Local Government Finance (England)

Part of the debate – in the House of Commons at 5:16 pm on 10th February 2021.

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Photo of Rebecca Long-Bailey Rebecca Long-Bailey Labour, Salford and Eccles 5:16 pm, 10th February 2021

I certainly echo the thanks that have been given to our amazing public sector workforce during the pandemic. In Salford they have been nothing short of outstanding.

The charity StepChange has found that the number of people who are in severe problem debt because of the covid crisis has risen to 1.2 million—the figure has nearly doubled since March—with a further 3 million at risk. It warns that we are facing a new and unprecedented debt crisis unless the Government implement a clear, preventive plan to tackle it.

Worse still, the Office for Budget Responsibility estimated at the time of the 2020 spending review that the number of unemployed people would hit 2.26 million by the middle of this year. Three million people have been completely excluded from any coronavirus income support, leaving them in dire financial situations. Along with proposed cuts to universal credit, this will contribute to one of the worst recessions in our economic history. I say to the Secretary of State that in effect forcing people to pay more in council tax at this time, instead of increasing the overall level of funding for local authorities, is not just morally reprehensible; it makes no economic sense, and it will not pave the way to recovery, as he says it will.

Already Salford has experienced a council tax collection deficit of £9.1 million this year, which is creating financial pressures for future budgets. The fact is that people simply do not have enough money to pay for it. There is also a £19.3 million budget deficit in business rate revenue due to covid-related business rate relief and a forecast reduction in rateable values. With covid alone, we have seen our budgets hammered, but the big financial damage was, sadly, inflicted by Government cuts long before covid hit.

Of course, the Government will wax lyrical about how they have provided more money to local government and ring-fenced pots of money for social care and covid, but that is strictly not true. At least 12 authorities that are in or around a section 114 position—the equivalent of bankruptcy for local authorities—are in talks with the Ministry of Housing, Communities and Local Government. Indeed, Richard Watts, the chair of the resources board of the Local Government Association, said on Monday that

“councils had seen a £15bn cumulative cut in their Whitehall grants since 2010.”

Also since 2010, £211 million has been taken out of Salford’s revenue budget—that is 53% of core funding from central Government being taken away from the city of Salford.

Despite all that, and in the face of such adversity, we have one of the most forward-thinking and progressive councils in the UK. The council has stretched every sinew and dipped into its reserves to set out a no-cuts budget this year. But that is just to break even. As the UK’s 18th most deprived authority, and with Salford seeing cuts 35% worse than the national average, forced increases in council tax and no commitment from the Government to increase the overall level of funding that we receive, the future is not just uncertain but unsustainable. This is not the levelling up that we were promised; it is levelling down.

Let me be clear to the Secretary of State: his proposals are not some grand Government efficiency project to streamline our public services and provide us with local revenue-generating powers; they will exacerbate regional inequality, cause further financial misery for people across Salford and steal from their future. His proposals steal the right to decent services, steal the right to a vibrant local economy and steal the right to decent social care. What we need from the Secretary of State today is Government funding, not austerity by stealth.