Local Government Finance

Sally-Ann Hart Excerpts

Wednesday 7th February 2024 Commons Chamber

[Sally-Ann Hart (Hastings and Rye) (Con)]

I am grateful to the Under-Secretary of State for Levelling Up, Housing and Communities, my hon. Friend the Member for North Dorset (Simon Hoare), and to the Chancellor for listening to our concerns about significant pressures on local authorities, especially those with responsibilities for child and adult social care. I welcome the recently announced £600 million of extra funding, including £500 million for local authorities with child and adult social care responsibilities. East Sussex County Council has welcomed the extra £5.386 million it will receive.

However, despite this extra funding, East Sussex County Council, a well-run Conservative council, has reported that, due to the significant pressures arising from the current economic situation and changing demography and need, the financial position for the coming year is the most challenging it has seen in recent years. This is in direct contrast to Labour-run Hastings Borough Council, whose independent auditor, Grant Thornton, said:

“We have identified significant weaknesses arising from funding gaps and unidentified savings and the council’s approach to due diligence when undertaking commercial investments which has resulted in a failure to achieve expected financial returns.”

The borough council is teetering on the brink of bankruptcy, so the Labour leader and six Labour councillors resigned from the Labour party and set themselves up as the Hastings Independent party. Their change of name will not absolve them of their failures and their refusal to take responsibility for the mess they got the council into.

Although welcome, the additional funding does not bridge East Sussex County Council’s financial gap for 2024-25, and it is for one year only. That means that, despite previous careful budget management, the budget for the coming year will still be supported by a significant withdrawal from limited reserves and there remains considerable uncertainty about funding for future years. That is not a sustainable position, at both a national and local level, because available reserves would be depleted by the end of 2025-26.

In its budget and 2024-25 council plan, East Sussex County Council agreed proposals to spend its £538.1 million net revenue budget on services and activities that will deliver its priority outcomes, including funding to cover a range of significant demand and cost pressures being experienced by services. Those plans are supported by a 2.99% increase in council tax and 2% adult social care levy. That decision was not made lightly, given the current pressures on household budgets, but in the light of the very significant deficit the council faces in the coming year and beyond, it needs to apply those increases in order to safeguard services as far as possible.

East Sussex County Council also agreed an £837.9 million, 10-year capital programme, which includes badly needed investment in local roads and highways structures, in reducing the council’s carbon emissions and in school places, including for children with special educational needs and disabilities. Dealing with our potholes in East Sussex, especially those in Hastings and Rye, desperately needs more funding from national Government, and I must emphasise that with a view to the March Budget. So we must look at how we fund the particular needs and characteristics of East Sussex. There is an urgent requirement for sustainable, long-term funding to meet these needs, and that must be understood by the Government, so that our residents benefit from high-quality services in the future. That means reviewing, developing and implementing a fairer funding formula for local authorities, and for the police, that reflects the actual need, as well as deprivation, geography, demographics and so on. That is especially important for local authorities with coastal communities, which, due to a lack of granular data, are often left behind.

Fairer funding does not necessarily mean more Government funding—as we have heard, it has been focused on more urban areas—but a redistribution or reallocation of existing resources more equitably. It is very encouraging to hear the Minister outline the plan for a fairer funding formula to come soon, in the next Parliament. Coastal communities face unique challenges related to their geography, demographics—often they have older populations—population density and economic activities. A fair funding formula would consider those specific needs, rather than applying a one-size-fits-all approach.

Coastal areas often have diverse populations, including seasonal residents and tourists. These fluctuations have an impact on service demands, infrastructure maintenance and social services. A fair formula would account for population dynamics and deprivation levels in these regions. Coastal communities are often more isolated due to their geographical location, which affects transportation, healthcare, education and access to essential services. A fairer formula would address the challenges of sparsity and ensure adequate support. Coastal areas require investment in flood defences, coastal erosion management and environmental protection. A fair formula would allocate funds to address those critical issues. Coastal economies often rely on tourism, fishing and maritime industries. A fair funding formula would recognise the need for economic resilience and support diversification efforts.

A fairer funding formula is essential to ensure that local authorities, especially those in coastal communities, receive adequate resources to address their unique challenges, focus on actual need and serve their residents effectively.