Sheffield MP challenges Prime Minister over “fundamental crisis in local government finance”

Sheffield South East MP Clive Betts questioned the Prime Minister at the Commons liaison committee on Tuesday. The committee brings together the chairs of all House of Commons select committees to scrutinise the work of the Prime Minister.

The former leader of Sheffield City Council is chair of the levelling up, housing and communities committee.

Mr Betts asked: “Since you were local government minister, Prime Minister, things have got worse for councils in terms of their finances, haven’t they?

“In the last six years, eight councils have effectively declared bankruptcy. In the previous 16 years, none did. What is the fundamental problem?

“Before you say ‘All those councils have made mistakes’, some of them have, but as John Fuller, a Conservative leader, said to the select committee recently, while the problems have been specific to some councils, there is now a moregeneral problem.

Distress

“Potentially, in the next year or two, about half the authorities will be in financial distress. Isn’t that a fundamental crisis in local government finance?”

Mr Sunak replied: “We recognise that they face challenges but that is why, particularly over this Parliament, significantly more funding has gone into local government, including the £600 million boost in the most recent local government finance settlement.

“That has meant that councils, on average, will have around 7.5% more spending power this forthcoming year than they had last year.”

Mr Betts responded that councils have faced a 30 per cent cut in funding over the past 14 years.

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He said: “As a Conservative council leader said to us, quoting the figures he is experiencing, ‘when you have social care going up by 19 per cent and children with complex needs going up by 23 per cent, but your income is only going up by 3 per cent to 5 per cent, it does not take a maths genius to work out that there is going to be a gap at some stage’.”

He said that the gap is about £4 billion and asked Mr Sunak: “That is a crisis, isn’t it? We are seeing social care demands going up, children’s care in particular going up, SEND – special educational needs – going up, and other services being decimated in many parts of the country.”

Concern

Mr Sunak said there are challenges but the grant to councils has more than doubled in cash terms since 2019. He acknowledged that social care is an area of concern.

The Prime Minister refused to be drawn on whether the government spending review would commit to more money to fund council services.

Mr Betts said later: “The Prime Minister can recognise there are challenges facing local government but he can’t accept it is because of cuts of over 30% in central government funding. The Prime Minister and his party are just in complete denial about the fundamentals of this crisis.

“This is not a party political issue – Conservative councils and Labour councils alike are all looking at going bankrupt and it will be social services, road maintenance and waste collection that will suffer. The same services already struggling after 14 years of cuts.

“We all know the real reason behind this. Rishi Sunak and his party are willing to see public services fall apart to fund tax cuts. That is not sustainable, not fair and will result in disaster for councils up and down the country.”