Local Government Finance

Rushanara Ali Excerpts

Wednesday 5th February 2025 Commons Chamber

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rushanara Ali)]

It is my pleasure to close this debate. I thank Members from all parts of the House for their important contributions. I also pay tribute to the dedicated public servants working in local government across the country for everything they do to deliver for their communities by providing essential local services, protecting the most vulnerable in our society and helping lay the foundations for a good life for working people. They are doing that with great resilience in the face of significant challenges over 14 years of chaos, under-investment and decline.

Turning the page on the many challenges we have inherited will not be easy, but the settlement we have discussed today, as the Minister for Local Government and English Devolution, my hon. Friend the Member for Oldham West, Chadderton and Royton (Jim McMahon) has said, is a significant step towards rebuilding local government as we rebuild Britain.

Public service is our collective duty, and we are grateful to those who contributed to the consultation on the provisional settlement and to the Members who made representations. Their input is vital, because strong, empowered local government is central to our plan for change and to delivering the higher growth and higher living standards that every community deserves. This is the change and national renewal that this Labour Government were elected to deliver, and we will achieve that by getting local government back on its feet and working with us in the spirit of true partnership.

We are fundamentally resetting the relationship between central and local government by delivering the greatest transfer of power from Whitehall to our communities in a generation through our landmark English devolution White Paper. Crucially, we are fixing the foundations of local government, starting with the broken funding system that has left many councils of all stripes in crisis. The final settlement does what is needed: it provides a 6.8% cash terms increase in councils’ core spending power, bringing total spending for the sector to more than £69 billion for 2025-26, as my hon. Friend the Minister stated. With the settlement and the Budget taken together delivering more than £5 billion of new funding for local services over and above council tax income, we are ending the wasteful and costly bidding wars for funding pots that local councils have had to endure and moving towards secure multi-year financial settlements. We are providing more money for social care, increased funding for special educational needs and disabilities and alternative provision, and a £600 million recovery grant to support councils with the greatest need. We are responding to the drivers of cost that we know are putting authorities under huge pressure. It is clear that there is much more to do, but this settlement marks a turning point for local government after years of neglect and failure.

Many hon. Members have raised important questions about the impact on local authorities in their constituencies. My hon. Friend the Minister addressed many points during the debate, but I will respond to some others. As the distinguished Chair of the Public Accounts Committee, the hon. Member for North Cotswolds (Sir Geoffrey Clifton-Brown) will know, the National Audit Office’s 2021 report stated that core spending power was 26% lower in 2021 than it had been in 2010. Investment in local authorities has been reduced in recent years. Turning that around will require time.

The opening remarks from the shadow Minister, the hon. Member for Thirsk and Malton (Kevin Hollinrake), beggared belief. It is as if we did not have 14 years of Conservative government; as if within the space of seven years we can fix the mess that they left behind, with record cuts and record levels of under-investment. We will not take lectures from a Government who consistently failed local government up and down the country and decimated public services. That is the mess that we have inherited and are working hard to fix. We will work cross-party where people are serious about tackling the root causes, but we will not tolerate hypocrisy and the complete denial of the failure of the past 14 years. That is the mess that we are trying to correct.

In rural areas, investment has gone up by 6%; in urban areas 7%—

[Robbie Moore]

Will the Minister give way?

[Rushanara Ali]

Perhaps the hon. Gentleman will listen. The Minister tried to respond to his comments but he was not interested in the answers, so he will sit down and listen to my closing remarks. I want to respond to hon. Members across the House who have taken these issues very seriously.

This Government have already invested £3.7 billion in social care. We have recognised the need for investment in response to the rise in national insurance contributions —up by £515 million, as my hon. Friend the Minister pointed out. We have invested £1 billion in SEND and £600 million in the recovery fund. That is a snapshot of the investment that we are putting in. Local government and local services were starved of much-needed support under the last Government. That is what we are trying to correct.

[David Simmonds]

Will the Minister give way?

[Rushanara Ali]

The shadow Minister has had his chance to make his points. It is my turn to sum up, and I want to address the points that have been made.

[Robbie Moore]

Will the Minister give way?

[Rushanara Ali]

The hon. Member had his chance to make his point. He should have taken the opportunity to hear the response from the Minister.

On the points about rural funding raised by the shadow Minister and other Members, this Government are absolutely committed to tackling the issues that matter to rural communities. As I said, places with significant rural populations will receive an average increase of almost 6% in core spending power next year, which is a real-terms increase. No council will see a reduction.

My hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi) raised a number of important points on temporary accommodation and SEND funding, among other things. The final settlement for the new children’s social care prevention grant is worth £270 million. She works tirelessly on her Committee to raise many issues, including homelessness and rough sleeping. This Government have already increased the investment to tackle homelessness and rough sleeping by £233 million, taking the total funding to nearly £1 billion.

My hon. Friend also raised the important matter of the local housing allowance. This Government are focused on increasing the availability of housing and tackling the long-term under-investment in house building, which is why we are determined to ensure we build 1.5 million high-quality homes. We have also invested £500 million in the affordable homes programme, because we recognise that there has been chronic under-investment in social and affordable home building and in the provision of housing over the past 14 years.

The hon. Member for Woking (Mr Forster) raised a number of points on social care, which I have addressed, as well as on national insurance. My hon. Friend the Member for Sheffield South East (Mr Betts) raised important points about investment in SEND, which I have also addressed.

The Chairman of the Public Accounts Committee, the hon. Member for North Cotswolds (Sir Geoffrey Clifton-Brown), made a very thoughtful and considered speech. I have addressed a number of the points he made, including on the rural services delivery grant. He also made a very important point about local audits; it is a scandal that a number of local authorities have not been able to provide the appropriate audits. My hon. Friend the Local Government Minister is working closely with the local authorities to ensure that that happens. It is, sadly, another legacy that we have inherited, but we are determined to work with colleagues, including the hon. and learned Member—my apologies, the hon. Member for North Cotswolds. He is not a KC, although he does have great expertise in his work. We will work together to tackle these issues—we are having to address them, and we are determined to do so.

My hon. Friend the Member for Telford (Shaun Davies) also raised issues around social care, which is a massive challenge that we are determined to tackle in the coming years. We are already investing funding into social care and supporting local authorities that have been struggling.

The hon. Member for Glastonbury and Somerton (Sarah Dyke) raised a number of points, including about home-to-school transport. We are aware that home-to-school transport costs are increasing significantly, in large part due to the pressures in the SEND system, and we are committed to addressing those challenges. The hon. Member for North Herefordshire (Ellie Chowns) raised a number of really important points. The consultation on the multi-year settlement ends on 12 February, and I will welcome her and other hon. Members making their contributions and views heard as part of that consultation.

[Robbie Moore]

Will the Minister give way?

[Rushanara Ali]

No.

We are very serious about working with colleagues both in Parliament and in local areas to tackle these very serious challenges, which local authorities need us to address after 14 years of under-investment.

[David Simmonds]

rose—

[Rushanara Ali]

I am concluding my speech. The shadow Minister has had his chance.

[Robbie Moore]

Will the Minister give way?

[Rushanara Ali]

The hon. Member took the opportunity to make a speech. I am sure he will get his clicks on Facebook and Twitter, so he does not need to continue in that vein.

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

On a point of order, Madam Deputy Speaker. Please indulge me. Could you give some guidance, on how, under Standing Orders, we can encourage Ministers to debate? This is, after all, a debating chamber. The Minister is either unable or unwilling to debate with right hon. and hon. Members.

--- Later in debate ---

[Madam Deputy Speaker (Caroline Nokes)]

The hon. Gentleman knows full well that that was not a point of order. It is at the Minister’s discretion whether she wishes to take an intervention. I am sure she is coming to her closing remarks.

[Rushanara Ali]

Thank you, Madam Deputy Speaker.

Once again, I thank hon. Members for their valuable contributions, even if we do not always agree. The point is that we can all agree that there is much work that needs to be done.

[Sir Geoffrey Clifton-Brown]

I am grateful to the Minister for giving way, because I am about to raise a really important point that has not yet been addressed. A lot of councils are seeing their reserves diminished hugely, and I worry that there are a lot more councils in the pipeline that might well come under a section 114 agreement. Will she commit tonight to her Department working ever more closely with councils to try to prevent them from getting into that situation? As I said in my speech, once we get into that situation it is always more expensive for council tax payers, and they get cuts in their services.

[Rushanara Ali]

An exemplar contribution. The hon. Gentleman is absolutely right about ensuring that local authorities receive expertise and support, which is why the local audit office is so important. I know my hon. Friend the Minister for Local Government and English Devolution will work with him and his Committee to ensure we get it right, so that local authorities get the right support to ensure their finances are carefully managed.

I thank hon. Members once again for their valuable contributions. As I hope has been clear throughout the course of the debate, the Government are under no illusion about the scale of the challenges before us. There is no silver bullet to solve them. After 14 years, the idea that within the space of seven months all the underlying issues can be resolved is for the birds. I hope hon. Members, including the shadow Minister, recognise that we have to take the issues seriously. Just turning up and scoring points will not do the job. We have to recognise that there are serious issues and challenges. Where we can work together, we must.

I am conscious that I did not give way to the shadow Minister. If he wants to work with us, I am very happy to give way.

[David Simmonds]

I am grateful to the Minister. I think most of us, certainly on the Conservative Benches—this was acknowledged with gentle humour by a number of colleagues—are determined to work together in a constructive way, because we recognise that this issue has a huge impact, but I have to ask the Minister a question. She referred to an “investment” of £538 million in respect of national insurance contributions. Does she really argue that it is an investment to raise taxes on one group of people to provide a grant to our local authorities to pay another government tax? Would it not surely be better to go for a lower tax, higher growth agenda, rather than seek to tax our way into prosperity, which does not have the best track record in economic history?

[Rushanara Ali]

Perhaps the shadow Minister did not hear the opening remarks of my hon. Friend the Minister for Local Government and English Devolution, or my remarks, about what the Government have already invested in local government—billions. Does he want me to go over it again? There is not much time, Madam Deputy Speaker, but I suggest that he goes back and listens to the speech and those announcements. He knows that, in a very challenging set of circumstances, we have invested an additional £5 billion in local government. I hope very much that we can work on areas in which we can agree, but where we cannot, let us agree to disagree.

As I have said, there is no silver bullet that will solve the difficulties that we have to address, many of which we have inherited. Today is the start, not the end, of the process of reform and renewal, but with this settlement we have begun the task of putting councils on a sounder financial footing, fixing the foundations, and strengthening the sector for the long term. This will give councils the certainty and stability that they need in order to plan, move from crisis management to prevention, and deliver the change that the country needs: higher growth, higher living standards, more jobs, more homes and more opportunities as we rebuild as part of our plan for change. We are putting more money into people’s pockets, and putting stability, investment and reform first to deliver national renewal. We are putting Government back in the service of working people. I commend this settlement to the House.

Question put and agreed to.

Resolved,

That the Local Government Finance Report (England) 2025–26 (HC 623), which was laid before this House on 3 February, be approved.

Resolved,

That the Referendums Relating to Council Tax Increases (Principles) (England) Report 2025–26 (HC 624), which was laid before this House on 3 February, be approved.—(Jim McMahon.)