Skip to main content

Local Government Funding Model

Volume 603: debated on Monday 14 December 2015

I will shortly be presenting to the House the local government financial settlement for 2016-17. I will set out how we will deliver a sustainable settlement for that year and later years and pave the way for future reforms to fund vital services, promote growth and efficiency and devolve power and resources, just as local government has requested.

Research by the Joseph Rowntree Foundation shows that since 2010-11 the areas of greatest need in England have seen the largest cuts in local government funding, breaking the historic link between the amount that a local authority spends per head and local deprivation levels. Over the past five years, councils such as Wirral have had severe cuts to their funding, whereas other areas have seen an increase. Forecasts suggest that Wirral will lose at least £126 million by 2020. What will the Government do to ensure that funding for local authorities genuinely reflects the needs of the people who live in the area?

The hon. Lady should wait to see what the settlement has in store, but she should know from the past few years that Wirral’s spending power, at £2,240 per dwelling, is 7% above the national average. Her council has reserves of £80 million, a third higher than they were in 2010. It is important that she bears that in mind.

20. People in rural areas such as my constituents pay an average of £80 more in council tax than those elsewhere, yet they receive about £130 less in central Government funding, which has an impact on local services. Does the Secretary of State agree that it is time to look for a fairer funding formula for all taxpayers? (902683)

I recognise that the cost of delivering services is higher in areas with a sparse population, for obvious reasons. The rural services delivery grant was introduced to reflect that extra cost, and it has since been increased. I will obviously have to bear that in mind when we assess what is needed in the financial settlement.

It is a year since a National Audit Office report found that the Department for Communities and Local Government had limited understanding of local authorities’ financial sustainability. Does the Secretary of State understand the unsustainability of high percentage, across the board cuts in low tax base authorities, and the fact that the complete removal of revenue support grant and the retention of all business rates without national redistribution will drive those authorities into the ground?

I would have thought that the hon. Lady, as a former council leader, would be in a position to welcome the spending review settlement, which not only provided protection in cash terms for the resources available to local government over the four years ahead but did what local government requested and made money available for the care of the elderly through the social care precept. I would have thought that her experience caused her to welcome that.

Will the Secretary of State ensure that the settlement reflects the pressures on top-tier authorities from adult social care costs, and particularly that it restates the opportunities for greater integration of health and adult social care spend, as supported by, for example, the London Borough of Bromley?

My hon. Friend is absolutely right. In advance of the spending review I had a communication from the Local Government Association estimating that the gap, if unaddressed, would be £2.9 billion. In the spending review settlement the Chancellor allocated £3.5 billion, to reflect the need to help our elderly population. That was a significant result for local government. As we come to make the settlement for individual authorities, we will ensure that that is in the hands of local people.

At least 340 unaccompanied child asylum seekers disappeared in this country between January and September, which is twice as many as did so in the calendar year before. That leaves them at terrifying risk of abuse, sexual exploitation and radicalisation. Councils say that funding cuts mean they do not have the resources properly to protect these incredibly vulnerable children, so why are the Government going ahead with a further cut to the unaccompanied child asylum seeker grant?

These are important statutory responsibilities of local authorities and it is vital that they discharge them. Through the spending review settlement, the Chancellor has made available funds to local government that make sure that the cash settlement by the end of the spending review period is the same as it is at the beginning. That is a positive result for local government.