Question to the Ministry of Housing, Communities and Local Government:

To ask the Secretary of State for Housing, Communities and Local Government, with reference to his Department's press release entitled £78bn for councils in turning point settlement to cut deprivation, published on 17 December 2025, what steps he is taking to ensure that councils are incentivised to pay off debts and ensure long-term financial stability.

The government is making good on long overdue promises to fundamentally update the way we fund local authorities, realigning funding with need and deprivation through the first multi-year Local Government Finance Settlement in a decade. We are introducing a fairer and evidence-based funding system, which will account for local circumstances, including different ability to raise income locally from council tax and the variation in cost of delivering services. Further information on how funding allocations have been calculated is available in the government’s response to the Fair Funding Review 2.0 and the provisional Settlement 2025-26 to 2028-29.

Local authorities are responsible for their own borrowing and investment decisions but must operate within a legislative and guidance framework designed to ensure that borrowing is prudent, affordable and sustainable. The government is responsible for that framework and monitors sector behaviour using information and data from a range of sources, including levels of borrowing and debt. To support compliance with the framework and to protect public money, the government is taking forward work to operationalise the new capital powers introduced by the Levelling Up and Regeneration Act, which provide for targeted intervention where councils take on excessive risk through borrowing and investment activity.

On handling Thurrock’s debt, I refer the hon. Member to the answer given to Question UIN 77936 on 13 October 2025.