Spending Commitments to Local Councils

Question

15:22:00

Asked by

To ask His Majesty’s Government whether they intend to review existing spending commitments made to local councils.

In asking the Question standing in my name on the Order Paper, I declare my interest as the vice-president of the Local Government Association.

My Lords, mayors, leaders, councillors and officers around the country have done an amazing job of supporting their communities, but too often in recent years that has been in spite of the Government and not with them. This Government are committed to ensuring that councils have the resources they need to provide public services to their communities in this Parliament. Of course, spending commitments beyond 2024-25 are a matter for the next spending review, but the work of engagement has already begun.

I thank the Minister for her Answer and warmly welcome her to her new role, for which she is most ably qualified. I am pleased to hear what she has to say, but this money is crucial. Can she be specific about a timeframe as to when councils will hear whether they have got the money? We are talking about many millions of pounds, in certain cases. More importantly, can she reassure the sector that, when decisions are made, they will involve looking at how advanced those projects already are, how much money has already been spent and, in particular, the impact on the financial sustainability of the council if it does not get the promised money? As she knows, for some councils that is critical.

My Lords, I thank the noble Baroness for her kind comments. We worked together often in Hertfordshire, and I hope that that relationship continues. Local places will rightly seek clarity on existing funding commitments, but as all noble Lords would expect, the Government are fully considering funding arrangements, including the very hard work that has been undertaken on projects to date. We will confirm as quickly as possible how we are going to take those projects forward.

My Lords, I congratulate the noble Baroness most warmly on her new position. I remind her that she spoke from these Benches less than two months ago saying that the existing spending commitments for local councils on drainage authorities were insufficient. Does she still hold that view?

My Lords, we all know that for too long funding and support for local leaders has been fragmented and inconsistent, and the noble Baroness rightly raises the issue of those authorities that have drainage levies imposed on them. We will continue to look at that issue. I did raise it and indeed I have had correspondence since I took up this new role, so we will continue to look at that.

My Lords, the noble Baroness has vast experience on this subject. Has she had the opportunity to study the recently published report by the Institute for Government entitled Fixing Public Services? It sets out in graphic terms the current situation following 10 years where demand for services has increased, but funding has not kept pace with any of it. The report suggests that unless action is taken urgently, some services for very dependent elderly and disabled people and children seriously at risk will reach a state of collapse. Can the noble Baroness assure the House that this will be prevented?

My Lords, neither I nor this Government are under any illusion about the scale of the pressures that local authorities are facing. Successive years of underfunding and increasing demand for services have left councils experiencing significant budget pressures and vulnerable to shocks, impacting the services that they provide to local people—these are key services, as the noble Lord set out. These will all have to be considered as part of the next spending review and I am sure that key adult care and children’s services will be very high on the list. I will look at the report with great interest.

My Lords, I welcome the noble Baroness to her post. Further to the question about spending commitments, can she confirm that the firm commitment in the Labour manifesto, “Labour will not increase taxes on working people”, applies to council tax?

I thank the noble Lord for his question. Council tax increases, of course, are ultimately decided by local authorities, but the Government are committed to keeping taxes on working people and households as low as possible. We will carefully consider the impact on councils and taxpayers before making any decisions on taxes. Decisions on referendum principles will be part of the next spending review process and of course we will seek the views of local government before we take any decisions on those.

My Lords, since the noble Baroness, Lady Thornhill, tabled her Question, I understand that a number of local councils have had spending commitments suspended, including Harlow in Essex, which is now set to lose out on £20 million towards the rebuilding of its town centre. Can the Minister tell me how many councils have had these disappointing letters, and what the Government plan to do to support councils such as Harlow which were relying on these commitments to deliver growth and regeneration that I am sure His Majesty’s Government would want to support?

My Lords, there has to be a short pause while we seek clarity on existing funding commitments, as I said earlier. The Government are fully considering those funding arrangements and I know that a great deal of work has been put in. Many of those projects are aligned with the growth that we want, and we hope to be able to give all local authorities the answers in very short order.

My Lords, the LGA estimates that one in 10 local authorities are on the brink of bankruptcy due to the lack of proper funding by the previous Government. What is the new Government’s policy to avert this disaster?

Under the previous Government, 19 councils needed to seek additional support from the Government to balance their budgets for this year. This Government are committed to ensuring councils have the resources needed to provide those public services. We are already working closely with local government and other departments to understand the specific demand and cost pressures facing them. We urge any council experiencing financial difficulties to approach the department as early as possible so we can help work through a plan to resolve them.

My Lords, councils have many demands placed on them, but a test of how effective the Government will be is whether they can reverse the cuts to cultural and leisure activities, including libraries. This is for the simple reason that they have usually been the first services to be cut.

The noble Lord is a great champion of libraries, culture and arts in this Chamber. The severe pressure that local authority funding has come under in recent years has had a particular impact there. We will want to look closely at whether we can help alleviate those pressures. Libraries provide such a fantastic resource for our communities, as do the leisure facilities that local authorities provide.

My Lords, I declare my interest as a vice-president to the Local Government Association. Will the Government support a pilot in one area, as laid out by the Institute for Government, for a small tax assignment scheme to test what it says will be the positive impact for local areas’ revenue? If not, why not?

I am sure that officials in my department are looking with great care at the report concerned. We will consider all the recommendations in it with due care, as we always would.

My Lords, what plans do the Government have to update the council tax bandings? They were last reviewed in 1991 so are now virtually meaningless.

We know that the council tax banding system has been around for a very long time. In recent years, it has been important to keep the stability of funding for local councils because of the pressure they have been under. We will continue to make sure we get the balance right between local autonomy on funding and the financial pressure on residents. However, long-term funding stability in the wider local government funding system should help that. As for looking at the banding system, that could cause the kind of disruption that would make life even more difficult for local authorities.

My Lords, will the Government look carefully at whether the burden of funding homelessness could be more equitably distributed between councils?

My Lords, homelessness is one of the most serious issues that local authorities have had to deal with; it has caused immense pressure on their finances and immense distress to the people affected by it. This morning, we heard from Oxford Economics and Skipton Group that only one in eight renters can afford to buy property. We must address this and deliver the long-term solutions that are needed. We will develop a new cross-government strategy, working with mayors and councils across the country to get us back on track to ending homelessness once and for all. I hope we can also scrap the Vagrancy Act 1824 and get that off the statute book.