We need your support to keep TheyWorkForYou running and make sure people across the UK can continue to hold their elected representatives to account.

Donate to our crowdfunder

Local Government Finance Settlement - Statement

Part of the debate – in the House of Lords at 6:15 pm on 19th December 2017.

Alert me about debates like this

Photo of Lord Shipley Lord Shipley Liberal Democrat 6:15 pm, 19th December 2017

My Lords, I remind the House that I am a vice-president of the Local Government Association.

The key test of this Statement is whether the provisional finance settlement will alleviate the general funding pressures facing local councils. I think that the answer to that question is: hardly at all. As the letter from the Communities Secretary accompanying the Statement explains, the resources available for local government will rise from £44.3 billion in the current year, 2017-18, to £45.6 billion in two years’ time, 2019-20. This represents an increase well under the current rate of inflation and does not reflect rising demand to the extent that it should. In recent years, pressures have grown significantly because of year-on-year underfunding. In the end, the question is how much is local government actually receiving to spend overall, and not simply how much is it going to have over the next two years? Nevertheless, I welcome the extra support allocated for rural services and the thinking on the new homes bonus and negative RSG. However, I hope the Minister will be able to say a further word about government thinking on business rates and what their ultimate objective is.

As I understand the Statement, there is to be an extension to the number of 100% business rate retention pilots. At the same time, all local authorities will be able to keep more of their business rate income, equivalent to 75% overall in 2019-20. Alongside this, there will be a new system of fair funding—or at least I assume that that is the objective. That will be introduced from 2020-21. For the new system to succeed it will require redistribution to reflect needs and resources. Will the Minister say a further word about what the Government are trying to do? Are they trying adequately to reflect needs and resources, or are they aiming at 100% business rate retention? If the latter, where will the support needed for poorer authorities come from?

We have heard about the pressures on children’s and adult social care. There is an issue of principle here. This time last year, I said that council tax should not be used to make up deficits in resourcing, particularly as demand rises in children’s services and adult social care. I do not understand why it should take 15 months from the announcement in March this year of some extra central funding for adult social care to the production of a Green Paper in the summer of next year to discuss the problems of adequate funding for adult social care. I think that the problem is much more urgent than that.

To take another example of things happening too slowly, the 20% increase which is to be permitted for planning fees was debated in your Lordships’ House many months ago. There is a demand now for additional planning expenditure, so I wish government could work a bit more quickly in dealing with some of the real problems on the ground.

There is a question about council tax referendum principles and the right of councils to increase council tax by the rate of inflation without a referendum. I would prefer that there were no referendum system at all and that local authorities were freed up to make the decisions they think are right in their area. In the end, they will face the verdict of voters through the ballot box. What is happening is that the Government are increasing council tax further. As I understand it, an extra 1% is to be permitted without a referendum so that, in practice, the rate of inflation is met at least in the next year. This is putting the cost of supporting national services on to the council tax payer. I am not convinced—and I said the same thing last year—that this is the right way to go. Poorer authorities, in particular, have a lower council tax base, so if the aim is to redistribute, simply charging extra through council tax to pay for services in the more deprived authorities seems not to be the right way to go.

Finally, can the Minister confirm that the Government intend to produce a model which is fair? The words “fair funding” were used a great deal this time last year. I very much hope that those words will continue to be used. For funding to be fair, council tax payers must also have fair demands on their wallets. Will the Minister bear that in mind? I hope that, for the rest of this Parliament, the Government will not simply load council tax so that local government receives more complaints because their council has been underfunded by central government for a considerable time.