David Simmonds (Ruislip, Northwood and Pinner) (Con) (Urgent
question): To ask the Secretary of State for Housing, Communities
and Local Government if she will make a statement on the
Government's policy on council tax referendum thresholds in
2025-26. The Minister for Housing and Planning (Matthew Pennycook)
Since the 2012-13 financial year, local authorities, fire
authorities, and police and crime commissioners have been required
to determine whether the amount of...Request free trial
(Ruislip, Northwood and
Pinner) (Con)
(Urgent question): To ask the Secretary of State for Housing,
Communities and Local Government if she will make a statement on
the Government's policy on council tax referendum thresholds in
2025-26.
The Minister for Housing and Planning ()
Since the 2012-13 financial year, local authorities, fire
authorities, and police and crime commissioners have been
required to determine whether the amount of council tax they plan
to raise is excessive. The Secretary of State sets thresholds on
excessiveness and knows the referendum principles for different
classes of authority. Since 2016-17, those thresholds have also
included a social care precept, providing higher thresholds for
authorities with social care responsibilities.
Decisions on the council tax levels to set, or whether to hold a
referendum to go beyond the referendum principles, sit with
councils. But the Government have been clear that we expect the
threshold to be maintained at the current level, set by the
previous Government. The Office for Budget Responsibility
forecast of the last Government assumed that council tax would
increase by a 3% core, plus an additional 2% for local
authorities with adult social care responsibilities for the
entirety of the forecast period. We will set out further details
in the local government finance settlement in the new year.
Beyond that, we are determined to support local government and
undo the mess that has been created over the past 14 years. That
is why at the Budget we announced over £4 billion in new local
government funding, including an additional £1.3 billion in the
local government finance settlement. That, as the hon. Gentleman
will be well aware, has been warmly welcomed by the sector.
Council tax funds about £20.5 billion of expenditure in England
on social care, which is 61% of all council funding. It is
therefore of huge interest to our constituents. The Prime
Minister and Ministers have repeatedly told the House that we
need to wait for the spending review and the local government
finance settlement to know what will happen with the referendum
limit, including at the Dispatch Box yesterday when the Prime
Minister told my right hon. Friend the Leader of the Opposition
to wait. Shortly afterwards, the press were told that the 5%
limit would remain in place.
Answers to parliamentary questions show that the Government are
expecting spending power to increase by £3.7 billion, funded by
grants of £1.3 billion. That demonstrates that the Chancellor's
Budget has opened up a £2.4 billion black hole in council
finances. In addition to that, the County Councils Network has
highlighted its concerns that although we have not yet had a
formal statement in the House, there are proposals to change the
way in which funding is allocated, further depriving local
authorities in urban, suburban and rural areas of the funding
that they need.
I would like to put two questions to the Minister. First, will he
promise the House that funding allocations through the grant
mechanism will follow the cost pressures on local authorities and
not any other form of indexation or formula, to ensure that
places facing the highest costs receive the funding that they
need? Next, while nobody would want to see the referendum limits
scrapped simply to bail out central Government, the announcement
of the 5% constrains local authorities when it comes to their
fundraising. Will the Minister tell the House whether it will be
our high streets through increased business rates or whether
significant cuts to other council services will be needed to fill
the Government's £2.4 billion black hole?
I thank the hon. Gentleman for his questions. Let me take them in
turn. The Government are committed to a fair funding settlement
for local government. We will set out further details in the
usual way in the upcoming local government finance settlement,
which will be presented to Parliament.
On the £2.4 billion figure, I am afraid that we simply do not
recognise it. I assume that the hon. Gentleman, in his
calculations, failed to take account of the over £300 million
raised from business rates and £300 million in additional new
houses coming along. Yes, it is right that £1.8 billion will be
raised through council tax in 2025-26, but, as I made clear, that
is because the Government are clear that we are maintaining the
previous Government's policy on council tax, in line with the OBR
forecast made in March 2024.
The question for the Opposition is: are they saying that the cap
should be abolished, as the Conservative Local Government
Association group's “Rebuilding the Road to Victory” document
called for all caps to be removed, or are they saying that the
limit should be reduced, which would be contrary to the policy in
place when the now Leader of the Opposition was the local
government Minister?
Mr Speaker
I call the Chair of the Housing, Communities and Local Government
Committee.
(Vauxhall and Camberwell
Green) (Lab/Co-op)
It is worth remembering why a number of our local authorities are
facing this decision and the tight financial situation: the
funding crisis over the past 14 years, forcing a number of local
authorities to make those difficult decisions. A number of our
areas are facing major in-year cost pressures from things such as
temporary accommodation and special educational needs and
disabilities provision. Does the Minister agree that we need to
accelerate the house building plan in order to get local
authorities back on a level playing field, so that our local
residents do not see that cost increase in their council tax
bills?
I thank the Chair of the Select Committee for that question. She
is absolutely right; after 14 years of the previous Government's
record in office, local government is on its knees. We have a
system on the verge of collapse. We had multiple years when
in-year spending pressures were ignored. The headroom that we
have provided through the Budget—more than £4 billion in new
local government funding, which I referenced earlier—will allow
us to start to turn that system around and to get ahead of some
of the challenges we are facing, whether the pressures on adult
social care, children's services or homelessness costs as a
result of temporary accommodation. That is why our house building
programme—within my specific remit of responsibility—and, in
particular, the increase in social and affordable housing supply
that we are committed to, is so important.
Mr Speaker
I call the Liberal Democrat spokesperson.
Mr (Newbury) (LD)
The Liberal Democrats are deeply concerned that people are simply
paying more council tax for fewer services. That is quite clearly
the result of Conservative tax cuts and their failure to tackle
social care. As a former council leader, I know that the burden
on councils has increased to such an extent that they are forced
to make impossible choices. The burden and the costs that
councils of all colours have to shoulder as a result of the
Conservative Government's policies must be reviewed. Will the
Minister ensure that councils do not have to close libraries, cut
bus routes and reduce road repairs in order to meet the growing
demands of the most vulnerable members of our community? Despite
the announcement in the Budget, will the Minister recognise the
LGA analysis that councils face a £6.9 billion shortfall because
of inflation, increased wage demands and demand pressures on
local services?
The Government certainly recognise the pressures on local
authorities and the burdens placed on households as a result of
14 years in which local government was run down. We are
determined to turn that situation around, as I have said, by
providing the headroom that local authorities need to get ahead
of some of the challenges that they have faced for many years.
That is why the more than £4 billion in new local government
funding announced at the Budget, including an additional £1.3
million in the local government finance settlement, has been so
warmly welcomed. That brings the total real-terms increase in
core spending to around 3.2%. We remain committed to the 5%
referendum cap—we believe that is the right threshold. To protect
the most vulnerable, we are also committed to the single-person
discount and local council tax support schemes, under which, as I
am sure the hon. Gentleman is aware, more than 8 million
households do not pay a full council tax bill.
Mr (Sheffield South East)
(Lab)
I really do not know how the Opposition spokesperson, the hon.
Member for Ruislip, Northwood and Pinner (), can stand there and talk
about cuts and shortfalls with a straight face. We know where
responsibility lies—and on the Lib Dem Benches as well.
[Interruption.]
Mr Speaker
Order. I think that the hon. Member for Thirsk and Malton () will want that Yorkshire
cup of tea. It will come very quickly if he carries on. I call
Clive Betts—another Yorkshireman.
Mr Betts
Let me take my hon. Friend on a trip down memory lane. When I
first became a councillor—only 48 years ago—councils had the
freedom to raise rates for domestic and non-domestic property.
Should we not, at some point, start a conversation with councils
and the wider public about whether thresholds at all are
appropriate? Councils in this country have less freedom to raise
local taxation than virtually any other councils in western
Europe. Council tax itself is regressive, both between
individuals and between different local authorities. Can we not
start that conversation at some point?
I thank my hon. Friend for that point, and I will relay it to the
Local Government Minister. On the general principle, we are
determined to rebuild local government from the ground up. That
is why we are providing multi-year funding settlements to
councils and removing a number of ringfences, and are committed,
as I said, to fair funding. On his general point about the
Opposition, I completely agree. It reminds me of a phrase my nan
used to use: “More front than Harrods,” she used to say. That is
what Opposition Members have.
(Salisbury) (Con)
Will the Minister rule out additional council tax bands being
among any changes that the Government make?
I say to the right hon. Gentleman that we are not talking about
council tax bands in this urgent question; we are talking about
the thresholds that remain in place. We are committed to those
thresholds. As I am sure you would expect, Mr Speaker, we will
set out more details about the local government finance
settlement at the appropriate point next year, in the usual
way.
(Kingston upon Hull East)
(Lab)
Areas like Hull city council were savaged by the previous
Government when it came to funding—absolutely savaged, to the
point where they were almost on their knees. Will my hon. Friend
the Minister tell the House what the Government are doing for
areas of high deprivation like Hull?
My hon. Friend is absolutely right. The damage done to local
government over the 14 years in which the Conservatives were in
office is profound. We have inherited, as I said, a system on the
verge of collapse. We are absolutely committed, as part of
rebuilding that system from the ground up, to a fair funding
settlement. As I say, the Minister for Local Government will
announce more details in the upcoming local government finance
settlement in the new year.
(Harrow East) (Con)
Local authorities across the country will welcome multi-year
settlements, so they can plan for the future. However, does the
Minister have any plans whatever for a revaluation of properties,
given that properties were originally valued back in 1992, when
council tax began? The hon. Member for Sheffield South East (Mr
Betts) and I produced a Select Committee report on what could be
done to ensure that councils need not be strictly neutral in
terms of finance, and could revalue properties to bring
valuations up to date.
The hon. Gentleman tempts me to discuss the local government
finance settlement ahead of it being formally presented to the
House. I am afraid I cannot do that, but the Government have
heard his point, and I will ensure that it is passed on to the
Local Government Minister.
(Chatham and Aylesford)
(Lab)
As a councillor, I saw 14 years of austerity and cuts to local
government, and a 93% cut equivalent for my council in Medway.
The opposition, the Medway Conservative group, recently stated
that it would not only scrap the recent council tax cap, but
introduce a local income tax on residents. Does the Minister
agree that there needs to be consistency on this issue, whereas
the Opposition's approach is to say, in one case, “Scrap the
cap,” and in another, “Keep it”?
My hon. Friend is absolutely right and we still have not had an
answer: we do not know the Opposition's position on thresholds.
[Interruption.] We are in government, as the hon. Member for
Thirsk and Malton () chunters from a
sedentary position, and we have confirmed that when it comes to
thresholds, we intend to maintain the position as it was under
the previous Government, and as baked into the Office for Budget
Responsibility forecast for the spending period. The Opposition
really do have to answer this question: are they saying that the
thresholds should be removed or increased, or are they saying
that they should be reduced and core services cut?
Mr Speaker
Unfortunately, it is not for the Opposition to answer the
questions—they are in opposition.
Dame (West Worcestershire)
(Con)
The Chancellor and the International Monetary Fund are known to
favour ending council tax and replacing it with a wider property
tax. The Welsh Labour Government tried to revalue all the
properties in Wales for council tax purposes. Can the Government
rule out doing either of those things?
I am not going to get into speculating about more fundamental
reform of the council tax system. As I have in a number of my
responses to this urgent question, the Government will set out
their position on the thresholds, and on other matters in respect
of the local government finance settlement, at the appropriate
point early in the new year.
(York Central)
(Lab/Co-op)
York is the lowest-funded unitary authority in the country, but
has one of the highest costs of living. That puts real pressure
on it. We are also among the poorest-funded for health, fire and
police services. When the Minister looks at the funding formula
for local government, will he look at the presumptions made, to
ensure more equity in the way it is put together?
As I have said repeatedly— I commit to it again—we are determined
to ensure that there is a fair funding settlement for local
government, and as I have said, more details will be forthcoming
in the settlement early next year.
(North West Norfolk) (Con)
Labour used to say that it would freeze council tax. Can the
Minister now confirm that its policy is actually to put council
tax up because of the flawed, broken promise on national
insurance?
No, that is not the case. We are maintaining the policy of the
previous Government, which, as per the OBR forecast, estimated
that £1.8 billion will be raised through council tax. The
position of the Government is that it will maintain the
thresholds. If the hon. Gentleman thinks differently, he should
tell House what his position is on thresholds: should they be
reduced or increased?
(Truro and Falmouth)
(Lab/Co-op)
I am pleased about the support for first and second-tier councils
and the commitment to fair funding, which will make a real
difference in, for instance, Cornwall. However, in unitary
authorities such as ours, where a great many services have been
shared, larger town councils have had to step up and take the
strain, but have not had the grants and other measures that have
been available to those first and second-tier councils. Could the
appropriate Minister meet me to discuss the position of larger
town councils in Cornwall?
I am more than happy to commit the Local Government Minister to a
meeting with my hon. Friend.
Mr (Basildon and Billericay)
(Con)
During Prime Minister's questions yesterday, the Government
accepted that they were giving councils a maximum of £600
million, but the Local Government Association has said that there
is £2.4 billion worth of pressure. Does the Minister accept that
councils will have to increase their tax by about £1.8 billion to
fill the gap between what the Government are offering them and
what they need to provide local services?
As I have made clear, we do not recognise the £2.4 billion
figure. It fails to take into account increases that I have
already mentioned, such as the £300 million increase in business
rates income and the £300 million increase in income from new,
additional houses. The hon. Gentleman is absolutely right that we
expect council tax to raise £1.8 billion in 2025-26, but that is
in line with the previous Government's spending plans and baked
into the OBR forecast as of March 2024.
(Southampton Itchen)
(Lab)
As a former deputy council leader, I am somewhat amazed by the
collective amnesia of Conservative Members. The hon. Member for
Ruislip, Northwood and Pinner () spoke of what “constrains”
local government spending power. Does my hon. Friend agree that
it is 60% cuts, such as those that Southampton city council has
suffered for 14 years, that have really reduced that spending
power, and does he agree that rather than faux outrage, what we
need is an apology?
I absolutely agree with my hon. Friend. We deserve an apology,
but I doubt that we will get one. Before 2010, it was vanishingly
rare for councils to fall into serious financial difficulty.
Since then, nine councils have been affected in just 14 years.
There is a pattern here. For too long, the Conservative
Government not only failed to carry out their duty to local
government, but hollowed out frontline services and crashed the
economy. We are turning that around with the support that we are
providing to local government in the Budget. We will set out more
details in the local government settlement early next year, as I
have mentioned.
(Strangford) (DUP)
As the Minister will know, although we do not have council tax
per se in Northern Ireland, the pressures on our family finances
are on a par with those on the UK mainland. The Government need
to be clear about just how much further the finances of average
families will be stretched, because this is a very worrying
trend. What extra help can families, especially disabled
families, expect to receive this year?
I thank the hon. Gentleman for his question, which relates to an
earlier one. I think that, in the urgent question, the Opposition
failed to account for the various other sources of support that
we are providing for families. We are continuing the household
support fund—that is £1 billion. There is a £1 billion uplift for
special educational needs. There is UK shared prosperity funding
of £900 million—the list goes on, but if the hon. Gentleman
wishes to discuss the specific conditions in Northern Ireland
further, I am more than happy to pass on that request to the
Local Government Minister.
(Luton South and South
Bedfordshire) (Lab)
I refer the House to my entry in the Register of Members'
Financial Interests: I am a vice-president of the Local
Government Association; Opposition Front Benchers might want to
reflect on that.
My hon. Friend mentioned front; I could talk about the
Opposition's brass neck in talking about concerns about the
pressures that local councils face. Does he agree that 14 years
of Conservative austerity, initially with the Liberal Democrats,
devastated the ability of many councils, including Luton council,
to provide much- needed services to families in our
constituencies?
I have been a local councillor, as have many Members of this
House. The hon. Member for Ruislip, Northwood and Pinner () has been a council leader,
so he will know what has happened to the system over the past 14
years. The Opposition continue to claim that there is a
multibillion-pound black hole in local council budgets. When
asked how they would fix it, however, they said, “It's not for us
to do; we're in opposition. It's for the Government.” It is a
classic policy of having no plan to fix the mess. They have
provided no clarity on their position on thresholds, and failed
to take responsibility for what they did over 14 years in
government.
(Bexleyheath and Crayford)
(Lab)
My Conservative-controlled council in the London borough of
Bexley had to apply for a capitalisation order three years ago
and make 15% of our staff redundant. Despite that, it still
overspent its budget every month for over two years, and is
currently overspending on the safety valve agreement made with
the previous Government. In addition, the Conservative leader of
the council, in responding to a question from me last year,
accepted that she was part of the LGA Conservative group
executive that published a manifesto last year asking their own
Government to remove caps on council tax. Given that, does my
hon. Friend agree that it is rank hypocrisy for the Conservative
party to complain now about black holes in council finances?
I absolutely do, and the Government are determined to extract
from the Opposition some clarity on their position on thresholds.
Do they agree with the LGA Conservative group, which has called
for the caps on council tax to be removed? Do they want those
caps to be reduced? We are still none the wiser. Hopefully, we
can find out in the weeks and months to come.
(Dartford) (Lab)
As a member of a council for more than 30 years—like other
Members of this House, I am still one—I have to say that, in the
last few years, I have not met a single councillor from any
political party across the local government family who does not
believe that local government finance is in its worst state for
decades. The latest LGA figures indicate that in Labour
authorities, council tax is £276 lower than in Conservative
authorities. Does the Minister agree that this shows that Labour
councils, the Labour party and the Labour Government provide
better value for money?
My hon. Friend is absolutely right. Labour councils charge less
on average than Tory councils, and the councils with the lowest
rates of council tax are all Labour. Council tax bills in Labour
councils are on average £345 less than in Tory councils. When it
comes to local government financing and council tax pressures,
people are right to vote Labour. It will ensure that their
council tax is lower than if they were under a Conservative local
authority.
(Milton Keynes Central)
(Lab)
I am a former local government leader. Does the Minister agree
that we should thank local authority leaders, especially Labour
leaders such as Pete Marland at Milton Keynes city council, for
keeping services during 14 years of austerity? Milton Keynes city
council has kept weekly bin collections, kept children's centres
open and reduced rough sleeping, while keeping council tax lower
than in its neighbouring Tory authorities. Does the Minister
agree that instead of using local authority leaders to make cheap
political points, the Conservative party should thank them and
apologise for 14 years of austerity?
My hon. Friend makes a good point. I extend the Government's
appreciation to all local government leaders—I mean that in a
cross-party spirit—for what they have done to keep services going
despite the pressures that they have faced over the past 14
years, when the previous Government ran down local government. We
should thank local government leaders, and this Government do. We
want to consult them on how we rebuild the system after 14 years
of pressure, and we would be more than happy to work across the
Chamber and have a mature, cross-party conversation about we fix
this mess. That will not happen if the political game-playing
from the Opposition continues.
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