Local Government Finance

John Milne Excerpts

Wednesday 11th February 2026 Commons Chamber

[John Milne (Horsham) (LD)]

We have heard a lot about the coalition years and austerity, to the extent that I began to wonder whether I had misread the title of the debate. Whatever the rights and wrongs of austerity, it was the conventional wisdom at the time. Had we been in coalition with Labour, I think the same thing would have happened, perhaps under another branding. At the time, I was living and working in the Republic of Ireland, which carried out a much more severe austerity, and its economy bounced back very well. Whether that was because of or despite austerity is an argument for the economists.

I thank the hon. Member for St Helens South and Whiston (Ms Rimmer) for her comments about not wanting this to be a zero-sum game, taking away from some at the expense of others. I very much agree with her and other Members who said that deprived areas and inner urban areas had been unfairly treated over a very long time. I wholly agree that something needed to happen, but not at the expense of rural areas such as the one I represent.

I applaud the Government for taking action on this issue—it had been kicked down the road for many years—including by writing off 90% of SEND deficits. That must have been a difficult decision, but it had to be done; those deficits could never have been paid for by local authorities. The Government are committed to centralising SEND spending for 2028-29, but we are not sure how far that commitment will truly go. Will it cover only the high-needs block deficits, or will it reflect other costs around SEND provision, such as home-to-school transport? In counties like West Sussex, where my constituency is, SEND transport costs have risen dramatically over recent years. Those pressures do not sit neatly in one budget line; they rip across children’s services and transport budgets.

We are still awaiting clarity on what will happen with education, health and care plans. Michelle Catterson, the head of Moon Hall school, has spoken clearly about how vital EHCPs are to families. Sustainability cannot be achieved by weakening the legal right to EHCPs, or by diluting councils’ duties to fund them. I am concerned that that is about to happen. When Ministers are asked directly about what will happen to EHCP protections, the answers are far from clear. Parents must have certainty. EHCPs must not become a back-door route to cost-cutting.

I also have serious concerns about the evidential basis for elements of the settlement. My local council, Horsham district council, was initially projected to operate with a healthy surplus, but the Institute for Fiscal Studies has now flagged miscalculations in the business rate valuations, and the council’s position has been inverted into a deficit. Many councils operating with business rate pools, as Horsham district council does, have found that funding formulas did not properly account for those arrangements until very late in the process. As the District Councils’ Network has warned, changing allocations between the provisional and final settlements because of revised policy assumptions is deeply destabilising. Councils are entitled to ask on what evidential basis those formulas are constructed.

Departmental research from 2018 suggests that population is often a more accurate predictor of need than deprivation alone, yet the settlement has put all the weighting into deprivation. Why? Can we see the justifications and rationales? Deprivation exists across the country, including in rural communities, such as mine. It may be in pockets, but it is still there, and it is felt just as deeply. We know that geography is a major cost driver for councils. Rural councils face longer travel times for care workers, higher transport costs for schools, dispersed populations, thinner provider markets and recruitment challenges, yet metropolitan councils are projected to receive significantly higher per-head funding increases. In some comparisons, Government-funded spending power rises by around 20% in metropolitan areas, but just 2% in rural areas. In county areas like West Sussex, when it comes to the funding increases, approximately 98p in every pound will have to be raised locally, as opposed to just 58p for metropolitan areas, which is a terrific difference. That imbalance raises legitimate questions about fairness between places.

That brings me to what may be the most fundamental inconsistency. The Government recognise remoteness as a cost factor in adult social care, so why is remoteness not consistently recognised in children’s services, school transport and wider service delivery? How can distance and sparsity increase costs for adults, but apparently not for children? If geography drives costs—in rural counties, it definitely does—then that must be reflected consistently across all funding formulas.

Finally, the reintroduction of the recovery grant is welcome in principle, but why is its allocation still based on deprivation indicators from 2019, when more recent data exists and has been used elsewhere across Government? When millions of pounds are being distributed, councils deserve clarity that allocations reflect current realities, particularly given the economic shifts of recent years. Without that transparency, we have mistrust. Councils stand ready to work with Government, but in return they must have fairness, clarity and clear evidence.