Council Funding

Alison Bennett (Mid Sussex) and Clive Jones (Wokingham) of the Liberal Democrats, and Natasha Irons (Croydon East) of the Labour Party, asked the Minister for Local Government and English Devolution, Jim McMahon, about the adequacy of council funding and the steps being taken to ensure local authorities have adequate resources to fund local services. In his response, the Minister acknowledged the challenges facing local authorities and stated that the government's priority is to reset the relationship between local and central government, ending the politics that has seen Westminster hold back towns, cities, and villages. He promised more stability for councils through multi-year funding settlements, ending the competitive bidding process, and reforming the broken audit system. The Minister noted that future local authority funding decisions would be a matter for the spending review and the local government finance settlement. Alison Bennett asked how the English devolution Bill would reduce local authority budget shortfalls and protect essential council services. The Minister explained that the Bill is a landmark piece of legislation that will address the imbalance of power between Westminster and communities, but it is not the sole answer, as the financial foundations of local authorities are struggling. Clive Jones raised the issue of Wokingham, the lowest-funded unitary authority per head in the country, and asked if the upcoming review of local government funding would look at the actual needs and costs faced by local authorities, rather than the current methodology based on historical data and simplistic measures of deprivation. The Minister assured that the fair funding formula would address the range of challenges local authorities face, including their local tax base and the cost of service delivery. Natasha Irons, a local councillor, welcomed the government's intention to reset the relationship with local councils and asked the Minister to outline the specific support that will be given to councils that have had to issue section 114 notices, to ensure they can deliver on the government's aims. The Minister acknowledged that many councils are on a "cliff edge financially" and stated that the Department's door is always open to local authorities that need to have conversations. Liam Byrne, the MP for Birmingham Hodge Hill and Solihull North, raised the issue of inadequate council funding in Birmingham due to "sadistic directions" based on speculative estimates of equal pay liabilities. He asked the Minister to revisit those directions and meet with Birmingham MPs to help get them right. The Minister responded by emphasizing the need to reset the relationship between the Westminster government and local authorities, stating that the government will work in partnership with Birmingham's leadership in a constructive way, as equals, going forward.