Local Government Finance

Debate between Kevin Hollinrake and Gareth Snell

Wednesday 5th February 2025 Commons Chamber

[Kevin Hollinrake]

I can only reiterate what the hon. Gentleman has said and what I said earlier: they do fine work and most do not do it for money but because they have the interests of their local communities at heart. That should always be the case, and those are the kind of councillors that we want. Where people have expenses to do their jobs, that needs to be properly compensated for.

Will the Minister accept that the majority of the extra money provided through the settlement is raised through council tax increases, which are effectively taxes on local taxpayers—that is, working people? As he is sensible and considered, does he regret the fact that the Prime Minister stood on a stage in Swindon on 30 March 2023 with the Deputy Prime Minister, who is also the Secretary of State for Housing, Communities and Local Government, stating that he would freeze council tax for the first year they were in Government? That has not been the case. The Prime Minister quite clearly promised

“a tax cut for the 99 per cent of working people who are facing a rise in their council tax”.

His words were also that there would be

“not one penny on your council tax”.

We said then that those promises were not worth the paper they were written on. How right we were.

Under Labour, typical council tax bills are to rise by 5% in April 2025, in another increased tax on working people. That means that the average household faces an above-inflation increase of around £100 in their council tax bills in that year. All that will do in many cases is fill the black hole in council finances that Labour is creating due to an increase in national insurance contributions. Furthermore, it is quite clear that Labour is deliberately funding largely Labour-led urban areas at the expense of rural areas.

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

I thank the hon. Gentleman for giving way. He is one of the more reasonable of his party’s Front Benchers—not that he needs my praise.

Between 2010 and 2024, Stoke-on-Trent city council had a cumulative loss of £411 million. In cash terms, if the budget had been frozen and there had been no increases, we would have had that much more in spend. Does the shadow Minister accept that the damage that his party did in local government cannot simply be fixed in one settlement after seven months of a Labour Government?

[Kevin Hollinrake]

I have spoken before about the financial pressures all councils are under. That is principally due to rising demand on services; that is the reality. Eighty per cent of discretionary spend is on the three areas I referred to earlier. There is no doubt that there are challenging circumstances. Nevertheless, the vast majority of money raised through the settlement is through council tax, and much of the money raised for core spending power will go on national insurance rises. There are direct costs, but there are also indirect costs that are not covered. Many councils will be worse off as a result.

--- Later in debate ---

[Kevin Hollinrake]

I think my right hon. Friend the Member for Richmond and Northallerton (Rishi Sunak) was talking about fairness, which we all believe in. The hon. Member for Middlesbrough and Thornaby East (Andy McDonald) will have a different perspective on fairness from other people. The reality is that there is a political division here. One thing that we must agree on is that the statutory duties on councils should be properly funded. My concern is that that will not be the case, and lots of those pressures fall differently on rural councils compared with urban councils.

[Gareth Snell]

Under the formula that has been proposed and on which we will vote this evening, Stoke-on-Trent city council will receive a recovery grant of £8.2 million. I hope that the shadow Minister is not saying that, were the Conservative party still in Government, we would not receive that additional cash, and would therefore be £8.2 million worse off.

[Kevin Hollinrake]

It is interesting, because the loss of the rural service delivery grant cost my local authority £14 million, so it depends where we draw the line and what the priorities are. The change in the rural services delivery grant is robbing Peter to pay Paul. That is the reality.