Inner-London Local Authorities: Funding

Debate between Luke Taylor and Alison McGovern

Tuesday 10th February 2026 Westminster Hall

[Alison McGovern]

The reason for my perplexed state is that during the period of consultation with Members of this House, I met 140 Members of Parliament on the settlement. I am sorry if the hon. Member has had the message that I will not meet her, because my office door has literally been open to Members over the recent period. We can discuss this at any point. The fact is that the London borough of Richmond is in the least deprived decile. While she rightly stands up for her borough, when I look at some parts of the country that have been forgotten for far too long, I feel that it is right that we have taken the decision through the settlement to reconnect funding with deprivation. But I can discuss that with her in detail in the future.

I want to make some points about cost. Local governments are still under pressure, and despite the increase of nearly 25% that I mentioned, that pressure will remain because of the costs that they are facing. That is why we are taking action now to support local authorities as we move towards a reformed special educational needs and disabilities system. The first phase of support will address historic deficits accrued, as was mentioned by the shadow Minister. All local authorities will receive a grant covering 90% of their high needs dedicated schools grant deficit, subject to the approval of a local change plan.

We are also fixing social care services, on which many people, including in London, rely. We are changing children’s social care in a generation by rolling out the Families First Partnership programme, backed by more than £2.4 billion of investment across this multi-year settlement. We are providing about £4.6 billion of additional funding, available for adult social care, by 2028-29, compared with ’25-26. When it comes to children’s care, the issue is not only that the costs are unsustainable, but that we are failing in our duty to so many children, and that is why we must change.

It is important to recognise that some places, including some inner-London boroughs, benefited disproportionately from the old system. However, we are supporting those places to plan for changes with transitional arrangements, including by protecting their income and providing additional flexibilities. For London, we are providing more than £550 million for income protection over the multi-year settlement.

[Luke Taylor]

The Minister mentions additional flexibility. Within that does she include allowing what I think are five inner-London boroughs, including Wandsworth, to increase their council tax by up to 10% without a referendum? Is that the additional flexibility that she mentions?

[Alison McGovern]

We set out that flexibility when we made the provisional statement, and there will be more details of that in the Chamber tomorrow. I am at the slight disadvantage of speaking between the publication of the settlement and the full debate in the House of Commons tomorrow. There will be more detail tomorrow for the hon. Gentleman.

The council tax bill for a house worth £5 million in central London can be less than the bill for an ordinary family home in places such as Blackpool and Darlington. It is not fair that properties worth so much more pay less council tax and receive comparatively better services than elsewhere, because of Government subsidy. Removing referendum principles for the six councils, as we have said, will allocate more than £250 million more funding for places with higher need, instead of subsidising very low bills for 500,000 households under those councils.

I want to turn to the direct questions from my hon. Friend the Member for Dulwich and West Norwood, who led the debate. She raised the issue of the costs of temporary accommodation, and she was absolutely correct to do so. I refer her to the homelessness strategy, which I published just before Christmas. The problems in temporary accommodation are very geographically concentrated. I am anxious to work with London councils, including her councils, to get children and families out of poor-quality, expensive temporary accommodation and into better-quality temporary accommodation that will be more reasonably priced for local authorities—even if it is still temporary, because some of what we are paying for is very poor value.

My hon. Friend mentioned LHA rates and asked whether I will work with the DWP and Treasury. I can tell her that I am doing so. The Housing, Communities and Local Government Committee Chair, my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi), also raised that with me in another setting. I will happily update the House as we go. My hon. Friend the Member for Dulwich and West Norwood mentioned a stalled site in her borough, which sounds like a dreadful waste. I will alert the Housing Minister and the Secretary of State to that. They were anxious to bring forward their plan for London with the Mayor of London for this very reason, but I will refer them to this debate. She asked about a visitor levy, which other Members mentioned too. I will take those comments as input to the consultation on a visitor levy.

My hon. Friend and the shadow Minister mentioned EFS. Again, shockingly, I found myself agreeing with the shadow Minister: that system should have been used sparingly and for exceptional circumstances. It is becoming less exceptional, and we have to get to the heart of why councils are in this position. Some of that is about costs, as we have said, but there are also other things, like reintroducing local audit, that I believe will help to defend the system and make it more sustainable as we go. My hon. Friend also asked about SEND deficits, which I have mentioned.

We are making changes that we believe are necessary to change public services and get local government back on its feet. By realigning funding with need and reforming services that put pressure on local government, we will empower local leaders to deliver for communities in London and across the country. Unlike many people, I firmly believe that it does not matter whether someone lives in a northern town or city, in the midlands, the south-west, Scotland, Wales or London—poverty is poverty, and we should respond to it all.