Local Government Finances - Motion to Take Note

Part of the debate – in the House of Lords am 2:05 pm ar 21 Mawrth 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Baroness Taylor of Stevenage Baroness Taylor of Stevenage Opposition Whip (Lords), Shadow Spokesperson (Levelling Up, Housing, Communities and Local Government) 2:05, 21 Mawrth 2024

My Lords, I draw attention to my interests in the register. I thank the noble Lord, Lord Shipley, for securing this vital debate and for his excellent and thorough introduction. I thank all noble Lords who have spoken so powerfully. It clearly demonstrates the very rich nature of our sector.

Your Lordships will know that I was a local government leader for nearly 17 years. Distressingly, because of local government funding cuts, I had to cut the council’s budget every single year of those 17. In the first years, this was a very specific technical adjustment which only affected a small number of councils—unfortunately, mine was one of them. After that came a torrent of funding cuts which saw millions of pounds taken from our budget in cash terms—and that is before unfunded inflation is taken into account.

Councils across the country have had the same experience. In spite of the constant refrain from Ministers on the Government Benches that more funding is going in, the fact is that it is not meeting either the rising demand for services, the increasing demand due to failures in other public services, inflationary costs, or the costs of dealing with multiple government initiatives.

I am afraid it is just not good enough to say that this is just a few councils which have been badly managed, or to say that, if councils cut back their budgets for consultants and equalities programmes, as the noble Lord, Lord Shipley, referred to, the problem would go away. In fact, the Hunger Games approach to funding taken by DLUHC, which sets councils and their communities against one another in competitive bidding rounds, has driven much of this expenditure. It would be interesting to know—across all government departments, but DLUHC would do—what departments have spent on consultants and equalities training in the last three years.

LGA analysis shows that, by 2024-25, cost and demand pressures will have added £15 billion to the cost of delivering council services since 2021-22. Despite increased funding in both of the last two years, mostly from council tax, there is—as the noble Lord, Lord Shipley, and the noble Baronesses, Lady Eaton, Lady Scott, and Lady Bull, have all said—an ongoing gap of £4 billion. There is a dreadful built-in impact here, too, that sees the poorest areas the worst affected. Many noble Lords have referred to that, as did the right reverend Prelate. The broken local government finance system means that those areas get the same cuts and are least able to fill the gap through council tax or retained business rates. As noble Lords have pointed out, the double whammy here is that these areas are likely to have the highest levels of increasing demand, too.

UK councils have fewer powers to raise revenue locally than any other G7 nation, with 95% of the UK’s tax revenue and 75% of public spending controlled centrally. So, when the Minister tells us about the increase in core spending power, as I am sure she is about to do, please remember that 44% of the additional core spending power available to councils will go solely to fund the cost increases in commissioned adult social care, due to the national living wage increase. This leaves a reduced amount of funding to address the impact of national living wage increases on other parts of the local government workforce and outsourced services that are highly exposed to the national living wage, such as waste collection and disposal, let alone the impacts of inflation, demand pressures and other cost drivers across all services.

As the right reverend Prelate mentioned, every aspect of our community life has been impacted. Every service has been affected. The noble Baroness, Lady Hamwee, pointed out the impact on our local democracy; it is not what people become councillors to do. This is not what communities expect; they are paying more in council tax and getting less back in services. We know that people truly value the services that impact on their lives every day, as soon as they walk out of their front door—but look at what has happened to them. Net spending on cultural services has been cut by 43%, with sport and leisure facilities down by 44%. England has lost almost 400 swimming pools since 2010.

Sport development and community recreation has been cut by 59% per person, and spending on parks and green spaces has been cut by 30%. Community centres have been cut by 39% and libraries by 50%—800 libraries have been cut. Museums and galleries have been cut by 40% and theatres and public entertainment by 38%. The noble Baronesses, Lady Bull and Lady Miller, the noble Earl, Lord Clancarty, and the noble Lords, Lord Foster and Lord Freyberg, all spoke very powerfully about the impact of local government cuts on cultural services.

More than half of areas have made cuts of more than 50% to transport and highways. This is even worse when you look at some areas, such as North Yorkshire, Bath and North East Somerset, and Lambeth, where there have been cuts of over 90% to highways work—no wonder there are potholes. Think of the negative impact of that on local economies.

These are services that everyone uses, but what about the most vulnerable in our communities? Some of the high-demand, high-cost services that local government delivers are used by only a very small percentage of our community. With services such as adult care, children’s services and temporary and emergency accommodation, many people will not realise the extent of the funding gap until they try to use that service. A recent County Councils Network report tells us that children’s and adult care services are consuming two-thirds of their total budgets. Surely, we should judge the strength of our communities and society by the way we deliver to the most vulnerable.

There are rising costs in children’s social care, with budgets up by 13.6%, driven by huge increases in placement costs. LGA research has shown that, in 2022-23, councils paid for over 1,500 placements costing £10,000 or more per week—over 10 times as many as the 120 placements purchased by councils at that price in 2018-19. It is way past time that this private-sector racketeering was brought to an end.

Costs of home-to-school transport are escalating, with budgets up by 23.3% in the last year, equalling a 130% cash-terms increase since 2016-17. Increasing costs and demand in adult social care means that budgeted spend increased by £2.5 billion in the last financial year. Costs of homeless services are increasing, with multiple contributory cost and demand drivers pushing budgets up by nearly 20% last year. Government data shows that more than 104,000 households were in temporary accommodation at the end of March last year, the highest figures since records began. Some district councils are now spending 30% to 40% of their total budget on emergency accommodation.

In most local areas, funding to the voluntary community sector from local government has either been cut or dried up all together, with seven in 10 organisations having withdrawn from public service delivery altogether, according to the excellent briefing from the National Council for Voluntary Organisations. The noble Baroness, Lady Bennett, mentioned this. When authorities issue a Section 114 notice, both the NCVO and Women’s Aid report that all their funding is cut immediately. I do not have time to go into the pressure on housing revenue accounts, but the recent decision to remove councils’ rights to retain 100% of right-to-buy receipts, at a time when we should be encouraging a surge in provision of new social housing, is incomprehensible. We need 90,000 new social homes a year, so that cut was a crazy decision.

Levelling up means nothing if we cannot support vulnerable children and adults, the homeless, the voluntary sector, domestic abuse victims and the leisure and arts sectors. Everything I have outlined will have long-term impacts. There will be pressure on acute services from not funding early intervention properly, and pressure on the NHS when our vulnerable residents cannot be looked after in their own homes. There will be an impact on the health and mental health of people and communities when their leisure and culture opportunities get closed down, and there will be significant long-term impacts of poor-quality, unaffordable and insecure housing. Young people will lose their opportunities and aspirations because their learning needs have not been met. New homes will not be delivered or will be delayed because of cuts to planning departments. There is such a simple solution: just allow local authorities full cost recovery on major planning applications. The noble Baroness, Lady Eaton, and the noble Lord, Lord Shipley, both mentioned that.

There will be a dramatic impact on the economy when local government cannot deliver either the infrastructure or the economic development support to meet business needs. The Government are quite simply closing down the best route—the local, devolution route—towards ensuring that we get the growth that the country needs to fund our public services properly.

I have been in local government for almost 30 years. My colleagues around the country are heroes, from those in parish and town councils—mentioned by the noble Baroness, Lady Scott of Needham Market—to those in the larger metropolitan authorities; they deliver for their communities, even in these most devastating and toughest of times. Please give them the trust and respect they deserve, give them long-term funding settlements, and work with them to reform the broken funding system—I was pleased to hear that the new noble Lord, Lord Fuller, is working on this project. Fix the broken business rates system that fails both businesses and the communities where they operate; give authorities the strong fiscal devolution they need, not the piecemeal approach we have seen in recent years; and then leave them alone to get on with it. Local councils, in touch with their local communities, will always deliver better than any Whitehall directive, even a levelling-up mission.