Inner-London Local Authorities: Funding

Jim Shannon Excerpts

Tuesday 10th February 2026 Westminster Hall

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

I beg to move,

That this House has considered funding for local authorities in inner London.

It is a pleasure to serve under your chairmanship today, Dr Murrison. My constituency includes part of the London borough of Lambeth and part of the London borough of Southwark. Before I was elected to this House, I spent five years as a local ward councillor in Southwark. I just managed not to overlap with the Minister, who was also a councillor on Southwark council and stepped down in 2010 as I was being elected.

Being a councillor is deeply rewarding, with a responsibility for delivering services in a way that makes a direct difference to people’s daily lives. From recycling to street cleaning, adult services, children’s social care, roads, parks, playgrounds and council housing, our councils are responsible for important aspects of the fabric of everyday life. They affect people’s quality of life and, in doing so, play a vital role in building trust and confidence in politics, the Government and public services.

I am proud that, as a councillor, I helped turn around a local primary school in a deprived area of my ward from being one of the worst in the borough to one of the best. I am proud that we delivered road safety improvements at a number of dangerous junctions in the ward. I am proud of the work that we did through tenants and residents associations and local community organisations to bring people together and build community. I am also proud that, despite more than a decade of Conservative and Lib Dem austerity, Southwark continued to keep the borough clean and open new libraries. It was one of the first councils to fund universal free school meals for primary-age children and it is a borough of sanctuary that supports the refugees and asylum seekers who are part of our diverse community.

I remember very clearly the Labour group meeting in 2010 in which we were briefed on the coalition Government’s local government funding settlement for Southwark. There was a stony silence in the room as the newly elected cabinet member for finance told us how big the cuts were and the services and investment that the council would no longer be able to deliver as a result.

We had no idea how much worse the cuts would get over the coming years such that, a decade on from the 2010 election, our councils were receiving 60% less in grant funding from central Government, and the capital grant for new council homes had been decimated. That marked a huge shift in local authority funding away from the certainty of grant funding and towards retained business rates, the new homes bonus and endless small, short-term pots of funding, often requiring resourcing for a bidding process.

At the same time, our councils saw rising need. Our ageing population has meant an increasing need for adult social care, and the erosion of support for families has resulted in more children being taken into care and the cost of expensive placements increasing. The rising numbers of children with special educational needs and disabilities has increased the costs of school placements and home-to-school transport.

That is all before we get to housing. Inner-London boroughs are at the epicentre of our national housing crisis. Spiralling rents and a lack of security in the private rented sector mean that more and more families have turned to their council for support with housing, while the lack of investment in new social housing and the loss of council homes under the right to buy has meant that they have had to be housed in temporary accommodation, which is very expensive and often the worst-quality accommodation. London councils are currently spending £5 million a day on temporary accommodation—that is £5 million a day into the pockets of some of the worst landlords, and at times paying for damp, mouldy, overcrowded homes, often far from a family’s home, neighbourhood, community and their children’s school.

[Jim Shannon (Strangford) (DUP)]

I always try to be helpful to the hon. Lady and all hon. Members. We have many brownfield sites in my constituency and there are many in London where the hon. Lady refers to there being a housing crisis. Does she feel that there should be a focus on trying to use those sites for social housing and improve the housing problems that London clearly has?

[Helen Hayes]

I am grateful to the hon. Member for his intervention. I will come on to talk about those sites in my constituency that have planning permission but currently are not funded to build the social homes that could be on those sites. I think that is an important part of how we solve these challenges.

The Conservatives’ interventions to reduce social housing rents have also been disastrous for the ability of our councils to fund the maintenance of social housing and to fund new social homes. Southwark council calculated that Conservative-imposed rent cuts and freezes will cost the council’s housing revenue account £1 billion over 30 years. What is a very small saving for tenants has had a really big impact on the ability of councils to keep up with the maintenance needs of their social housing stock.

The Conservatives were happy to cut our councils’ budgets to the core and did not worry about the erosion of services that inevitably followed. Reform imagined that our councils were full of waste and profligacy, only to find that they are lean organisations that have constantly innovated in the face of austerity but that, over time, have become stretched, sometimes to breaking point.

A budget settlement based on a definition of deprivation that did not include housing costs, as was originally proposed, would have had absolutely dire consequences for inner-London councils. The reality is this: if rent eats up so much of someone’s income every month that they cannot afford the bare essentials, or if the only property they can afford to rent is so bad that it causes them and their family to become ill, then they are deprived and they face exactly the same consequences of that deprivation as anyone else anywhere in the country who simply does not have enough money to get by.