Local Government Finance (England)

Part of the debate – in the House of Commons at 6:56 pm on 10th February 2021.

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Photo of Luke Hall Luke Hall Minister of State (Housing, Communities and Local Government) 6:56 pm, 10th February 2021

I thank my hon. Friend for his question. I will come on to talk about funding reform in a minute and perhaps try to address that point.

Importantly, we are giving councils the flexibility to defer rises using the adult social care precept to next year if they think that local circumstances dictate that that should be the case. That is of course a decision for them. Vitally, as my hon. Friend Peter Aldous pointed out, we are providing councils with up to £670 million of new funding to help them to reduce council tax bills for those who are least able to pay.

The referendum threshold that we have set strikes the right balance between allowing councils to raise income to deliver the services they need and making sure that residents have the final say over any excessive council tax rises. We trust councils to make the right decisions on council tax. I am afraid the Labour party cannot even persuade its own councils of that—they are constantly writing to the Secretary of State and me to ask for the caps to be removed completely. The long-standing policy of the Labour group on the LGA is to see the caps scrapped altogether.

My hon. Friend Duncan Baker made the fair point, raised by councils with particularly seasonal economies during the consultation on the settlement, that they could have lost out because of the proposed structure of the sales, fees and charges scheme for the first quarter of next year, as it might not best account for the impacts of the pandemic on their income from April through to the end of June because usually they receive a large proportion of their annual income in that period, perhaps because of car parking and their having seasonal or coastal economies. We have listened to that point, and I thank my hon. Friend for raising it and the many councils that raised it during the consultation. We will allow them to use their seasonal profile so that they are able to claim a larger proportion of their losses in the April to June quarter of this coming financial year and are therefore better protected from the income losses because of covid-19. That is one of the many ways in which we are trying to support councils as we ensure that they have the resources they need to deliver first-class funding services.

A number of Members, including my hon. Friends the Members for Milton Keynes North, for Sedgefield (Paul Howell), for Waveney and for Windsor (Adam Afriyie), raised the possibility of future funding reform. I can confirm to them that we on the Government Benches still believe that we need an updated and fairer method of distributing funds among local government. This year, of course, we have had to concentrate on supporting councils through the pandemic—we did not think it was right to use this time to engage in detailed conversation about local government finance reform—but I absolutely reassure them that we are committed to the principles of reform and to making sure that we put money where it is needed most. Once we get through this pandemic, we will return to the priorities for financial reform. I am happy to have conversations with councils such as Windsor and others and to listen to their concerns if they have tried, historically, to do the right thing by keeping taxes low and want to understand their options for the future.

My hon. Friend the Member for Sedgefield talked about the fact that he wants to make sure that in any funding reform, rural funding is received in areas that have a large urban population centre but rural fringes. He is right to raise that issue and I am happy to discuss it with him.

Several colleagues raised rural services, and they are right that we have increased the rural services delivery grant this year from £81 million to £85 million, which its highest ever level. We absolutely recognise that there are cost pressures—whether that is the need to drive long distances for refuse collection or to service more hubs across a larger geographic area—on the delivery of services in rural communities.

My hon. Friend Bob Seely raised the individual circumstances that his constituents face. I am delighted that we are finding a way forward to work with his local authority to ensure that it can help to build the evidence case on the relative challenges facing the Island because of its separation from the mainland, with a particular focus on the impact of the local government finance system.

We are backing local government all the way with the necessary funding, both now and into the future, with a 4.6% rise in core spending power, £3 billion to help councils fight and recover from covid-19 and flexibility for councils to raise revenue, while also giving people the final say on excessive council tax increases. From our future high streets fund to our towns fund, the troubled families programme and increased funding to tackle domestic abuse and support rough sleepers and get them off the streets, we are backing councils, which are at the forefront of our shared recovery. I hope Members from all parties recognise the critical importance of passing the settlement and giving local government the support and confidence they need to plan for the brighter days ahead. I commend the settlement to the House.

Question put and agreed to.


That the Local Government Finance Report (England) 2021-22 (HC 1200), which was laid before this House on 4 February, be approved.


That the Referendums relating to Council Tax Increases (Alternative Notional Amounts) (England) Report 2021-22 (HC 1201), which was laid before this House on 4 February, be approved.—(Michael Tomlinson.)


That the Referendums relating to Council Tax Increases (Principles) (England) Report 2021-22 (HC 1202), which was laid before this House on 4 February, be approved.—(Michael Tomlinson.)