Financial Distress in Local Authorities

Khalid Mahmood Excerpts

Thursday 1st February 2024 Commons Chamber

[Mr Betts]

I thank the hon. Gentleman—I call him my Select Committee Friend—because he has been part of all these debates and always the Committee report was unanimous. He is absolutely right: we have to find a way of funding social care in the specific parts and for the general social care issues. Council tax simply cannot meet that burden; we cannot keep putting council tax up to cover it. That leads on to the additional challenge that most people do not receive social care and what they are seeing every year is their council tax going up but the services they do get—the libraries, parks, buses and road sweeping—being reduced. They are paying more and getting less, and that is not sustainable in the long term.

[Mr Khalid Mahmood (Birmingham, Perry Barr) (Lab)]

I commend my hon. Friend on his brilliant work. On local government funding, he will know that Birmingham City Council is under special measures having issued a section 114 notice, and other services have been hugely hit by the lack of funding. One reason councils have been forced into this position is that there has been a lack of funding to the reserves that keep them out of bankruptcy, so the lack of proper funding for local authorities is a real issue.

[Mr Betts]

I recognise the particular problems in Birmingham. Some councils that have issued section 114 notices have specific problems; we know about the equal pay issues in Birmingham, for example. Some councils—I am referring generally—have perhaps brought those problems on themselves. However, as we say in the report, the challenge is no longer just individual councils with particular problems, but the generality of local government being under pressure, as set out by all our witnesses from the sector. In that situation, any challenging problem that comes to a council on top of a general problem can tip it over the edge.