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Council Funding

Volume 742: debated on Monday 4 December 2023

18. What recent assessment he has made of the effectiveness of assessments of relative needs at ensuring the adequacy of council funding. (900453)

We are in close and regular contact with sector representative bodies and councils from across the local government family to monitor budgets and service delivery. I have had many discussions with those bodies and organisations since my appointment. As hon. Members will know, the final local government finance settlement for 2023-24 made available up to £59.7 billion for local government in England, an increase in core spending power of up to £5.1 billion, or 9.4%, in cash terms on 2022-23. The Government will continue to look in the round at local government spending ahead of fiscal events, and we will be announcing funding for next year’s finance settlement later this month.

May I take this opportunity to wish Mr Speaker a speedy recovery?

I thank the Minister for his response, but I say respectfully that I do not find it satisfactory. I declare an interest as a proudly active Somerset councillor. Councils provide essential services, such as adults’ and children’s social care, yet increasing costs in social care, alongside inflation, mean that many councils around the country are struggling to provide adequate care. I must warn him that, without action, lives will be foreshortened. The cost of providing services is higher in rural areas than urban areas, yet rural residents will receive 13% less per head in social care support. Will he reassure me that the forthcoming fair funding review will address the unequal way rural councils are funded?

The hon. Lady, who is my constituency neighbour in some respects, makes an important point in a serious way. I concur very much on the seriousness of the issue and the challenge that it is presenting to our upper-tier authorities. As I said, we will of course look in the round at all the pressures being placed on local government to see what we can do to help. She rightly mentions the rural services delivery grant, which I have championed. It is very much in my mind to see what we can do during the settlement to address the issue that she raises of the cost disparity of delivering quality services in rural settings, particularly where populations are sparse.

Under the current relative needs assessment formula, the poorest fifth of councils receive about 10% below their assessed needs, while the richest fifth get 15% above them. That is hardly levelling up, is it, Minister? A review of the current formula, which is over 10 years old, has been repeatedly postponed. Meanwhile, local authorities such as Blackburn with Darwen Borough Council could be missing out on thousands or perhaps millions of pounds, which could deliver much-needed services in our town. When will the review finally take place?

The hon. Lady raises an important point about the formula. I am tempted to say that if the spectre of covid had not, quite rightly, taken up a huge amount of bandwidth in both central Government and local government, we might have been in a different place. We can spend an awful lot of time discussing the minutiae of the formula, and there will be a time when that needs to be done. The crucial task that we have in hand at the current time is to play the cards that we have been dealt, to deliver a settlement that works for local government and to deliver the quality and range of services that all our communities, irrespective of where they are in the country, have a legitimate expectation to receive.

We are not making terribly fast progress this afternoon. Could everyone who has their question written down cut out the bit at the beginning and just ask the question? This is not speech time; it is Question Time, so let us just have questions. If we get short questions, we can get short answers, too.

Local government finance has been front and centre of our local news given the stark situation in Nottingham. The Minister will know about Nottingham’s unique circumstances following decades of poor decisions and mismanagement, but it will not be lost on him that the whole sector is under significant pressure. I know that he will make the case about finances to the Treasury, but the Government could help significantly by allowing more flexibility in the system. Will he work with colleagues around Government to help us to remove ringfences, particularly in areas, such as public health and transport, in which we could make better decisions if we had more freedom to do so?

I am not going to give a running commentary on the situation in Nottingham, save to say that my right hon. Friend the Secretary of State and I keep it under close review. On my hon. Friend’s wider point about trust and liberalisation, his call falls on open ears. I am happy to work with anybody who wants to ensure that our local authorities can stand up and deliver, as long as they accept accountability and responsibility for the decisions they take. The Government have a proud record on working in a relationship of trust with our local councillors and councils in order to deliver for people up and down the land.

In 2018, Tory-led Northamptonshire County Council issued a section 114 notice—as close as a council can come to declaring itself bankrupt. Since then, under this Conservative Government, we have seen a further eight councils from across the political spectrum do exactly the same. In September, the credit agency Moody’s warned that more local authorities will

“fail over the near term”

due to high inflation, interest rates and service demand. By the Government’s own assessment, how many more councils are at risk between now and budgets being set next year?

I welcome the hon. Gentleman to his place and echo the remarks of my right hon. Friend the Secretary of State; it is great to see him back on the Front Bench.

The hon. Gentleman raises an important point. Nobody is going to doubt that section 114 is a serious issue. As I have said to the Local Government Association and others, I do not think it is right for us to name and shame, point the finger or assign blame. We are intent on working with councils that have already alerted us to see what we can do to help, and on working alongside councils that have concerns to ensure they do not fall into that situation. I am not going to give a running commentary on that, save to make this pledge: we will work with those councils to ensure that they can continue to deliver for their voters.