Financial Distress in Local Authorities

Nadia Whittome Excerpts

Thursday 1st February 2024 Commons Chamber

[Mr Betts]

If it was in my gift, of course I would give Barnsley the money it is asking for today, but unfortunately it is not. In another report, the Committee was fairly critical of the individual pots for levelling up, which are not joined up together. It is unsatisfactory that some councils can get bits of money from all these pots, while others get nothing at all. To address those problems, we have suggested a move towards single pots for local authorities, reflecting their needs and giving greater discretion and freedom to decide on spending at a local level. We are quite a long way off that at this stage. In principle, the Government recognise that is the way to travel, but they have not got a road map about how we are going to get there.

[Nadia Whittome (Nottingham East) (Lab)]

I thank my hon. Friend for all his work on this important report. It is a privilege to serve on the Levelling Up, Housing and Communities Committee under his chairship. He does not need me to tell him that, like many local authorities, Nottingham City Council is in a perilous financial position. Our council’s spending power has been cut by a huge 28% compared with 2010, despite high levels of deprivation in our city. This is considerably higher than the average, still devastating, reduction of 19% among councils. How important does he believe it is to make the local government funding system fairer?

[Mr Betts]

I completely agree that it should be made fairer. The only caveat I would add is that one authority’s system of fair funding is another authority’s unfair funding, which is always a challenge. Everyone accepts that the funding system must be brought up to date. The current funding system has data in it that goes back to the last century, which is not a reasonable way to allocate money in the current age, so yes, it needs to be revised.

On the funding cuts and the council tax increases, the biggest funding cuts have tended to be made to those councils that used to receive the most grant, which tend to be the poorer councils. The council tax increases have disadvantaged councils with a low council tax base, which tend to be those councils who received the biggest cuts. We have not gone into that in detail in this report, but I know we have had evidence to that effect in the past.