Local Government Responsibilities: Public Services

Debate between Matt Western and Jim McMahon

Wednesday 18th March 2020 Commons Chamber

[Matt Western]

My hon. Friend is making an excellent speech. Having been a councillor myself, I can echo his comments. The difficulty for our local authorities is that in the absence of the central Government grant, they are having to be more inventive and creative in respect of how they bring in revenue streams. What we have found in the last couple of weeks and what is forecast is that certain revenue streams will be cut off, and councils will become more and more desperate to continue what few services they can maintain. When the car parking charges and the revenue streams for the local civic centre are not coming in, they will be under even more pressure than they were before. Does he agree that the local authorities need to understand urgently how the £500 million that the Chancellor mentioned will be distributed—and distributed fairly?

[Jim McMahon]

I think that is right. When councils have to look elsewhere for funding, a risk naturally comes with that. The National Audit Office produced a report on this and the Government share these concerns. The Public Works Loan Board interest rate was doubled overnight by the Government, because they are concerned about the exposure that councils face in buying assets as investments. The NAO expressed the same concern. In a two-year period, councils have been buying investment portfolio assets of £6 billion. Why? Because they are desperate to see income from other places, but this is office accommodation and in retail, sometimes not even in the area that the council is responsible for. The Government response is to double the Public Works Loan Board rate instead of addressing the fundamental reason why councils have to look elsewhere for funding, which feels illogical. We have to make sure that the base funding for councils is absolutely where it needs to be.

We are coming to the greatest test of local government, public service and society that any of us have seen in our lifetime. It will test us all. It will test the fabric of society and test public services to breaking point, at a time when they are built on extremely weak foundations. I am genuinely fearful for how we can continue this in a sustained period. For a short time, they will make it work. They will roll their sleeves up and work together. They will create a partnership at a local level and find a way through it, but the Government know full well that this is not a crisis that will last weeks or even months. A sustained response will be required and the Government will have to make sure that they give local government the funding that they need to provide the critical response. We also need to manage public expectation.