Local Government Finance (England)

Part of the debate – in the House of Commons at 5:49 pm on 10th February 2021.

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Photo of Peter Aldous Peter Aldous Conservative, Waveney 5:49 pm, 10th February 2021

The comments I shall make are provided from the perspective of county areas, and I provide them both as an MP in the county of Suffolk and as chairman of the county all-party group. It is to be welcomed that the Government have listened to the concerns of county councils, including Suffolk County Council, and the County Councils Network, and have used the local government funding settlement to provide further funding to councils in recognition of the additional cost pressures they have absorbed as part of their response to covid-19, at a time when the pandemic is also putting enormous strain on their income. That said, there is a significant funding gap that predates the pandemic that remains, like an elephant in the room, which the settlement has not addressed. This can be properly tackled only by completing the fair funding review.

Shortly before the announcement of the spending review and the provisional settlement, the County Councils Network, representing 36 English local authorities serving county areas, published the results of its autumn budget survey. It showed that for 2021-22 only one in five of its member councils were confident that they could deliver a balanced budget this coming year without dramatic reductions to services. In that context, the settlement and the further announcement that the Secretary of State has made today are to be welcomed, as they head off this nightmare and provide some certainty by ensuring a roll-over of all existing grants for councils, alongside some additional resources to meet the underlying pressures on council budgets that predated the impact of covid-19. However, this is only temporary respite; councils still face a significant funding gap that they will need to close next year.

The local tax income guarantee scheme is to be welcomed, as it provides essential support for local authorities suffering losses in tax income in 2020-21. As a result, councils will be able to deliver balanced budgets in 2021-22, without dramatic reductions to services. However, it must be pointed out that the scheme is less favourable for council tax losses than for losses in business rates. As county councils receive a much higher share of council tax income compared with their share of business rates income, county councils will be disadvantaged.

This settlement gets us through an incredibly challenging and highly unusual time for local government, but it does not address that elephant in the room: the funding gap that predated the pandemic. It can be tackled only by implementing the fair funding review, which has the potential to deliver fairer settlements for councils all around the council, be they rural or metropolitan, be they from the north, the south, the west or the east, and for coastal communities such as Lowestoft and Waveney. I therefore urge the Minister to confirm in his summing up that a final consultation and indicative allocations under the new formula will be published this year, in 2020-21, so that the review can be implemented in 2022-23.