Local Government Finance (England)

Part of the debate – in the House of Commons at 4:59 pm on 10th February 2021.

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Photo of Ben Everitt Ben Everitt Conservative, Milton Keynes North 4:59 pm, 10th February 2021

It is a pleasure to speak in a local government finance debate, because it is an area close to my heart. I want to begin by echoing words that have been spoken on both sides of the Chamber: councils have absolutely played a blinder during the pandemic. We have asked a lot of our local authorities at every level, and they have consistently delivered in the most challenging circumstances. Those circumstances are challenging not just because of the pandemic, but because of the financial situation councils have faced over the past few years.

The structure of the settlement between local and central Government needs to be reformed. There is something fundamental about the revenue support grant and financial settlement that needs to be reformed. Put bluntly, it is broken. We cannot keep bailing it out year after year. The fair funding review, which was set to come in about 18 months ago, and then again this year, was a very good way of going about that reform, and I commend the Department for the work it has done to identify and address the issues. It is unfortunate that emergency measures had to be put in place during the pandemic and that we did not get to the stage we needed to in implementing the review.

The problem is that it is about much more than simply tweaking the formula. We need to look at the whole relationship between where revenue is raised and where it is spent, and that involves looking much wider than simply at council tax, formula grant and the new homes bonus, which has been such a lifeline to councils over the last few years. We need to look at how we reform business rates. Some in this Chamber have argued for 100% retention of business rates, and there is definitely an argument for that, although it might make some London authorities richer than some small European countries. Some might see that as no bad thing, but we need to make sure that there is an equitable distribution of business rate revenue that supports our wider goals.

It is those wider goals that I want to spend a couple of moments talking about. The first is levelling up and the second—not to sound like a broken record from the Housing, Communities and Local Government Committee—is of course social care. Let us take levelling up first. We cannot level up until we reform the way we distribute financial support for house building. At the moment, we are supporting houses in areas where the markets need it; what we need to do is recognise that housing is part of the solution to levelling up. We have to make a choice: are people going to live in an area, or are we going to put the jobs there? It is about pump-priming, and we need to make a call on investing in housing in the former red wall areas and other areas that need levelling up. I am passionate about that, and I know that the Minister and the Secretary of State are aware of that.

We also need to recognise that we do not level up without providing sustainable enterprise—jobs for the people who live in those houses. We need to make sure that we are not just looking at this from a departmental point of view, but working across Government to realise this country’s ambition to be truly one nation and a global Britain in a newly connected world.

Looking specifically at the problems we face in the formula grant and the amount allocated to local government to spend on services, the elephant in the room is of course social care. Reforming the social care element of funding—how the revenue is raised and how it is distributed —is urgent now. It is the one big thing we need to fix. There are many solutions, and I believe there is cross-party support for many of them. We are in the middle of dealing with a pandemic—in fact, no, we are hopefully near the end of dealing with a pandemic—and now is the time to reach across the aisle, to look at how we fund social care in a sustainable way and to take these things forward in a non-partisan manner.