Local Government Finance

Debate between Will Forster and Jim McMahon

Wednesday 5th February 2025 Commons Chamber

[Mr Forster]

I was about to be nice to the Minister and the team before the hon. Member intervened, which is quite ironic.

I am very grateful that the Government have listened to the concerns of distressed councils, including mine. Unlike the previous Government, who imposed higher council tax rises and higher interest rates as a punishment for bankruptcy, this Government have listened, and I am grateful to the Minister for doing so. That has saved my council alone millions of pounds. What I found very surprising was the brass neck of the shadow Secretary of State, the hon. Member for Thirsk and Malton (Kevin Hollinrake), when he criticised this Government for their tax rises; the previous Government punished my council with a 10% council tax rise because it dared to go bankrupt as a result of Conservative decisions. I have urged the Minister to not impose the same level of council tax rises as the previous Government, and I hope he will not do so.

Thanks to the work of the Liberal Democrats who now run Woking council and the amazing council staff, Woking is turning a corner, but I really worry for its future and that of councils like them, and the District Councils’ Network worries as well. The Minister has highlighted that there is no reduction in any local authority’s funding this year, but the DCN says that 0.3% is the average cash increase in core spending power for boroughs and districts. That is not good enough. Those councils shape their areas—they protect homeless people—and a 0.3% increase in core spending power is just not acceptable.

Turning to county councils, the County Council Network says that four in 10 of its members say that they are in a worse position than before the autumn Budget and the financial settlement, and one third say that their service reductions next year will now be severe. Considering that there is very little fat left to cut, I really worry about those services.

[Jim McMahon]

The hon. Member must accept that part of the difficulty we have in a two-tier system is the inability to move money around that system. It is correct to say that rural councils, mainly in two-tier areas, have had an increase of nearly 6%, but we have a huge inability to move that money around. There is around £2 billion in the two-tier system that could be freed up through reorganisation of local government, so will he stop looking both ways on reorganisation, and give a commitment on behalf of his party that the Liberal Democrats will support it?

[Mr Forster]

I thank the Minister for admitting that the 0.3% rise in DCN funding is happening. I do not think he can say that the Liberal Democrats and I are looking both ways on unitarisation, based on the statement earlier and the questions that took this debate later than Members might have wanted. We have concerns about unitarisation, particularly about the way that the Government are doing it. Fundamentally, we welcome reform of local government, but it cannot be imposed on councils and local areas, and we are concerned that that is happening. My county council, Surrey county council, has 14 days of reserves left—that is how bad of a state its finances are in. The Minister has talked about the past 14 years; I am more worried about the 14 days until my local authority, which is protecting vulnerable elderly people and children, will run out of money.

Social care is another area where the previous Government failed miserably, and I worry that Labour is set to repeat the same mistakes. Councils that provide social care are supposed to be better off under this settlement, but the reality is that demand for care is rising, costs are soaring, and local authorities are still struggling to meet their legal needs—I am sure all Members know that from their casework, and we see it time and again in tribunals. The Government’s allocation of funding for social care is simply not enough, and their refusal to commit to long-term reform, and particularly to have a long-term inquiry, will make the problem worse, not better.

On top of that, local authorities are saddled with extra costs from the Government’s policies. The increases in national insurance contributions will push up payroll costs for councils across the country, yet the Government’s package of support is lacking. Councils will be short of hundreds of millions of pounds just from NI contributions, and once again they will be pushed to increase council tax or cut services.

The Liberal Democrats are concerned that rural councils will suffer as a result of the Government’s decision to remove the rural services delivery grant in favour of the new recovery grant. The new grant will be allocated through a need and demand basis, and we are concerned that that will exclude rural councils from critical funding because it does not consider the specific reasons that the delivery of services is more expensive in rural areas.

Local Government Reorganisation

Debate between Will Forster and Jim McMahon

Wednesday 15th January 2025 Commons Chamber

[Jim McMahon]

The request can come in for reorganisation, but the Government’s role from the point at which we start the statutory invitation process becomes quasi-judicial. We therefore need to make sure we steer well clear of defining what outcome we want because we are, in effect, neutral in that process. It is our job to receive proposals as they come forward, and it could well be that the county and district councils put forward entirely different proposals. It is our job to make sure we consider both on an equal basis.

[Mr Will Forster (Woking) (LD)]

As the Minister knows, the former administration at Woking borough council racked up debts of £2.1 billion. That money will never be fully repaid to the Government, but surrounding local authorities are anxious that as part of reorganisation they might have to share that debt. Will the Minister confirm how the Government will handle debt in Woking, Surrey and elsewhere as part of the reorganisation? Also, will he agree to write off Woking’s unsustainable debts to ensure that reorganisation happens sensibly?

[Jim McMahon]

Agreeing to write off £2 billion of debt at the Dispatch Box would be quite career-limiting, I would say. I can say, however, that the scale of the financial challenge in some areas is absolutely understood and we will work to try and find a solution. We are not yet at the point of announcing that, however.

Oral Answers to Questions

Debate between Will Forster and Jim McMahon

Monday 28th October 2024 Commons Chamber

[The Minister for Local Government and English Devolution (Jim McMahon)]

Councils across the country, of all political stripes, work hard to deliver vital public services in our country. We know that 14 years of mounting pressure is biting hard. We are committed to moving towards a multi-year funding settlement, ending wasteful bidding competitions that essentially set one council against another. Last week, I met political group leaders at the Local Government Association conference to understand what specific demand pressures they are facing, and we are committed to working together on those big issues. Members will know that we cannot pre-empt the Budget statement due later in the week, but we are of course fully engaged in that process. We stand ready to speak to any council experiencing financial difficulties, as I confirmed in my letter to MPs just over a week ago.

[Mr Forster]

As the Minister knows—I have met him to discuss this subject—my local authority, Woking borough council, effectively went bankrupt last year. It has had to cut services that many consider essential, and it will have to consider cutting others. Does the Minister agree that it is time for Government and Parliament to review which services are classed as statutory and non-statutory?