely that there are different views, but I am impressed by the leadership being shown by Labour, the Conservatives, the Liberal Democrats and others, because local leaders believe in their place and want the best outcome for it. I will leave the local politics to them. It is our job to ensure that we assess the proposals that come forward on a fair basis.

[Monica Harding (Esher and Walton) (LD)]

My constituents are well served by the fiscal stewardship of their district council of Elmbridge, and are rightly concerned that they will be forced to take on the debt of neighbouring councils such as Woking. Equally, they are looking forward to the May elections, and kicking Conservative Surrey out. Does the Minister not agree that leaders taking devolution forward should have a democratic mandate, and will he reassure my constituents that any unitary moves will be paused until the question of debt is sorted out?

[Jim McMahon]

We certainly accept, particularly in the case of Woking, where the debt is significant, standing at over £2 billion, that the question of debt has to be addressed through the process, but it is for the process to address it. We cannot say up front how we will treat debt in different areas, because every area is different. I do not think that any Member would expect us to do that.

[Joe Robertson (Isle of Wight East) (Con)]

I draw attention to my entry in the Register of Members’ Financial Interests.

Residents of the Isle of Wight are expecting full elections this May. The no-overall-control unitary authority has asked the Government to be part of a priority devolution deal with Hampshire, but not local authority reorganisation, which is not on the table. We are not being asked to do that because we are already a unitary. Does the Minister agree, therefore, that there is no good reason to delay elections when the Isle of Wight council’s future and viability is not under discussion? That is an accepted point. Why should a democracy have to have elections when the council will continue?

--- Later in debate ---

[Jim McMahon]

I think that is a fair point, and I will take it away.

[Sarah Dyke (Glastonbury and Somerton) (LD)]

Somerset, Dorset and Wiltshire are working together collaboratively on the Heart of Wessex devolution deal and hope to be on the devolution priority programme, but there is still some uncertainty over what decision Bournemouth, Christchurch and Poole will make. Can the Minister confirm that the decision to include the Wessex proposal will not be held back, depending on the BCP decision?

[Jim McMahon]

We have to stick to the principles of the White Paper, because that informs the legislation that will come later this year. We are very clear in the criteria that we will not, and cannot, agree to any devolution proposals that create orphans that cannot be resolved. We expect that local leaders will come together and do what is right, given the geography of their place, to deliver devolution as soon as possible.

[Max Wilkinson (Cheltenham) (LD)]

Cheltenham has had a voice since Victoria was on the throne, and we need to be reassured by the Minister that we will retain that voice as part of any devolution and local government reorganisation. Otherwise, power will simply be taken away from my community and given either to Gloucester or as far away as Bristol, with a new regional mayor. Can the Minister reassure me that localism will be part of his agenda too?

[Jim McMahon]

The hon. Member makes a fair point. We are clear in the White Paper that we want to see devolution rolled out at an ambitious pace. We are doing that, and are pleased with the responses that we have had. We want to see local government reorganisation because we believe that efficiencies can be drawn out and reinvested back into frontline services that people see, feel and value. We also accept that that cannot be at the cost of local people feeling connected and empowered in the places where they live. Local empowerment and powers for the local community are central to the White Paper, and to our agenda going forward.

[Tom Gordon (Harrogate and Knaresborough) (LD)]

My constituents in Harrogate and Knaresborough recently underwent local government reorganisation. As part of that, the North Yorkshire (Structural Changes) Order 2022 granted five years to develop a new North Yorkshire council-wide local plan. Work on local district plans halted to prioritise that new plan, which has now been compromised by the introduction of new housing targets under the national planning policy framework.

Will councils undergoing new rounds of local government reorganisation receive transitional arrangements, or will they fall into the same trap as Harrogate and Knaresborough and North Yorkshire, where speculative planning applications will see endless concreting over the green belt and issues with getting housing where we actually need it, rather than where we want it? Will the Minister meet me to discuss the legacy issues of that local government reorganisation, and outline what lessons have been learned from previous reorganisations?

[Jim McMahon]

The hon. Member is conflating two separate issues. One is the process of reorganisation, and his area of Harrogate has been through that process, including the postponement of elections to facilitate it. On housing development, if he wants to stop speculative development and to have control of what is built in local communities in Harrogate, the best way to achieve that is to have a plan in place where developers can be held to account.

[Martin Wrigley (Newton Abbot) (LD)]

I draw attention to my entry in the Register of Members’ Financial Interests.

Talking of localism, district councils provided a useful amount of local accountability. How will the Minister ensure that local accountability continues when the regional identity may be different? May I also ask about the future of towns and parishes, which are not mentioned at all, and neither are national park authorities? How will those be empowered to have more local responsibility?

[Jim McMahon]

The White Paper was directive on this issue. I can only assume the hon. Gentleman has not read it, or he got bored and gave up halfway through—I will leave him to answer that. Over quite a long period of time, councillors have been relegated to the back benches if they are not in the cabinet, and we do not believe that is right going forward. We want local councillors to be frontline councillors, community conveyors, leading in their local communities and getting things done. However we marshal the system—regardless of the size of the council, where it is, whether it is a unitary council in a met area or a reorganised council in a shire county—localism has to be at its heart.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for his answers to this urgent question. He is outlining a clear policy and strategy for the way forward, and we welcome that. The papers today are full of calls for debt cancellations for English councils, which do not provide much relief to those councils that have sought to stretch moneys and resources to make ends meet, rather than ramping up debt with vanity projects. How can the Minister ensure that reorganisation assists councils to prioritise people over policy?

[Jim McMahon]

I thought I was going to get a request to reorganise Newtownards—I have got enough on my plate with England! The point the hon. Gentleman makes about the treatment of debt is important, and we understand there are pressures. In most places, the treatment of accrued debt is manageable within the geography, but we accept there are outliers—Woking and Thurrock have been mentioned—where the debt that has been built up is significant and that we need to take a view on that. We are not at that stage yet until we see what proposal will be developed further.

[Steff Aquarone (North Norfolk) (LD)]

I refer the House to my entry in the Register of Members’ Financial Interests. There is a strong case for devolution in Norfolk. However, can the Minister confirm that holding elections in May does not prevent devolution for Norfolk, and would he agree that Norfolk’s voters should be allowed to have their say on who is taking forward our devolution negotiations?

[Jim McMahon]

We need to separate out that the devolution priority programme is one stream and the local government reorganisation programme is another. We are trying to bring those streams alongside each other, recognising that they are to a degree separate processes, so that at key points in the decision-making process, they come together to ensure transparency and clarity and so people know what timetable we are working to. I accept to a point that they can be decoupled, but the two are linked. If we are going to reorganise and move towards mayoral combined authorities, we have to bring them in line to ensure that it is a programme that makes sense in the round.

[Alex Brewer (North East Hampshire) (LD)]

People in North East Hampshire have told me loud and clear that they want their democratic right to vote in May. Given that councillors up for re-election were elected in May 2021, does the Minister think they still have a mandate to make decisions for their local communities?

[Jim McMahon]

If we decide to postpone the elections based on a credible plan that moves devolution and reorganisation along, the councillors who have their terms extended are legitimate and have the powers and rights of any other councillor. As I have said, we need to be careful that we do not undermine the democratic process by trying to portray councillors who believe in their communities and who by and large are doing a good job, regardless of party politics, as somehow not there by right. They have been elected; it just so happens that in some places their term will be extended by a short period.

[Dr Al Pinkerton (Surrey Heath) (LD)]

Residents in Surrey Heath face the prospect of cancelled elections, forced unitarisation and then forced amalgamation into a new western Surrey unitary authority, if the leader of Surrey county council gets his way. That western unitary authority would inherit £5 billion of debt. I am sure the Minister will agree that in seeking a new sense of identity for west surrey, a shared sense of bankruptcy was not what we were looking for, but that is the prospect we face. What would the Minister say to my residents, who played no part in accumulating that debt but who may in the future play a part in paying it off?

[Jim McMahon]

We have covered the hon. Member’s point about debt. Perhaps he has scars from coalitions of the past, but I suggest that now is a time to come together and put party interests to one side.

Draft Combined Authorities (Borrowing) and East Midlands Combined County Authority (Borrowing and Functions) (Amendment) Regulations 2025

Jim McMahon Excerpts

Wednesday 8th January 2025 General Committees

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

I beg to move,

That the Committee has considered the draft Combined Authorities (Borrowing) and East Midlands Combined County Authority (Borrowing and Functions) (Amendment) Regulations 2025.

It is a pleasure to serve under your chairmanship, Mr Twigg. The draft regulations were laid before the House on 19 November 2024. They have three elements: first, the conferral of borrowing powers on the York and North Yorkshire combined authority, the North East mayoral combined authority and the East Midlands combined county authority; secondly, the conferral of the general power of competence for economic development and regeneration on the East Midlands combined county authority; and thirdly, the amending of certain parts of the East Midlands Combined County Authority Regulations 2024.

I will come to each of those elements in turn, but, put simply, the regulations will extend the borrowing powers of the York and North Yorkshire and North East combined authorities to apply to all their functions, and enable the East Midlands combined county authority to borrow against its functions; confer on the East Midlands combined county authority its constituent councils’ general power of competence for economic development and regeneration; and make amendments to the East Midlands Combined County Authority Regulations 2024 to address typographical errors and additional operational requirements that were identified after those regulations were made.

If approved by the House, the draft regulations will implement a commitment made to the three authorities in their original respective devolution deals. The regulations will match the Government’s ambition for English devolution by moving power out of Westminster and back to those who know their areas best. The extension and conferral of borrowing powers via the regulations is an important step towards empowering the authorities to invest in their local areas, giving mayors and local leaders the tools needed to stimulate their local economies and drive growth.

Currently, in line with primary legislation, the York and North Yorkshire combined authority can borrow in relation to its transport, police and fire functions, and the North East mayoral combined authority can borrow against its transport functions. As a combined county authority, the East Midlands is unable to borrow against any of its functions. The regulations will allow all three authorities to borrow against any of their functions, thereby delivering on commitments made in their respective devolution deals. The three authorities and their respective constituent councils—13 in total—have consented to the regulations.

The conferral of borrowing powers will bring the York and North Yorkshire combined authority, the East Midlands combined county authority and the North East mayoral combined authority in line with their existing combined authority peers, which have followed the same process for the conferral of borrowing functions. Additionally, it will bring the three authorities in line with local authorities, which are empowered to borrow for all their functions.

As combined authorities and combined county authorities, the York and North Yorkshire, East Midlands and North East authorities are subject to requirements for borrowing provided for in the Local Government Act 2003. The prudential borrowing regime provides that an authority can borrow lawfully only if it can demonstrate that the servicing and repayment of its debts is affordable. This ensures that the three authorities’ proposed borrowing powers will be used appropriately.

Like other areas, York and North Yorkshire, the East Midlands and the North East, as combined and combined county authorities, have a further check on their ability to borrow. Such authorities are subject to a debt cap, which must be agreed with His Majesty’s Treasury. Each agreed debt cap specifies the ceiling of the authority’s debt. I can confirm that all three authorities have successfully agreed their respective debt caps for the 2024-25 financial year, and negotiations on debt caps for the 2025-26 financial year are due to start shortly.

The regulations also confer on the East Midlands combined county authority its constituent councils’ general power of competence. This power will be used only in relation to economic development and regeneration. The conferral of the power fulfils commitments that were made as part of the original east midlands devolution deal, which was agreed with all the constituent councils, and will enable the East Midlands combined county authority to support local businesses and grow the visitor economy. This was a fundamental element of the proposal submitted by the constituent councils—Derby city council, Derbyshire county council, Nottingham city council and Nottinghamshire county council—to establish the East Midlands combined county authority.

The councils’ proposal makes reference to how the combined county authority will ensure that workers, businesses and local areas are supported, where possible, by schemes such as the east midlands investment fund in the delivery of key aspirations in net zero and skills. The conferral of the east midlands constituent councils’ general power of competence for economic development and regeneration will ensure that the combined authority is able to achieve its aims and deliver for the people of the east midlands.

The limited conferral of the general power of competence is a new power for the East Midlands combined county authority, so the Deputy Prime Minister, in her capacity as Secretary of State for Housing, Communities and Local Government, must be satisfied that the statutory requirements outlined in the Levelling-up and Regeneration Act 2023 have been met. I can report that the necessary statutory requirements have been considered, and the Deputy Prime Minister is content that they have been met. The Deputy Prime Minister is satisfied that the conferral of the power will improve the economic, social and environmental wellbeing of those who live and work in the east midlands, is in keeping with the need to secure effective and convenient local government, and reflects the interests of local communities. An appropriate consultation on the conferral of this power has also been undertaken in the east midlands.

Economic development and regeneration featured as a core element of the devolution deal that was signed on 30 August 2022, and was consulted on during the statutory consultation with residents, businesses and stakeholders on the establishment of a mayoral combined county authority in the east midlands. The consultation ran from 14 November 2022 to 9 January 2023, with the public and local stakeholders expressing support for the economic development activities that the combined authority intends to undertake. When asked about policies relating to economic regeneration and development, 48% of responses were supportive, with 36% unsupportive and 16% having no opinion.

The use of the function, if conferred, will be subject to the provisions of the East Midlands Combined County Authority Regulations 2024, which have already been determined as securing effective and convenient local government. The combined county authority has a directly elected mayor and two members from each of its constituent councils. In the East Midlands combined county authority, decisions, including those relating to the use of the general power of competence for economic development and regeneration, are passed by a simple majority, but any such majority must include the mayor. There is an agreed mechanism for district councils to input into the combined county authority through four non-constituent members representing the views of district councils from across both two-tier areas. Other local interests are also represented through either non-constituent or associate membership of the combined county authority.

There is precedent for the conferral of a combined authority’s constituent councils’ general power of competence for economic development and regeneration. Existing combined authorities, such as the West Midlands and the Liverpool city region, already have this power, which they have utilised for the purpose of economic development in supporting businesses and tourism in their areas. The East Midlands authority will similarly make use of the power for the benefit of those who live and work in its geography.

The regulations will also make amendments to the East Midlands Combined County Authority Regulations 2024, which were made at pace to ensure that the East Midlands authority was established in time to hold its inaugural mayoral election on 2 May 2024. This was successfully achieved, not only ensuring that the mayoral election could take place but creating the first ever combined county authority. With the East Midlands combined county authority established, it has been possible to see how the legislation works in practice and, in discussion with the East Midlands authority, certain amendments to the 2024 regulations have been identified that are necessary to enable the authority to operate effectively and in line with its devolution deal, as originally intended.

The amendments to the 2024 regulations will, first, enable non-constituent members to have voting rights in East Midlands combined county authority committees, provided that those non-constituent members have been granted voting rights by the East Midlands authority’s constituent members. Secondly, they will allow the Mayor of the East Midlands combined county authority to arrange for functions to be exercised by a committee of the combined county authority. Thirdly, they will clarify voting arrangements by specifically outlining that the mayoral budget requires a two-thirds majority. This is in line with other existing combined authorities and has been included to resolve any ambiguity, as has reference to the unanimous vote required for use of transport functions.

The amendments in the regulations will also resolve a typographical error in the 2024 regulations in relation to the housing, planning and regeneration functions of the East Midlands authority. As the Committee has heard, the amendments to the 2024 regulations are of an operational nature, and will benefit the smooth running of the combined county authority by ensuring that it can function effectively and providing clarification and certainty on the use of its functions and powers. The amendments have been discussed with the East Midlands authority and its constituent councils, and both the councils and the combined authority have consented to the amendments being made.

In conclusion, the regulations, which are supported locally, will continue the Government’s mission to shift powers and money from central Government to those in our regions with skin in the game. I commend the regulations to the Committee.

--- Later in debate ---

[Jim McMahon]

I thank the shadow Minister and wish him a happy new year in return. His were generally positive comments, with the exception of the standard view of the Mayor of London, who is obviously doing a fantastic job of delivering the Government’s missions—and long may that continue.

Let me answer the shadow Minister’s questions, all of which were completely legitimate. We expect all public bodies, whether they are councils or mayoral combined authorities, to exercise their borrowing powers with the restraint that the public would expect. We expect them to borrow for a purpose and honour their borrowing commitments through the repayment schedule. That is why there is a clear mechanism in place for HMT to assess borrowing caps on an individual basis, reliant on the financial status of the local or combined authority in question. The checks and balances are robust and in place, and it may well be that the powers are not used in some places.

The point is that as we move towards a new phase of devolution there has to be an assumption of trust and autonomy for local authorities to do what is right for their local communities, without them always coming cap in hand to the Government or waiting for a new Government grant scheme that they can bid into. In the end, areas will be expected to self-organise, to work with their local business community and investors, and to marshal projects for the economic wellbeing of the country. This devolution mechanism is very much about bringing the relevant areas in line with other authorities that already have those powers.

We have seen mayoral combined authorities in particular making a difference to economic growth. Greater Manchester is significantly outperforming large parts of the economy elsewhere in England. That has been in large part because of the mayor’s convening role and the activity and energy of the local authorities, but also, importantly, because they have been able to team up and label different elements of funding to make schemes stack up and bring them to market so that they can be achieved. Having that role in place, with the legal powers required, is entirely what this mechanism is all about.

I have a different view from the Opposition on the use of a mayoral precept. The reason for that is that every mayoral operation has a cost to it. We can all agree that we want them to be slim, efficient and nimble, but the idea that some mayors have a cost to them and some do not is frankly ridiculous. Every mayoral combined authority has an operating cost. The more that authority does, the higher that cost will be, reflecting the activity that has been undertaken. There are two ways to meet that cost. We can have a levy or a charge on the local authority, which is not particularly transparent and cannot be seen by the public. The public do not even get to see on their council tax bills how much has been spent on that function, so where is the democratic accountability? Alternatively, we can shine a light on it and say that the public have a right to know how much mayoral combined authorities cost. That should be transparent on the council tax bill, and the public, through the democratic voting process, will have the right to say whether they believe that money is being used to the best effect.

[Paul Holmes]

I do not want to break the spirit of consensus, but although the Minister is quite right that transparency is crucial to all local mayors and that the public must know how much the authorities cost, why is it that Labour mayors seem to be raising their precept much more than any Conversative mayor? Is he saying to the Committee that Labour mayors are inefficient and their operations cost more than those of Tory mayors?

--- Later in debate ---

[Jim McMahon]

I do not want to say who has the largest number of mayors, but I do not think the shadow Minister needs me to remind him that there is only one Conservative mayor in the whole country, and in the smallest combined authority, as he knows. This is not particularly about rights and wrongs, and I suggest that it would be best not to stray towards the finances in the Tees valley.

As a point of principle in terms of democratic accountability, taxpayers have a right to know which elected official is spending money on their behalf and to be able to make a judgment about whether that money is used to best effect. Having that transparency is an important part of this democratic devolution project. I understand why the Opposition would want to make hay out of a precept and refer to it as a new tax; I would say the public are paying one way or the other and it is far better that it is transparent. I will leave that there.

This may be straying a bit too far from the SI, but we reject entirely any suggestion that devolution or reorganisation is top-down. Today, councils across England will meet to discuss whether they want to make their own submission ahead of the deadline this Friday for local government reorganisation and/or devolution. They will decide whether it is right for them. They will decide who they want to work with and whether they want reorganisation in some places, potentially with devolution with a mayoral combined authority. Some might decide that they are not in a position to join a mayoral combined authority but want to take the first step to a foundational agreement that begins that journey. That is not top-down; that is local areas working together to self-organise, and a Government who are facilitating that devolution. In the end, if we do not get power away from this place, we will not allow every part of our country to realise its full potential. Areas will always be at the behest of the Government, and that cannot stand.

[Dr Luke Evans (Hinckley and Bosworth) (Con)]

I declare an interest as a Leicestershire MP. Leicestershire looked at joining the East Midlands combined county authority but decided not to. Given what the Minister said about this Friday, if Leicestershire decided that it wanted to go into D2N2, would we need further legislation to change the borrowing that is set again, and a further SI to add that in, or is there a mechanism lined up so that county authorities can join mayoralties without the matter having to come back to Parliament?

[Jim McMahon]

I am not sure that I entirely understood the question, but this SI is about new member councils joining an existing combined authority. Any member council can join, but its membership would need to be confirmed by secondary legislation, not least because in some places functions are exercised by the local authority as a member of a combined authority, rather than by the combined authority directly. The whole thing needs to be reconciled taking into account its new membership. Leicestershire has huge economic and social potential, but without devolution it will not realise its full potential and will get left behind. I do not know whether Leicestershire is making a submission on Friday, but I sincerely hope that it will. I encourage the hon. Gentleman and other hon. Members present to speak to their local authorities and encourage submissions.

The regulations confirm the commitment made in devolution agreements with the York and North Yorkshire combined authority, the East Midlands combined county authority and the North East mayoral combined authority to provide them with borrowing powers against their functions. Providing borrowing powers will provide all three authorities with the opportunity to invest in their services and functions to the benefit of those who live and work in their geographies.

The regulations will also ensure that the East Midlands combined county authority can operate as its devolution deal intended, by conferring the east midlands constituent councils’ general power of competence for economic development and regeneration on the combined county authority, and by ensuring that amendments are made to allow the combined county authority to operate robustly and effectively. I am confident that the regulations will give the authorities the tools to shape their futures, driving growth and higher living standards across their geographies. I commend the regulations to the Committee.

Question put and agreed to.

Local Government Finance Settlement

Jim McMahon Excerpts

Wednesday 18th December 2024 Written Statements

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

Our fiscal inheritance means that there will be tough choices to get us back on the path to recovery. Fixing the foundations of local government will be a long process following the 14 years of decline and instability overseen by the previous Government. But our programme of reorganisation and reform will lead to more efficient structures; will mean funding is sent to where it is needed the most; investment focusses on crisis prevention, rather than an expensive crisis response; and councils once again have the certainty and flexibility they need to focus on their priorities. Together, we will fix the foundations for everyone.

We are under no illusion about the scale of this task. The demand for, and cost of, services has increased significantly. The persistent failure of the previous Government to do the right thing, underlined by their decision to drop the long-overdue fair funding review, compounded by spiralling inflation and a failure to grow our economy, has left councils of all stripes in crisis. Our fiscal inheritance means that there is no easy route to solving this.

This 2025-26 local government finance settlement and our programme of reform for the future mark the first steps towards stabilising and rebuilding the financial sustainability of local government. We will take a more efficient approach to Government grant funding, including a one-off recovery grant to get councils back on their feet. And, in 2026-27, when we move to the first multi-year settlement for local government in a decade, we will ensure that grant funding goes to where it is needed the most: delivering better services by investing in prevention, and improving value for taxpayers’ money. Our consultation on local authority funding reform sets us on this path to recovery.

More secure finances must go hand in hand with higher standards and stronger financial decision making, both of which are impeded by the broken local audit system that we have inherited in England. Today we launched a strategy to streamline and simplify the local audit system through the establishment of a new and proportionate local audit office—combining the functions of the existing system—and ensuring that the core underpinnings are fit for purpose. We will embed transparency, restore our public financial early warning system, and ensure that every council is equipped to deliver the best value for council tax payers and business ratepayers. We will strengthen the local government standards system to support councils to deliver the high standards that they strive for. We welcome views on proposals to better support local government to uphold the highest standards of conduct and sanction misconduct whenever and wherever it occurs as part of our standards consultation. These steps are a crucial part of our plans for a stronger local government, as set out in the “English Devolution White Paper” this week.

Together, these reforms will begin to stabilise local government finances and ensure that all councils are fit, legal and decent, so they can better deliver for their residents. We will build on the significant steps we are already taking, laying the groundwork for children’s social care reform and increasing funding for homelessness and SEND services next year. We are giving councils more say over how they run local bus services, guaranteeing the future of vital reforms to our waste and recycling system, filling potholes, and bringing planning fees up to cost recovery. The hard work has already begun, and today we set out our detailed funding proposals for 2025-26 and our plan for the years ahead.

Provisional local government finance settlement 2025-26

The autumn Budget announced over £4 billion in additional funding for local government services, of which £1.3 billion would go through the 2025-26 local government finance settlement. We recognise the challenges that local authorities are facing as demand increases for critical services. Today we are announcing over £700 million of additional grant, which increases the total additional grant funding that will be made available to local councils in England through the settlement to over £2 billion. The over £700 million increase in funding announced today includes a £200 million increase to the social care grant, taking the grant’s total increase from 2024-25 to £880 million. It also includes £515 million of further funding, which will be made available at the final settlement to support councils with the increase in employer national insurance contributions.

The provisional settlement for 2025-26 therefore makes available £69 billion for local government, which is a 6% cash-terms increase and a 3.5% real-terms increase in councils’ core spending power on 2024-25. The final settlement will increase further, to incorporate the £515 million of funding announced for national insurance contributions.

Grant decisions for 2025-26

The proposals we announced on 28 November—a new £600 million recovery grant, a new children’s social care prevention grant, additional funding for social care, and repurposing the existing rural services delivery grant and the services grant—lay the foundations for fundamental reform by allocating new funding through improved formulas in 2025-26 and investing in priority services.

Social care

We will make available up to £3.7 billion extra funding for social care authorities through the settlement next year. In total, local government will receive over £10 billion in grant funding for social care, including: £1.05 billion in the market sustainability and improvement fund; £2.6 billion via the local authority better care grant; and £5.9 billion via the social care grant.

We can also today confirm that the new children’s social care prevention grant will be uplifted at the final settlement to £263 million. Taken together with the new children and families grant, the Government are doubling settlement investment in preventative services within children’s social care, to over half a billion in 2025-26, laying the groundwork for fundamental reform of children’s social care next year.

National insurance contributions (NICs)

In recognition of the decision to increase employer NICs, we can today confirm that the Government will provide £515 million to English local councils, including mayoral combined authorities and fire and rescue authorities, allocated based on an assessment of each council’s share of relevant net service expenditure. We have published a methodology note today to explain how this funding will be distributed across local authorities. Individual allocations will be published at the final settlement early next year.

Council tax

It is for local authorities to decide at what level they set their council tax. However, the Government are committed to keeping taxes on working people as low as possible. This settlement maintains the previous Government’s policy—as set out in the March 2024 Office for Budget Responsibility forecast—of setting a 5% council tax referendum principle, made up of a 3% core principle and the 2% principle for the adult social care precept. Voters will have the final say over excessive increases above this threshold.

The Government are committed to improving the presentation and transparency of council tax bills and will therefore require local authorities to adjust the presentation of the adult social care precept on council tax bills from 2025-26. This will simplify bills and provide clarity on council tax levels set by the local authorities. The Government will publish a consultation in 2025 to consider other options to improve transparency of council tax billing and support taxpayers to manage their household finances with a default option to pay over 12 months, as with most other household bills.

Requests for exceptional financial support

The Government have a framework to support councils in financial difficulty. This will be a collaborative and supportive process, and we have already confirmed that we will not replicate previous conditions that made borrowing more expensive. Similar to the approach taken by the previous Government, we will consider requests for bespoke referendum principles from councils seeking exceptional financial support. But this Government will put taxpayers and the impact on working people at the forefront of our decisions. Any requests from councils will be considered on a case-by-case basis, and the Government expect any additional increases to be agreed only in exceptional circumstances, not as a punishment where councils have failed. We will look carefully at councils’ specific circumstances—for example, their existing levels of council tax relative to the average and the strength of plans to protect vulnerable people. The Ministry of Housing, Communities and Local Government continues to offer any council a discussion, in confidence, about its ability to manage its budget.

Levy account

Every authority in England will receive a share of the accumulated surplus currently held in the business rates levy account. We can confirm that £100 million will be returned to the sector on a one-off basis, distributed in line with relevant legislation. Individual allocations of this funding will be published at the final settlement early next year.

Fixing the foundations: consultation on local authority funding reform

From 2026-27, the Government will fundamentally improve the way we fund councils, based on a new assessment of need and resources. These reforms will build on the framework set out in the previous Government’s abandoned review of relative needs and resources (originally, the fair funding review).

We will reset the business rates retention system, as was intended when the previous Government established the system. We will move gradually towards an updated system and will invite views on possible transitional arrangements to determine how local authorities reach their new funding allocations. Some local authorities work collaboratively with mayoral combined authorities in their area to ensure that extra business rates income is directed to local growth priorities across the wider region. In recognition of this, and as part of the Government’s reform of funding for local government, we will consider how the business rates retention system could better and more consistently support strategic authorities to drive growth. The Government will also reduce the number of funding pots to give councils more flexibility to focus on priority outcomes agreed with Government.

Today’s consultation is on objectives and principles. The consultation will give councils, sector organisations and the public the opportunity to contribute to the Government’s proposals. We will consider all representations to develop our understanding of the drivers of need, including the impact of rurality. This reform is about spending taxpayers’ money as efficiently as possible, but it is also about the impact it will have on real people’s lives and local authorities’ ability to deliver for their citizens.

Conclusion

The consultation on the provisional local government finance settlement 2025-26 will be open for four weeks, closing on 15 January 2025. The consultation on local authority funding reform will be open for eight weeks, closing 12 February 2025. We welcome views from the sector and beyond on each of these consultations.

This written ministerial statement covers England only.

[HCWS342]

Provisional Local Government Finance Settlement

Jim McMahon Excerpts

Wednesday 18th December 2024 Commons Chamber

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

The Government were elected on a mandate of change, to deliver a new era of economic growth and national renewal, and reverse the years of failure and decline that we inherited. Through the tough decisions that we took in the Budget, we prevented a return to austerity while protecting working people’s payslips. The plan for change that the Prime Minister unveiled earlier this month is the next stage on the journey of reform—a plan to kick-start growth and get Britain building again, putting more money in people’s pockets and delivering 1.5 million new homes, good jobs and opportunities for all.

Just this week, we announced our plans to rebuild and reform local government, and to empower local leaders to deliver that change so that the benefits are felt in every community. We cannot do this alone. We need strong, empowered local government to work with us, as equal partners in a new relationship. Public service is our collective duty, but after a decade of cuts, fiscal mismanagement and the failure of the previous Government to fix the foundations, it is a fact that councils of all political stripes are in crisis. The broken local audit system in England and the scandal of the unacceptable backlog that led to the recent whole of Government accounts disclaimer further illustrate the dire straits of the system and the legacy that we must reconcile.

The Prime Minister gets this. As a former director of a critical public service, he knows that reform is vital, and so does the Deputy Prime Minister, having worked on the frontline as a home care worker, seeing the human impact every single day. I am proud to have public service and local government in my blood too. That is why I take the responsibility to lead the Government’s work to rebuild the sector with the seriousness that is due and the urgency that is required. The work has already begun, and today marks a major milestone in our mission to rebuild local government and put councils on a firmer financial footing, as we publish the provisional local government finance settlement for ’25-26 and launch our consultation on these proposals, alongside our consultation on wider funding reform.

In the autumn Budget, the Government announced £4 billion of additional funding for local government services, of which £1.3 billion would come in the settlement presented today, but we know that we need to rally. That is why I am announcing over £700 million of additional grants. That includes over £200 million of extra funding for social care since the policy statement. I also confirm that the new funding includes £515 million that will be made available in the final settlement to support councils with the increase in employer national insurance contributions. The package in the provisional settlement will enable local government to invest in the vital services that people rely on, making £69 billion available—equivalent to a 3.5% real-terms increase in councils’ core spending power when compared with ’24-25. I confirm that this will increase even further in the final settlement.

Today is the start, not the end. Taken together, the additional funding made available in this settlement and the Budget will deliver over £5 billion of new funding for local services over and above local council tax. Alongside that, every authority in England will receive a one-off share of £100 million currently held in the business rates levy account.

Together, we must ensure that public investment is used for long-term prevention and reform of local public services, rather than expensive short-term crisis responses, which often have much worse outcomes. We are determined to end the cycle of failure that we have seen for too long, and we will provide certainty by ensuring that no authority will see a reduction in its core spending power after accounting for council tax flexibilities next year. We are also ensuring that taxpayers’ money goes to where it is needed the most. That includes an immediate down payment: a highly targeted £600 million recovery grant, funded through repurposing the rural services delivery grant and the services grant, ahead of broader reforms to a fairer funding system later. Today, we are launching a consultation on local authority funding reform starting in ’26-27.

There will always be tough decisions to make, but we are determined to ensure that we fairly reflect the real drivers of cost, including demand, the need for public services, and importantly, the ability of councils to raise revenue locally. That is why we are making up to £3.7 billion of extra funding available through this settlement to help local authorities to meet the spiralling costs of social care. That includes an additional £200 million uplift to the social care grant, which I confirm today, taking the total increase to the grant for ’25-26 to £880 million. That includes the new children’s social care prevention grant, first announced in the policy statement, which I today confirm will be uplifted in a further final settlement by £13 million, taking the total to £263 million. That is the first step in our national roll-out of transformed family health services, as we double settlement investment in preventive children’s social care services to over £500 million next year. I place on record my appreciation, and that of the Deputy Prime Minister, for the partnership and determination shown by the Treasury, the Education and Health Secretaries, and their Ministers and officials.

We will not do as the previous Government did and impoverish councils, and those who need support the most, then parade them around for public shaming. That helps no one. We must work together to get councils back on their feet financially. The principle stands that it is for local authorities to decide at what level they set their council tax, and they are accountable to local taxpayers; however, we are committed to keeping taxes on working people as low as possible, and we have to strike a balance, so we will maintain the previous Government’s policy, as set out in the Office for Budget Responsibility forecast, of setting a 5% council tax referendum principle, made up of a 3% core principle and a 2% principle for the adult social care precept. That means that residents will have the final say over increases that go beyond that.

We have put in place a framework for 2025-26 to support those councils in the most financial difficulty. Similar to the approach taken by the previous Government, we will consider requests for bespoke referendum principles on a case-by-case basis. We expect the changes outlined today will give the respite needed and clarity on the direction of travel, but we also know that 14 years have hit hard and, for some, the recovery grant and the other measures will still mean that additional support is required. We will put taxpayers and the impact on working people at the forefront of our decisions, and we will look carefully at councils’ individual circumstances—for instance, how much they charge in council tax and the strength of their plans to protect vulnerable people on low incomes.

To recognise the impact of council tax on households across all councils, we are consulting with the sector on changes to payment instalments, which will allow annual council tax bills that are spread over 10 months to move to a 12-month schedule by right, helping household budgeting, spreading the cost for working people and mirroring how most household bills are paid.

Ensuring local government can deliver for working people in the long term requires a root-and-branch reform of the way that councils are funded. That is why through the 2026-27 settlement—the first multiyear settlement in 10 years—we will introduce an up-to-date assessment of councils’ needs and resources. Today we are launching a consultation on the objectives and principles of those changes. We will consider representations from all corners of the sector to develop our understanding of the drivers of need, including deprivation, and of the impact in rural areas on service delivery—fairness for all delivered once and for all. We will redouble our work to shift power away from Westminster into the hands of those communities who know their area best. We will reduce the myriad of funding pots that councils have to contend with, giving them the flexibility they need to deliver local and national priorities.

That effort is underpinned by our strategy to streamline and simplify the local audit system in England. Local communities deserve transparency, accountability and the effective early warning system that local audits provide. We are taking immediate action by replacing the broken and dispersed system with a focused, proportionate and value-for-money local audit office, ensuring that the system is fit for purpose. This is a long-term challenge, and it will take hard work and dedication to achieve, which is why we are wasting no time in fixing the foundations, getting the audit backlog under control, overhauling the system for the long term, returning to secure multiyear settlements, and bringing forward ambitious plans for devolution, growth and reform of public services, while improving standards, accountability and efficiency. We are building for the long term to get local government fighting fit, legal and decent, and as equal partners to rebuild our country from the ground up, and ready to play its part in delivering the Government’s missions through our plan for change. I commend the statement to the House.

[Mr Speaker]

I call the shadow Minister.

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

It is Christmas. The two wise men and the wise woman on the Government Front Bench have arrived bearing their gifts for local councils, but on closer inspection, while the goal is beautifully packaged, the box is somewhat emptier than people had been expecting.

It has been a challenging few weeks for local government. We have heard the Government’s plans to take as much of the local as they can out of local government, and it is clear that this statement will leave our local authorities facing further challenges in doing their day jobs and significant uncertainty as we go into the new year. All that comes from a Government who promised just a short time ago that they would end the bidding war, as they called it, among councils. They then promptly started a new bidding war for homelessness funding, rather than addressing it through the settlement given that it is a core statutory duty of local authorities. The consequence of the Government’s approach is that localism, on central Government terms only, represents just in London a £700 million net cut in the funding that councils will have available to deal with homelessness at a time when rough sleeping is at 27%.

Councils face uncertainty about the cost of funding elections. The Minister told us just a few days ago that he would be considering whether to cancel local elections in places facing local government reorganisation. Up and down the country in all those local authorities, our returning officers are booking and paying for the polling stations, hiring the staff and carrying out the canvassing. They need certainty as we go into the new year.

Of course, our councils face additional and uncertain challenges that were announced in the Children’s Wellbeing and Schools Bill, as well as from various statements made by other Ministers, that clearly imply a significant increase in the cost of new statutory duties coming the way of our local authorities, with no clarity about how those may be funded. All of that is on top of bringing forward local government reorganisation proposals to a deadline early in the new year. It is not clear whose interests that serves, but for all those local authorities that may be considering that, it represents a significant additional cost pressure.

As many of our councillors go away for their Christmas break and try to digest the detail of the settlement over their Christmas lunch, they will face rumbling indigestion as they realise that their budget pressures will grow significantly, especially in rural local authorities, which face huge losses from the cancellation of funding that supported the additional and quantified costs of local government services in a rural environment.

I will be fair to the Minister: the £2.7 billion black hole that we spotted at the time of the Budget announcement has shrunk by around £700 million, but when it comes to council tax increases that will be announced by our local authorities in February, how much will they have to put up council tax to meet the shortfalls? How much will they have to put up council tax to cover the Government’s new approach to asylum, which is driving up the cost of temporary accommodation? When will the Government provide clarity on the dedicated schools grant override, given the impact it has on our local authority budgets? When will they provide clarity on the election preparation costs? Given that the Local Government Association has identified a £1.766 billion shortfall just from the Government’s national insurance contributions measure, when will they announce further funding to cover those costs?

Let us consider this: the cancellation of the new homes bonus means £3 million lost by Birmingham, £3.7 million lost by Buckinghamshire, £4 million from Central Bedfordshire, £5.3 million each from Ealing and Milton Keynes, £3.7 million from North Yorkshire alone, £9.5 million from Lincolnshire, £14.3 million from the rural services grant and an £18 million cut for a rural local authority in this Budget. It is clear there are tough times ahead for local authorities as they begin to look at the detail. The new homes bonus, in particular, means the places that have built the most homes are the ones that lose the benefit. If this is fixing the foundations, I would not want to stay in the tent which is the only thing they would hold up in our local authorities.

[Jim McMahon]

Here we go again. I would think that after 14 years of councils being on year-to-year watch to find out what position they would be in, the Conservatives would at least welcome the preparation now for multiyear settlements. They had 14 years to get their house in order, and they could not even line up to give councils more than 12 months’ certainty about what was coming. The one thing councils were absolutely certain about was that it was only going to be bad news after bad news. When there were crises in adult social care and children’s services and when homelessness was rising at a rate of knots, the last Government were completely missing in action—that was what councils were facing. How many councils went bust on their watch? Councils were lining up saying to the Government that they could not afford—

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Birmingham.

[Jim McMahon]

Let us talk about Birmingham, because the Opposition referenced the £3 million new homes bonus. The new recovery grant—£600 million of brand new money targeted at those councils with high deprivation and low tax bases—just for Birmingham is £39 million. That will start the repair work of rebuilding the foundations.

When we talk about fair funding and why it is needed, we will not do what the previous Government did, where they put party politics ahead of the national interest. Let me remind the Conservatives of what the previous Prime Minister, the right hon. Member for Richmond and Northallerton (Rishi Sunak), said in Tunbridge Wells in 2022:

“We inherited a bunch of formulas from Labour that shoved all the funding into deprived urban areas and that needed to be undone. I started the work of undoing that.”

That is a record of shame. It is nothing to preach about. To right the wrongs of the past 14 years and finally get money where it is needed, this Government will work for public service, not party interest.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

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

[Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)]

I thank the Minister for outlining this much-needed funding uplift. I agree with him that councils up and down the country, regardless of their political persuasion, need the Government to support them, not to criticise and denigrate them, which is sadly what we have had in some cases over the past 14 years. He mentioned some of the authorities that still face those pressures, including Birmingham, Nottingham and Woking, which have already effectively faced bankruptcy. The Local Government Association has outlined that up to one in four councils is likely to require additional emergency support.

A Sky report has today outlined that families are stuck in temporary accommodation for an average of five and a half years. We should not be calling that “temporary accommodation.” Imagine spending the entirety of your school life in temporary accommodation because you do not have your own home. The funding that the Minister has announced for tackling homelessness is welcome, but it is a sticking plaster, if we are honest, because it does not give councils the tools to build social housing. Homelessness will end only if we build new homes, so what steps is the Minister taking to ensure that councils have those powers?

In the short term, the £18 billion boost to the homelessness prevention grant is a step in the right direction, but the Government must consider the unintended consequences. Local authorities are already reliant on that funding to plug gaps in temporary accommodation—many use up to 75% of it for that purpose—but the new rules mean that only 49% of the grant may be used in that way. How will that change not lead to a further reduction in funding for temporary accommodation, at a time when, as we all know, the system is broken?

[Jim McMahon]

I thank the Chair of the Select Committee for her question. We are all getting ready for Christmas and looking forward to time with our families and our own respite, but in the end it is hard to enjoy that moment given the prospect of just how many children in this country are in temporary accommodation. Some 159,000 children do not have a secure, affordable place to live and so are in temporary accommodation. In my own town, there are 500 such children. We do our best—we martial for the Christmas parties that charities put on—but it is no replacement for a secure family home.

There will be lots of differences in the exchanges that take place here, but we need to focus on why we are doing what we are doing. The reason we are building 1.5 million new homes is of course economic, and about decent, well-paid, working-class jobs—we talk a lot about that—but in the end it is about sorting out the housing crisis. If we sort out that crisis, we sort out the temporary accommodation crisis and the financial crisis in local government. If we sort out the crisis in adult social care, of course we sort out the financial crisis, but we will finally deliver on the promise of the state looking after the generation who gave so much. If we sort out the crisis in children’s social care, we finally deliver on the state promise to invest in the next generation.

Repairing the foundations is, of course, about financial foundations—that is important—but it is also about people and communities, and in the end that is what we are all here for.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the Liberal Democrat spokesperson.

[Vikki Slade (Mid Dorset and North Poole) (LD)]

I refer the House to my entry in the Register of Members’ Financial Interests, as I am a Member of Bournemouth, Christchurch and Poole council. Local government was brought to its knees under the last Conservative Government, with funding slashed and responsibilities piled on its depleted and exhausted workforce. I thank the local government workforce and wish them a happy Christmas.

I and my local Liberal Democrat colleagues welcome the move to multi-year settlements—something we have long called for—and the funding announced today for homelessness prevention. I agree with the Deputy Prime Minister and the Minister that we must eliminate the use of B&Bs, especially for families at Christmas. I also welcome the announced consultation on changing the funding formula, as listening to our local leaders is absolutely crucial.

However, we remain really concerned about the removal of the rural services grant, which suggests that the Government do not understand the nature of rural communities, including the difficulties of providing services over sometimes vast areas, subsidising public transport, and identifying hidden poverty, often among older populations—that costs an awful lot.

On special educational needs, it is deeply worrying that councils—particularly those that may literally run out of money, such as Bournemouth, Christchurch and Poole council—still have no idea about what will happen to the statutory override. How are they supposed to set their budgets in February without that certainty? Can the Minister confirm that no council will be forced to join the Safety Valve scheme, for example, which would put at risk the support provided to some of the most vulnerable children?

As we go into winter, the impact on social care is of the greatest concern. Dorset council shared with me a letter sent to the Dorset Care Association in which the director of adult social care states:

“We simply will not have the resources to meet the national insurance contributions for providers.”

Indeed, the Minister told me, in response to a written question, that only direct national insurance costs would be covered. What does he say to providers and to staff in charities such as Diversability, who fear for their jobs this Christmas?

[Jim McMahon]

It is important that we have a debate on local government finance based on the numbers. I have said already that, when taking into account council tax, no council will see a reduction in its core spending power. That means that before the final settlement, and not including extended producer responsibility and live parts of the grant, the hon. Lady’s own council will see an increase of at least 5.8%. We are covering the national insurance contributions made there, and in addition we are funding an extra £880 million through the social care grant. We have heard representations through the sector.

We are not saying that all this will fix everything today—it cannot. We are less than six months into the new Government and we have 14 years to reconcile. I hope the hon. Lady does not mind, but I remind her that a number of those 14 years were under the coalition Government. What we missed then and are trying to make up for now is that if we take away community and preventative services, which we all know make a big difference—not just in cost but in outcomes—we end up paying more and more at the back end, but for worse outcomes. The cruelty is that the Liberal Democrats’ moment in government, which I accept was short, was the time to invest in reform and prevention. That time was not taken and that opportunity was missed, and 14 years later we are reconciling that and fixing the system from the ground up. We will do that.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

I welcome this commitment to local government and recognise that the Minister has a big job to do in addressing the challenges that have arisen because of the last 14 years—not least in local government audit. I welcome what seems to be a commitment to embracing the Redmond review. Will he give more detail about what will replace the Office for Local Government?

[Jim McMahon]

Most in the sector would agree that Oflog—the Office for Local Government—had a vague remit that was an expensive way of gathering data. In the end, if it were to be developed, we could risk mission creep whereby its remit would verge into the areas that local authorities so disliked about the former Audit Commission. We are trying to get the right balance between the early warning system that enables us to see which individual councils are under stress, and, importantly, noting any developing systemic threats or themes for which central Government might have to take much earlier action. We want to rebuild that early warning system.

However, we are absolutely clear that we are not replacing the Audit Commission. For one, it was hugely expensive, and we need to ensure that any money goes to the frontline of local public services. Honestly, councils do not need inspectors going in to mark their homework when they should be trusted to get on and do the job well. People understand what the National Audit Office is, so we hope that they will understand and see the benefit of a local audit office, and that it will be embraced by the sector.

[Joy Morrissey (Beaconsfield) (Con)]

Will the Minister set out how he expects local authorities such as mine in Buckinghamshire to absorb with such little notice multi-million pound impacts from significant changes to the social care funding formula, and the effects of the NICs rises on commissioned services and suppliers, particularly charities such as Mind, which will be greatly affected by the changes?

[Jim McMahon]

Again, the hon. Lady’s council will see a core spending power increase of 5%, and that is only this part of the settlement—it does not include extended producer responsibility or billions of pounds in other grants that will come. This is a genuine attempt to make sure we give councils the funding that is needed, and I think we have succeeded in a very difficult context, but it is a matter of fact that some councils’ local tax bases are stronger, for reasons that go back many years and, in some cases, many centuries. That is not because of the efforts of the local council—it is what it is—and for too long, councils in deprived communities with lower tax bases have done everything that has been asked of them. They have raised council tax to the maximum, so local communities are paying more and more, but increasingly they are getting less and less. They are seeing their neighbourhood services diminish.

There are tough choices, and we do not shy away from that. We have been very honest in the oral statement about the trade-offs that have had to be made, but the increase of 5% in the core spending power of the hon. Lady’s council will help deal with the issues she has raised.

[Peter Dowd (Bootle) (Lab)]

I would prefer to see the wise men and women on Labour’s Front Bench than Ebenezer Scrooge and Jacob Marley on the Conservative Front Bench. Does the Minister agree that the statement he has made today is in stark contrast to the legacy left by the Conservative party, which left local government in dire straits?

[Jim McMahon]

That is the point: the previous Government knew just how bad the situation was, but they put off the tough decisions. For example, how many times in 14 years did the previous Government promise that they would go back to multi-year settlements so that councils knew where they were, but failed to do so? How many times did the previous Government say that they would bring in a fair funding review, but failed to do so? How many times did the previous Government say that they would deal with the audit backlog? They did not just fail to do that; the backlog got worse. If we had not taken action, it would have been 1,000 sets of audited accounts, and that was not due to covid, because those accounts went back to 2015. That failure was systemic, and it was all on the watch on the previous Government. What that meant in practice was £100 billion of public money that they could not account for, so they did not really know the state of the sector, because they completely gave up on monitoring it.

[Greg Smith (Mid Buckinghamshire) (Con)]

Following on from the question asked by my hon. Friend the Member for Beaconsfield (Joy Morrissey) and the Minister’s answer, can I assure him that there are areas of deprivation in rural communities such as Buckinghamshire? Further to the point made by the shadow Minister, my hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds), while the devil is in the detail, it already looks from the figures like Buckinghamshire will take a multimillion-pound hit from the loss of various grants. Can the Minister give an assurance that rural communities will be treated equally to urban ones, and will not be left behind?

[Jim McMahon]

Either the hon. Gentleman does not know the status of the rural services delivery grant, or he is trying to mislead the House. A large share of large rural authorities should have got the rural services delivery grant but did not, because that grant was not about rural services. When the previous Prime Minister stood up in Tunbridge Wells and said that the Government had taken money from deprived communities and moved it across, he did not mean that it was for all communities; it was for party politics. So where were Conservative Members then when it came to those rural communities that did not get the grant? I did not hear anybody standing up and asking for their rural community to get the money for those services that Conservative Members are now trying to champion. We will absolutely make sure that deprivation and need are part of the funding reforms that are coming, but we will also make sure that we genuinely take into account the cost of delivering services in rural areas. The sector needs a fair funding review, and we are determined to deliver one.

[Helen Hayes (Dulwich and West Norwood) (Lab)]

I welcome the Minister’s statement, particularly the additional funding to tackle homelessness and provide early help and support for families. I also welcome the principle that resources should be directed according to need. However, as the Minister knows, the elephant in the room of local government finance is that the statutory override for deficits related to special educational needs and disabilities is due to come to an end in March 2026. Councils will be setting their budgets in the new year through to the end of March 2026, and if there is no plan to address the SEND deficits, many councils will be issuing section 114 notices. Councils urgently need certainty at this point, so what discussions are taking place with local authorities about the statutory override, and when will they have the certainty they need?

[Jim McMahon]

I agree about the importance and significance of the statutory override—that is felt very acutely in the Department and in the sector. We are consulting now on a number of matters, including the statutory override, and we are in constant dialogue with the Treasury about how we deal with that in the long term. In the end, this is another example of the legacy we have inherited. We are taking very difficult decisions to reconcile, reform and repair the system—decisions that should have been taken earlier but were not. That issue is very much on our agenda.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call Lee Dillon, a member of the Select Committee.

[Mr Lee Dillon (Newbury) (LD)]

I refer Members to my entry in the Register of Members’ Financial Interests: I am a member of West Berkshire council. Last Christmas, I was the leader of that council, and I can honestly say to the Minister that I would much rather receive in my inbox the settlement proposed by the Government than what I received from the Conservative Government.

In his statement, the Minister talked about fixing the foundations. I welcome the £3.7 billion for social care, but does he agree that, with councils spending up to two thirds on their budgets on adult and children’s social care, social care needs full-scale reform if we are to fix the foundations? Will he support the Liberal Democrats’ calls for a commission to undertake that piece of work?

[Jim McMahon]

To be honest, although I absolutely agree that we need reform, I believe the urgency is today. Think about the number of older people who would have been entitled to adult social care in 2010 who now do not even get support from the local authority, because eligibility has changed in so many areas. There is a crisis, and that crisis is not just being felt in the homes of all the people who have given to this country and deserve better; it is being felt in the acute sector and in the health service, where we are paying far more at the back end because community preventative services are not in place. We are working with the Cabinet Office and the Treasury to say, “Let’s learn as we go” on some of this, in terms of innovation and pilots where we can invest to save—invest in those community preventative services up front, to try to better reduce demand. Of course, it is about money, but in the end it is about the service we provide. I appreciate the hon. Gentleman’s comments about the settlement in the round.

[Shaun Davies (Telford) (Lab)]

I refer Members to my entry in the Register of Members’ Financial Interests as a councillor in Telford and Wrekin, as well as an honorary vice-president of the Local Government Association.

The Government’s first step to restore funding for local government after a very difficult 14 years is welcome, but council areas such as mine have fast-growing populations, provide outstanding services and provide leadership to the sector. On all three of those counts, until this point, that has not been reflected in the settlement that Telford and Wrekin council has received. Will this Government change that? I also gently remind the House that when I was chair of the Local Government Association over the past couple of years, there was not a single Conservative councillor who thought the settlement or the last Government’s approach to it was fair or proportionate.

[Jim McMahon]

I am pleased to say that this year, core spending power in my hon. Friend’s area will increase by 8.1%, and again, that does not take into account the billions of pounds that will follow. That reflects the service demand pressures, but also the reality of the local tax bases in that area. Telford, like many areas, does a very good job of providing local public services, but the council itself recognises that the neighbourhood services that most people see and feel—those that make a difference to quality of life—have been retreated on because of the need to fund targeted services, and social care in particular. We are absolutely determined to rebuild adult and children’s social care and sort out the housing crisis, but we also want people to live in good places that people are proud of, which requires those neighbourhood services to be rebuilt. It will take time to do that, but our commitment to Telford and the rest of the country is that we are absolutely determined to do so.

[Mike Wood (Kingswinford and South Staffordshire) (Con)]

The core spending power tables that the Government have published today show that total Government funding for South Staffordshire is down by 7.5%. Just what do the Government have against council tax payers in South Staffordshire?

[Jim McMahon]

Given the hon. Gentleman’s background, I am surprised that he is displaying such ignorance of council finance. The Government’s role in local government finance is to be an equaliser. As he knows, everywhere has the ability to raise tax locally through council tax and business rates, but he also knows that some areas have the ability to raise far more than others because of their tax base. It is the job of the Government to equalise—to make sure that when it comes to demand for services, everywhere gets the service provision it needs. That requires the Government to provide more funding in some places to reconcile that lower tax base, so that everyone gets the services they are entitled to. The presentation that the hon. Gentleman has offered shows either ignorance or politics, but I think the country deserves better.

[Mr Clive Betts (Sheffield South East) (Lab)]

I very much welcome today’s statement and the extra funding that has been announced. I commend the Minister for repeatedly reminding the Conservative party of 14 years of austerity, during which local government saw bigger cuts to its budgets than any other part of the public sector. Of course, the Lib Dems were a party to the coalition Government when the worst of those cuts were made.

May I ask my hon. Friend two questions? First, when he comes to consider more fundamental reforms—which we accept will not be in place for another year—will he look at the council tax system as a whole? It is an unfair and regressive system that takes a disproportionate amount of money from the poorest people in the poorest houses. Secondly, can he confirm that the local audit office will be a stand-alone body that looks at public sector audit, not an add-on to the audit, reporting and governance authority—a previous proposal—which was basically to be a private sector body that looked at local government as an afterthought?

[Jim McMahon]

I thank the former Chair of the Housing, Communities and Local Government Committee for that question. I can confirm that the core spending power of that element in this settlement for Sheffield will be 8.5%, which is before the additional funds that will follow. Sheffield gets a good settlement from this, but we recognise that it is in a context of growing demand, so we hope councils see that we are meeting them on the challenge they face.

On whether we will review council tax, I think every Government recognise that there are huge limitations with council tax, and also huge geographical variations. It is regressive, which is the nature of a tax based on property values rather than the income of the people in them. However, council tax is understood, its collection rates are high and it is really the foundation—although not the total, as my hon. Friend knows—of the funding of council services. The urgent issue we need to face is that previous Governments moved away from their role as the equaliser in the system. Whereas the revenue support grant used to be in place to support councils by reconciling lower tax bases, recent Governments have been missing in action. We are saying to councils of all political stripes, across every type of authority and every part of the country, that we will reconcile that and work with them to equalise the situation.

On the local audit office, we are absolutely determined that this will not be a return to the Audit Commission. We are trying to do a number of things. First, we want to rebuild the early warning system to make sure that we see any systemic problems developing in the system. However, we also recognise that the cost of audit has increased by 150%, which is a direct cost to taxpayers, and that there is fragmentation in the market, and we need to look at the fall-back position as opposed to auditor supply. There is quite a lot that we need to deal with, but this is very much about the provision of audit and making sure the early warning system is rebuilt; it is certainly not a blow to the inspection regime.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I know the Minister wants to give thorough responses, but I have absolute confidence that he can do that with fewer words.

--- Later in debate ---

[Jim McMahon]

That is exactly the point of moving to a fairer funding formula—and we will of course consult on the component parts making that up. We have to take this in the round—I genuinely want any part of the country and any type of local authority to be able to interrogate the system, and even if they disagree with the quantum—there will always be arguments that—to be able to say that the rationale and the evidence base hold. It is a matter of accepted fact that there is a premium on the cost of rural service delivery, just because of the travelling involved. For example, for a home care worker, there is the travel time between appointments and all the rest of it. However, it is probably also accepted that the evidence base is not as robust and strong as it needs to be, so we want to make sure through this process that we take into account the need for that strong and robust evidence base.

[Chi Onwurah (Newcastle upon Tyne Central and West) (Lab)]

Fourteen years of Tory austerity and fiscal mismanagement have halved the central Government funding for Newcastle city council, sucked the blood vampire-like from our local economy, and left local businesses and families drowning in uncertainty, so I welcome this increased funding and the specific commitments on housing and social care. However, can the Minister reassure me that there is further light at the end of the tunnel, because this Government’s work on reforming public services, local funding, business rates and innovation investment will mean that the people of Newcastle and the north-east will have the power and the resources to build the public services and the economy that we choose?

[Jim McMahon]

That is completely right. By the way, I give credit to council officials, frontline workers and councillors, because it is local government that has led on innovation and reform and that has bound together local communities in very difficult times—and, I would say, with other parts of the system too often working against the local interest, not with it. We need to find a way of sending that message not to local government, because I think it is understood there, but to the wider system. We need to say that when we make such public sector investment in Newcastle and other places, we expect the whole system to rally around a single plan for the place and its people. We expect local government to be respected as the local leader—the convenor of place—that can hold the ring to make sure there is not duplication or contradictions and that the money delivers the right outcomes for local people. We are absolutely committed to that.

[James Wild (North West Norfolk) (Con)]

Large rural counties such as Norfolk face higher costs in delivering their services, and the Government’s jobs tax adds £14 million to the pressures that Norfolk county council is facing. Can the Minister clarify whether the NICs funding he referred to in his statement, which will go to Norfolk county council and other councils, will cover the cost of social care commissioned services?

[Jim McMahon]

First, I pay tribute to the leaders in both Norfolk and Suffolk for the conversations we are having, particularly on devolution. We look forward to, I hope, making progress on that in the near future, because that is where the real prize is. We can sort out the foundations of council funding and reorganise public services to get efficiencies, but in the end we need to see devolution. We need to see power coming out of this place and being given to local communities. The best way to achieve that is through a mayoral strategic authority working hand in glove with local authorities.

On the question about NICs, we have provided over £500 million for the costs of employers’ national insurance contributions and we are providing additional money through the social care grant, and it is for councils to decide how best to spend that money.

[Emma Foody (Cramlington and Killingworth) (Lab/Co-op)]

I welcome the Minister’s statement and the fact that this Government are starting to fix the damage done by more than a decade of disastrous settlements for local government. In my constituency, that means increases of more than 5% for each local authority in core spending power, but does the Minister agree that as important, if not more important, is the consultation on long-term proposals to fundamentally improve the way that local government is funded through a fairer system?

[Jim McMahon]

That is exactly right. We have approached this year as very much a recovery operation. We could see that councils were in the ditch and needed to be pulled out and taken home, and that is exactly what this one-year settlement will do. However, what they need and deserve is a multi-year settlement that gives long-term security and stability, and for that long-term settlement not to be the continuation of a broken system, but a system that has been rewired and put right. With the fair funding review, the multi-year settlement and the reform agenda, putting prevention at the heart of public services, we will begin to achieve the end to which my hon. Friend rightly points.

[Tom Gordon (Harrogate and Knaresborough) (LD)]

We have heard a lot from colleagues about the delivery of rural services. Harrogate and Knaresborough was one of the areas that saw local government reorganisation, and we are now geographically the largest council in England. So what reassurances will there be on making sure that rural services can be provided? One of the biggest barriers the council faces is being able to deliver home to school transport, the cost of which has gone from £5 million just a few years ago to what is expected to be over £25 million this year.

[Jim McMahon]

I have covered the rural services element before, so I will home in on the home to school transport issue, which I know is a huge issue in many county council areas, where children are carried further away to get to schools. I will be honest and say that some of that is absolutely required, and has always been required, but quite a lot of it is the result of a broken system in which education is not being provided in local communities and parents have been forced to move further out. The plan we have to rebuild education and to invest in schools, some of it funded through impositions on private schools to get that money into the state sector, is about rebuilding local education provision so that parents have the choice and the confidence to go to the state school nearest to their home. That will have an impact on council budgets for home to school transport.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

After eight years of Conservative rule in Stoke-on-Trent, the council was taken to the brink of bankruptcy, and the Minister will be well aware of the extraordinary financial support that we have received and about which we are having additional conversations. How will the recovery fund interact with authorities in receipt of extraordinary financial support? May I also put on record the thanks of the city to Councillor Alastair Watson and Jon Rouse, the chief executive, for the work they have done to stabilise council finances in difficult times?

[Jim McMahon]

I thank my hon. Friend for that question, and I join him in paying tribute to the council officers and council leadership in Stoke-on-Trent. As a direct cash payment—the down payment I mentioned earlier—Stoke-on-Trent council will get £8.7 million, and its core spending power will increase by 8.6% just in this round, but that may well over 10% by the time the full allocations come through. That is part of the rebuilding process, and as I have said, it reflects the fact that we cannot punish councils because of their inherited historical tax base. We must make sure that the Government step up to their role to equalise the system so that everyone has fair access to public services.

[Clive Jones (Wokingham) (LD)]

I thank the Minister for his statement. I recognise and accept the importance of proper funding for areas of high deprivation, but it is important to acknowledge that councils with low deprivation face rising demand for their services. In my constituency of Wokingham, children with special educational needs and disabilities are suffering from this lack of investment. They are deprived, too, but in ways that are not being measured, so their council is not getting the crucial funding to look after SEND services properly. We want Wokingham borough council to get on with the job of delivering more for local residents, so how will the Minister ensure that Wokingham receives what it needs?

[Jim McMahon]

I thank the hon. Member for coming to one of our surgeries to make representations on behalf of his council. I know that he cares about these issues. We need to be careful not to think that those who have received the recovery grant are the only places that have deprivation, because that is not the case. The recovery grant is very targeted and has two components: one is whether the area has a weaker tax base; the other is whether the area has significantly higher deprivation than other comparable areas. We are clear that we need to root out deprivation and need wherever they exist. The fair funding review is intended to take into account many different component parts, including the cost of rural service delivery, general overheads, premises costs, deprivation and the rest, so that, whatever the issue and whatever the context, councils have confidence that the funding is correct.

[Amanda Martin (Portsmouth North) (Lab)]

I thank the Minister and his team for listening to the voices of Portsmouth North and for the additional funding allocated to homelessness and rough sleeping, so that Portsmouth city council’s projected deficit can be addressed. It would be remiss of me not to thank the council workers, alongside Bev and all the volunteers at Helping Hands and other charities in the city. They have supported the growing number of people on our streets under the shameful Tory coalition’s reign of recklessness. Can the Minister confirm that after five months in government, this is just the start of additional support for our councils? Can he also clarify that, should the Lib Dem-run Portsmouth city council need further advice, his door is always open?

[Jim McMahon]

I congratulate my hon. Friend on her question to the Prime Minister earlier.

The council’s overall core spending power will increase by 7.8%. Putting Portsmouth to one side, whatever measures we take in general terms, we can never cast the net so wide and so thinly that we catch every council at the extreme ends. If we did, the net would never get to the depth needed. The door is open to any council that needs a conversation about their particular circumstances. Regardless of party politics, councils can have absolute confidence that we will deal with them professionally, appropriately and with the respect they need.

[Several hon. Members rose—]

[Calum Miller (Bicester and Woodstock) (LD)]

I draw the House’s attention to my declaration in the Register of Members’ Financial Interests as a county councillor in Oxfordshire. In my constituency and in my surgeries and correspondence, the frustration, desperation and anger of parents and children with special educational needs is constant and shocking. Their needs are not being met, and as the Minister has acknowledged, the funding shortfall for the high needs block is significant and has led to a deficit, which the Local Government Association estimates will be £3.6 billion at the end of this financial year. I very much welcome the Minister’s focus on this issue, as well as that of his colleagues in the Department for Education. Can he assure parents and children in my constituency that, under the multi-year settlement to which he has referred, the future needs of these children will be adequately met, and the needs of the council addressed, as we face those huge deficits?

[Jim McMahon]

Yes, I can confirm that we are providing, with the support of the Department for Education, new funding of £1 billion to support the high needs block in SEND for the reasons that the hon. Member says. We also know that money today is not the answer in the long term. We have to reform SEND provision in the mainstream, so that parents and pupils get the support that they need.

[Josh Fenton-Glynn (Calder Valley) (Lab)]

I welcome the money for homelessness in today’s statement. Evidence increasingly suggests that prevention works in homelessness. Calderdale is one of three local authorities working with Crisis to pilot a system of early prevention. In six months, that has already led to a 20% reduction in people using temporary accommodation. Will the Minister look at that work and commit to championing what works?

--- Later in debate ---

[Jim McMahon]

My hon. Friend makes a good point. Where councils such as Calderdale are doing well and excelling, they are working hand in glove with the local community and voluntary organisations to ensure they get the coverage to reach into communities. I applaud that work, and I hope that the 7.4% uplift in core spending power in this part of the settlement goes some way to supporting it.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for a positive statement on the funding that is available. Government policy states that local government is the foundation of a good state, from bin collections to driving economic growth. It is paramount that that is done across the whole of the United Kingdom of Great Britain and Northern Ireland. What discussions has the Minister had, or will he have with the Secretary of State for Northern Ireland regarding the possibility of securing greater funding through the Barnett consequentials so that Northern Ireland can have the funding it needs to stimulate local, community and economic growth?

[Jim McMahon]

I probably have to be a bit careful not to stray into that, given that this is a statement about councils in England, but the premise of the hon. Member’s question about adequate funding for local public services is correct. Let us remember that councils deliver more than 800 different services to local communities in England. They employ more than a million people, many of whom will be local people of the community. Councils are a huge power and force for good, and I will certainly ensure that the representation he has made is passed on to the Secretary of State for Northern Ireland.

[Deirdre Costigan (Ealing Southall) (Lab)]

Massive cuts to local government services by the previous Conservative Government have seen rough sleeping more than double and families in temporary accommodation regularly forced to move from hotel to hotel with their belongings in black sacks. I welcome the record £14.7 million in homelessness funding that the Minister’s Department has awarded to Ealing council. That is an increase of almost £4 million. Can the Minister outline how that will help those people sleeping out in West Ealing and in Southall town centre tonight? How will it end the use of hotels and bed and breakfasts for families in Ealing Southall?

[Jim McMahon]

That is precisely why we have provided an extra £233 million to meet the demand. We do not take any pleasure or pride in that, actually. It is a sign of a system that is not working that we must keep on providing more and more money for temporary accommodation, to the benefit of hotel owners and not to the benefit of the people who need a safe, secure and affordable home. This funding has to be part of a wider plan. That is why the 1.5 million new homes are so important. If we do not provide those safe, affordable homes for people, we will always be in this cycle of trying to play catch up, and that is not sustainable.

[Emily Darlington (Milton Keynes Central) (Lab)]

May I, too, welcome the multi-year certainty given by the statement today? As a former deputy leader of Milton Keynes council, I can say that it is the kind of certainty we ask for, rather than getting a letter—on Christmas Eve, usually—setting out what the funding might be, already halfway through our budget-setting process. I also welcome the fact that Milton Keynes is getting more than £7 million to prevent homelessness. I welcome the fact that there will be transparency, but can the Minister give reassurances to Milton Keynes that with the loss of the new homes bonus, additional funding will be given to Milton Keynes to make up for that difference?

[Jim McMahon]

I thank my hon. Friend for the advocacy that she shows for Milton Keynes and for the local authority. Overall core spending power in Milton Keynes will increase by 6.1%, and that is only part of the settlement—the council can easily expect that to increase in its final settlement. It shows that the Government are working in partnership with the council to deal with the issues that she raises.

[Natasha Irons (Croydon East) (Lab)]

I welcome the extra funding going in to tackle homelessness, especially the £15 million allocated to Croydon council. After 14 years of Tory Members turning their backs on local councils, local councillors and the communities they serve, does the Minister agree that there is a cost to doing nothing when it comes to reforming local government funding? Can he outline what kind of support might be available to councils still carrying large amounts of debt?

[Jim McMahon]

There is a legitimate question to ask the previous Government about why on earth some councils were allowed to borrow disproportionately to their revenue. In the end, some councils have found themselves on the wrong side of that. When we were designing the recovery grant, that was about deprivation and low tax bases, and dealing with the quantum was about directing money to particular services, but I will be honest: there will always be councils—Croydon will be one of them—which, because of their unique situations, are just outside that general allocation. We are ready to have one-to-one support conversations where needed.

[Chris Vince (Harlow) (Lab/Co-op)]

Madam Deputy Speaker, let me wish you a lovely Christmas break. [Hon. Members: “Ah!”] Don’t put me off. I welcome the Minister’s statement. As someone who worked for a homeless charity in Harlow, I welcome the additional at least £1.2 million of funding to support homelessness and rough sleeping in Harlow as well as the additional £1.6 million of funding to neighbouring districts, which partly overlap between me and the hon. Member for Epping Forest (Dr Hudson). That is coupled with multi-year funding for councils, for which I achieved cross-party support in the Harlow district council chamber. Does the Minister agree that that shows a clear desire by the Government to support the most vulnerable people in my constituency, but that that must come with joined-up thinking on the planned 1.5 million new homes and investment in our NHS?

[Jim McMahon]

That was a cute way to get a long question in—merry Christmas, Madam Deputy Speaker.

My hon. Friend is absolutely right. I pay tribute to the work that he does to represent the people of Harlow as well as the local authority. We stand ready to work on those long-term funding settlement issues to ensure that we genuinely rebuild the foundations.

[Peter Lamb (Crawley) (Lab)]

I commend the Minister for his work in bringing forward the settlement to secure a fair deal for the sector, but, as many hon. Members have alluded to, the elephant in the room is temporary housing. That is in large part due to decisions taken by the last Conservative Government to freeze the housing benefit subsidy at 2011 levels and cap the local housing allowance at a far lower level than local housing tends to cost, with the end result being that local government is subsidising central Government’s welfare bill to an astounding extent, with two thirds of the council tax in my local area going towards paying that bill. As an advocate for the sector, will the Minister meet with counterparts in the relevant Departments to try to lift that cap, so that people are housed at a rate that is cheaper both financially and socially?

[Jim McMahon]

We come back again to the broken housing market. The need to build 1.5 million new homes is there, but—let us be clear—they have to be the right homes in the right places for the need in the local area. That means not only more social homes but council provision. We continue to see a cycle—we have all seen today’s inflation figures, which are driven by private rent—in which the taxpayer pays more and more for accommodation that is often substandard and does not even meet the decent homes standard, with no benefit to the taxpayer. We have got to rebuild council housing and social housing and make it fit for purpose and affordable.

[David Baines (St Helens North) (Lab)]

Thank you, Madam Deputy Speaker, and merry Christmas—I won’t get any longer for saying that.

I thank the Minister for his statement and welcome the announcements made today. In 2010, the last year of the previous Labour Government, St Helens borough council received £127 million in central Government funding. Under the Conservatives, that was cut to just £13 million a year. Services cannot be run on thin air and, despite the best efforts of council staff and Labour councillors, cuts have had consequences. Will the Minister assure me and my constituents that under this Government we will get the funding for the essential services that we need?

[Jim McMahon]

That is exactly the reason core spending power in St Helens will increase by 8.6% just through these measures. Given the type of council, we could easily expect that to top 10%. That is our down payment to say, “We need time to prepare the multi-year settlement and we need to do the fair funding review, but we know that councils cannot wait for that, given the last decade,” as my hon. Friend described.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

The last question goes to the ever-patient Mark Ferguson.

[Mark Ferguson (Gateshead Central and Whickham) (Lab)]

Thank you for squeezing me in, Madam Deputy Speaker. I refer the House to my entry in the Register of Members’ Financial Interests. I was glad to hear my hon. Friend refer to the unfair funding formula championed by the previous Prime Minister, laser targeted as it was at reducing support to communities like mine. There are parts of Gateshead where the average life expectancy for a man is 73 years, yet the last Government focused wholeheartedly on reducing support to areas of deprivation like that. I welcome the almost £2 million that Gateshead council is receiving to tackle homelessness this year on top of its previous allocation, but given that one of the shameful legacies of the last Government is crumbling infrastructure in communities like mine, what efforts will be made to support councils like mine with the infrastructure they need?

[Jim McMahon]

In the end, some of it is about the quantum of funding, and some of it is about freedom of funding. Taking away the ringfencing and reporting is absolutely critical to that. Gateshead, and every other council, has our absolute commitment.

Finally, Madam Deputy Speaker, may I say thank you to the millions of public sector workers, council officials and, importantly, councillors for the work that they do in providing good public services every year, day in, day out? May I wish everyone a merry Christmas and a happy settlement day?

English Devolution

Jim McMahon Excerpts

Monday 16th December 2024 Written Statements

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

Today, I am pleased to announce that the Government have laid the English Devolution White Paper.

The No. 1 mission of this Government is to relight the fire of our economy and ignite growth in every region. But we have an economy that hoards potential and a politics that hoards power—England is one of the most centralised developed countries, with too many decisions affecting too many people made by too few.

To truly get growth in every corner of the country and raise living standards, as set out in the Government’s ambitious plan for change, we must rewire England and end the hoarding in Whitehall by devolving power and money from central Government to those with skin in the game.

That means empowering mayors to drive growth and ending the patchwork approach to devolution. But it also means rebuilding and reforming local government as the foundation for devolution, a reset in the relationship between central and local government, and giving communities stronger tools to shape the future of their local areas.

To do this, we will bring forward a landmark English devolution Bill when parliamentary time allows. In advance of the Bill, we have today laid the English Devolution White Paper.

Deepening and widening devolution in England

At its core, the White Paper sets out how the Government will strengthen and widen the mayoral model of devolution across England. Mayors are uniquely placed to drive growth. They can use their mandate for change to take the difficult decisions needed to drive growth; their standing and soft power to convene local partners to tackle shared problems; and their platform to tackle the obstacles to growth that need a regional approach.

To equip mayors with the tools they need to deliver, we will:

Provide unprecedented powers and budgets for mayors, via our enhanced devolution framework. This will include:

A clear and transparent route for mayors to access integrated funding settlements over time. Starting with Greater Manchester, the West Midlands, South Yorkshire, West Yorkshire, Liverpool City Region, and the North East, this is a consolidated budget across housing, regeneration, local growth, local transport, skills, retrofit, and employment support.

New powers over strategic planning and control of grant funding for regeneration and housing delivery, putting our regions at the centre of the drive to build 1.5 million homes in this Parliament.

Devolution of non-apprenticeship adult skills functions and supported employment funding to mayors, as well as a substantive role in future employment support that is additional to core Jobcentre Plus provision. Mayors will take on joint ownership of the local skills improvement plan model and will have a crucial role in ensuring there are clear pathways of progression from education into both further and higher education and local employment opportunities.

A statutory role for mayors in governing, managing, planning, and developing the rail network, with an additional right for the most established mayors to request devolution of services, stations and infrastructure.

A strengthened role for mayors in relation to business support, boosting exports and attracting international investment.

Moving mayoral strategic authorities to simple majority voting, including the mayor’s vote, wherever possible, because unanimity is not in the best interests of getting houses built or growing the local economy.

Reform and join up public services, to help services deliver for citizens and reduce the number of politicians. One of the simplest and most effective means to do this is bottom up, through place. So the Government will: transfer police and crime commissioner (PCC) and fire and rescue authority (FRA) responsibilities to mayors where boundaries align; explore the possibility of a single mayor taking on PCC and FRA responsibilities across two or more authorities where this would result in coterminous boundaries; establish an expectation that mayors are appointed to integrated care partnerships and are considered for the role of chair or co-chair; and announce a long-term ambition to align public service boundaries, including jobcentres, police, probation, fire, health services, and strategic authorities. Through these measures, strategic authorities will be positioned as convenors on public service reform, working in partnership with local authorities.

Hardwire devolution into Government, because, for too long, the priorities of places have been ignored. New forums, like the Prime Minister’s Council of the Nations and Regions, and statutory local growth plans, which dovetail with the Government’s national industrial strategy, will hardwire local areas into the way the UK Government operate, enabling every corner of the country to play its part in delivering the Government’s plan for change.

Establish “devolution by default”. Devolution in England has been ad hoc and inconsistent, with it being too unclear what powers places can access, when and how. The Government will legislate to set out which powers go to which type of authority. The most far-reaching and flexible powers will be for areas with mayors, because they provide the most visible and accountable form of local leadership. This is the floor of our ambition, not the ceiling, so we will enable our most mature institutions to request and pilot new functions to drive innovation.

As we widen devolution, our goal is simple: universal coverage of strategic authorities in England. These should be larger than individual councils, covering wider areas where people live and work, to utilise the benefits of economies of scale. Many places already have combined authorities that serve this role.

The Government issued an invitation to places without devolution to submit proposals in July. We have had constructive conversations with a range of areas, including Cheshire and Warrington, Norfolk and Suffolk and others, about how devolution could support their ambitions.

The Government will shortly set out their priority programme for devolution—which will be for areas that are willing to progress devolution to an accelerated timescale, and to plan for inaugural mayoral elections in May 2026. The Government will continue to develop proposals for new strategic authorities collaboratively and in partnership with local areas. However, to ensure that everyone in England can benefit from devolution and ensure the effective running of public services, the Government will legislate for a ministerial directive, allowing the creation of strategic authorities where absolutely necessary and, after due time has been allowed, local leaders have not been able to agree. This goes hand-in-glove with our partnership approach to local government reorganisation. Taken together, this will mean fewer politicians who are more able to focus on delivering for residents.

Delivering devolution at every scale

Everyone—from regional mayors leading strategic economic policy, to frontline councillors convening their communities—needs the tools and trust to deliver change. That is why the White Paper is a vision for putting power in the right places and repairing the foundations of local government.

Councils are the foundation of our state—critical to driving growth, delivering and reforming the local public services people rely on, and to our democratic system. But local government has not been empowered to live up to its potential and people have suffered as a result. We will rebuild local government after 14 years of mismanagement and decline, so that it is fit, legal and decent. This means fairer funding and multi-year financial settlements, as we committed to in the local government finance policy statement in November. The initial consultation on the principles of this funding reform will be launched later this week. The public being able to hold councils to account for decisions means ending micromanagement from central Government—so we will reform the use of wasteful competitive and ringfenced funding pots and rationalise funding for service delivery into the local government finance settlement wherever possible; streamline and rationalise reporting requirements; and review requirements for local authorities to seek Secretary of State consents for the use of their powers.

We will establish a genuine partnership between central and local government, recognising the vital role of local councillors as frontline community convenors, and executive members and leaders as partners in delivering the Government’s missions and plan for change. This includes delivering 1.5 million homes, with upper tier local authorities coming together to deliver strategic planning where there is not a strategic authority in place, underpinned through provisions in the forthcoming planning and infrastructure Bill.

And, because unitary councils can lead to better outcomes for residents, save significant money which can be reinvested in public services, and improve accountability with fewer politicians who are more able to focus on delivering for residents, we will facilitate an ambitious programme of local government reorganisation. This programme will cover two-tier areas and unitary councils where there is evidence of failure or where their size or boundaries may be hindering their ability to deliver sustainable and high-quality public services. Reorganisation should not delay devolution, and we will take a phased approach to delivery, including prioritising areas where reorganisation can unlock devolution.

Too many of our towns, villages and neighbourhoods have been left behind by economic change and have been let down by struggling public services. We will empower communities with new rights and levers to drive change and regenerate their neighbourhoods, and protect cherished community assets, introducing a new community “right to buy” for assets of community value. We have also retained the long-term plan for towns and will reform it into a new regeneration programme. We will enhance local authorities’ powers, enabling them to address the challenges facing their areas. This will include strengthening councils’ ability to take over the management of vacant residential properties and to introduce large selective licensing schemes to improve conditions in the private rented sector, without requiring Secretary of State approval.

Upgrading the systems

Finally, we will secure devolution for the long term, strengthening accountability and building capacity. We will deliver improvements to the accountability system for devolution, including an outcomes framework for integrated funding settlements, so it remains fit for purpose as we devolve more powers and funding, and improve external scrutiny of local public spending, such as reforms to the local audit system and local government standards and oversight. To build capacity at all levels, we will ensure the right people are available for the job, seconding out from central Government if needed, while ensuring mayors are focused on their role and can empower their team to deliver.

Next steps

I have engaged closely with England’s regional mayors, via our new Mayoral Council, and local authorities, via our new Leaders Council, and will continue to do so as we roll out this ambitious programme. When parliamentary time allows, we will bring forward the English devolution Bill, which will help us deliver on the vision set out in the White Paper and on our commitment to empower communities to take back control from Westminster, so we can work in partnership to drive growth and ensure people across the whole country benefit.

[HCWS316]

English Devolution

Jim McMahon Excerpts

Monday 16th December 2024 Commons Chamber

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

With permission, I would like to make a statement on the publication of the Government’s English devolution White Paper.

This Government were elected on the promise of change, and we are determined to transform our economy and our country through a decade of reform and national renewal that reverses the chaos and decline that we inherited. We will rebuild Britain from the ground up, so that it works for working people, through a mission-led plan for change that unlocks growth and raises living standards in every region. We will deliver new homes, jobs and opportunities for all by matching investment with reform to improve local services, and to maximise the impact of every penny we spend.

The British people deserve an economy that works for the whole country, and to have control over the things that matter to them. That is why we are moving power out of Westminster and putting it back into the hands of those who know their area best. The White Paper that we have published today sets out the means through which we want to achieve that, backed up by our landmark English devolution Bill, which will finally redress the imbalance of power between this place and communities up and down the country.

This change cannot be delivered soon enough, because for all the promises of levelling up, after 14 years, our nations remain economically divided, with living standards in many parts of the country stagnating. We have an economy that hoards potential and a politics that hoards power. As a former councillor and council leader, I have seen the immediate and tangible difference that local leadership can make. However, I also recognise the frustration that local leaders face in delivering the change that their areas need. In fact, it mirrors the frustration that local people feel when they cannot effect change in their neighbourhood or on their high street. That hits at the heart of what it means to live a decent life. Pride of place and security are rights too often denied in the places that need them the most. This Government are determined to end the top-down approach to decision making in this country, and to replace it with a principle of partnership.

The last Labour Government began the process of change by creating the London Mayor, the Scottish Parliament, the Welsh Senedd and the Northern Ireland Assembly. I saw the transformational impact of empowered local leadership in Greater Manchester when in 2014, a decade ago, I was one of the local council leaders who worked in co-operation to agree the first English devolution agreement outside London—an agreement that created the combined authority, which has delivered genuine change under the leadership of an elected Mayor, working hand in glove with local leaders.

Crucially, none of the now 12-strong mayors would claim that they act alone. Whether they are attracting investment in clean carbon and renewable energy, growing digital and creative industries, bringing buses back under public control, or tackling violence against women and girls, all would point to solid local partnerships and the importance of local government in delivering change, but the truth in England is that the process of devolution remains unfinished. Today, we are introducing to the House the measures to finally get the job done.

At its core, this White Paper sets out how the Government will strengthen and widen the mayoral model of devolution across England, shifting power, decision making and money away from Westminster in a completely new way of governing and driving growth. We are empowering more Mayors by introducing integrated funding settlements, and by giving them a statutory role in the rail network, and greater control over strategic planning, housing funding and skills training, so that they can deliver change that local people can see and benefit from. Ultimately, our goal is mayoral devolution that means that powers can be used to shape local labour markets, integrated transport systems, clusters of businesses, and housing development. That is the sort of strategic decision-making that is not possible over a smaller geographic area. By creating strategic authorities—a new tier of local government—we will give our cities and regions a bigger voice in getting the resources and support that they need.

The Government will shortly set out their devolution priority programme for areas that stand ready to progress devolution on an accelerated timescale, and a plan for inaugural mayoral elections to take place in May 2026. Each of those areas will have an elected mayor sitting on the Council of the Nations and Regions. We will work with those areas that are already in discussions with the Government to confirm their position. To those areas that are ready to move at pace, we say: come forward now. Be part of this movement. Be part of this moment.

We understand that devolution is a journey, and that some areas will need time to decide what course to follow. We want to walk alongside all areas—areas defined locally, not from those at the centre with a map—as they take the first step to realising the potential of devolution, for instance through a foundation agreement to unlock new powers. Our ambition is clear; we will legislate for a new power of ministerial directive that allows the Government to create strategic authorities where absolutely necessary, if local agreement has not been possible, to achieve full coverage of devolution across England. We will deliver a new constitutional settlement for England that makes devolution the default setting, with an ambitious devolution framework secured in law, guaranteeing powers for each level of devolution. All that will be underpinned by improvements to accountability, including an outcomes framework for integrated settlements, so that the system remains fit for purpose as we devolve more powers and funding.

None of this reform can be achieved without strong local government. Councils are the bedrock of our state. They are critical to driving growth and delivering local public services that people can rely on, but they have been neglected for too long. That is why we are establishing a proper partnership with local leaders through multi-year funding settlements, and moving away from farcical bidding wars for limited ring-fenced funding pots. We will give councils the respect and powers that they deserve and need to deliver the missions and the plan for change, so that change is keenly felt in every community. We said that we would reset the relationship between central and local government, and we meant it. We will give councils the certainty and stability that they need to plan ahead and prioritise their budgets, and to tackle local issues through public sector reform and prevention, rather than through more expensive crisis management, for which taxpayers are paying more and more, often for worsening outcomes. We have to tackle that head-on.

It is important that councils be the right size and shape to serve the people they represent, with simpler structures that people can better understand. Through our bold programme of unitarisation, as announced by my right hon. Friend the Chancellor of the Exchequer in the Budget, we will ensure that local government reorganisation and devolution can be delivered in tandem as soon as possible. We look forward to areas coming forward with their own proposals. This statement gives the clear direction that local governments have been asked for, and my door is always open for discussions with colleagues about how that will look and feel in their area. Although I recognise that this will be a challenging process for some, for many there is growing agreement that the time has come for change.

I am under no illusion about the scale of the task that we face in delivering more power into the hands of local leaders, but we are committed to resetting the relationship with local and regional government, and to working with local leaders to deliver the change that the country voted for; that is what the electorate will judge this Government on. Placed alongside the work that we are progressing on fixing the broken audit system, rebuilding the standards regime, and bringing forward plans for community power, this plan shows that the Government are determined to get our house in order and ensure a top-to-bottom redistribution of power in England, as we reset our economy, restore local government, and rebuild our country from the ground up, so that it works, finally, for working people. That is what it means to take back control, and that is what we will deliver. I commend this statement to the House.

[Mr Speaker]

I call the shadow Minister.

--- Later in debate ---

[Jim McMahon]

I will come to some of the questions raised, but let nobody in the Chamber take lessons and lectures from the Conservatives when it comes to the perilous state that local government has been left in. Let us talk about the councils that were going bust left, right and centre on their watch. Let us talk about the fiscal discipline on 1,000-audit backlogs. What does that mean? It means £100 billion of public money that they could not account for, which held up the signing off of the national accounts. That was their legacy, and they talk about being custodians of public money—they did not even know where the money was.

What about the crisis that was building up in adult and children’s social care and in homelessness? At a time when we should have been thinking about prevention and reform and getting ahead of the problem, essentially the previous Government were making matters worse, not better. When Conservative Members talk about their legacy and being on the side of councillors, we should ask which Government it was that eroded the standards regime—its teeth were put completely to one side—leaving councillors open to abuse and intimidation and turning council chambers into hostile, toxic environments. Which Government was it that made councillors publish their home addresses when they were facing death threats?

We are doing the work now to repair the foundations of local government, giving it the funding that is needed. After a decade of year-by-year funding, we have given local government a multi-year financial settlement so that it can get its house in order as part of the rebuilding work. That is what is needed now: grown-up politics, a plan to fix the country and a plan to put local government back on its feet. But just doing that is not enough; we have to break the centralising system.

If a local authority wanted £1 million for a local project, the previous Government made them compete with their neighbouring council for a limited supply of money. The bidding wars that took place wasted millions of pounds of public money, and in the end they did not deliver on their core promise of levelling up. That was the agenda, and it has got to change. We have to change that cap-in-hand, parent-child relationship where power is hoarded at the centre.

The people queuing up to have conversations about reforming public services and devolving powers to mayoral combined authorities may not be Conservative Front Benchers, but they are Conservative council leaders who recognise that they finally have a Government on their side, willing to work in partnership to make the changes where the previous Government failed.

[Madam Deputy Speaker (Judith Cummins)]

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

[Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)]

I thank the Minister for the statement. It is about how we bring local leaders back to the agenda and back to the central aims that they have been complaining about over the last 14 years. It is important that any devolution reforms build trust among local people, who rely on vital services from housing and planning to social care; the Minister must keep that in mind as he is going through the reforms.

Ultimately, some councils may fear that residents’ voices in smaller district areas will be lost if they are absorbed into larger unitary authorities. Will the Minister outline how he will ensure that residents do not feel disenfranchised by losing representation in their community? Will he assure the House that, should residents choose not to adopt a mayoral model, they will not be disadvantaged?

We know that our frontline services are at breaking point, as the Minister outlined, and many will welcome the multi-year settlement, but we do not want to see adult social care and temporary accommodation—all those areas—becoming stuck between a disbanding district authority and a nebulous unitary authority. Will the Minister assure the House that there will be proper accountability during the reorganisation and that we will not see local residents and councillors left in limbo?

[Jim McMahon]

I thank the Chair of the Select Committee for that very important point about how we maintain public trust and confidence in a period of change. First, local government representations to Government will be self-organised within counties, and we will receive the recommendations and requests that come forward. We will write to all 21 areas in scope to invite them to make representations to be part of the first wave priority programme. From the conversations that we have had, we expect a significant number of local authorities to want to be part of that reorganisation. But to be clear, that is not something that we are imposing. We are writing out and local areas are self-organising, because they understand that reform and modernisation are central.

When it comes to not losing a local voice, the White Paper makes it very clear that the devolution offer is not just about creating new structures, and it is certainly not about creating new politicians. This has to be a genuine shift of power. There is a big section on community power, because a lot of people—and this may even transcend the previous Government—do not feel power in the places where they live. Quite often they feel that things are done to them and, when they see the decline of high streets and town centres, they feel that the change is going one way, and it is not good. The paper is about rebuilding local community power. Our expectation in the White Paper is clear that, regardless of the size of local authority, every council—including existing unitaries—will work out a way of getting to those local communities at neighbourhood level, and reflect in a democratic way and a public service way how best to give local people a voice.

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

[Madam Deputy Speaker (Judith Cummins)]

Before I call the Minister, I remind Members that time is at a premium, and I want to be able to get everybody in.

[Jim McMahon]

I thank the Liberal Democrat spokesperson for her question, and for her service as an elected council member for a period. I understand that there will be concerns about the move to larger unitaries, but the fact is that there is a two-tier premium that the taxpayer is paying. At a time when resources are limited, we have a responsibility to take money from councils’ overhead costs in the back office and bring them to the frontline to give people good neighbourhood services. I suspect that if people were asked, “Would you prefer the existing two-tier system or more money being directed at local public services?”, most would want the money to go into local public services. However, there is a balance here, and it is for local areas to find it.

We are very clear in the White Paper that we want to move away from councillors being perceived as back-bench. We want to reform them, essentially, as frontline councillors —as the conveners of a community, with greater power and influence and the ability to get things done.

On social care, an additional £4 billion was provided in the Budget, with the provisional settlement to be announced this week. Of that amount, £600 million is for a recovery grant to go to areas with high deprivation but low tax bases, to ensure that we rebalance fairness in the system.

[Cat Smith (Lancaster and Wyre) (Lab)]

Although the Minister said in his statement that the proposal was the end of a top-down approach from central Government, to many of my constituents it looks like a one-size-fits-all model that works for Greater Manchester, which he represents quite ably, but does not necessarily work for the rural English counties. What assurances can the Minister give my constituents—and me, frankly—that this approach will not be imposed on local areas against their will? How will he measure consent from a local area that this is the approach they want?

[Jim McMahon]

I thank my hon. Friend for her question, and for securing a Westminster Hall debate on this very issue. The Government do not accept the one-size-fits-all argument any more than an argument that councillors work in some areas but not others, and that Members of Parliament work in some areas but not others. In the end, when given the powers and resources, mayors can achieve change in partnership with local leaders.

We are not creating super-councils. We are creating a strategic authority that will give power from this place downwards, giving councillors far more power. On how we will do it, I can say that in Lancashire, in our drive to widen devolution across the country, the principle is for foundation authorities; of course, Lancashire has already agreed to a level 2, which, in the White Paper, would be the equivalent of a foundation authority. In that sense, it already has devolution in place.

[Sir Edward Leigh (Gainsborough) (Con)]

The Government say that they want to end the top-down approach. How does that square with a district council such as West Lindsey in Lincolnshire being denied any say in massive solar farms or wind turbines? Will the Minister do me a favour and confirm that his aim is to pass more power back to district councils? Indeed, will he promise that he will not unilaterally abolish them just because we have a new mayor for Lincolnshire?

[Jim McMahon]

It would be a bit rude to diminish the powers of the Mayor of Greater Lincolnshire before they are in place, especially as I will move the order enabling the election to happen, and we want them to be a success. We could have taken a different view—it was a legacy agreement that was carried over from the general election—but I recognise genuinely that the leaders there, who are leaders of different parties from my own, worked in good faith to reach an agreement with the previous Government that we felt needed to be honoured. That needs to be the tone of all such conversations. We need to take party politics out of the conversation, which can be difficult to do in this place. Those are not the conversations that I have with council leaders and councillors across the country, who genuinely want to put party politics to one side and to work in the interests of their local community. On the question of power over local planning decisions, if local councils want power, they must have a plan.

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

Decisions taken in this place are subject to rigorous scrutiny and accountability, but recent history in several areas shows that that is not always the case with local decision making—not all councillors and mayors are paragons of virtue. As we dissolve more powers, can my hon. Friend explain what levels of scrutiny and accountability will be built into his plans?

[Jim McMahon]

It is a very important point, and we were mindful of that concern because devolution in England has been developed by deal, rather than with a clear framework from the outset, so there are natural gaps. I do not decry, by the way, the progress made previously in filling in the map of the midlands and the north of England, but we need to reconcile that now.

If we give more powers and resources downwards, we need to ensure that the checks and balances are robust. There is a lot that we need to do. There are recommendations in the White Paper on the principles of a local public accounts committee, for example, so that public spending can be brought into scope. We are also looking at oversight for the bodies that strategic authorities establish, such as trading companies or joint ventures, to see whether they should be in scope of best value. We are also looking at checks and balances for the officer structure and whether to bring in an accountable officer structure, as in a local authority, to ensure a clear difference between the political and operational leaderships and the powers that each has.

[Mr Gagan Mohindra (South West Hertfordshire) (Con)]

I welcome the Minister to his place; this is the first opportunity I have had to do so. As the Department will be aware, both Dacorum borough council and Three Rivers district council in my constituency do not have a local plan in place. They are both controlled by the Liberal Democrats. Will the Minister confirm what would happen in the case of his proposed plans? Separate to that, we have local county elections next May. What are his intentions for them? Do they still go ahead? There is a lot of uncertainty. In 2026, how many mayoral elections does he anticipate?

[Jim McMahon]

On local plans, if any areas at this point have failed to get a local plan in place, they are leaving the door open for development to take place without any checks and balances, and in a way that really does take away local power. We are trying to reconcile that and get a balance. I hear quite often about the housing targets that have been set—the 1.5 million new homes. I should say, by the way, that there are a lot of good skilled working-class jobs that go with that 1.5 million new homes. There are 150,000 kids in temporary accommodation who need a home. There are 500 kids in hotels in my constituency who deserve a secure, affordable place to live. There is a bigger crisis here, which is why local plans are so important. Where they are not in place, we will have to look at strategic plans in those areas. We are out to consultation on a number of those points.

On county elections, the letter will go out today to county councils inviting them to make a submission in January. Subject to that submission being robust, it can be part of a priority programme. We will do what the previous Government did and accept the view that if a local authority will not exist in the near future, it makes no sense to have an election to it. However, we will very soon after want to have an election for the shadow authority that will follow, so further detail will follow on that.

[Oliver Ryan (Burnley) (Lab/Co-op)]

I thank the Minister for his White Paper. At the back of it, there are five pages of powers that are not currently enjoyed by Lancashire, as a foundation authority. Will he agree to work with partners in Lancashire to ensure that we can get a deal done and over the line for a mayoral and a reorganisation package? Lancashire’s time is now and, in his words, can we grasp this moment and this movement?

[Jim McMahon]

Well, I am glad somebody was listening! There are huge opportunities in Lancashire. If we think about the work that has been done to secure a mayoral combined authority in Hull and East Yorkshire, and if we think about the opportunities in Cumbria, Cheshire and Lancashire, that completes the map of the north. Our leaders there are already self-organising through the Great North project, chaired by Mayor Kim McGuinness, to lead from the front on inward investment. It would be a shame, given Lancashire’s economic success, particularly on energy and other issues, if it is not part of that agenda. On the organisation, I think most people in Lancashire accept that, after 20 years or more of talking about it, the time had probably come. But it is for local areas to come together and have a plan that is right for their place, and to make a submission to the Government. It is not for the Government to redraw the map of England and impose it on every community. But our ambition is clear and the direction is clear: we absolutely welcome areas making that submission and we want to work towards more mayoral combined authorities.

[Lewis Cocking (Broxbourne) (Con)]

I place on record my thanks to my two district councils, which I wholeheartedly support: Broxbourne and East Herts. Page 17 of the White Paper states that the Government want to create unitary councils of “500,000 or more”. What does “or more” mean? Does that mean I could end up with a “super council” for Hertfordshire covering 1.2 million people, which is not a proposal that I would support?

[Jim McMahon]

In some ways we have to give direction. What we heard during the consultation stage with local government—that includes, by the way, the County Councils Network and the District Councils’ Network—is that the more clarity on a framework that can be provided by central Government upfront, the better for local government to be able to organise. We are very clear that on an efficiency level—if the drive is for efficiency—the 500,000 is roughly the population needed to draw out those efficiencies. In the example that the hon. Gentleman gave, it would not be 1.2 million. It might be two or even three councils, because in areas in discussions about a mayoral combined authority, we have accepted—it is outlined in the White Paper—that there will need to be some flexibility in terms of scale and size of the local authorities that sit under it.

[Mr Toby Perkins (Chesterfield) (Lab)]

Derbyshire already has a mayor, but we have a two-tier authority. If we cannot get agreement on the size of the unitary authority, will Derbyshire and similar authorities still hold elections next May, and how will my hon. Friend break the impasse if those at county level want one Derbyshire and those in the districts want two or three?

[Jim McMahon]

The assumption is that elections in counties will take place as planned, unless authorities actively approach us to say that they want reorganisation discussions and have proposals that they can work up. In those circumstances, we will take the view that elections to an authority that will not exist should be postponed so that an election for a shadow authority can follow. On Derbyshire, we need to be careful: the Government’s role is to invite and to receive, not to draw the maps, which is for local authorities to do. As my role is quasi-judicial and I will need to take a view on potentially competing proposals, I cannot comment on what individual counties may or may not look like.

[Mr Lee Dillon (Newbury) (LD)]

Councils are clearly on their knees, and I welcome multi-year funding settlements and changes in the grant programme, but will the Minister confirm that the Government will support devolution so that not a penny of councils’ budgets is spent on it and they can focus on frontline services? In his statement, the Minister said that councils could

“take their time to decide on the course they wish to follow”,

but went on to say that the Government would

“legislate…to create strategic authorities”

where they felt that was necessary. How does the Minister square those two sentences?

[Jim McMahon]

This is about partnership, about tone and about how we can work together. Because there has been a fair amount of talk in the sector about reorganisation and devolution, even before the White Paper a number of authorities had approached the Government saying that they wanted to have a conversation about local government reorganisation and/or devolution. We have had to respond that we cannot have a hundred hares running all over the place without a transparent plan and timescale that can be understood so that people can make a judgment about whether this option is right for their area or not. What we will have is a proposal to double-run a devolution priority programme alongside a local government reorganisation, with a key point where those two pieces of work must come together for joint decision making. That will at least mean that every authority knows what stage it has reached, and can make a choice: is it at the right point in the process to opt in, or will it need more time?

The point about the backstop is very important. As I have said, there is no map that we are intending to impose anywhere. Let us suppose that within a region we have an agreement to compile every county bar one, and we reach the end of the current Parliament. In that event, I think it legitimate to say, “Well, there is nowhere else to go.” It is fairly self-explanatory that there will be a fundamental strategic authority in that area, and that is the type of process that we are considering. We are not considering redrawing the map of England and imposing this in one fell swoop. It is about partnership and working with local areas, and so far those conversations have been very fruitful.

[Andy MacNae (Rossendale and Darwen) (Lab)]

I hugely welcome the White Paper. For us who are in the frontline trying to deliver services to our residents under the dysfunctional two-tier system that exists in Lancashire, this is a breath of fresh air. It is exactly what we have been requesting for years. Does the Minister agree that now is the time for Lancashire leaders to put aside short-term personal and political considerations, not to wait for the Bill to be published, and to work with urgency in drawing up proposals for new local government structures that are focused on the needs of residents and, ultimately, bring the highest level of devolution to Lancashire?

[Jim McMahon]

I entirely understand that there are local tensions in Lancashire, to put it mildly, but my experience of council leaders in all parties and at county, district and unitary level has been positive. Even when there are differences, they are shared in a respectful way. I would not underestimate the progress of the level 2 agreement that we have in Lancashire, which will see a devolution of powers relating to, for instance, skills and compulsory purchase orders as a first step towards overall devolution. The agreement contains a commitment that by autumn next year a proposal for a mayoral combined authority will be submitted to the Government, with or without local government reorganisation. We have been very clear about our direction on local government reorganisation, and our expectation is that those in Lancashire and other places have heard about that direction and will act accordingly. In the end, times change. My son’s primary school in Oldham had the Lancashire education committee plaque on it; in Lancashire county hall, there is the Oldham plaque. Times change and boundaries change, but people and communities do not, and the Government who represent them have to be fit for purpose.

[Mr James Cleverly (Braintree) (Con)]

If devolution means anything, it means giving local leaders the right to do things differently. If a future mayor of Essex wants to compete with London by creating a less heavily regulated or less heavily taxed business environment, would that individual have the power to do so under the proposals put forward by the Government?

[Jim McMahon]

It is in the eye of the beholder. If the right hon. Gentleman wants to turn Essex into Monaco, I suspect that it will not happen. But if he is asking for genuine freedoms and flexibilities so that local leaders can make the right decisions to attract investment, assemble sites, invest in infrastructure, and remove barriers to planning and infrastructure, that is absolutely where we are going. On the issue of tax and fiscal devolution, we are very clear that the White Paper represents a moment in time; it is very much the start, not the end. What should be read in the White Paper is an ambition to provide certainty across Government and to make sure that the level of ambition is raised. When the right hon. Gentleman sees the schedule of devolution across the programme and the competencies—which are very important for economic development and regeneration—he will see that there is a lot of scope there.

[Matt Rodda (Reading Central) (Lab)]

I thank the Minister for his statement. I welcome the prospect of the further devolution of powers over transport, housing and other important economic matters. Can the Minister outline the greater scope for using those powers? In Berkshire, we would like to see a western rail link to Heathrow, which would dramatically improve connectivity between Reading, Slough and Heathrow airport. Unfortunately, many other strategic projects have been held up, such as a third bridge for Reading. Will he comment on the potential benefits of devolving these issues?

[Jim McMahon]

My hon. Friend makes a good point. I said that this is less about structures and politicians, and more about outcomes, and those are exactly the types of examples that we need to look towards. The real test for many people is, “If I’m standing at the bus stop on a miserable Monday, when it’s raining, does the bus turn up or not?” Having more control over local bus services, through franchising or even public ownership, is part of the offer on the table, but buses alone do not fix the transport system; we also need rail devolution. The White Paper points to an ambitious schedule of devolution when it comes to rail and multimodal transport, and particularly to single ticketing, because, in the end, even if we have co-ordination of transport, it needs to be affordable for people, and different modes of transport need to be linked when it comes to single ticketing. There are definitely opportunities on the transport agenda.

[Tim Farron (Westmorland and Lonsdale) (LD)]

The Minister will know that in Cumbria we are still going through the process of a reorganisation that happened just 18 months ago. For better or worse, all reorganisations are massively distracting and take people’s eyes off the ball. Does he understand why residents, businesses and everybody else in both parts of Cumbria—we now have two local authorities—are outraged at the thought that a mayoral model might be imposed on us? Is that not the opposite of devolution? Is it not right that local communities should be able to have the devolution that we want? We are up for all the devolution that the Minister will give us, but we do not see why we have to have a top-down mayoral model and be told that we have to have a reorganisation again, five minutes after the last one.

[Jim McMahon]

I pay tribute to leaders in Cumbria for the engagement that we have had with them; I recognise that they have just been through a local government reorganisation and that there has been a lot to settle in the area. They have embraced our conversations with great maturity, and those conversations have been fruitful, but we recognise that different places are at different points. Different places have different pressures that they need to reconcile, which is why we are looking at a priority programme for the areas that will soon be ready to go. We need to get the legislation and consultation in place and make the case to the public. We accept that some areas will need longer.

On mayors, I have been here long enough to see a number of Members stand up and protest against the idea of a mayor, only to pop up a bit later as the candidate for the same position, so I say to people in Cumbria: be careful what you wish for.

[Madam Deputy Speaker (Judith Cummins)]

I remind the House that we have around 40 minutes, and around 40 Members wish to speak, so please keep answers and questions succinct.

--- Later in debate ---

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

I welcome the move to devolve to every corner of the United Kingdom, but in relation to the upcoming Cornish devolution discussions, what is the Minister’s vision of how the Government will put into practice the legal obligations to protect and support Cornish national minority status in the same way that minority status is protected for our Celtic cousins in Wales and Scotland?

[Jim McMahon]

I thank Members in Cornwall and the leaders in Cornwall for the discussions that we have had. I know that devolution is an issue that is strongly felt, and that identity in particular is an issue that is strongly felt. We recognise that we need to strike the right balance, so the White Paper will point to a population size that is optimal in our view—in terms of economic footprint, public service alignment and reconciling public service delivery boundaries—but we recognise that in Cornwall, as in Cumbria, we might have to take a more nuanced approach. I will be clear that our view is to have established powers related to integrated settlements and devolved powers of significance. That will come with a mayor, but of course Cornwall has agreed to a level 2 deal and in the current White Paper, that would be a foundation deal as a starter for that journey.

[Dame Harriett Baldwin (West Worcestershire) (Con)]

Whatever our views on the different flavours of local government, surely we in this House can all agree that good local services are delivered when there are excellent, hard-working local councillors who have been democratically elected. At the moment in counties up and down the land, county councillors are campaigning for re-election for four-year terms next May. The matter before us is an important decision for local people to make and it should be part of the discussions in the election campaign next year, so can the Minister take this opportunity to rule out any suggestion that he is cancelling any county council elections next year?

[Jim McMahon]

In all things I try to be direct, and I have been direct in saying that if those councils that come to the Government with a request for reorganisation meet the test and have a credible programme in place, the elections will likely not take place until the year after, because they will be postponed to elect the shadow authority that would replace the county and the districts. We are clear on that. To give the hon. Lady assurance, there will not be a mass cancelling of elections for the sake of it, in the hope and prayer that some councils might come forward for reorganisation. There has to be a balanced and proportionate approach, and that is what we intend to take.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

Stoke-on-Trent is already a unitary authority, but it is surrounded on either side by a two-tier district system of Newcastle and Staffordshire Moorlands, who are our friendly neighbours and proud communities but fundamentally different places. Can the Minister set out what will happen to existing unitary authorities? Can he also say how, as part of this review, he will protect the identities of communities who look to a place rather than to a compass point and a county name? And if we are going to have new mayors with new powers, can he set out what the corresponding reduction of Ministers in this place will be to reflect the reduced number of services they will provide?

--- Later in debate ---

[Jim McMahon]

On the question of whether we will reduce the number of Ministers, I can easily answer that by saying that that is well above my pay grade, but I hope there will always be a need for a Local Government Minister to oversee, to hold people’s hands and to be a well-wisher. The identity question is really important, and any devolution or reorganisation has to get the balance right. The tests that will be applied are in the White Paper. This is about getting the balance right between ensuring: that the economic footprint, which is the real economy, is recognised; that, as much as possible, there is public service boundary alignment to services across policing, the health service and others; and that we capture identity as much as possible. There will be a trade-off in some cases, but it is for local areas to come forward with the right proposal for their area after due consideration.

[Layla Moran (Oxford West and Abingdon) (LD)]

Of the 42 councils across the country that have increased social homes, four are in Oxfordshire. South Oxfordshire district council has doubled the number of social homes it has delivered over the last 10 years. Meanwhile, Oxford city council next door has halved its number. There are district councils that are doing incredible work, so why should they face finding themselves lumped in with underperforming councils? Surely, rather than having a distracting reorganisation, proper devolution to those councils that are doing well is the way to deliver for local people.

[Jim McMahon]

There is nothing in the White Paper that is about decrying the work that has gone before. In fact, there is a great deal that celebrates the work done by local government, such as the community leadership provided by frontline councillors, council leaders and council executives on a range of issues. They are the builders of devolution, so this is not about something being done to them from the top; it is about local areas coming together and making a request to the Government for local government reorganisation and/or devolution. As a Government, we will work as partners in that development, but we fully appreciate that district councils across England are doing a very good job of delivering good public services, but there also has to be an acceptance that this is not the most efficient way of delivering public services; there are other ways.

[Chris Curtis (Milton Keynes North) (Lab)]

I thank the Minister for the ambition he has shown in his statement, particularly on how we can get local authorities to support the building of the 1.5 million homes that this country needs.

Before the White Paper’s publication, the Department saw expressions of interest from various areas. However, some of those initial submissions may no longer reflect the scale of ambition or the devolution options that we now know are available. Can the Minister reassure me that authorities with greater ambition, which are ready to act swiftly in line with the powers and vision outlined in the White Paper, will be given the opportunity to revise their proposals and to fast-track a mayoral model on geographies better suited to delivering results for their residents?

[Jim McMahon]

There were three types of programme on the transition to the new Government. The first were the legacy devolution agreements that were agreed under the previous Government but had not yet passed through Parliament, which we wanted to reconcile. The second were the areas that we wanted to target—by and large, areas in the north of England to complete the map of the north and to populate that area. The third was a write-around from the Deputy Prime Minister to get a real sense of where different areas might be on their approach to partnerships, to the type of scale and to the type of geography. We saw the expression of interest process very much as a temperature check, so the proposals that came forward are certainly not binding either on local areas or on the Government. We expect further proposals to come forward, including from the same areas.

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

What guarantee can the Minister give that there will be new money from the Treasury to fund the costs of any local government reorganisation in Essex, to avoid the costs of that reorganisation resulting in cuts to public services or increased council taxes?

[Jim McMahon]

That question was raised earlier, and I apologise for not addressing it. The Government will provide capacity to enable both devolution and local government reorganisation through discussions with local authorities. Some of that might be funding, and quite a lot might be support through workforce development. Last week, we launched the workforce development group —a joint project between MHCLG, other Government Departments and bodies such as the Local Government Association—to make sure that we are addressing the workforce issues. Even before the reorganisation, we know that many counties are struggling to recruit to jobs like adult social care and many districts are struggling to recruit to jobs like planning, so there is a bigger issue here that we are looking to address.

[Dave Robertson (Lichfield) (Lab)]

I draw the House’s attention to my entry in the Register of Members’ Financial Interests, which lists me as a member of Lichfield city council and Lichfield district council.

I want to touch on the future of parish and town councils, as the White Paper talks in two places about stronger engagement between the new authorities and parish councils. Can the Minister go further by saying how that will work, particularly given their importance in places like Staffordshire? Staffordshire has almost 1 million people, is 3% of the length of England, and has real centres of community and a lot of population centres that are not currently reflected in their district councils but are very much reflected in their town councils in places like Burntwood.

[Jim McMahon]

Again, we say in the White Paper—I also referenced this in my opening remarks—that it was a Labour Government who introduced quality status for parish councils to recognise that that tier of government has a very important role to play and can do far more if trusted and given the power to do so.

We see that town and parish councils have an important role to play but, in the end, that is notwithstanding reorganisation. Reorganisation will need to take place in many areas, and parish and town councils could or could not do more, but I would say that that is a slightly separate issue.

As to the proposal for individual areas to take account of issues like identity, belonging and the different units of government, we are happy to have those conversations on a one-to-one basis. I can assure the House that there will be ample opportunity to meet me and my fellow Ministers on a one-to-one basis, as well as for drop-in sessions, to make sure that matters that are not picked up on the Floor of the House can be picked up later.

[Manuela Perteghella (Stratford-on-Avon) (LD)]

I refer the House to my entry in the Register of Members’ Financial Interests as a district councillor. Real devolution means empowering local communities, not centralising power into regional super-unitary councils. Residents in my constituency of Stratford-on-Avon would be best represented by a south Warwickshire unitary council, rather than a remote Warwickshire-wide unitary council, which will have five different local plans. Does the Minister agree that a top-down minimum target population of half a million people risks dividing existing communities and forcing together communities with no shared identity?

[Jim McMahon]

That is a fair point. I am losing track of the number of MPs who are standing up to declare they are still councillors, although I recognise there is a transition—I went through it myself—and there may be an overlap between being a councillor and a Member of Parliament. On the detail of individual counties, it is for local areas to make a submission to Government, and for the Government to assess the proposals that come forward. The Government do not have a plan on a map for the hon. Lady’s county, but we expect that the county and the district will get together to work out a proposal that they can accept and submit to Government, which we can then review.

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

Cornwall will welcome further devolution. We are a long way from London, but I want to build on the question about town councils. In places like Cornwall, cuts to unitary councils have meant town councils have already taken on a lot of responsibility, so how does the Minister see those town councils continuing in the future?

[Jim McMahon]

When Labour was last in government, we brought forward landmark legislation to create the Mayor of London, Parliaments in Scotland and Wales and the Assembly in Northern Ireland. The quality council status was introduced for parish and town councils, and powers on wellbeing and other matters were given to local government. The previous Labour Government recognised, just as this Government recognise, that devolution has to work from the top to the bottom and the right powers have to be in the right places. At a neighbourhood level, we see town and parish councils playing a critical role in devolution, and we look forward to further discussions with the sector.

[Simon Hoare (North Dorset) (Con)]

There is much to commend in the White Paper and, broadly, the Minister is to be congratulated. However, he knows as well as I do, as welcome as the multi-year settlement announcement is, it is predicated on an outdated and effectively broken funding system. I understand the Treasury is not keen to revisit that in any meaningful way, but may I urge him to consider a rural-proofing mechanism to the funding formula, to ensure that the additional costs of delivering local services in rural areas are recognised? Change is scary, but I do not recognise the picture painted by the hon. Member for Mid Dorset and North Poole (Vikki Slade). In Dorset, we became a unitary authority, and no sane person would ever want to go back to a two-tier system, but we benefited from the excellent skills of Paul Rowsell, who died earlier this year and is much missed. Will the Minister ensure there are expert teams within his Department to work alongside those councils that wish to make that important change, which will deliver savings and better services to local people?

[Jim McMahon]

I thank the hon. Gentleman, who is my predecessor, for his question and for the tone with which he dealt with us in opposition; I honour that in return. The fair funding review is absolutely critical. We are committed to a multi-year financial settlement, which is about giving security, but we all know there is no security if the money is insufficient to meet demand. The hon. Gentleman and the House have absolute assurance that all the cost factors, including the cost of rural service delivery, will be taken into account in a fair funding review.

[Mr Bayo Alaba (Southend East and Rochford) (Lab)]

In comparable countries, a city like Southend would generate £55 billion more across the country. Will the Minister explain what powers the English devolution Bill will give to mayors, so they can drive local growth and areas can fulfil their financial potential?

[Jim McMahon]

I remember when the Greater Manchester devolution deal was signed in 2014. Its principles were to reform public services, so we could focus on prevention rather than crisis management, which is more expensive and has worse outcomes, and grow the local tax base, because the area would become more productive through investment. I will be honest and say that we did not see the investment in prevention reform, so growth was stunted. However, even in that context, growth in Greater Manchester has outperformed that of other areas, in large part because of the devolution agreement and the leadership and co-ordination involved. Even by independent assessments, allowing our regions to realise their full potential would be worth between £30 billion and £50 billion to the economy that is not currently being realised, so there is an alternative and we have to grasp it.

[James McMurdock (South Basildon and East Thurrock) (Reform)]

Yesterday, a former Labour deputy leader referred to my party as a “threat to democracy”. I am sure that that was a cute turn of phrase for television, but given that the framework that the Minister has laid out allows elections next year to be gamed so easily, is the real threat not potentially the Labour party?

[Jim McMahon]

I would not characterise the hon. Gentleman’s party as a threat to democracy, but it might be a threat to sanity. We are all tested on a too-regular basis by fairly ridiculous statements that try to drive a wedge and divide people instead of bringing them together. One thing about devolution is that, regardless of party politics, across Labour, the Liberal Democrats and the Conservatives what we have seen in local areas is that when it comes to people, places and putting communities first, party politics are put to one side. I extend that invitation to the Reform party, too.

[Jim Dickson (Dartford) (Lab)]

It is instructive to hear a former local government Minister on the Opposition Benches, the hon. Member for North Dorset (Simon Hoare), describe the current system as “broken”. That is probably why we need the White Paper. My constituents have grown weary and frustrated at non-delivery by various tiers of local government in Kent, particularly when it comes to failures to provide special educational needs and disabilities support for pupils, and poor bus services compared with neighbouring ones in London. What hope for better delivery across all services—schools, social care, health, transport and roads—might we have from the White Paper?

[Jim McMahon]

It was previously very difficult for the Government to have an honest conversation with local government about what an adequate level of public service provision should be in a given place, because they knew full well that they were not providing the resources to enable that to happen in a fair way across the country. When we fix the financial foundations of local government through the fair funding review and the multi-year settlement, and build rigour around it, we will move away from the hundreds, and in some cases thousands, of top-down metrics that central Government expect councils to report on. We will look to simplify the funding system to end unnecessary ringfences that act as shackles on local government, but there has to be governance, accountability and a very clear responsibility to deliver the outcomes that the Government want in return for those freedoms, flexibility and fair funding.

[Clive Jones (Wokingham) (LD)]

My constituents will be waiting to see how the Department’s plans for local government reorganisation affect Wokingham borough council. They will want to ensure that their voices are listened to if we are to be shuffled around, merged or abolished by Whitehall. Importantly, they will want to know whether the Government’s plans will hit their wallets. Can the Minister commit to ensuring that funding for any changes will come from his Department, not from council tax, which should instead be used to fund vital local services?

[Jim McMahon]

Only this week are we seeing a genuine redistribution of money in the local government system so that it goes to the areas that need it the most. For far too long, the funding formula did not recognise deprivation or that some tax bases are weaker at a local level than others. The £600 million recovery grant is intended to get to those areas. On value for money for public services, and getting them down to a neighbourhood level, as I said, there is a two-tier premium that is paid by local taxpayers to the tune of around £2 billion, which could be better used for local public services, and by central Government through the floor protections that we give to district councils, and that frankly could be used in better ways in areas of high deprivation and need.

[Alice Macdonald (Norwich North) (Lab/Co-op)]

I hope that Norfolk will be part of the devolution priority programme so that we can unlock the powers and funding that we need on areas from transport to housing. May I ask the Minister specifically about the role of key cities? Norwich is a key national and regional economic power, but it needs devolution to fully unlock its potential. It is vital that we have a key role and voice in the process of devolution and reorganisation. Can he assure us that that will be the case, and set out the process for cities in particular to do that?

[Jim McMahon]

Obviously, we inherited the plans for Norfolk and Suffolk from the previous Government. I will be clear that we could not progress with that deal because it would have seen directly elected council leaders assume the role of a mayor, but without the framework in place to support that, which we did not support. We have been working constructively with both counties to look at a mayoral combined authority over a bigger footprint, and we hope they will come forward as part of the programme. That is a matter for them. They may decide now is not the right time, but there is huge potential.

On devolution in Norwich and also Ipswich, it is important that reorganisation is strongly anchored in terms of place and the economy. Of course, in this case, Norwich would be central to that.

[Sir Desmond Swayne (New Forest West) (Con)]

What say will voters in the New Forest have if there are proposals to remove either their district council or their county council?

[Jim McMahon]

Local government reorganisation is a statutory process, so it requires local areas to produce plans, as does devolution. Both are required to go to public consultation to solicit views—that is part of the process. When the formal process starts, the Government’s role is to assess the proposals and the consultation as submitted. We do not take a view on geography and form until we make the final decision.

[Andrew Cooper (Mid Cheshire) (Lab)]

The biggest issues holding back economic growth in Mid Cheshire are long-term under-investment in our transport infrastructure and the lack of a joined-up skills agenda, working with businesses across local authority borders. That is not unique to my constituency. The reality is that, in 2010, east Germany’s economy overtook northern England’s, and that trend has accelerated over the past 14 years. What new powers will the English devolution Bill give strategic authorities to drive improvements in local transport and to take control of their sub-region’s skills agenda?

[Jim McMahon]

This was one of the reasons why we were so keen to complete the map of the north of England. Most would accept that strategic transport, certainly, crosses county boundaries. If we think about connectivity in the north of England, how Lancashire, Greater Manchester, the Liverpool city region, Cheshire, Cumbria and the rest are joined up, and then even into Yorkshire, requires co-ordination. We want mayors and strategic authorities to work together across that pan-region, so that even more powers can be devolved to address the type of issues that my hon. Friend talks about.

[Ben Obese-Jecty (Huntingdon) (Con)]

According to the White Paper, a constituency like mine will see Cambridgeshire county council and Huntingdonshire district council merged into a unitary council as the principal authority, under Cambridgeshire and Peterborough combined authority as the strategic authority. How will unitary councillors fulfil the roles of multiple district and county councillors in a part-time capacity, and what does it also mean for the forthcoming combined authority mayoral election in Cambridgeshire and Peterborough?

[Jim McMahon]

The forthcoming election for Cambridgeshire and Peterborough will go ahead as planned. There is no proposal to change the boundary of what is currently a combined authority that will move to being a strategic authority. Local government reorganisation where there is an existing mayoral combined authority, providing that it is coterminous in terms of the review it has undertaken, will not have an impact at all. All that happens is the membership of the combined authority will change to reflect the new council structures as they appear.

[Tom Hayes (Bournemouth East) (Lab)]

As a former councillor of 10 years who sought election to this place to give power back to communities, I am absolutely thrilled by this devolution White Paper, and I congratulate the Minister on bringing it forward. I have two points. On page 16, there is an ambition to make the mayor the chair of the integrated care partnership and also the police and crime commissioner, as in South Yorkshire. I commend that and would like to hear more about it. On page 94, there is a proposal for a right to buy community asset. Hengistbury Head outdoor centre in my constituency just found out that it will be a community benefit society with a lease for 99 years, but it has taken far too long to get to that place. I invite the Minister to come to Hengistbury Head outdoor centre—it may involve getting in a kayak—to find out more about what this right to buy could involve at the ground level. I would love to know more about the Government’s intent on the matter.

[Jim McMahon]

I know many Labour and Co-operative Members of Parliament have been campaigning hard on the extended community right to buy. That is about giving communities the power to take over those important community assets on their high streets and in their town centres in a meaningful way. The Minister for local growth, my hon. Friend the Member for Nottingham North and Kimberley (Alex Norris), is working hard on a communities White Paper, which will provide far more detail. In the end, it is not just about that community right to buy; it is about a genuine shift where people feel far more control, power and agency in the places where they live.

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

Trying to create multiple unitary authorities in Essex will not work, will not have public support, will take the best part of a Parliament to implement and will not save money—in fact, quite the opposite—and there is a risk that local government will grind to a halt in the meantime. As for mayors, in 23 years of canvassing in my constituency, I have never once had a constituent say to me on the doorstep, “I want a mayor of Essex.” Indeed, looking up the road to London, the last thing on earth that we in Essex want is another Sadiq Khan.

[Jim McMahon]

I will put the right hon. Gentleman down as undecided.

[Amanda Martin (Portsmouth North) (Lab)]

I welcome the Minister’s ambitious announcement and the opportunities that devolution could bring the people of Pompey, and I thank him and his team for the time that they have given Members of this House and for his offer of an open door. Portsmouth is one of the most densely populated parts of the country, so alongside the commitment to desperately needed affordable housing, will the Minister commit to using the English devolution Bill to empower my communities with the right to buy beloved community assets, such as empty shops, pubs and much-needed community spaces, to ensure that cities such as mine, and the people in them, feel the pride of ownership once again?

[Jim McMahon]

That is a good point. When we talk about important community assets, we see from an economic point of view that it is far better for them to be used and productive, but in the end we also recognise that they are hugely important to community identity and pride. In a lot of working-class areas, including Oldham, Chadderton and Royton, which I represent, the local civic building, local pub and local church are not just buildings but part of people’s story, and people really care about them.

[Caroline Voaden (South Devon) (LD)]

Top-down reorganisation of a failing council such as Conservative-run Devon county council is a bit like shuffling the deck chairs on a sinking ship. We know that years of chronic underfunding have made it impossible for councils to fulfil their obligations, so I welcome the multi-year funding settlement. However, creating larger regional authorities does not devolve power; it shifts power and responsibility away from local communities to a distant, higher-tier authority that will feel remote to towns and parishes in places such as Devon. We must have the opportunity in May to pass our verdict on Conservative-run Devon county council, which has been failing our most vulnerable children for over a decade. Will the Minister assure me that those elections will go ahead as planned in 2025?

[Jim McMahon]

It would be rude to deny the good people of Devon a spat between the Conservatives and the Liberal Democrats. But in all seriousness, it is for local areas to decide whether they want to apply to the Government to be part of the reorganisation programme. If we receive a request from that area, we will administer it in a fair way, as we would any other.

[Steve Race (Exeter) (Lab)]

I welcome the huge opportunity in the White Paper for cities such as Exeter, which is also held back by Tory-run Devon county council—the upper-tier authority. Can the Minister confirm that devolution and reorganisation will work hand in hand to help Exeter, a key economic growth city, to retain, enhance and expand its historic self-governance, and to unleash its economic potential as an equal partner in a strategic authority?

[Jim McMahon]

Absolutely. One keenly felt problem with the previous devolution framework was that it did not have due regard for the role of district councils in primary cities, university cities and economic hubs. Reorganisation gives those places the ability to grow, become unitary authorities, and take their place in the new strategic authorities.

[John Glen (Salisbury) (Con)]

Fifteen years ago, just before I joined this House, we saw the reorganisation of Wiltshire county council into the unitary Wiltshire council, and the abolition of several district councils. It seems that another reform in the heart of Wessex will be the probable outcome of these proposals for Somerset, Dorset and Wiltshire. Can the Minister assure the people of Salisbury, who still have some difficulty accepting the abolition of Salisbury district council, that the proposed changes will be positive in terms of the combination of resources for strategic investment in transport and other such services?

[Jim McMahon]

In any local government reorganisation, there is always a fine balance between trying to create a cohesive new council and respecting the strong local identities that people feel—identities that are unique. When that is done right, the council can be confident in its own standing, because it knows that it is delivering outstanding services; when it is done wrong, it is trying to impose an identity on a place through the form of a council that does not reflect the local identity. For those of us in towns such as Oldham that went through the 1974 reorganisation, that is felt as keenly as in other areas, but that is not about the type of government; it is about culture and approach. When it is done well, it can work.

[Adam Jogee (Newcastle-under-Lyme) (Lab)]

I pay tribute to all the district councillors in the loyal and ancient borough of Newcastle-under-Lyme, including the Tories who tried and failed to defeat me—I will be nice to them. On page 10 of the White Paper, the Minister notes that:

“We must end the top-down micromanaging”.

I agree. Notwithstanding how much of this announcement was trailed in the press and on social media in recent days, can I press the Minister on the point raised by my neighbour, my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell)? The Minister has said that there will be trade-offs when it comes to local identities. Who will ultimately decide on those trade-offs, and when will people in the real world be able to have their say on these proposals?

[Jim McMahon]

People in the real world had their say at the ballot box, because devolution and taking power out of this place was a manifesto commitment that we are absolutely clear-eyed about delivering. The White Paper is about delivering that commitment. As for process and consultation, first, it is for local areas to determine what proposal they will submit to the Government—the Government do not have a proposal that we are submitting to local areas. Secondly, it would be ideal if local areas could get around a single proposal so that the Government’s only role is to receive it and say, “Thank you very much,” rather than choosing between alternative proposals from the same area.

[Alison Bennett (Mid Sussex) (LD)]

I thank the Minister for the time he made available to me at one of his surgery appointments recently and welcome the announcement of something that we discussed then: the ending of bidding for discrete funding pots, which was a trademark of the last Conservative Government. How will we ensure that these announcements do not impinge on the announcements his Department made last week? My hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) eloquently set out the challenges of reorganisation in Cumbria. How are we going to make sure that those housing targets can be delivered during this period of uncertainty?

[Jim McMahon]

We are very mindful that there is a lot of change in the system quite early on. That is deliberate. We believe strongly that when the next general election comes, people will make judgments based on whether they feel better in their own financial security—whether they have money in their pocket and feel like they are getting on in life—and feel secure in the place where they live. Local public services are part of that. As such, we have made a deliberate decision to make the necessary structural changes early on in the Parliament, through the White Paper and other measures, so that we can get them out of the way and people can really see the benefits towards the end of the Parliament.

[John Slinger (Rugby) (Lab)]

I declare an interest as a member of Rugby borough council. Page 16 of the White Paper speaks about

“Reforming and joining up public services”,

and says that,

“Over the long term, the government is announcing an ambition to align public service boundaries”.

Will my hon. Friend expand on how these reforms can enhance people’s ability to hold public service leaders to account through their elected representatives, and to exercise greater democratic control over such services?

[Jim McMahon]

We talk quite a lot about how sufficient funding was not provided over a decade of underfunding, but that does not mean there were not growing costs in the system. We have found that in the end, local government is where all the demand presents itself—whether it likes it or not—when there is failure in other parts of the system, whether that is the failure of developers to build enough properties, the NHS not quite being able to co-ordinate with community services, or the private sector exploiting its audience and charging eye-watering sums, such as in children’s services. We have to redesign local public services around people, place and communities, and public sector reform and prevention are part of that. The alignment of public service boundaries is critical; if people do not have democratic control and oversight over things such as integrated care boards or police and crime commissioners, aligned to strategic authorities, we will not make the progress that we need to make.

[Tom Tugendhat (Tonbridge) (Con)]

I welcome the intention to reorganise local government that the Government have set out. Clearly, this has been in play for a while, but the Minister will know that the independent and sovereign kingdom of Kent has had an identity of its own for about 2,000 years. The exact borders of that identity are open to some debate even today—quite extraordinarily, but they are. Will he please tell us what priorities he will use in the devolution priority plan? Will he be championing size—the 500,000-plus—the transport infrastructure or the historical affiliations? How is he going to understand this, and how will he prioritise for the priority plan?

--- Later in debate ---

[Jim McMahon]

I think the right hon. Member has outlined exactly the balance we are trying to get. One priority is about size for efficiency through both devolution to strategic authorities and local government reorganisation, if that follows in the same area. The second is about how the real economy is functioning, because in the end this is about growth and making sure that a functioning economy can be identified and can grow. Those will, of course, be mixed in with identity to make sure that it works. It follows, I think, that in most places the historic counties will be the building blocks for that, but I know that some boundaries are quite hotly contested, as we have seen in Cumbria. However, we are not going back 2,000 years.

[Noah Law (St Austell and Newquay) (Lab)]

Parts of Britain such as Cornwall that have national minority status have been working towards devolution for decades, if not centuries. Given that the Minister has outlined a certain pace and ambition in this White Paper, will he work with Cornwall council, town and parish councils, and ourselves to ensure that that pace and ambition are delivered on and secure Cornwall its rightful place on the Council of the Nations and Regions in due course?

[Jim McMahon]

There have been a number of competing proposals. I do not believe in elephants in the room, but one was an explicit proposal to have a Devon and Cornwall combined authority with a mayor. It was by and large proposed by Devon, but it was met with what I would describe as quite animated resistance from Cornwall for different reasons. It is not our intention—and, frankly, there are not enough hours in the day—to keep getting involved in local disputes about boundaries and identity. What we want, and this is genuine, is for the local area to self-organise, come up with a proposal that is right for the area, and make that proposal to the Government so that we can work in partnership and deliver the outcome of getting powers out of this place and into places such as Cornwall.

[Ellie Chowns (North Herefordshire) (Green)]

I welcome the elements of this White Paper that are about devolution, but we have to recognise that some elements are about concentration. The Minister has talked about the two-tier premium, but the reality is that his proposals mean that in some places a local tier will be replaced by a more distant mayoral tier. Does he recognise that this risks creating a bit of a democratic deficit? Surely, we should be trying to keep the “local” in local government as much as possible. Given that average turnout in the last lot of mayoral elections last year averaged 30%, what will he do to address the risk of democratic deficit? In particular, will he introduce a fair and proportional system for local elections?

[Jim McMahon]

The truth is that these strategic authorities are about taking power from this place and moving it down to communities. Every Minister gets hundreds of sign-offs every single day, but as Conservative Members will remember, they include Ministers having to sign off whether cyclists can pass through a local park because the parish council has to apply to central Government for permission. That is part of the centralising nature of the state that we have to change.

[Luke Myer (Middlesbrough South and East Cleveland) (Lab)]

I welcome the statement and the White Paper. Centralisation is part of the reason why we are one of the most regionally unequal advanced economies, as IPPR North has set out, but it is important that these strategic authorities are run well. What steps will the Minister take to ensure that they are funded fairly, and what assurances can he give that strategic authorities must demonstrate responsible stewardship of the public finances?

[Jim McMahon]

That is why there is a proposal in the paper to regularise the mayoral precept process. Where combined authorities exist and do not apply a precept, it is not that mayors and combined authorities do not cost money—of course they do—but that local authorities pay for them through a levy or a contribution outside the precept system. Our view is that, for transparency, accountability and political accountability, when mayors and combined authorities or strategic authorities are spending money, the public have a right to see that identified in their council tax, and they can make a judgment about whether that money is being spent wisely.

[Dame Karen Bradley (Staffordshire Moorlands) (Con)]

The residents of Staffordshire Moorlands do not want to be subsumed into Stoke-on-Trent. Can the Minister guarantee that they will not be forced into a devolution deal against their will, and that decisions that matter to them will continue to be taken in the Moorlands and not in Stoke-on-Trent?

[Jim McMahon]

I do not want to get myself into neighbourhood disputes—there are not enough hours in the day. I hope that it will be clear from reading the White Paper that this is not a forcing together, but a genuine distribution of power from a centralising state to communities where it really matters. My hope is that local disputes, some of which I am sure are well rehearsed and go back a long time, are put to one side. In the end, the prize is the greater good, which is for the benefit of all.

[Peter Swallow (Bracknell) (Lab)]

I welcome the Minister’s recognition that unitary authorities deliver for residents. Bracknell Forest council is an example of a unitary authority promoting a strong sense of place and delivering economic growth. Although it is small, it is mighty. Will my hon. Friend agree to work with Bracknell Forest council to develop a plan that works for Bracknell?

[Jim McMahon]

We are absolutely committed to working in partnership, giving capacity and time to ensure that those local nuances are reflected in whatever follows.

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

The Minister has just concluded the Greater Lincolnshire devolution deal, which I welcome and support. As he will know, there were two unitary authorities in the north of the county and the rest is a two-tier system. Do the Government expect that two-tier area to come forward with proposals for unitary authorities? If so, may I remind him that the sparsity factor plays with Lincolnshire, and the target of 500,000 is far too high. Prior to 1974 there were three county councils to cover the whole county.

[Jim McMahon]

We do not have a proposal for reorganisation for Greater Lincolnshire, but that is not to say that conversations are not taking place locally about making a representation to Government. When that letter goes out later today, we expect areas that are currently not on our list will come forward on that basis. In the end, it is for local areas to determine what submission they want to make, but in terms of sparsity and having an anchor that makes sense, I completely understand the hon. Gentleman’s point.