Covid-19: Funding for Local Authorities

Rachel Hopkins Excerpts

Tuesday 24th November 2020 Westminster Hall

[Rachel Hopkins (Luton South) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) on securing this important debate.

Speaking as a sitting councillor on Luton Borough Council and as a vice-president of the Local Government Association, I too thank all the officers and workers at Luton Borough Council, and all those working in councils across the country who have shown brilliant leadership and determination throughout our coronavirus response. Their local expertise has been critical to delivering services for our communities, from supporting the roll-out of testing to ensuring that the most vulnerable can access food. It is important to note that they have worked alongside NHS and other public service workers, including the fire and rescue service and the police.

Local authorities across the country have stepped up, as we know, delivering vital additional support at pace, despite suffering a £15 million cut in core local government funding since 2010. As was mentioned, the National Audit Office has calculated that local authorities have seen Government funding reduced in real terms by almost a half since 2010-11. Austerity has left many councils understaffed and underfunded, with demand for many services, such as adult social care and children’s services, increasing. The pandemic has compounded those existing difficulties through extra costs, lost income and cash-flow pressures.

Since 2010, Luton Borough Council has had £138 million cut from its budget. It tried to mitigate the impact by generating increased income from Luton airport, which it owns, to fund council services. However, covid-19 health restrictions affecting aviation have caused that income to dry up, meaning the council will not receive its forecast £20 million annual dividend and the £9 million donation to our local charity and voluntary sector is at risk.

Although the Government stated that councils would receive the support they need to get through the crisis, and have acknowledged Luton Borough Council’s exceptional circumstances due to the airport, there is a requirement for local councils to set balanced budgets in year, so in the absence of any specific and exceptional Government finance to compensate for loss of commercial income, Luton Borough Council has had no choice but to implement an emergency budget that has made £22 million of in-year cuts. This is affecting our non-statutory services, which are highly valued by local residents. At a time or rising unemployment, 400 jobs will potentially be lost.

I recognise that the Government have made some additional grant support to councils, but it barely scratches the surface of the problem. Without a funding package that considers years of underfunding under a decade of Tory austerity and the instability caused by the pandemic, services in adult social care, public health, homelessness support and children’s services are at risk. The Local Government Association is calling on the Government to provide an additional £8.7 billion in core funding in 2021-22. That consists of £4 billion for the current funding gap to sustain 2019-20 service levels, £1.8 billion to deal with other quantifiable pressures to stabilise the sector, and £2.9 billion for other core funding requirements to help councils improve their core service offer.

We also need a long-term council funding review that begins to rebuild local resilience, as local councils must be at the heart of building back better in our communities. For the sake of our communities across the country, I hope the Minister has been able to persuade the Chancellor to announce a package along those lines in tomorrow’s spending review.