Local Government Finance (England)

Debate between Michael Gove and Rebecca Long Bailey

Wednesday 9th February 2022 Commons Chamber

[Michael Gove]

My hon. Friend makes an important point, but it is vital not to pit urban against rural or Dorset against London. In the debate on the police grant report, he and my hon. Friend the Member for South Dorset (Richard Drax) drew attention to particular crime challenges that Dorset faces, with major cities such as Bournemouth in the broader Dorset area, issues of county lines and rurality, and pressure on public services overall. They were absolutely right to do so. We have sought to ensure that in the settlement we provide Dorset’s police and fire and rescue service with appropriate resource, but of course we keep things constantly under review.

For the benefit of the House, I will briefly run through the details of the funding settlement. Overall, the settlement funding assessment—in essence, what used to be the revenue support grant allocation—comes to some £14,882,000,000, a truly significant amount and a significant increase. In the local government finance settlement, we are also increasing our compensation to local authorities for under-indexing the business rates multiplier. We are making sure that local authorities have the opportunity to raise the council tax precept by 2% on the social care precept and that they benefit from an improved better care fund from the new homes bonus. The rural services delivery grant, which helps to address some of the issues that my hon. Friend the Member for West Dorset (Chris Loder) so ably raised, is being held at £85 million.

Perhaps the two most substantial changes are the increase in the social care grant, to take account of the particular pressures on local authorities as a result of the challenges that adult social care services face, and the additional £822 million that has been made available in a specific services grant. That money is unringfenced, and it is in keeping with the direction of our “Levelling Up” White Paper and of the Government overall in recognising that, wherever possible, those in local government are best equipped to meet local needs. That principle of devolution and local discretion will be in our mind as we consider how to reform local government finance further in future.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

The right hon. Gentleman is being generous in giving way. He will know that Salford City Council has faced budget cuts of £232 million since 2010 and has stated that the approach to funding that he outlines does not adequately reflect the demand that it faces. Does he agree that true levelling up requires funding to meet actual demand, and that it requires differentials for poverty, inequality and council tax payers’ ability to pay to be effectively factored into Government grant methodology?

[Michael Gove]

The hon. Lady makes an important point. As we review future reforms to local government finance, I look forward to working with her and other colleagues to make sure that her point about deprivation, which affects a considerable number of her constituents, is reflected in our overall approach. It is important to say that the most relatively deprived areas of England—those in the upper decile of the index of multiple deprivation —will receive 14% more per dwelling in available resource through this year’s settlement than the least deprived areas. The settlement serves the cause of social justice with a redistribution towards poorer areas, but of course we keep these things under review.

Levelling Up

Debate between Michael Gove and Rebecca Long Bailey

Wednesday 2nd February 2022 Commons Chamber

[Michael Gove]

My right hon. Friend is absolutely right. We need to make sure that the additional funding available through the UK shared prosperity fund goes to all the communities in Wales that deserve it.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

The Secretary of State bursts with enthusiasm today, yet his plans are not bursting with much new funding. Even the director of the Northern Powerhouse Partnership says that

“the government is planning to spend less on English regional development than was the case under Theresa May or David Cameron.”

It said that true levelling up would need long-term financial backing from the Chancellor. When will we see that?

[Michael Gove]

We saw it at the spending review.