Local Government Finance (England)

Part of the debate – in the House of Commons at 5:04 pm on 10th February 2021.

Alert me about debates like this

Photo of Diana R. Johnson Diana R. Johnson Labour, Kingston upon Hull North 5:04 pm, 10th February 2021

Thank you, Mr Deputy Speaker. I am very pleased that both the Secretary of State and the shadow Secretary of State opened the debate by paying tribute to the vital role that local government has played in our national response on covid. I would like to personally thank all the local government officers in Hull for their amazing work over the past 12 months in supporting our community. In my view, local government must be central to any serious plan for levelling up that the Government bring forward, but sadly, in Hull over the past decade it has felt more like levelling down.

The Chancellor, who was previously so adept at locating the forest of magic money trees, has made the deliberate and calculated political decision to underfund local government by around £2 billion and to invite local councillors to make up that funding shortfall by levying a large council tax increase of up to 5%. That would be around 4% above the current rate of inflation even before the fire and police precepts were added. I find it disgraceful that the Chancellor is playing political games at a time of a national public health and economic crisis, devolving blame and not power, and yet again providing only a sticking plaster solution to the issue of social care, despite the Prime Minister’s promises. As the Chair of the Select Committee, my hon. Friend Mr Betts, said, there was a joint report from the Health Committee and the Local Government Committee a few years ago—I was a Member of the Health Committee at the time—that set out a way forward. It is unfortunate that we still have not had a response from the Government on those very sensible proposals.

It is not just that local authorities in the poorest areas have had the deepest funding cuts since 2010. The areas that those councils represent also have the poorest families who have been hardest hit by the decade of austerity and then by the covid crisis over the past year, as unemployment, which is always higher in those areas, has risen sharply. Many of those families are currently having to choose between heating and eating, and they simply cannot afford the large increase in council tax made in Downing Street. The council tax is a regressive tax that hits hardest the low-income working families who are just outside the scope of benefit entitlement, so a 5% council tax hike would be a major act of austerity targeted at those families at the worst of times.

In Hull, a 5%-plus council tax increase would raise little for local services such as adult social care and children’s services, which are already under huge pressure; it would instead cause disproportionate misery for families who simply cannot afford any extra tax burdens at this time. Council tax increases also raise less for services in disadvantaged and deprived areas than in wealthier areas. A 1% council tax hike in Hull who would bring in around £883,000. In the East Riding, our wealthier neighbour, that same 1% would bring in £1.7 million. So a 5% council tax increase in Hull would generate £4.4 million, but that would not close the budget gap of £13 million that Hull City Council will face in 2022-23. Given the 80-seat Tory majority, this council tax bombshell will no doubt be forced through the House tonight. It will then fall to local councillors to make the unenviable choice of whether to pass on this austerity measure made in Downing Street to low-income working families to maintain services, or to reject this austerity made in Downing Street and make further cuts to services. This puts councils between a rock and a hard place.

In conclusion, it is worth reflecting once again, in this centenary year, on the events in Poplar in 1921, when Labour borough councillors rejected the idea that the poor should keep the poor and refused to impose austerity on the poorest families. They went to prison for it. Their victory secured equalisation of the rates—a fairer system of local government finance that lasted decades, apart from a few episodes such as the poll tax, until the Tories and the Lib Dems in the 2010 coalition Government started year by year to dismantle the idea of fairer funding for poorer areas. We now face the renewed need to battle for a fairer deal for areas such as Hull and other disadvantaged areas in our country, and for funding that works for working families in those communities.