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Local Government Finances: London
26 March 2025
Lead MP
Calvin Bailey
Leyton and Wanstead
Lab
Responding Minister
Alex Norris
Tags
TaxationHousing
Word Count: 14035
Other Contributors: 17
At a Glance
Calvin Bailey raised concerns about local government finances: london in Westminster Hall. A government minister responded.
Key Requests to Government:
The Government should address the housing crisis and homelessness issues by updating the cap on local housing allowance payable for temporary accommodation to provide immediate financial relief for boroughs, allowing them to spend more resources on preventing homelessness.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Lead Contributor
London boroughs are facing a financial crisis with significant budget cuts, such as Brent council having to cut its budget by £220 million since 2010. The cost of temporary accommodation has surged, with London councils spending £4 million per day on it, representing the fastest-growing financial risk for local authorities.
Andrew Rosindell
Con
Romford
Endorses the comments made by all MPs regarding the broken local government funding system, highlighting that outer-London areas have been underfunded and unfairly treated for decades.
Southgate and Wood Green
Highlights the severe budget cuts faced by Enfield and Haringey since 2010, with Enfield losing £200 million and suffering from damping. Describes additional pressures on adult social care and children's services in Haringey.
Dan Tomlinson
Lab
Chipping Barnet
Barnet council processes 10 homelessness applications every single day—more than double the number it was processing just two years ago. This, coupled with additional spending on educational needs and adult social care, is crippling councils’ budgets.
Daniel Francis
Lab
Bexleyheath and Crayford
Highlights his experience as a councillor in Bexley and the ongoing funding crisis faced by the local authority, including staff redundancies and selling assets to balance budgets.
Danny Beales
Lab
Uxbridge and South Ruislip
Addressed short-termism and poor governance in Hillingdon, highlighting low reserves and the need for long-term financial investment. Emphasized the impact of not investing in early years services leading to later pressures. The hon. Gentleman questioned whether the previous Government's funding was adequate for London boroughs, highlighting significant increases in public health funding, homelessness funding, local government funding, and pothole funding under this Government.
David Simmonds
Con
Ruislip, Northwood and Pinner
Highlights that significant increases in funding are often offset by other cuts or charges. Discusses the impact of ringfenced grant funding to tackle homelessness and the national insurance contributions rise, leaving local authorities net worse off. Points out a 29% increase in rough sleeping compared to the previous government period. The hon. Gentleman raised the issue of the garden tax in London boroughs and expressed concerns about financial pressures in outer London due to unfunded costs such as asylum and rough sleeping.
Dawn Butler
Lab
Brent East
In her constituency, Brent council has had to cut its budget by £220 million since 2010. She supports the need for change in government policy.
Helen Hayes
Lab
Dulwich and West Norwood
Describes the impact of austerity measures on local councils, highlighting significant cuts in funding leading to a housing crisis and increased homelessness. Proposes five quick measures for Government support including raising the local council housing allowance and delivering multi-year settlements.
Jim Shannon
DUP
Strangford
He agrees on the importance of addressing housing issues, including rental accommodation and price management to ensure people can afford to live in social and rented housing.
Joe Powell
Lab
Kensington and Bayswater
Encouraged Westminster city council to use new council tax powers for second home owners, which could raise £11 million a year. Praised the pioneering work on insourcing temporary accommodation.
Julia Lopez
Con
Hornchurch and Upminster
Residents of Havering pay high council tax but receive inadequate services due to an outdated funding formula that does not reflect demographic changes, such as a fast-growing child population. The borough faces significant financial pressure from increased employer national insurance contributions.
Luke Taylor
LD
Sutton and Cheam
London faces a funding crisis due to austerity cuts since 2010, with boroughs receiving 28% less per resident. Outer London boroughs like Sutton are getting the worst deal, with outdated funding formulae leading to significant mismatches between allocations and needs.
French
Con
Bexleyheath and Crayford
Emphasised the need for the Government to address funding issues affecting local councils, citing a £5 million impact on Bexley council from contract inflation and the jobs tax.
Louie French
Con
Old Bexley and Sidcup
Questions why the current government has cut housing targets for Labour councils in central London, prompting a response about addressing challenges inherited from past failures.
Natasha Irons
Lab
Croydon East
Councils are at the coalface of politics and are leaders in delivery. Boroughs are now at crisis point due to housing emergency, pushing London councils into spending £4 million a day on temporary accommodation.
Peter Fortune
Con
Bromley and Biggin Hill
For Bromley, the story of underfunding started in 1997. The net budget has reduced by more than a quarter in real terms and nearly two fifths per person. If Bromley received the average settlement grant of funding per person for London, the borough would receive an additional £80 million a year.
Rachel Blake
Lab/Co-op
Cities of London and Westminster
Discussed temporary accommodation costs, special educational needs challenges, and the visitor economy in central London. Highlighted a 173% increase in rough sleeping and a 69% increase in temporary accommodation over the last 14 years.
Government Response
Alex Norris
The Parliamentary Under-Secretary of State for Housing, Communities and Local Government
Government Response
The Minister acknowledged the importance of local councillors and officers and their dedication in keeping vital public services running. He stated that London receives a total core spending power of up to £11.35 billion this year, representing a 5.8% cash-terms increase over last year. The Government has allocated £233 million directly to councils for homelessness prevention, with nearly £1 billion available for targeted support. We have made it clear that while we continue to expect councils to do what they can to deliver for their residents, we do know—and we have heard in the debate—that the sector is in a fragile state. Seven London councils have requested support this year and we are working with them to drive improvements. The Government will not make additional borrowing more expensive and will take steps to prevent the disposal of community and heritage assets when considered as a route to financing capitalisation support. We are committed to the first multi-year settlement in a decade, implementing a comprehensive and up-to-date assessment of needs and resources as part of the multi-year settlement from 2026-27. The recovery grant went to places where deprivation outweighs council tax recovery, but we have announced an extra £550 million of support for local government as part of the settlement.
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About Westminster Hall Debates
Westminster Hall debates are a chance for MPs to raise important issues affecting their constituents and get a response from a government minister. Unlike Prime Minister's Questions, these debates are more in-depth and collaborative. The MP who secured the debate speaks first, other MPs can contribute, and a minister responds with the government's position.