Housing, Communities and Local Government: Departmental Spending

Paul Holmes Excerpts

Thursday 9th July 2020 Commons Chamber

[Paul Holmes (Eastleigh) (Con)]

I congratulate the hon. Member for Sheffield South East (Mr Betts), my colleague on the Select Committee, on securing this debate. I want to echo his sentiments by acknowledging how hard the local government staff in my constituency and around the country have worked during the coronavirus. I want to talk briefly about two things. The first is the effect that this extra funding over the past few months has had on Eastleigh Borough Council in my constituency. Secondly, and more importantly to me, I want to talk about the dangerous clot that is rumbling in the local government funding situation and that is coming down the line, particularly because of the abuse of the leadership of my local authority in borrowing for commercial property rents.

I welcome, of course, the somewhat inevitable fact that the local government resource departmental expenditure limit has increased by 226% in the past year, and that spending power generally has gone up among local authorities. In Eastleigh, we have seen a total package over the last month of around £42.25 million, which I must say is very welcome for helping out my constituents. It is also welcome that so far the Government have announced more than £27 billion-worth of support for local authorities. It has made all the difference.

More important to me is the situation faced by my constituents in Eastleigh: the reckless decisions of the Lib Dem administration in Eastleigh and its lack of good governance compared with that shown by MHCLG Ministers. Over the past 10 years, the Liberal Democrat administration has decided to build a property portfolio that places the future viability of the local authority at risk, and proposes that it would eventually have to come to the Government for support.

To give some context, the annual budget of Eastleigh Borough Council is £31 million, but the council has borrowed more than £494 million to fund reckless spending decisions on commercial properties. The council owns the Ageas Bowl, where a really good cricket match is currently going on; the Hilton hotel; Travelodges; industrial sites; and offices. The chief executive has himself admitted that if the economic downturn continues, commercial rents will place the council in an invidious position.

The Institute for Fiscal Studies lists Eastleigh as vulnerable in three areas. First, it is vulnerable in respect of interest and investment income as a proportion of revenue expenditure and the potential risks of commercial property income. At the behest of the council’s leaders, every constituent of mine in Eastleigh currently has a debt of £4,500, equivalent to the amount that the council has in debt.

Eventually, the council will come to the Government to be bailed out. That is why I welcome the Government’s decision in respect of the Public Works Loan Board, but there will be a situation wherein councils—Eastleigh being one of them—will have to come to the Government to be bailed out, and ultimately my constituents will suffer because of services being downgraded. It will also damage their confidence in not only local government but national Government as a whole.