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Local Government Finance

Part of the debate – in the House of Commons at 3:36 pm on 5th February 2020.

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Photo of David Simmonds David Simmonds Conservative, Ruislip, Northwood and Pinner 3:36 pm, 5th February 2020

I am grateful, at this point in the debate, for my experience in local government, where a three-minute limit is standard when speaking in chambers. Mindful of the time, I wish to focus on a key point for Ministers to consider as we welcome the consultation.

The Local Government Finance Acts of 1988 and 1992 are the main underpinnings of what happens in this country when it comes to local government finance decisions. Local authorities’ duties are driven largely by the legislation passed in this House over the years, including the Health and Social Care Act 2012, the Children Act 1989, the Children (Leaving Care) Act 2000 and many others. We can all recognise that over many years the funding level has not kept pace with the legal obligations imposed on local authorities by the duties agreed in this House. It is therefore welcome that the Government are beginning to think of a funding formula that is fair in that it addresses the fact that, in many parts of the country, funding now lags significantly behind the legal obligations that local authorities have to deal with.

My own constituency of Ruislip, Northwood and Pinner is no exception in having significant numbers of elderly residents who are asset rich but cash poor, for whom the local authority has a legal duty to provide social care but who would not be recognised in any of the funding formulae we saw under the previous Government, which prioritised poverty in general as opposed to local authorities’ specific duties arising out of their obligations.

When they take forward the consultation, I urge Ministers to consider the broader picture of local government finance, because the core grant—the revenue support grant, as was—is only a small part of that picture. We have heard Members mention council tax and business rates, but of course elements such as the housing revenue account are a significant factor in local authorities’ ability to deploy resources. Indeed, one challenge we have seen is that the benefit of the new homes bonus has in many areas accrued to district councils, while the costs of providing adult and children’s social care services has to be met by counties. That is one reason why the pressure has become so acute.

Across the picture, we see a situation in which local government resources are under significant pressure. More flexibility about how we deploy those resources and more recognition of the innovation and entrepreneurial approach that many local authorities have brought to the issue would be welcome, as would an approach that recognises that, given that resources are tight, we must prioritise the meeting of local government’s core legal obligations to our citizens, which is absolutely a fair approach to dealing with local government funding. I commend to the House the approach that the Government have taken.