Local Government Finance, 10.02.21
Through this pandemic councils and their staff have gone above and beyond to provide many essential services, as well as helping administer many of the central government’s financial support packages.
I was very pleased to hear the Secretary of State for Housing, Communities and Local Government recognise this huge effort and praise the work of frontline council workers. He also set out further details on how his Department is helping councils to manage the cost of this support. This includes £3 billion in additional covid-19 support for councils next year and in particular the final allocations for £670 million of grant funding for local council tax support.
During the debate I was keen to draw Members’ attention to the London Councils finance report, which made clear that the funding by the Department is likely to meet those costs pretty much in full. While there are a few councils who are facing significant financial challenges, I am pleased to report that Hillingdon is not one of these.
You can read my full contribution to the debate below:
I draw the House’s attention to my entry in the Register of Members’ Financial Interests, particularly my roles as a vice-president of the Local Government Association and as a serving councillor.
I have listened intently to the remarks that have been made during the debate, and I think we need to reflect on the fact that local government finance has been on a journey over many decades, as Governments of all parties have sought reform and efficiency with varying results. My first ever council tax fixing meeting saw the last Labour administration in the London Borough of Hillingdon proposing a 14.8% council tax rise—not untypical under the Labour regime in the late 1990s—with £60 million of unspecified efficiency savings, in a budget described at the time as legal only for the duration of the meeting at which it was set. Labour Members do need to reflect, when commenting on this, that they are past masters of the art of putting up local taxes. In that case, it was very much as Labour funnelled money to northern authorities, rather than ensuring an equitable distribution of funding, which the revised funding formula that the Government have brought forward seeks to achieve.
The big challenges remain, and in particular I would highlight the differential impact and the differential benefit that we see from council tax rises. If we look at London alone, there are 33 authorities with essentially the same set of responsibilities, governed by statute, to the residents. However, because of the different proportions of budgets that are raised by council tax, the amount that the maximum possible social care precept, if applied, would raise in one of those authorities is, at one end, an additional 0.2% of resource and, at the highest end, an additional 1.8%. That is because we see a variation between the around 90% and the around 10% of funding being reached through the council tax, with the rest coming from other sources. So it is very clear, and I very much agree with the remarks that have been made during the debate, that council tax is not a long-term and sustainable solution to the challenge of social care funding.
It is also clear that the solutions are likely to be local. One of the key lessons I have seen in the course of the covid pandemic—and this is true throughout the world—is that strong local services have been crucial in saving lives and mitigating the impact on communities. The UK will do well, for the purposes of its future resilience, to emulate places that have highly autonomous, devolved local authorities that have made good decisions over many decades, meaning that they were in a good position to support their residents when a crisis of this nature hit. So we need to be thinking as a Parliament, in my view, about which are those things that we most effectively do at the centre and which are those things that we need to finance but we believe are most effectively done locally.
I would particularly like to associate myself with the remarks of my right hon. Friend the Secretary of State in opening this debate. It is clear that councils have done a remarkable job in supporting residents, and perhaps almost uniquely across the public sector, have been exceptionally efficient and effective in knowing their communities and ensuring that the resources, whether from central Government or locally raised, have got to the sharp end.
As we consider the local government finance position today, we need to reflect on a decade that began with a council tax freeze grant—councils being encouraged with extra resources to freeze council tax and have no rise at all—to a position where 85% of the extra resources that become available as a result of these initiatives will be financed through rises in council tax. We need to ensure that these local authorities, which have a very strong and very clear democratic mandate—for the most part led by exactly the sort of people all our communities want to see more of in politics, and by people who are more trusted than we are as Members of Parliament to make decisions in the local interest—have genuine autonomy and control over those things for which they are responsible and are properly resourced for doing those things that we in this House have decided we will require them to do. That is clear from the feedback that I have had from across London. I draw Members’ attention to the London Councils finance report, which highlighted that the grant for covid costs provided by the Department is likely to meet those costs pretty much in full, and that was very much welcomed. That also reflects the efficiency of local authorities and their ability to get the money to the sharp end.
Although it is absolutely right that the Government have made additional resources available, they have capitalised on local authorities’ knowledge of their communities and their ability to find people who may be reluctant to have a vaccination, identify communities that they need to get into because they need extra support and help, and redeploy staff from libraries and all sorts of different services to do the door-knocking for test, track and trace. Those are the people who have unequivocally stepped up to the plate and gone beyond what is required during this crisis.
As we go beyond this one-year settlement, welcome as many of its provisions are, we need to ensure that we properly reflect on how we sustain those services for the future. We must move away from the annual wrangling between Government and local government; each needs a much more settled view of what the other’s role is and of how we will finance it for the long term. The settlement that is to be voted on today is most definitely an important step in the right direction, and I very much welcome it, but it is clear that we need to find a different way of formulating that relationship for the long-term future and the good of our communities.