Local Government Finance (England)

Part of the debate – in the House of Commons at 5:24 pm on 10th February 2021.

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Photo of Margaret Greenwood Margaret Greenwood Labour, Wirral West 5:24 pm, 10th February 2021

I begin by paying tribute to the hard work and dedication of Wirral Council workers and Wirral Council throughout the pandemic.

Sadly, financial challenges are nothing new to our local councils. More than a decade of Conservative Government austerity has put immense pressure on our local authorities and pushed many of the services that we all rely on to near breaking point. According to the Special Interest Group of Municipal Authorities, Wirral Council has had its spending power reduced by £124 million, or 30%, since 2010-11. The authority was in a position in which it had to save around £40 million next year, and it has recently been forced to consult on difficult proposals that impact on public services because of the Government’s austerity measures. Other councils up and down the country have also found themselves in extremely difficult positions because of the Government’s actions. In addition—and as a result of the pandemic and measures to combat it—councils around the country face huge financial uncertainty over the next few years and into the foreseeable future.

It is therefore a matter of real concern that the Government have given no clarity over funding levels after March 2022. As the Local Government Association has called for and as council officers in Wirral have emphasised to me, it is vital that the Government provide a multi-year settlement in 2022-23 to put councils on a long-term and sustainable footing. Ministers must also demonstrate meaningful progress towards a solution to the funding crisis in adult social care. Hidden in the fine print of the Chancellor’s November spending review was an assumption that councils would raise council tax by up to 5%. Surely the Chancellor must have been aware that such a move would place a significant financial burden on households, particularly those in hardship, in a year of economic uncertainty.

Our country has had the worst recession of any major economy, and families up and down the country are already worried about paying the bills and putting food on the table. A decade of irresponsible choices by the Conservatives has had an impact on household finances, even before covid hit. A quarter of UK households went into the covid-19 crisis with less than £100 in their bank; 3.6 million people were trapped in insecure work; and the UK was one of the most unequal countries in Europe. To make matters worse, the Government plan to cut universal credit by £1,000 a year, despite campaigning by Labour and numerous charities on this issue. In November last year, a coalition of more than 60 organisations, including the Joseph Rowntree Foundation, Child Poverty Action Group and the Trussell Trust, said that this cut would be “a terrible mistake” and that,

“The removal of this support would not only be immoral, but it will also damage the UK’s recovery” from the pandemic.

The Office for Budget Responsibility estimated at the time of the 2020 spending review that the number of unemployed people would surge to 2.6 million by the middle of this year. For the Government to undermine council funding to such an extent that local authorities have to increase council tax to continue paying for crucial services such as adult social care is nothing short of shameful.

Ministers should address the crisis in social care and come forward with the necessary funding. It is disappointing that the public health grant for 2021-22 has still not been announced, leaving councils with yet more uncertainty. I have made this point previously in the House, but it is worth making again: the Government must increase the public health grant for next year. The Health Secretary told me in November that the Government would increase it, but that is not what the Treasury said; it said that the public health grant would simply be maintained. The Association of Directors of Public Health has said:

“In the current circumstances, and following years of cuts to public health, it is completely incomprehensible that the Government is not increasing the public health grant” to local authorities next year. I urge the Minister to work with colleagues across the Government to ensure that local public health teams get the funding they need to continue to meet their public health responsibilities.

In March last year, the Government told more than 300 council leaders that they stood ready to do

“whatever is necessary to support councils in their response to COVID-19.”

However, they later backtracked and said that councils would not be fully reimbursed for costs during a pandemic and that they should not

“labour under a false impression that what they are doing will be guaranteed funded by central government”.

This is a complete betrayal of our communities and the councils that serve them by the Government at this extraordinarily difficult time. Instead of putting councils in the position of having to increase council tax, the Government should stand by their pledge to do whatever is necessary to support councils and give them the funding they need to run local services. The Government should also give local authorities the confidence that they need to plan ahead in these desperately uncertain times by giving them clarity over longer-term funding.