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Provisional Local Government Finance Settlement
17 December 2020
Lead MP
Robert Jenrick
Debate Type
Ministerial Statement
Tags
Crime & Law EnforcementSocial CareEconomyHousingEmploymentLocal Government
Other Contributors: 36
At a Glance
Robert Jenrick raised concerns about provisional local government finance settlement in the House of Commons. A government minister responded. Other MPs also contributed.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Government Statement
Crime & Law EnforcementSocial CareEconomyHousingEmploymentLocal Government
Government Statement
Today, I have written to all local authorities in England to thank their staff for their exceptional service during the pandemic. The Government has provided councils with more than £7.2 billion of additional funding for covid-19 expenditure and ensured they receive support for losses from sales, fees, charges, leisure centres, and local taxes. For 2021-22, an extra £2.2 billion is available to fund critical public services including adult and children’s social care (£1 billion grant and a 3% adult social care precept). This settlement results in a 4.5% cash terms increase for English councils in real terms. Additional funding includes the troubled families programme with £165 million, domestic abuse support at £125 million, and homelessness efforts costing over £750 million (a 60% rise from the previous spending review). The Government also introduces a new £4 billion levelling-up fund to finance infrastructure projects in local communities. This settlement aims to ensure councils have the resources they need for recovery and service delivery amidst ongoing pandemic challenges.
Steve Reed
Lab Co-op
Streatham
Question
How does the Secretary of State expect families to afford a 5% council tax increase during an unprecedented economic downturn? When will we see the Government’s plan to fix the social care crisis, and how much is being increased for public health grants next year?
Minister reply
The Minister responds by emphasising that councils have been provided with comprehensive support including £2.2 billion extra funding, a 3% adult social care precept, and additional measures like the troubled families programme (£165 million) and domestic abuse support (£125 million). He underscores the ongoing commitment to tackling homelessness and rough sleeping through significant investment and highlights that the settlement aims to ensure councils can manage their finances effectively while supporting communities in recovery.
Steve Reed
Lab Co-op
Streatham
Question
The MP thanked the Secretary of State for advance sight of his statement but expressed concern over the vast funding gap local authorities face and criticised the proposal to force councils to hike council tax during a health crisis and economic recession. He highlighted that the proposed 5% increase would disproportionately impact families on average incomes and less wealthy areas, and questioned the absence of a clear plan to address social care issues.
Minister reply
The Minister thanked the MP for his comments and acknowledged the support provided to local councils during the pandemic, including £7.2 billion in funding. He defended the government's record on council tax increases compared to previous Labour administrations and criticised examples of financial mismanagement by Labour-run councils.
Bob Blackman
Con
Harrow East
Question
The MP welcomed the £8 billion additional funding given to councils this year but asked for confirmation on what additional support will be available to local leaders in areas facing tier 3 restrictions.
Minister reply
The Minister confirmed that further funding is provided monthly for councils and their business communities under tiers 2 and 3, aiming to cover month-by-month costs of about £500 million.
Clive Betts
Lab
Sheffield South East
Question
The MP thanked the Minister for the settlement and questioned whether the forecast assumes all councils will put their council tax up by 5%. He also inquired if the Government would provide extra funding if additional unforeseen costs are incurred.
Minister reply
The Minister confirmed that local councils' decisions on council tax rates affect spending power forecasts. He stated he would keep any additional covid-related costs under review and highlighted the government's commitment to supporting local councils with about £10 billion in pandemic-related funding.
Question
The MP thanked the Minister for his work during the pandemic, recognised the fair funding review that acknowledged additional cost of providing services on the Isle of Wight, and asked if the delay due to the pandemic has affected the island's ability to support its residents.
Minister reply
The Minister confirmed he would be happy to meet with Bob Seely and his local council leader. He highlighted significant financial support provided to the Isle of Wight for both councils and businesses, totalling £68.3 million.
Stephen Timms
Lab
East Ham
Question
Will the additional funding for homelessness ensure that councils can continue to provide housing for people with no recourse to public funds? Does the Secretary of State have longer-term plans to support vulnerable households?
Minister reply
The Government has extended the derogation policy and provided £750 million in funding for the next financial year. Councils are also encouraged to bid for an additional £430 million move-on accommodation fund. The settlement will be reviewed annually.
Lucy Allan
Con
Telford
Question
Will the funding announced by the Secretary of State mean that there is no need for Telford and Wrekin Council to increase council tax or make cuts to vital services?
Minister reply
The Government has provided £22.5 million in covid-19 funding this year, supporting local businesses, and Telford is also in the running for the towns fund. The minister reassures that there should be no need for draconian measures such as significant increases to council tax.
Jeremy Corbyn
Ind
Islington North
Question
Can the Secretary of State guarantee that funding available to local authorities now to house all rough sleepers will become a permanent feature of Government policy? Will he introduce legislation to give greater security to those living in private rented accommodation?
Minister reply
The Government is committed to ending rough sleeping and has invested £433 million into new move-on accommodation. The minister suggests that Jeremy Corbyn should encourage his own council to build more homes, as Islington is currently building less than half the number of homes needed.
Peter Aldous
Con
Lossiemouth
Question
Can the Secretary of State provide further details on when the Government will bring forward proposals for fair funding distribution to local government?
Minister reply
A multi-year settlement would be beneficial, but given current instability and uncertainty in local council finances due to the pandemic, it is not the right time. The Rural Services Delivery Grant has been increased to £85 million, the highest ever amount.
Gareth Bacon
Con
Orpington
Question
Can a commitment be made by the Government to provide three or four-year financial settlements for local government into the future?
Minister reply
While multi-year settlements would benefit local councils, it is not feasible at this time due to instability and uncertainty in the sector. The minister suggests making representations to the Chancellor about next year.
Wendy Chamberlain
Lib Dem
North East Fife
Question
When does the Secretary of State plan for reform to local government finance?
Minister reply
While wholesale reform is not planned this time, a judgment will be made next year whether it would be right to bring about such significant changes.
Alicia Kearns
Con
Rutland and Stamford
Question
Can my right hon. Friend confirm his intention to maintain the rural services delivery grant next year? Will these principles be incorporated into the fairer funding review?
Minister reply
The minister will certainly take representations forward, advocating for a fairer distribution of public funds in local government.
Mohammad Yasin
Lab
Bedford
Question
Covid-19 costs are expected to leave Bedford Borough Council with a funding gap of nearly £22 million by 2021-22. One councillor described the lack of a fair funding settlement as, “the Government expecting councils to set balanced budgets with both hands tied behind their backs while wearing a blindfold.” When will the Secretary of State realise that, to finally beat the pandemic and keep local economies going, the Government need to fund local authorities properly as promised?
Minister reply
It would not be right for me to say in public the self-reported estimate of costs provided to us by Bedford Borough Council because that has been done in confidence. Across the country, the sum of money that we have provided to local councils well exceeds their self-reported covid-19 expenditure. For Bedford specifically, the total funding provided this year is £20.9 million so far and for businesses, it's £27.8 million supporting 2,300 businesses.
Question
May I welcome my right hon. Friend’s commitment to maintain the rural services delivery grant? Many of these councils have also seen a significant drop in income due to loss of revenue through things such as car parks and other services. Will he lay out what steps he will take to support these councils that have lost significant income during this year?
Minister reply
The sales fees and charges scheme created earlier this year provides 75p in the pound to councils for losses due to car parks and attractions, already paying more than £500 million. Cornwall Council has benefited and will continue to benefit from this scheme.
Olivia Blake
Lab
Sheffield Hallam
Question
I am concerned that the revised housing targets could lead to a 35% increase for Sheffield, potentially causing a north-south divide on green-belt building. Will the Secretary of State confirm that the new target will not be imposed on Sheffield?
Minister reply
The Government want more private sector investment going into northern cities and propose an annual delivery of homes in Sheffield at 2,800 instead of 2,500 as per the local housing need.
Ben Spencer
Con
Runnymede and Weybridge
Question
I thank my right hon. Friend for this much-needed further financial support for our local authorities, which lead the local response to covid. Local government staff in Runnymede and Elmbridge borough councils and Surrey County Council have worked tirelessly this year. With Runnymede and Weybridge now entering tier 3 restrictions, will my right hon. Friend join me in thanking those staff for their efforts?
Minister reply
I would be delighted to join the hon. Friend in thanking the brilliant staff at local councils for their fantastic work during challenging times.
Southgate and Wood Green
Question
While I welcome any funding for local government, it is not enough. Enfield Council has had £193 million of cuts to funding since 2010. It has spent £64 million in dealing with the covid-19 emergency but received less than half from the Government and not been receiving its fair share of public health funding since 2013. When will the Government level up for Enfield?
Minister reply
We have provided Enfield Council with £43.6 million of covid-19 funding so far, £44 million for businesses, and a further £12.5 million settlement, making its core spending power a quarter of a billion pounds.
Question
At the start of this pandemic, the Government stated that they would provide local authorities with all the support they needed to get through these challenging times. The total amount of additional Government support that Blackpool Council has received since March now stands at over £129 million. Will my right hon. Friend join me in urging those councils to demonstrate restraint and consider value for money from local services?
Minister reply
My hon. Friend makes a very important point, we are happy to provide support but also want to encourage restraint and value for money from local services.
Clive Efford
Lab
Eltham
Question
Council tax increases have become a stealth tax for this Government. Council tax now makes up 60% of core spending in local authorities—up from 49% just five years ago. Does the Secretary of State acknowledge that raising council tax year on year is leaving local authorities with high deprivation further behind?
Minister reply
The real-terms decrease in council tax compared to when we came to power and grants have ensured equalisation across the country, providing £270 million of equalisation grants.
Question
The additional funding for local authorities like Bromley is very welcome but ongoing upward pressure on adult social care costs causes financial uncertainty. When will we tackle the difficult task of reforming social care funding?
Minister reply
My right hon. Friend the Secretary of State for Health and Social Care will bring forward proposals in due course, introducing long-term reforms promised to introduce sustainable finances for local authorities.
Kevan Jones
Lab
Durham North
Question
The MP adds his thanks to council staff and councillors for their work during the last year, particularly those at Durham County Council. He highlights the challenge faced by Durham County Council due to its composition of 50% band A properties in council tax bands, limiting its ability to raise large amounts compared with councils in the south. The MP criticises the Government's settlement as punishing northern council taxpayers while rewarding southern ones.
Minister reply
The Secretary of State acknowledges the thanks and praises Terry Collins for his service. He clarifies that County Durham will receive £5.2 million in equalisation payments, ensuring a 4.5% cash and real-terms increase in core spending power, which builds on last year's 7% increase.
Andy Carter
Con
Warrington South
Question
The MP welcomes the statement but expresses concerns about Labour-controlled Warrington Council's debt of £1.6 billion and its financial management, comparing it to Croydon and Nottingham councils. He calls for a Government inquiry into high levels of council borrowing that risk local services and burden taxpayers.
Minister reply
The Secretary of State agrees on the importance of preventing risky financial ventures by local councils. He promises to look further into Warrington Council's situation and highlights the need for better management skills in these areas.
Glyndwr
Question
The MP questions the Government’s honesty regarding council funding increases, suggesting they are forcing councils to raise council taxes. He asks for support for Cheshire West and Chester Council, which is £1 million in debt despite managing well during the pandemic.
Minister reply
The Secretary of State offers to look into the issue but notes that Cheshire West and Chester has already received £39.8 million from the Government. For next year, it will receive a 4.1% cash and real-terms increase in core spending power, building on last year’s 6% rise.
Alberto Costa
Con
South Leicestershire
Question
The MP asks for compensation to Conservative-led Blaby District Council for the loss of the new homes bonus, which amounts to more than £1 million. He requests a specific response on this issue.
Minister reply
The Secretary of State agrees to write with full details about Blaby District Council’s situation and announces an extra year of the new homes bonus backed by over £600 million in Government money.
Debbie Abrahams
Lab
Oldham East and Saddleworth
Question
The MP is concerned about the local authority budget increases being based on council tax rises, stating it is inappropriate given current circumstances. She asks for reimbursement of Oldham Council’s £10 million covid-associated deficit.
Minister reply
The Secretary of State confirms that Oldham has received £33.5 million so far and will benefit from the sales, fees, and charges scheme providing 75p in the pound. He also mentions Oldham’s inclusion in the towns fund and an earlier grant of £1 million.
Felicity Buchan
Con
West Worcestershire
Question
The MP thanks her right hon. Friend for council support during the pandemic and raises concerns about high business rates in Kensington, leading to a struggling high street. She asks for a review of business rates.
Minister reply
The Secretary of State praises her local council and mentions this year’s business rates holiday benefitting many businesses. He confirms there will be a fundamental review of business rates.
Lyn Brown
Lab
Newham Westside
Question
The MP discusses the high level of homelessness and child poverty in Newham, highlighting its financial difficulties due to 10 years of cuts and additional £20 million underfunding for covid impacts. She requests assurance that the settlement will address these issues.
Minister reply
The Secretary of State assures her of further funding next year and offers to meet to discuss specific issues such as the council’s financial support, including almost £50 million in covid-19 expenditure.
Robert Halfon
Con
Harlow
Question
Madam Deputy Speaker, may I wish you a happy Christmas? My right hon. Friend knows that we are bidding for the £25 million towns fund to regenerate Harlow. Coupled with the recently announced £50 million Harlow investment fund, does he agree that this regeneration money will completely transform our town and is all the more important given the struggle local businesses have had due to the coronavirus pandemic?
Minister reply
Can I thank my right hon. Friend for his hard work over the course of this year? The Government are supporting Harlow through the towns fund, which brings forward exciting proposals, and also through Homes England’s £240 million investment in a new garden village to provide much-needed housing and further town centre regeneration.
John Cryer
Lab
Leyton and Wanstead
Question
Would the Secretary of State look again at suspending, even if temporarily, the no recourse to public funds rule? Many constituents on zero-hours contracts are affected by this rule.
Minister reply
The Government’s position has not changed. The law remains as it is, but we have extended the derogation enabling councils to support EEA nationals and allowed councils to use discretion under the law to support vulnerable rough sleepers who lack recourse to public funds during the virus.
Nigel Mills
Con
Amber Valley
Question
Even with support for councils with outsourced leisure centres, Amber Valley Borough Council’s finances are in a pretty terrible state. Does he believe that the two-tier council system will survive this crisis?
Minister reply
Earlier this year, I laid a written ministerial statement setting out the Government’s position on local government reorganisation. We have taken forward three propositions—one in Cumbria, one in Somerset and one in North Yorkshire—and bids for those have been submitted to me.
Steve McCabe
Lab
Birmingham, Selly Oak
Question
Public health teams have been a key part of the response to the covid crisis. The King’s Fund reports that the public health grant settlement last year was 22% lower per head than it was for 2015-16. How does the Secretary of State plan to address that?
Minister reply
We have provided exceptional resources both to the NHS and to local authorities over the course of the year, so the suggestion that public health has not been resourced this year is not correct. We have been providing huge sums of money to support the increasingly important role of directors of public health in local councils.
Welwyn Hatfield
Question
How can local authorities such as Doncaster Metropolitan Borough Council continue to benefit from local settlement schemes? What steps is his Department taking to encourage them to bid for funding in a timely manner?
Minister reply
The resettlement programme is resuming early in the new year after an understandable pause as a result of covid-19, and we will ensure that it is properly resourced so that it can continue to fulfil its important function. We have produced several schemes over the last couple of years, including the towns fund and the high streets fund.
Liz Twist
Lab
Blaydon and Consett
Question
I want to thank all the staff at Gateshead Council for their magnificent job in responding to the pandemic. Can the Secretary of State tell the House what conversations he has had with Cabinet colleagues about public health funding for next year?
Minister reply
The question that the hon. Lady asks is primarily for my right hon. Friend the Secretary of State for Health and Social Care, but I would say that public health has been significantly invested in over the course of this year as a result of the covid-19 pandemic.
Kate Griffiths
Con
Burton
Question
I am grateful to my right hon. Friend for the continued generous financial support offered to our local authorities. Burton has recently submitted its town investment plan, which is a joined-up plan to renew our high street, expand sustainable travel and enhance the skills of our young people. Will my right hon. Friend grant us our £25 million Christmas wish?
Minister reply
I look forward to receiving the proposals for my hon. Friend’s towns fund bid. We will be making further announcements on that early next year.
Florence Eshalomi
Lab Co-op
Vauxhall and Camberwell Green
Question
I want to ask the Secretary of State about funding for our hard-working firefighters, including the London Fire Brigade. They have seen a 38% cut in central Government funding since 2010 and 11,200 fewer firefighters during the same period. Is it fair that the Government are forcing fire authorities to shoulder these costs?
Minister reply
I think the hon. Lady’s question is better directed to the Minister with responsibility for the fire service who laid a written ministerial statement earlier today specifically with respect to the police and fire settlements.
Shadow Comment
Steve Reed
Shadow Comment
The shadow minister thanks council staff but criticises the Government's funding settlement, highlighting that it leaves local authorities with a significant funding gap leading to potential job losses and service cuts. He notes the proposed council tax hike as more than twice inflation rates and argues this will disproportionately affect poorer areas and families on average incomes. The Labour representative questions the lack of progress in fixing social care despite previous promises from Boris Johnson, and points out that the settlement will exacerbate current issues rather than alleviate them. Additionally, he challenges the Secretary of State to explain how families can afford a 5% council tax increase during an economic crisis and demands clarity on the Government’s plan for addressing the social care crisis.
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