Local Government Finance (England)

Part of the debate – in the House of Commons at 4:20 pm on 10th February 2021.

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Photo of Robert Jenrick Robert Jenrick The Secretary of State for Housing, Communities and Local Government 4:20 pm, 10th February 2021

Among the many acts of heroism that we have seen over the past year, the quiet dedication, hard work and compassion shown by all who serve their communities in local government has truly shone through. I am sincerely thankful for their efforts. I am grateful to them for protecting the most vulnerable, including those who are shielding from the pandemic, and providing unprecedented levels of support through Everyone In to reduce rough sleeping, bringing it to the lowest levels that we have seen for many years. I am grateful to councils for their support for local businesses, enterprises and entrepreneurs; for keeping essential public services going against the odds; and for the part that they are now playing in the success of our national vaccine programme, ensuring that it reaches all communities and paving the way for our recovery as a nation later this year.

From the outset of the pandemic, we promised to do everything within our power to support local authorities during this most unusual and difficult time. Our local government financial settlement shows that we have kept that promise, with a real-terms increase in core spending power and a guarantee that no council anywhere in the land will receive less funding than it did last year. That stands alongside an unprecedented package of covid-19 support this year and next year, totalling more than £11 billion directly to councils and £30 billion in additional help for local councils and their businesses and communities.

The settlement strengthens social care, with councils able to access an additional £1 billion, comprising £300 million from the social care grant and a 3% adult social care council tax precept. It also supports children’s social care, helping councils to provide better services for the most vulnerable children in society, children in care and children with disabilities. Those vital services have experienced severe disruption over the last few months and will no doubt experience further demand as we ease lockdown and move forward as a country.

Balancing the contributions of national and local taxpayers, this settlement gives councils increased flexibility, with a 2% council tax referendum limit for most authorities and an extra 3% for social care authorities, which councils may choose to defer until 2022-23. I can inform the House that many councils, particularly Conservative ones, are indeed doing so. The council tax referendum principles are not a cap, nor do they force councils to set taxes at the threshold level. Councils should and must consider the financial concerns of local residents at this most challenging time, alongside the public’s support for action on keeping our streets safe and providing essential services.

Recognising the vital door-to-door services that councils deliver day in, day out to the most isolated, our settlement provides an extra £4 million to authorities in remote rural areas through the rural services delivery grant, taking the total to £85 million—the highest contribution to the delivery of public services in our rural areas to date. Lower- tier local councils will also receive a new £111 million lower-tier services grant, with main funding allocations for the full range of council services rising in line with inflation.

Finally, we know that the new homes bonus accounts for a considerable part of funding for many councils. We are therefore implementing a further round of the bonus allocations, with the same 0.4% funding baseline as last year and no new legacy payments on the new round. We will reform it over the course of next year to ensure that this significant amount of money is focused on the councils that are keenest to build, build, build and get the homes this country needs under way.

While these measures are providing confidence and stability, we know that councils will continue to face very unusual challenges as a result of covid-19 for quite some time, despite all the success of the vaccine roll-out, so today I am setting out further details of nearly £3 billion in additional covid-19 support for councils next year. We were able to provide certainty to local councils in December on allocations for £1.55 billion of unring-fenced funding, and I am now very pleased to confirm, on top of the funding already provided in the settlement, the final allocations for £670 million of grant funding for local council tax support. This helps local authorities to continue reducing council tax bills for those who are finding it hardest to pay.

We have also provided our published final position on the extension of the sales, fees and charges scheme from April to June 2021, a vital safety net for councils facing lost income as a result of covid-19, ensuring that everything—from the local car parks to our theatres, heritage attractions and all the things that local councils provide and which demand income to keep going—will have that guarantee of certainty and confidence to move forward until at least the mid-point of this calendar year. They will soon receive grant funding reflecting 75% of irrecoverable losses in their council tax and business rates income from 2020-21, with an up-front payment early in the financial year to aid cash flow. In both respects, we have listened to the sector, acted and provided them with the certainty and the resources they need. We made promises and we have kept them, and we are making sure that local councils can continue to deliver for their citizens.

We know that a handful of councils face serious financial challenges—some, it has to be said, due to very poor management, but others due to the exceptional events of the past year. There is quite a broad range, and today we are publishing details of the targeted support that we are providing to four councils unable to balance their budgets without some additional recourse to Government. This aid is provided on an exceptional basis, with these councils being subject to rigorous reviews of their financial positions, their governance and their ability to meet some or all of their budget gaps for the next year without Government funding. Taxpayer support of this kind is never provided lightly, and in return for the increased flexibility afforded to councils next year, we expect sound financial management, with residents shielded from unaffordable increases.

I wish I could say that here, in our nation’s great capital, the Greater London Authority is blazing a trail that others might wish to follow, but, sadly, the opposite is true. I have reluctantly placed before the House today a principle to allow for the Mayor of London’s request to increase council tax by £15 on band D properties without holding a referendum in order to fund transport concessions above the level available elsewhere. This brings the total increase in precept he is seeking from Londoners to nearly 10%. While the final decision on the increases rests with the Mayor, and with the Mayor alone, I would urge him to abandon this ill-judged pursuit of tax hikes and to behave responsibly at a time of great difficulty for Londoners.

We want to unite and level up our councils, as we do the whole of the country, and to build back better from this pandemic and stronger than before. That starts with holding local polls in May this year. We said that further delaying elections would require a high bar, and the huge success of our vaccine programme gives us confidence that we can and should now move forwards. More than ever, people deserve their say on issues ranging from safer streets to the level of council tax, and we are providing £15 million to ensure that our polls are made covid- secure. My Department and the Cabinet Office will do all we can to support local council officers and the brilliant staff and volunteers of polling stations the length and breadth of England with the hard work and challenges that lie ahead. We want to ensure that the process is as smooth as possible and, in particular, that as many schools as possible can remain open.

We know that there are challenges posed by the pandemic, of course there are, and we also know that the scars are likely to take time to heal, but we are not cowed by them. We want to work together to learn from our experiences and to solve long-term problems in local government, because councils will be the thread running through our response to each and every one of these issues. We will empower them to reboot and restart vital public services on which communities depend, from health to justice: making sure that vulnerable children get the care that they need; helping schools to see children returned safely and address lost learning, particularly in our most deprived communities; and increasing funding for social care to help tackle the backlog in assessments while laying the foundations for future reforms and a sustainable future for the sector for decades to come.

As we tackle those issues, we will help councils to grapple with the sharp drops in footfall that we have seen on our high streets, and the knock-on effects for local businesses. Our £3.6 billion towns fund and the urban centre recovery taskforce will ensure that our towns and city centres are renewed and become once again the vibrant places that we love and that we want to see people living, working and shopping in again, and attracting tourists from home and abroad.

Our £900 million getting building fund is integral to this work, kickstarting local recoveries and delivering the next generation of roads, bridges, 5G networks and full-fibre broadband, with more than 50% of the shovel-ready projects already started, creating thousands of jobs all over the country. Our £4 billion new levelling up fund will invest in high-value local projects, regenerating eyesores, upgrading town centres, breathing new life into local arts and culture and, above all, creating and sustaining jobs. We will be setting out more details on that shortly through my right hon Friend the Chancellor.

In each and every one of these endeavours, we see a very strong role for local councils, knowing their communities best and being at the heart of their future economic recovery. We do this while helping councils to seize new opportunities, particularly in technology. We do not intend to return to the way that things were done before by default. As we leave the pandemic, we want to ensure that councils build back better, build better public services and embrace some of the good things that have come out of this unusual period. Councils have rightly embraced meeting and working remotely, and we will build on reforms to digitise our planning system, utilise our local digital fund and ensure that local authorities fully embrace moving more meetings, services and processes online, transforming how they deliver for residents, for their staff and for the country.

We will work with councils to build back better from the pandemic, becoming a more prosperous, greener, safer and more neighbourly country. Local councillors will be a golden thread woven through the fabric of that better country. The settlement that we are debating today provides local councils with the resources that they need to plan for the future. It recognises the role that councils have played every day at the forefront of our response to covid-19, and we thank and salute them for the hard work that they have done on our behalf. This settlement places them at the heart of our national recovery. I commend this motion to the House.