Local Government Finance

Nusrat Ghani Excerpts

Wednesday 11th February 2026 Commons Chamber

[The Secretary of State for Housing, Communities and Local Government (Steve Reed)]

I beg to move,

That the Local Government Finance Report (England) 2026-27 (HC 1604), which was laid before this House on 9 February, be approved.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

With this it will be convenient to discuss the following:

That the Referendums Relating to Council Tax Increases (Principles) (England) Report 2026-27 (HC 1605), which was laid before this House on 9 February, be approved.

[Steve Reed]

Before I begin, I notify the House that the local government finance report has been updated with small corrections on pages 7 and 13. These corrections have been passed on to the House in the proper way ahead of today’s debate. Like you, Madam Deputy Speaker, I am grateful to the Joint Committee on Statutory Instruments for its careful consideration of these reports.

I believe in local government, because I have lived it. As a councillor and as a council leader, I saw the difference that councils make to people’s lives. Local government is the part of our democracy that is closest to people and the things that they care about the most—their family, their community and their home town.

Labour took office after 14 years of ideological cuts imposed on local government. The Tories devolved the blame for their failure in national government by imposing £16 billion of cuts on councils and local communities. Even worse, they targeted the worst of those cuts deliberately on our poorest communities. The former Prime Minister, the right hon. Member for Richmond and Northallerton (Rishi Sunak), was filmed standing in a leafy garden in Tunbridge Wells boasting about how the Conservatives had stripped away funding from struggling towns so that they could play politics with public money.

--- Later in debate ---

[David Baines (St Helens North) (Lab)]

I was council leader at St Helens for five years before coming here in July 2024. I just want to say thank you to the Secretary of State and the Minister for Local Government, and the Ministers in post before them, for the engagement, because the relationship now is different from what it was before. The conversation we have had since the provisional settlement has been constructive—it has been good; it has been done in good spirit—and I am very grateful for the result that we have for St Helens. In 2010, St Helens got £127 million a year from the last Labour Government, but when the Conservative party opposite left office it was £13 million a year. Does the Secretary of State share my absolute shock at the brass neck of Conservative Members?

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Brief interventions can be just as productive as lengthy ones.

[Steve Reed]

I thank my hon. Friend for his intervention. What he is seeing is the realignment of funding with deprivation, and that is as it should be.

--- Later in debate ---

[Steve Reed]

I thank my hon. Friend for recognising that funding is now following deprivation. He will find the answer to his question in the homelessness strategy, which I will come to. [Interruption.] Madam Deputy Speaker, you are indicating with your wrist that I need to speed up, so I will make some progress.

On children’s social care, the system was again left on its knees. That is why this Government are driving forward the biggest transformation of children’s social care in a generation by rolling out the Families First Partnership programme. We have backed the programme with nearly £3 billion over four years, including an investment of over £2.4 billion in this multi-year settlement. It gives local authorities, police and health partners the tools to provide families with the right support at the right time, shifting the system from expensive statutory provision towards early intervention and preventive support. It will help families stay together, divert thousands of children from care and transform the outcomes and wellbeing of children across the country.

The investment in the Families First Partnership programme marks a milestone in transforming the children’s social care system, but we recognise that the children’s social care residential market is fundamentally broken. Local authorities are being pushed to the brink, while some private providers are making excessive profits. This cannot—and it will not—continue. Instead, we are working to reduce reliance on residential care and move towards a system rooted in family environments through fostering. Last week, the Government set out a plan to expand fostering for 10,000 more children by the end of this Parliament. The evidence is clear that taking this approach will be better for children and better for the local authorities that provide the services. Using the new powers in the Children’s Wellbeing and Schools Bill, we will explore the implementation of a profit cap in the children’s social care placement market to ensure that public money delivers value and care, not profiteering.

It is obvious that the current special educational needs and disabilities system is not working for children and families. We know that it is not working for councils either, as they are seeing funding for neighbourhood services diverted into a broken system. The Government are bringing forward ambitious reforms that will create a better and financially sustainable SEND system, built on early, high-quality support for kids with SEND to improve their time at school and maximise their potential throughout life. My right hon. Friend the Secretary of State for Education will set out the details of those reforms in the upcoming schools White Paper.

Crucially, we are taking action now to support local authorities as we move towards that reformed system. We will deliver this in phases, the first of which will address historic deficits accrued up to the end of 2025-26. All local authorities with SEND deficits will receive a grant covering 90% of their high-need deficit up to the end of 2025-26. This is subject to local authorities securing the Department for Education’s approval of a local SEND reform plan.

On homelessness, as my hon. Friend the Member for Leyton and Wanstead (Mr Bailey) has said, we know that temporary accommodation is a growing financial pressure on councils, with near record levels of rough sleeping and declining social housing stock. The final settlement also provides a £272 million uplift to the homelessness, rough sleeping and domestic abuse grant, taking total investment delivered through the settlement to £2.7 billion. On the ground, that will mean families off the streets; kids out of temporary accommodation and instead living in safe, secure homes; and people’s lives put back on course. We are matching that landmark investment with our national plan to end homelessness, led by the Minister for Local Government and Homelessness, to put the full might of the state behind preventing homelessness before it happens.

Today’s settlement is about keeping a promise—a promise to repair the broken foundations of local government, and a promise to put the heart back into our communities. When the last Conservative Government slashed councils to the bone, the consequences were severe: the services people use every day were undermined, streets became filthy and people’s lives got tougher. The hard work of councillors, mayors and frontline staff kept vital services running during those hard Tory years, and we thank them for the work they did in those circumstances. Our aim is a future where councillors, working with their communities, have the freedom to innovate—rebuilding public services and investing in high streets, youth clubs and libraries. We are fixing the foundations so that councils and their communities can build the public services, renew the high streets and shape the future they want to see.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Before I call the shadow Minister, I will announce the result of today’s deferred Division on the draft Greenhouse Gas Emissions Trading Scheme (Amendment) (Extension to Maritime Activities) Order 2026. The Ayes were 362 and the Noes were 107, so the Ayes have it.

[The Division list is published at the end of today’s debates.]