Council Tax: Government’s Proposed Increase

Part of the debate – in the House of Commons at 4:43 pm on 25th January 2021.

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Photo of Shabana Mahmood Shabana Mahmood Labour, Birmingham, Ladywood 4:43 pm, 25th January 2021

When the Secretary of State said that the Government stood ready to do whatever is necessary to support councils in their response to the pandemic, council leaders at the sharp end of responding to the pandemic were entitled to take him at his word, and they were right to do so. It is an absolute betrayal that the Secretary of State has since gone back on his word and that councils face a total shortfall across all local authorities of £2.6 billion. We can compare that with the billions the Government have wasted during this crisis on contracts handed out to people with strong links to the Conservative party and people who have been donors to the Conservative party. Those contracts have failed to live up to what they were supposed to be delivering, all while local authorities face such a huge shortfall. It is unconscionable.

In Birmingham, we face a shortfall of £207 million, and the Government have not even pledged half of that amount. Over the next two years, our council is expecting an additional spend of £55 million on adult social care, £11.4 million on children’s social care, £9.5 million on education and £2.3 million on PPE. Which of those, I ask the Secretary of State, is superfluous to requirements? Which of those is an add-on or a waste of money? None of them—they are part of the statutory responsibilities of our local government. In Birmingham, we are expecting a total loss of £44 million in business rates and £20 million in our council tax receipts. Given the state of the economy, does anyone seriously think that business rates and council tax receipts will recover quickly, if at all? The changes that are occurring to the high street, as I speak, mean that the hight street is changing beyond all recognition and some of its revenue will never return to local government.

The expectation of a 5% increase in council tax implicit in the Government’s own numbers is morally wrong, given the promises that the Government made at the start of the pandemic, but it is also wrong that the Government continue to pass the buck on funding for local government. For a decade they have succeeded in devolving the blame for their cuts, but they know that the biggest factor that is driving up expenditure of local government is adult social care. We have an ageing population, and that brings with it increasing costs, much of which are currently picked up by council tax payers. This method of funding is simply not sustainable.

The pandemic has brought into clear focus the parlous, frighteningly fragile state of our adult social care. It is a dereliction of duty that the Government have for 10 long years failed to come up with a sustainable solution to the adult social care crisis, preferring to let councils and families muddle through. That cannot continue. I urge the Government to change course and come up with fairer, more sustainable funding for local government.