Asked by
To ask His Majesty’s Government what assessment they have made of
the state of the finances of local authorities.
My Lords, I beg leave to ask the Question standing in my name and
declare my interest, as set out in the register, as a
vice-president of the Local Government Association.
The Parliamentary Under-Secretary of State, Department for
Levelling Up, Housing & Communities () (Con)
We have listened carefully to local authorities about the
pressure that they are facing. That is why we have announced that
the final local government finance settlement for 2024-25 will
now make available £64.7 billion, an increase of 7.5% in cash
terms on last year and above inflation. The department
continually monitors the local government sector through data and
direct engagement with individual councils. This includes
considering the impact of inflation and wider economic
circumstances.
My Lords, I congratulate the Government on that 7.5% increase for
the local financial settlement for the coming year. However,
council leaders also say that what makes planning very difficult
is that they do not get much warning of these final settlements
and increasingly spend more and more of their budgets on the
statutory obligations. They are spending a much-reduced amount on
the preventive measures, despite the evidence of the social and
financial benefits of prevention. Can His Majesty’s Government
commit to producing a medium-term financial strategy to help
local authorities to plan the effectiveness and impact of their
spending much more effectively?
(Con)
My Lords, in recent years we have tried to give more clarity
around elements of the settlement on a multi-year basis. We will
continue to do this for the next spending review and beyond.
(CB)
My Lords, one of the big problems that local authorities have is
dealing with more and more homeless people. Section 21 on
no-fault evictions is still on the statute book and causing more
problems for the local authorities that have to deal with a mass
increase in homelessness.
(Con)
I reassure the noble Lord that the Government are committed to
abolishing Section 21 evictions. That is what the Renters
(Reform) Bill, currently being considered by the House of
Commons, will do. Additionally, we have put wider support in
place to tackle housing pressures, through building more
affordable homes and, for example, increasing the level of the
local housing allowance.
(Lab)
My Lords, does the Minister regret that the parlous state of
local government finances is having a terrible effect on the
provision of services by charities and not-for-profit
organisations? We are hearing of closures of vital services such
as Citizens Advice and Age UK, but there are also the very small
charities which have great preventive work and enable a lot of
pressure to be taken off the National Health Service and other
social services.
(Con)
My Lords, we recognise the pressures that local government is
facing. That is why we have announced such a substantive increase
into the funding for councils this year. We recognise that the
voluntary sector is often an important delivery partner for local
authorities in the work that they do. They will benefit from the
settlement that we have announced. My department also works
carefully with, for example, the Department for Culture, Media
and Sport, which leads on the voluntary sector, to ensure that we
understand the impact on the voluntary sector and the interplay
with local government.
(Con)
My Lords, local authorities are no longer run by Derek Hatton,
Ken Livingstone and Ted Knight, the bogeymen of 40 years ago, but
the legislation which they provoked is still with us—rate
capping. As a result, many well-run upper-tier local authorities
struggle to provide good-quality adult and children’s services
despite the increase and are looking at Section 114 notices.
Against a background of devolution and promotion of local
accountability, has the time not come to review the rate-capping
policy?
(Con)
My Lords, we are committed to broader reform of local government
finance, but we have said, in recognition of the disruption and
uncertainty caused by the pandemic, that this will be something
for the next Parliament. We have also set out ambitious proposals
when it comes to devolution of greater powers and greater
financial decision-making to local government. That starts with
the trail-blazer authorities in Greater Manchester and the West
Midlands but will be on offer more widely across the country.
(Lab)
My Lords, whenever there are questions about local government
funding in your Lordships’ House, we consistently hear Ministers
tell us how much more funding has been granted, but I cannot help
wondering if someone in DLUHC needs a new battery for their
calculator. The data from the House of Commons Library reveals
that there will be a £5.8 billion shortfall in the coming
financial year, when prices are adjusted for inflation. Every
council bar one—the Greater London Authority —is expected to
experience a real-terms cut in funding, with 218 authorities,
which is more than two-thirds, experiencing a reduction of more
than 30%. We heard the Minister’s figures again today, but what
would she say to the leader of Plymouth City Council, whose
funding has reduced from £110 million in 2010 to £12 million in
2024?
(Con)
My Lords, I do not recognise the figures that the noble Baroness
has put forward. The settlement, which we announced in its final
form, represents a real-terms increase for councils compared to
last year. There is also a funding floor in place to ensure that,
before decisions on council tax are taken into account, councils
across the board have certainty. I would be interested to know
what additional finance the party on the Benches opposite is
planning to put into local government.
(LD)
My Lords, I remind the House that I am a vice-president of the
Local Government Association. The Minister said a moment ago that
the Government have listened carefully to local government, so
she will know that local government thinks it needs £4 billion to
restore its finances, yet there was an allocation of only £600
million to meet the crisis in funding local public services.
Could she explain why that sum was so low?
(Con)
My Lords, I disagree that the amount was low. It was an
additional amount on top of the provisional settlement, which
sees the core spending power for local government rising from
£60.2 billion this year to £64.7 billion next year—both a
real-terms increase and a 7.5% cash increase. That is
substantial. When we look at local government funding, we engage
across the sector and look at wider economic pressures. We take
it all into account when reaching a settlement.
(CB)
My Lords, does the Minister agree that cuts in local government
funding started in 2010 after the banking crisis and have
accumulated, in real terms, year on year? That being so, many
non-statutory services have been withdrawn, particularly in
family support, and statutory services have been reduced to
crisis intervention in many authorities. Is there any real hope
that the Government will recognise that there is a severe problem
in local government finance?
(Con)
My Lords, of course I acknowledge that, in 2010, difficult
decisions had to be made about public finances both centrally and
in local government. However, in recent years, we have seen
real-terms increases in the finances going towards local
authorities. I also recognise the pressure that they face on
issues such as adult and children’s social care and special
educational needs provision. We have seen real increases in
demand. Alongside additional funding, we need to look carefully
at the right reforms to put in place to help manage that demand,
without just putting in more and more funding.
Lord Swire (Con)
Is there any appetite within the Government to look at the
existing structures of local government? It seems increasingly
difficult to justify having parish councils, town councils,
district councils, county councils and unitary authorities. Is it
not time to review the value for money we get from these
different tiers and possibly to rationalise them?
(Con)
My Lords, the levelling-up White Paper set out our ambition for
every part of the country that wanted a devolution deal in place
to have one. As I referred to earlier, we are seeing
trail-blazers of greater devolution in mayoral combined
authorities, where we can put power back into the hands of local
communities.
(Lab)
My Lords, I recently read an article in the Financial Times on
the state of our local authorities. It states that, due to all
the budget cuts over the last 14 years, to make ends meet they
are resorting to
“Asset stripping the public realm”.
The symbols of our civic identities are being sold off, which is
diminishing our towns and cities and undermining our civil
cohesion. Does the Minister agree with that assessment?
(Con)
No, I do not agree with that assessment at all. We have put in
additional funding to local government—not just this year, but in
many recent years. In addition, we have put in significant
funding, for example through the levelling up funds, to invest in
local community assets that will build pride of place and develop
local economies.
