Local Authority Finances

Housing, Communities and Local Government – in the House of Commons at 12:00 am on 30th April 2018.

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Photo of Jeff Smith Jeff Smith Opposition Whip (Commons) 12:00 am, 30th April 2018

What assessment he has made of the financial sustainability of local authorities in 2018-19.

Photo of Rishi Sunak Rishi Sunak Parliamentary Under-Secretary (Housing, Communities and Local Government)

Local government will have access to more than £45 billion in core spending power in this financial year. In addition, local authorities estimate that they will keep around £2.4 billion in business rates growth.

Photo of Jeff Smith Jeff Smith Opposition Whip (Commons)

I watched the Secretary of State’s impressive and moving speech in an Adjournment debate last week, and I know that the whole House will be pleased to see him in good health and back in his place. However, he is going to have to do better than his predecessor at supporting local government, because councils across the country are in crisis-management mode. They are raiding reserves to support revenue expenditure, and that is simply not sustainable. As Tory councils go bust, will he join me in congratulating Manchester’s Labour council on its excellent financial management in the face of some of the harshest and most unfair Government cuts faced by any council in the country under the Tories and the Liberal Democrats?

Photo of Rishi Sunak Rishi Sunak Parliamentary Under-Secretary (Housing, Communities and Local Government)

I hope that Manchester is willing to thank this Conservative Government for backing it with the resources it needs: £13 million in housing infrastructure funds, £30 million for adult social care and, indeed, a business rates pilot that is delivering £20 million, benefiting businesses across Manchester. Those are the actions of a Conservative Government who are delivering for people across the country.

Photo of Neil O'Brien Neil O'Brien Conservative, Harborough

If Leicestershire was as well funded as London’s Camden Council, it would be £350 million a year better off. Does the Minister agree that the only way of making good councils financially sustainable is to have a fair funding formula, with transparent formulae and up-to-date data? Will he look closely at the Leicestershire model for bringing that about?

Photo of Rishi Sunak Rishi Sunak Parliamentary Under-Secretary (Housing, Communities and Local Government)

I could not agree more, and it was a pleasure to meet his local council to understand its model. It has a lot to commend it, and we will consider it as part of our fair funding consultation.

Photo of Emma Hardy Emma Hardy Labour, Kingston upon Hull West and Hessle

I am pleased that Labour’s Hull City Council rejected the Secretary of State’s predecessor and the local Liberal Democrat councillors’ proposal to spend all its reserves, because we have seen in Northamptonshire how badly that can go wrong. Does the new Secretary of State accept that spending the reserves is an incredibly bad idea?

Photo of Rishi Sunak Rishi Sunak Parliamentary Under-Secretary (Housing, Communities and Local Government)

It is worth pointing out that council reserves across the country have actually increased over the past few years and that it is of course for local authorities to decide what prudent level of drawing down may be possible in any given year.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

The previous Secretary of State was minded to put commissioners into Northamptonshire County Council. Will the excellent Minister update the House on when that may happen and by what method the House will be notified?

Photo of Rishi Sunak Rishi Sunak Parliamentary Under-Secretary (Housing, Communities and Local Government)

I thank my hon. Friend for his question; I know that he is following this matter carefully, as are his colleagues from across Northamptonshire. The Department and the new Secretary of State will consider all the representations received over the past couple of weeks, and we will be making an announcement shortly, most likely through a written ministerial statement.

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee

I wish the Secretary of State all the best in his new role and for his future health.

Despite the figures that the Minister has given, the Local Government Association says that there is a £5 billion funding gap in local government finances from 2020, and the National Audit Office says that the position is financially unsustainable. Will he therefore look carefully at the Housing, Communities and Local Government Committee’s recommendation about business rate retention? When business rate retention changes from 50% to 75%, instead of using that to cut public health grants and other grants, we say that local authorities should be allowed to keep the extra money so that they can properly meet the rising demand for social care for the elderly, for looked-after children and for people with disabilities.

Photo of Rishi Sunak Rishi Sunak Parliamentary Under-Secretary (Housing, Communities and Local Government)

It was a pleasure to work with the hon. Gentleman’s Committee, and I look forward to reading its report in detail—I thank the Committee for its work. As for the quantum of funding, he tempts me to pre-empt the results of the spending review, which is due next year. That will be the time to consider his point.