Jim McMahon MP: speeches 2024

Speeches

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  I probably have to be a bit careful not to stray into that, given that this is a statement about councils in England, but the premise of the hon. Member’s question about adequate funding for local public services is correct. Let us remember that councils deliver more than 800 different services to local communities in England. They employ more than a million people, many of whom will be local people of the community. Councils are a huge power and force for good, and I will certainly ensure that the representation he has made is passed on to the Secretary of State for Northern Ireland.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  In the end, some of it is about the quantum of funding, and some of it is about freedom of funding. Taking away the ringfencing and reporting is absolutely critical to that. Gateshead, and every other council, has our absolute commitment. Finally, Madam Deputy Speaker, may I say thank you to the millions of public sector workers, council officials and, importantly, councillors for the work that they do in providing good public services every year, day in, day out? May I wish everyone a merry Christmas and a happy settlement day?

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  That is completely right. By the way, I give credit to council officials, frontline workers and councillors, because it is local government that has led on innovation and reform and that has bound together local communities in very difficult times—and, I would say, with other parts of the system too often working against the local interest, not with it. We need to find a way of sending that message not to local government, because I think it is understood there, but to the wider system. We need to say that when we make such public sector investment in Newcastle and other places, we expect the whole system to rally around a single plan for the place and its people. We expect local government to be respected as the local leader—the convenor of place—that can hold the ring to make sure there is not duplication or contradictions and that the money delivers the right outcomes for local people. We are absolutely committed to that.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  That was a cute way to get a long question in—merry Christmas, Madam Deputy Speaker. My hon. Friend is absolutely right. I pay tribute to the work that he does to represent the people of Harlow as well as the local authority. We stand ready to work on those long-term funding settlement issues to ensure that we genuinely rebuild the foundations.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  That is precisely why we have provided an extra £233 million to meet the demand. We do not take any pleasure or pride in that, actually. It is a sign of a system that is not working that we must keep on providing more and more money for temporary accommodation, to the benefit of hotel owners and not to the benefit of the people who need a safe, secure and affordable home. This funding has to be part of a wider plan. That is why the 1.5 million new homes are so important. If we do not provide those safe, affordable homes for people, we will always be in this cycle of trying to play catch up, and that is not sustainable.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  First, I pay tribute to the leaders in both Norfolk and Suffolk for the conversations we are having, particularly on devolution. We look forward to, I hope, making progress on that in the near future, because that is where the real prize is. We can sort out the foundations of council funding and reorganise public services to get efficiencies, but in the end we need to see devolution. We need to see power coming out of this place and being given to local communities. The best way to achieve that is through a mayoral strategic authority working hand in glove with local authorities. On the question about NICs, we have provided over £500 million for the costs of employers’ national insurance contributions and we are providing additional money through the social care grant, and it is for councils to decide how best to spend that money.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  Either the hon. Gentleman does not know the status of the rural services delivery grant, or he is trying to mislead the House. A large share of large rural authorities should have got the rural services delivery grant but did not, because that grant was not about rural services. When the previous Prime Minister stood up in Tunbridge Wells and said that the Government had taken money from deprived communities and moved it across, he did not mean that it was for all communities; it was for party politics. So where were Conservative Members then when it came to those rural communities that did not get the grant? I did not hear anybody standing up and asking for their rural community to get the money for those services that Conservative Members are now trying to champion. We will absolutely make sure that deprivation and need are part of the funding reforms that are coming, but we will also make sure that we genuinely take into account the cost of delivering services in rural areas. The sector needs a fair funding review, and we are determined to deliver one.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  I congratulate my hon. Friend on her question to the Prime Minister earlier. The council’s overall core spending power will increase by 7.8%. Putting Portsmouth to one side, whatever measures we take in general terms, we can never cast the net so wide and so thinly that we catch every council at the extreme ends. If we did, the net would never get to the depth needed. The door is open to any council that needs a conversation about their particular circumstances. Regardless of party politics, councils can have absolute confidence that we will deal with them professionally, appropriately and with the respect they need.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  I thank my hon. Friend for the advocacy that she shows for Milton Keynes and for the local authority. Overall core spending power in Milton Keynes will increase by 6.1%, and that is only part of the settlement—the council can easily expect that to increase in its final settlement. It shows that the Government are working in partnership with the council to deal with the issues that she raises.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  It is important that we have a debate on local government finance based on the numbers. I have said already that, when taking into account council tax, no council will see a reduction in its core spending power. That means that before the final settlement, and not including extended producer responsibility and live parts of the grant, the hon. Lady’s own council will see an increase of at least 5.8%. We are covering the national insurance contributions made there, and in addition we are funding an extra £880 million through the social care grant. We have heard representations through the sector. We are not saying that all this will fix everything today—it cannot. We are less than six months into the new Government and we have 14 years to reconcile. I hope the hon. Lady does not mind, but I remind her that a number of those 14 years were under the coalition Government. What we missed then and are trying to make up for now is that if we take away community and preventative services, which we all know make a big difference—not just in cost but in outcomes—we end up paying more and more at the back end, but for worse outcomes. The cruelty is that the Liberal Democrats’ moment in government, which I accept was short, was the time to invest in reform and prevention. That time was not taken and that opportunity was missed, and 14 years later we are reconciling that and fixing the system from the ground up. We will do that.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  That is the point: the previous Government knew just how bad the situation was, but they put off the tough decisions. For example, how many times in 14 years did the previous Government promise that they would go back to multi-year settlements so that councils knew where they were, but failed to do so? How many times did the previous Government say that they would bring in a fair funding review, but failed to do so? How many times did the previous Government say that they would deal with the audit backlog? They did not just fail to do that; the backlog got worse. If we had not taken action, it would have been 1,000 sets of audited accounts, and that was not due to covid, because those accounts went back to 2015. That failure was systemic, and it was all on the watch on the previous Government. What that meant in practice was £100 billion of public money that they could not account for, so they did not really know the state of the sector, because they completely gave up on monitoring it.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  That is exactly the reason core spending power in St Helens will increase by 8.6% just through these measures. Given the type of council, we could easily expect that to top 10%. That is our down payment to say, “We need time to prepare the multi-year settlement and we need to do the fair funding review, but we know that councils cannot wait for that, given the last decade,” as my hon. Friend described.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  Given the hon. Gentleman’s background, I am surprised that he is displaying such ignorance of council finance. The Government’s role in local government finance is to be an equaliser. As he knows, everywhere has the ability to raise tax locally through council tax and business rates, but he also knows that some areas have the ability to raise far more than others because of their tax base. It is the job of the Government to equalise—to make sure that when it comes to demand for services, everywhere gets the service provision it needs. That requires the Government to provide more funding in some places to reconcile that lower tax base, so that everyone gets the services they are entitled to. The presentation that the hon. Gentleman has offered shows either ignorance or politics, but I think the country deserves better.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  I thank the former Chair of the Housing, Communities and Local Government Committee for that question. I can confirm that the core spending power of that element in this settlement for Sheffield will be 8.5%, which is before the additional funds that will follow. Sheffield gets a good settlement from this, but we recognise that it is in a context of growing demand, so we hope councils see that we are meeting them on the challenge they face. On whether we will review council tax, I think every Government recognise that there are huge limitations with council tax, and also huge geographical variations. It is regressive, which is the nature of a tax based on property values rather than the income of the people in them. However, council tax is understood, its collection rates are high and it is really the foundation—although not the total, as my hon. Friend knows—of the funding of council services. The urgent issue we need to face is that previous Governments moved away from their role as the equaliser in the system. Whereas the revenue support grant used to be in place to support councils by reconciling lower tax bases, recent Governments have been missing in action. We are saying to councils of all political stripes, across every type of authority and every part of the country, that we will reconcile that and work with them to equalise the situation. On the local audit office, we are absolutely determined that this will not be a return to the Audit Commission. We are trying to do a number of things. First, we want to rebuild the early warning system to make sure that we see any systemic problems developing in the system. However, we also recognise that the cost of audit has increased by 150%, which is a direct cost to taxpayers, and that there is fragmentation in the market, and we need to look at the fall-back position as opposed to auditor supply. There is quite a lot that we need to deal with, but this is very much about the provision of audit and making sure the early warning system is rebuilt; it is certainly not a blow to the inspection regime.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  That is exactly the point of moving to a fairer funding formula—and we will of course consult on the component parts making that up. We have to take this in the round—I genuinely want any part of the country and any type of local authority to be able to interrogate the system, and even if they disagree with the quantum—there will always be arguments that—to be able to say that the rationale and the evidence base hold. It is a matter of accepted fact that there is a premium on the cost of rural service delivery, just because of the travelling involved. For example, for a home care worker, there is the travel time between appointments and all the rest of it. However, it is probably also accepted that the evidence base is not as robust and strong as it needs to be, so we want to make sure through this process that we take into account the need for that strong and robust evidence base.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  Again, the hon. Lady’s council will see a core spending power increase of 5%, and that is only this part of the settlement—it does not include extended producer responsibility or billions of pounds in other grants that will come. This is a genuine attempt to make sure we give councils the funding that is needed, and I think we have succeeded in a very difficult context, but it is a matter of fact that some councils’ local tax bases are stronger, for reasons that go back many years and, in some cases, many centuries. That is not because of the efforts of the local council—it is what it is—and for too long, councils in deprived communities with lower tax bases have done everything that has been asked of them. They have raised council tax to the maximum, so local communities are paying more and more, but increasingly they are getting less and less. They are seeing their neighbourhood services diminish. There are tough choices, and we do not shy away from that. We have been very honest in the oral statement about the trade-offs that have had to be made, but the increase of 5% in the core spending power of the hon. Lady’s council will help deal with the issues she has raised.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  I thank the hon. Member for coming to one of our surgeries to make representations on behalf of his council. I know that he cares about these issues. We need to be careful not to think that those who have received the recovery grant are the only places that have deprivation, because that is not the case. The recovery grant is very targeted and has two components: one is whether the area has a weaker tax base; the other is whether the area has significantly higher deprivation than other comparable areas. We are clear that we need to root out deprivation and need wherever they exist. The fair funding review is intended to take into account many different component parts, including the cost of rural service delivery, general overheads, premises costs, deprivation and the rest, so that, whatever the issue and whatever the context, councils have confidence that the funding is correct.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  I agree about the importance and significance of the statutory override—that is felt very acutely in the Department and in the sector. We are consulting now on a number of matters, including the statutory override, and we are in constant dialogue with the Treasury about how we deal with that in the long term. In the end, this is another example of the legacy we have inherited. We are taking very difficult decisions to reconcile, reform and repair the system—decisions that should have been taken earlier but were not. That issue is very much on our agenda.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  There is a legitimate question to ask the previous Government about why on earth some councils were allowed to borrow disproportionately to their revenue. In the end, some councils have found themselves on the wrong side of that. When we were designing the recovery grant, that was about deprivation and low tax bases, and dealing with the quantum was about directing money to particular services, but I will be honest: there will always be councils—Croydon will be one of them—which, because of their unique situations, are just outside that general allocation. We are ready to have one-to-one support conversations where needed.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  My hon. Friend makes a good point. Where councils such as Calderdale are doing well and excelling, they are working hand in glove with the local community and voluntary organisations to ensure they get the coverage to reach into communities. I applaud that work, and I hope that the 7.4% uplift in core spending power in this part of the settlement goes some way to supporting it.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  That is exactly right. We have approached this year as very much a recovery operation. We could see that councils were in the ditch and needed to be pulled out and taken home, and that is exactly what this one-year settlement will do. However, what they need and deserve is a multi-year settlement that gives long-term security and stability, and for that long-term settlement not to be the continuation of a broken system, but a system that has been rewired and put right. With the fair funding review, the multi-year settlement and the reform agenda, putting prevention at the heart of public services, we will begin to achieve the end to which my hon. Friend rightly points.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  I thank my hon. Friend for that question, and I join him in paying tribute to the council officers and council leadership in Stoke-on-Trent. As a direct cash payment—the down payment I mentioned earlier—Stoke-on-Trent council will get £8.7 million, and its core spending power will increase by 8.6% just in this round, but that may well over 10% by the time the full allocations come through. That is part of the rebuilding process, and as I have said, it reflects the fact that we cannot punish councils because of their inherited historical tax base. We must make sure that the Government step up to their role to equalise the system so that everyone has fair access to public services.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  To be honest, although I absolutely agree that we need reform, I believe the urgency is today. Think about the number of older people who would have been entitled to adult social care in 2010 who now do not even get support from the local authority, because eligibility has changed in so many areas. There is a crisis, and that crisis is not just being felt in the homes of all the people who have given to this country and deserve better; it is being felt in the acute sector and in the health service, where we are paying far more at the back end because community preventative services are not in place. We are working with the Cabinet Office and the Treasury to say, “Let’s learn as we go” on some of this, in terms of innovation and pilots where we can invest to save—invest in those community preventative services up front, to try to better reduce demand. Of course, it is about money, but in the end it is about the service we provide. I appreciate the hon. Gentleman’s comments about the settlement in the round.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  The Government were elected on a mandate of change, to deliver a new era of economic growth and national renewal, and reverse the years of failure and decline that we inherited. Through the tough decisions that we took in the Budget, we prevented a return to austerity while protecting working people’s payslips. The plan for change that the Prime Minister unveiled earlier this month is the next stage on the journey of reform—a plan to kick-start growth and get Britain building again, putting more money in people’s pockets and delivering 1.5 million new homes, good jobs and opportunities for all. Just this week, we announced our plans to rebuild and reform local government, and to empower local leaders to deliver that change so that the benefits are felt in every community. We cannot do this alone. We need strong, empowered local government to work with us, as equal partners in a new relationship. Public service is our collective duty, but after a decade of cuts, fiscal mismanagement and the failure of the previous Government to fix the foundations, it is a fact that councils of all political stripes are in crisis. The broken local audit system in England and the scandal of the unacceptable backlog that led to the recent whole of Government accounts disclaimer further illustrate the dire straits of the system and the legacy that we must reconcile. The Prime Minister gets this. As a former director of a critical public service, he knows that reform is vital, and so does the Deputy Prime Minister, having worked on the frontline as a home care worker, seeing the human impact every single day. I am proud to have public service and local government in my blood too. That is why I take the responsibility to lead the Government’s work to rebuild the sector with the seriousness that is due and the urgency that is required. The work has already begun, and today marks a major milestone in our mission to rebuild local government and put councils on a firmer financial footing, as we publish the provisional local government finance settlement for ’25-26 and launch our consultation on these proposals, alongside our consultation on wider funding reform. In the autumn Budget, the Government announced £4 billion of additional funding for local government services, of which £1.3 billion would come in the settlement presented today, but we know that we need to rally. That is why I am announcing over £700 million of additional grants. That includes over £200 million of extra funding for social care since the policy statement. I also confirm that the new funding includes £515 million that will be made available in the final settlement to support councils with the increase in employer national insurance contributions. The package in the provisional settlement will enable local government to invest in the vital services that people rely on, making £69 billion available—equivalent to a 3.5% real-terms increase in councils’ core spending power when compared with ’24-25. I confirm that this will increase even further in the final settlement. Today is the start, not the end. Taken together, the additional funding made available in this settlement and the Budget will deliver over £5 billion of new funding for local services over and above local council tax. Alongside that, every authority in England will receive a one-off share of £100 million currently held in the business rates levy account. Together, we must ensure that public investment is used for long-term prevention and reform of local public services, rather than expensive short-term crisis responses, which often have much worse outcomes. We are determined to end the cycle of failure that we have seen for too long, and we will provide certainty by ensuring that no authority will see a reduction in its core spending power after accounting for council tax flexibilities next year. We are also ensuring that taxpayers’ money goes to where it is needed the most. That includes an immediate down payment: a highly targeted £600 million recovery grant, funded through repurposing the rural services delivery grant and the services grant, ahead of broader reforms to a fairer funding system later. Today, we are launching a consultation on local authority funding reform starting in ’26-27. There will always be tough decisions to make, but we are determined to ensure that we fairly reflect the real drivers of cost, including demand, the need for public services, and importantly, the ability of councils to raise revenue locally. That is why we are making up to £3.7 billion of extra funding available through this settlement to help local authorities to meet the spiralling costs of social care. That includes an additional £200 million uplift to the social care grant, which I confirm today, taking the total increase to the grant for ’25-26 to £880 million. That includes the new children’s social care prevention grant, first announced in the policy statement, which I today confirm will be uplifted in a further final settlement by £13 million, taking the total to £263 million. That is the first step in our national roll-out of transformed family health services, as we double settlement investment in preventive children’s social care services to over £500 million next year. I place on record my appreciation, and that of the Deputy Prime Minister, for the partnership and determination shown by the Treasury, the Education and Health Secretaries, and their Ministers and officials. We will not do as the previous Government did and impoverish councils, and those who need support the most, then parade them around for public shaming. That helps no one. We must work together to get councils back on their feet financially. The principle stands that it is for local authorities to decide at what level they set their council tax, and they are accountable to local taxpayers; however, we are committed to keeping taxes on working people as low as possible, and we have to strike a balance, so we will maintain the previous Government’s policy, as set out in the Office for Budget Responsibility forecast, of setting a 5% council tax referendum principle, made up of a 3% core principle and a 2% principle for the adult social care precept. That means that residents will have the final say over increases that go beyond that. We have put in place a framework for 2025-26 to support those councils in the most financial difficulty. Similar to the approach taken by the previous Government, we will consider requests for bespoke referendum principles on a case-by-case basis. We expect the changes outlined today will give the respite needed and clarity on the direction of travel, but we also know that 14 years have hit hard and, for some, the recovery grant and the other measures will still mean that additional support is required. We will put taxpayers and the impact on working people at the forefront of our decisions, and we will look carefully at councils’ individual circumstances—for instance, how much they charge in council tax and the strength of their plans to protect vulnerable people on low incomes. To recognise the impact of council tax on households across all councils, we are consulting with the sector on changes to payment instalments, which will allow annual council tax bills that are spread over 10 months to move to a 12-month schedule by right, helping household budgeting, spreading the cost for working people and mirroring how most household bills are paid. Ensuring local government can deliver for working people in the long term requires a root-and-branch reform of the way that councils are funded. That is why through the 2026-27 settlement—the first multiyear settlement in 10 years—we will introduce an up-to-date assessment of councils’ needs and resources. Today we are launching a consultation on the objectives and principles of those changes. We will consider representations from all corners of the sector to develop our understanding of the drivers of need, including deprivation, and of the impact in rural areas on service delivery—fairness for all delivered once and for all. We will redouble our work to shift power away from Westminster into the hands of those communities who know their area best. We will reduce the myriad of funding pots that councils have to contend with, giving them the flexibility they need to deliver local and national priorities. That effort is underpinned by our strategy to streamline and simplify the local audit system in England. Local communities deserve transparency, accountability and the effective early warning system that local audits provide. We are taking immediate action by replacing the broken and dispersed system with a focused, proportionate and value-for-money local audit office, ensuring that the system is fit for purpose. This is a long-term challenge, and it will take hard work and dedication to achieve, which is why we are wasting no time in fixing the foundations, getting the audit backlog under control, overhauling the system for the long term, returning to secure multiyear settlements, and bringing forward ambitious plans for devolution, growth and reform of public services, while improving standards, accountability and efficiency. We are building for the long term to get local government fighting fit, legal and decent, and as equal partners to rebuild our country from the ground up, and ready to play its part in delivering the Government’s missions through our plan for change. I commend the statement to the House.

• 18 Dec 2024 · Provisional Local Government Finance Settlement · Hansard source

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  We come back again to the broken housing market. The need to build 1.5 million new homes is there, but—let us be clear—they have to be the right homes in the right places for the need in the local area. That means not only more social homes but council provision. We continue to see a cycle—we have all seen today’s inflation figures, which are driven by private rent—in which the taxpayer pays more and more for accommodation that is often substandard and does not even meet the decent homes standard, with no benefit to the taxpayer. We have got to rebuild council housing and social housing and make it fit for purpose and affordable.