Local Government Finance

Jonathan Brash Excerpts

Wednesday 11th February 2026 Commons Chamber

[David Simmonds]

Madam Deputy Speaker, I am sure that you will be pleased to know that that prompts me to move on to the next part of what we need to say. Let us recall for those who cry austerity at Conservative Members that the last Labour Government spent on average 10% more in every year of its final decade in office than they raised in taxes, which left a colossal legacy of debt that we have scarcely begun to repay. Millions were squandered on projects such as building schools for the future that were cancelled at the tail end of the last Labour Government by Alistair Darling, as they ran out of money. When we look at the reports of what this means at constituency level, councils such as Surrey, which embraced this Labour Government’s devolution agenda, have now lost the opportunity for the mayor that they were promised. They report that they have been left £60 million a year short. Members will be ill-served by the consequences of the Budget.

[Mr Jonathan Brash (Hartlepool) (Lab)]

I am sure the hon. Member did not mean to inadvertently mislead the House, but as I was a councillor in Hartlepool in 2010, I can tell him with absolute surety that it was the Conservatives who cancelled the building schools for the future programme. I think he should take the opportunity to correct the record. You cancelled it; we initiated it.

[Madam Deputy Speaker (Caroline Nokes)]

Order.

[Mr Brash]

Sorry, they cancelled it; we initiated it.

[David Simmonds]

One of my tasks in the world of local government was to engage with that last Labour Government and the disastrous consequences of their overspending. They were completely clear with authorities such as mine that stopped work on BSF that they did not have the money to see through the promises that they were making to the public. We were told that by the Department for Education. I am very confident that my constituents understand the consequences that a Labour Government have on their politics.

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[Mr Betts]

Absolutely. Councils should be funded according to need, not according to political representation. [Interruption.] Before Conservative Members start, I do not know whether they are old enough to remember Dame Shirley Porter and Westminster council, and how they were stuffed with money over visitor nights, just to ensure Conservative victory at the local elections. But we will move on from that. That was a long time ago.

I say to the Minister that these are big challenges that need to be addressed. We have to get to grips with them. We also have a local government finance system that is fundamentally broken. The Chair of the Housing, Communities and Local Government Committee commented on that in her excellent speech. Moreover, the Select Committee in the previous Parliament made the same recommendations as her Committee did. In the modern age, how can we continue to fund local authorities using a council tax system based on valuations from 1991? It is nonsensical. It is not sustainable. Imagine asking someone how the value of their new house had been arrived at, and them saying, “Well, this is a guess at what it would have been worth in 1991, had it been built then.” This is ridiculous, and we must change it. It is also regressive. Michael Gove, the former Secretary of State, said that the system was regressive, and it is. Poorer households pay disproportionately more in council tax. It simply is not fair.

In every year since 2010, council tax has taken a higher and higher share of local government funding, placing a greater and greater burden on that part of the funding settlement, which is regressive. When the Chancellor made commitments during the election campaign not to increase certain taxes, council tax was omitted. Therefore council tax has been going up disproportionately. It is an unfair, regressive tax that hits the poorest hardest. We simply have to do something about that.

This comes back to the democracy point that the Chair of the Select Committee made. While this is going on, poor families have to pay disproportionately more, but in terms of local government spending, more is going on social care, homelessness and special education needs—the things that are really important, but which most people do not receive. That means that most people, particularly those on lower incomes, are paying more tax every year and getting less in services, because of the cuts to other services, as the Public Accounts Committee recognised. That is not sustainable. It undermines trust in local authorities. People say to me, “The council has put up my council tax, but I am getting less for it.” This really has to change.

[Mr Brash]

In Hartlepool, 70% of every penny the council spends is on social care, and my constituents pay, as a proportion of their property value and as a proportion of their income, far, far more than the more affluent areas of the country. As my hon. Friend has said, they do not receive the services that they need. Is it not time to abolish the council tax system?

[Mr Betts]

The reform needed is so fundamental that the system would not be recognisable from what we have now. That is how we have to try to move forward.

We were promised business rates reform, but what we have had so far is not reform, but some minor changes. Yes, we have had good changes to try to help pubs and leisure facilities, but it is not fundamental reform. We could look at what Denmark and Australia have done to reform their whole system of council finances based on land values. That is one alternative. Let us at least have a look at it. Let us at least accept the need for change, even if we cannot agree at this point on precisely what that change should be.

In bringing about that change, I say to my hon. Friend the Minister that we should look at giving local authorities more power to determine their own levels of taxation. We are an outlier in Europe in how centralised our local government finance system is. That is another challenge. It partly comes from the great inequalities we have between different parts of the country, which are much greater than in most other European countries. I welcome the ability for councils to introduce a tourism tax, but that is a minute step towards more say for local councils about the money they can raise. It is a welcome but very small step.

I congratulate the Minister on the reforms and improvements to the existing system. Those are welcome, and my city and my constituents welcome them. However, big challenges lie ahead in making more fundamental reform to the system and giving more powers back to local councils to determine what money they can raise. The Minister will probably not stand at the Dispatch Box today and say, “We completely agree. We are going to get on with it,” but the Government should at least start thinking about it.

[Bradley Thomas (Bromsgrove) (Con)]

I will keep my comments brief, and they will be focused on council tax. The reason they will be brief is that I was hoping to intervene earlier on the Secretary of State. He said that he did not want to dodge difficult topics and wanted to talk about promises, but he did not take an intervention from me, probably because he knew what was coming.

I will talk about broken promises and about difficult topics. The primary one affecting my residents right now across Bromsgrove and the villages, as well as people across Worcestershire, is the Government’s collusion with Reform to hike council tax by a staggering 9%. That will be the highest council tax increase that Worcestershire county council has imposed on its residents. It will likely be the highest increase in council tax across the country this year, and it is reprehensible, because prior to the general election in 2024, the Labour party stood clearly on a manifesto that said it would freeze council tax. Labour Members know as well as I do that they have no will to deliver that.

[Mr Brash]

Will the hon. Member give way?

[Bradley Thomas]

I will not give way, because the Secretary of State would not give way to me. I will not give way and be lectured to by Labour MPs who are not upholding their promises.

The Government stood on a manifesto to freeze council tax, knowing full well that they would not be able to deliver that. Worse still, last May, prior to the local elections, the Reform party stuffed leaflets through the doors of residents across Worcestershire and across the country pledging that it would cut council tax. Reform spoke about this DOGE—Department of Government Efficiency—programme for local government. It is interesting that not a single Reform Member of Parliament is here in the Chamber today to defend their record.

Where is this DOGE programme? Why has it revealed nothing? Reform thought that it could turn the sofa upside down, give it a good shake and £100 million would fall out. Well, that did not happen. Instead, I can tell the House what has happened in Worcestershire. Since last May, the overspend by the Reform administration has been £100 million. As a result, it has come cap in hand to the Government for emergency funding and for a council tax rise way in excess of inflation and of the 5% threshold for a referendum.

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[Mr Jonathan Brash (Hartlepool) (Lab)]

May I start with the hon. Member for Bromsgrove (Bradley Thomas), who did not give way when I asked him to? I will happily give way in a moment should he wish to correct the record, but he said that the 2024 Labour manifesto on which we stood promised to freeze council tax. No such promise exists in that manifesto, and I invite him now to correct the record.

[Bradley Thomas]

Residents across the country knew ahead of the general election that the Prime Minister had made various very public pledges that the Labour party would freeze council tax should it come to office. If there is a mistake on my part and those words were not in the manifesto, I apologise for that, but—here I return to my point about trust in politics—if we want residents across the country to have faith in the political system, it is important for politicians to stand by their promises, whether they are written in a manifesto or uttered on television.

[Mr Brash]

I would say that if we want there to be trust in politics, we need to be accurate in what we say in this place, but I appreciate the hon. Gentleman’s correcting the record.

The Minister understands exactly what I am going to say. I know how sympathetic and supportive she is in this respect, and I hope that in the coming days we will be able to deal with the issue that I am going to raise. I thank her for her support in recent weeks.

I want to be clear about what Hartlepool is facing, and about why I cannot regard the current settlement to be fair and also believe it to be self-defeating. Hartlepool now has the third highest number of children in care in England. That pressure has been made worse by other local authorities placing families in my town, leaving us with a £6 million overspend in children’s social care alone. My brilliant Labour council has already taken decisive action, halving that projected deficit in-year and establishing a robust, credible plan to eliminate it entirely. That plan is exactly what the Government say they want to see: it means fewer children coming into care, more early intervention, stronger families and better outcomes. It includes strengthened early help and family support, a dedicated edge-of-care team, a refreshed in-house foster care model, safe reunification pathways, wholesale SEND reform, enhanced support for care leavers, and better workforce planning. This is a serious, preventive change, not a sticking plaster solution.

But here is the problem: these reforms require short-term stability to succeed. The settlement does not recognise the sheer number of children in care in my constituency. It undermines prevention, which means that we are likely to see more children in care, more long-term costs, and worse outcomes. That is why I see this settlement as self-defeating. Ministers will rightly point to percentage increases in funding, but those percentages mean far less in Hartlepool than they do almost anywhere else, because our baseline is already so low. The cost of a child in care is exactly the same in Hartlepool as it is anywhere else.

When we look at it in cash terms, the reality is stark. The increase in the Government grant for Hartlepool this year is just £3 million, which is equivalent to funding around six children in care. After weeks of discussions and representations, the final settlement for Hartlepool has remained unchanged, yet down the road—this sticks in the craw for me—Reform-led Durham county council has received an additional £3.7 million this year, which means that it is reducing the amount by which it is increasing council tax. The increase in Durham’s final settlement is more than our entire increase this year. I cannot describe that as fair funding.

As we have heard from many Members from across the House, the unfairness is compounded by a broken council tax system. Hartlepool has one of the weakest tax bases in the country, with a high proportion of homes in band A. A 1% increase in council tax in Hartlepool raises a fraction of what it raises in wealthier areas, yet our residents already pay far more, both in real terms and as a share of their income, than those living almost anywhere else in the country. The settlement simply does not change that reality.

Governments of all stripes talk about core spending power, but half of that core spending power is achieved by raising council tax. That hammers the poorest communities the most, and it is a regressive tax. That is not fairness; it is entrenched inequality. To make matters worse, changes to deprivation measures and population assumptions mean that Hartlepool’s needs are being systematically underestimated. Official forecasts put our population at under 94,000, yet the Office for National Statistics data shows that it is already closer to 100,000—growth that is driven in large part by other councils discharging their homelessness duties into my constituency. Hartlepool is not asking for special treatment; we are asking for support to deal with a problem that is not of our making.

[Mr Snowden]

The hon. Member is touching on an important issue that affects a lot of councils across the north of England, including Blackpool, which neighbours my constituency. Larger metropolitan areas are effectively exporting their children-in-care problems to much cheaper areas, such as Blackpool and Hartlepool, which the hon. Member represents. Some kind of restriction on how far councils can move children who are being put into care might stop the dumping of children in care in areas where housing is cheaper.

[Mr Brash]

I thank the hon. Member for his comments, and I endorse them wholeheartedly. I have heard stories of London boroughs and Birmingham city council putting families in taxis with the threat, “Get in the taxi, or you’re homeless.” They do not know where they will get out at the other end, and they discover that they are in Hartlepool only when they arrive. It is left for our council to deal with the pressure and the additional SEND needs, and for our council to deal with the children, who sometimes end up in care. It is a disgraceful practice that should rightly be cracked down on. I know that the Minister is alive to this problem, and it needs to be dealt with.

[The Minister for Local Government and Homelessness (Alison McGovern)]

I thank both my hon. Friend and the hon. Member for Fylde (Mr Snowden) for their comments. My hon. Friend is rightly talking about the financial consequences. Does he think—as I do, and as I am sure the hon. Member for Fylde does—that the abysmal outcomes for children are what we should care about? I am sure he agrees with me that this issue ought to be a priority.

[Mr Brash]

I absolutely agree. Just this week, there have been stories in my local press about a family with children who have been moved to a place where they have no connections, no familial links and no understanding of the local community. The Minister is absolutely right: those children are suffering as a result of the behaviour of councils.

[Natasha Irons]

I want to add my voice on this point. In Croydon, we find ourselves in a similar situation, in that inner London boroughs put their children into our part of London because the housing is slightly cheaper. I also have constituents who have faced exactly the situation that my hon. Friend outlined: being threatened with homelessness, with the council discharging its duty, if they do not take a placement in Birmingham. In some cases, that means people losing their job, their children losing places at school, and losing all connections with their family. There needs to be a holistic look at how we support councils to keep families locally, but also at how we prevent councils having to pick up the tab for these terrible situations.

[Mr Brash]

I absolutely endorse all that; part of that work needs to be taking a very close look at the funding settlement. We need to look at whether councils that may have done very well out of the settlement are still moving people out of their areas, even when they have extra finances from this Government.

[Mr Snowden]

I thank the hon. Member for giving way, as he gives me a chance to respond to the Minister as well as to himself. As a former police and crime commissioner for Lancashire, I saw at first hand the impact on communities of cities miles away in effect dumping children into high crime, high deprivation areas simply because the housing is cheaper. Dealing with the damage that has on children’s life chances—let alone the impact on communities already struggling with regeneration by adding to the problems—is paramount. I would be more than happy to meet the Minister and the hon. Member to discuss how we take forward this issue not only on the Fylde coast, but across the north.

[Mr Brash]

I will take up the hon. Member on that invitation. He mentioned Blackpool, and I know that the Members who represent Blackpool and Stoke—in the top three areas for the number of children in care—would also be very interested in his offer.

Without support to deal with the gap in our in-year funding for children’s social care, the risks are clear: prevention will fail, costs will rise, and vital community services such as youth provision, libraries and community hubs will be under threat. I fully support my Labour council colleagues, who have been clear that they are not prepared to make those cuts, which would be so self-defeating in the round.

This is a moment of profound seriousness for my constituency. Hartlepool has a plan for children’s social care that is aligned with the Government’s agenda, but we now need a settlement that gives us a fair chance to deliver it. I have spoken today with our council leader and colleagues in Hartlepool, and they are distraught, despondent and profoundly worried about what the future holds—in just a matter of days, when the budget is due to be set in Hartlepool—so I appeal to the Minister for any piece of support she can give me.

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[Graham Stuart (Beverley and Holderness) (Con)]

It is a pleasure to take part in this debate, which has had a number of distinguished contributions, not least from the hon. Member for Knowsley (Anneliese Midgley). As she rightly said, at a time when the cost of living is biting so much on so many, people really need to feel better off.

The hon. Lady also highlighted the regressive nature of council tax, which is why it is so regrettable that this settlement is built on the basis of putting up council tax on everyone. It is exactly what the previous Labour Government did, too; they doubled the level of council tax over their 13 years in office. In contrast, over the 14 years of the Conservative Government, council tax grew only a little more than inflation, as it was held down for many years, although it did go up and down over time. That is the history: Labour puts up council tax. Its spokespeople speak about how terrible and regressive it is, and then in government it visits that on people in constituencies across the country.

The Government have used the expected 4.99% annual rise in council tax in all their figures to claim that there will be increased spending power. That is based on sticking up tax by 5%, and then another 5%, and then another 5%—it is compounding.

[Mr Brash]

Will the right hon. Gentleman give way?

[Graham Stuart]

I will come to the hon. Gentleman in a while.

The impact for those in the cheapest or lowest-value homes in the East Riding—very often people in rural areas, with poorly insulated homes, costly transport and low income—will, by year three, be £200 a year out of already taxed income. That is the reality of what this Labour Government are visiting on poor people in my constituency and other constituencies around the country, while they crow about it being fair. There is nothing fair about it.

The local government finance settlement will mean only one thing for families in Beverley and Holderness: higher council tax bills, at a time when every other bill is soaring—thanks, again, to this Government. The Secretary of State for Energy Security and Net Zero is signing up for the most expensive deals imaginable and putting up the price of energy, while the jobs tax—one of the most economically irrational taxes imaginable—taxes jobs and brings in no money, because employers simply employ fewer people. That is what that £26 billion hit on the economy comes down to.

[Mr Brash]

Will the right hon. Gentleman give way?

[Graham Stuart]

I will come to the hon. Gentleman, but I will make a little more progress first.

I know the reality from talking to my constituents. Jenny in Cherry Burton says that she cannot really afford to shop for healthy food as half her money is gone before she even gets home, forcing her to make choices that no family should have to make simply to get through the week. Andrew in Beverley faces rising energy bills, which I have touched on, and rising food prices, all while supporting his two children, who are at university and cannot find part-time work; previously, they would have done, but now they cannot find part-time work because those jobs have tended to disappear. There are fewer and fewer opportunities for young people to get on the jobs ladder and, for those at university, to supplement their income while they pile on student debt, which will only go up even more as time goes on.

These are not abstract pressures but lived realities, and this settlement will pour on yet more misery. The Prime Minister says that every minute not spent talking about the cost of living is a minute wasted, but warm words do not warm homes.

[Mr Brash]

The right hon. Member made a point about core spending power. I share his irritation at the use of core spending power, because such a large percentage of it is in council tax, but it was introduced in 2016 by the last Conservative Administration. The concept of core spending power including council tax was introduced by the Conservatives. What did he say about it at the time?

[Graham Stuart]

I do not remember the specifics of that, but I can say that, whereas the last Labour Government doubled council tax despite it being regressive, that did not happen under the Conservatives, whatever introductions there were. Those taxes were held down, because that is what conservatives do. They recognise that it is better to leave money in the pockets of people to make their own decisions, not take it away from them.

Families across the East Riding are now asking a very simple question, because they know that promises do not pay bills. How will this local government finance settlement, and the £200 council tax bombshell that follows it, help them cope? Let us be clear about what is happening: the Chancellor underfunds, councils are squeezed, council tax rises, and families pay. Council tax is, as many Labour Members have said, regressive. The lower the income, the heavier the burden. The smaller the home, the sharper the hit. At the very moment that household budgets are tightest, this Government tighten them further.

Nowhere is that clearer than in social care. In the first Budget since Labour came into office, the Chancellor allocated over £20 billion to health. Why did they not recognise that so many of the problems in the NHS actually come from the failure of funding in social care? It could so easily within the same spending envelope have eased the pressure on the NHS by better funding social care so that to keep those who are ready to leave hospital from occupying the beds that they do—they have for the past few years, and they do today.

The Government did not put sufficient additional money into social care, and in Beverley and Holderness, with an ageing population and rising adult care needs, that imbalance matters. Instead of funding care properly at source, Ministers shift the cost on to council tax payers—and then they claim that they have fixed it.

I saw the real-world cost of squeezed council budgets when I visited Sunk Island last month. On Sunk Island Road and Brick Road, residents endure patch upon patch of repairs that are never truly repaired. They are paying more yet still waiting for lasting fixes. This is the pattern: more tax, less certainty, higher bills, patchwork results.

Government should strengthen communities, not squeeze them, so I ask the Minister: when families are stretched to breaking point, why is this Government’s answer yet another bills hike? In Beverley and Holderness, the only change that this Government appear to deliver is the small change left in people’s pockets after the Chancellor has emptied them.