Local Government Finances: London

Peter Fortune Excerpts

Wednesday 26th March 2025 Westminster Hall

[Peter Fortune (Bromley and Biggin Hill) (Con)]

It is a pleasure to serve under your chairmanship, Ms Lewell.

Before serving the people of Bromley and Biggin Hill as their Member of Parliament, I served them as a councillor in the borough for 12 years. I was also privileged to be deputy leader of that great borough. I have, therefore, long been familiar with the financial challenges that face local government. As much as the Labour party would like to pin the blame solely on decisions taken in 2010, the story is far longer than that.

For Bromley, the story of underfunding started in 1997, under the previous Labour Government. Bromley council’s net budget has reduced by more than a quarter in real terms and nearly two fifths per person. It is true that the previous Conservative Government asked councils to make significant savings to tackle the country’s deficit but, ultimately, without those difficult decisions our nation would not have been able to weather the financial storm caused by the coronavirus.

I regret that the previous Conservative Government did not deliver a long-promised fair funding review, but I recognise that that was hard to achieve in the aftermath of the pandemic, the energy crisis and high inflation. It is a problem that successive Governments of all stripes have failed to grasp. The new Labour Government’s actions have made it even more challenging for councils. It is the same old Labour story in London: more money is spent on Labour areas and less on the Conservative suburbs.

Bromley council was awarded the second-lowest funding settlement amount per person. If Bromley received the average settlement grant of funding per person for London, the borough would receive an additional £80 million a year. In addition to inadequate settlements, Bromley did not benefit from the recovery grant. With inflation rising fast again under the Labour Government, the funding pressures will worsen, further eroding councils’ financial standing. Nor have councils received adequate funding to cover the cost of Labour’s decision to increase employer’s national insurance contributions. This jobs tax will further push up costs, especially in social care.

Bromley is a well-managed borough, and I commend its Conservative leader, Councillor Colin Smith, and his excellent team, but like all London councils Bromley faces enormous pressures that are simply unaffordable. We retain the fourth-lowest level of council tax in outer London because we are a low-cost borough. Bromley council has saved more than £150 million since 2011, but being a low-tax, low-cost borough means there are few remaining savings.

It is becoming increasingly impossible for councils to balance the books. Bromley can this year, but only thanks to the authority’s reserves, carefully built and protected over many years of sensible and responsible stewardship, despite opposition calls to reduce them. That is not sustainable in the long term. It is why a quarter of London boroughs have already effectively declared bankruptcy and requested exceptional financial support.

Future local government settlements must adequately fund councils to deliver, especially considering the rising national insurance costs. They should reflect the higher costs that all London boroughs face, fixing the area cost adjustments that wrongly say that Bromley is one of the most affordable places in London. There should also be a mechanism to reward low-cost and efficient authorities, instead of asking them to make savings while spendthrift authorities are given more.

Finally, the Government should allow councils to change statutory charges to match costs, and reduce ringfencing to allow councils to be more flexible and more concerned with their own priorities.