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Council Tax and Revenue Support Grant

I am grateful to my hon. Friend for his question. I accept that the existing settlement is a complex landscape with multiple different grants, interventions and interactions. At the core of those grants, there is a set of need assessments, need calculations and funding formulas. Some of those funding formulas are a number of years old, some are more than a number of years old, some are more recent and some approach things in different ways from others, so I accept that there is a complex landscape. Local government finance has always been a complicated and challenging landscape, but there is, at the core, a set of needs assessments. There is always a question about whether they could be updated and changed and whether they could better reflect how things are working and what is happening in individual

localities, but needs assessment is at the heart of local government finance. As I indicated, there has also been a move over the last few years to a greater set of earmarked grants, specifically around adult social care, and they are intended to reflect need to the extent that is possible.

To respond to the second of the points from my hon. Friend’s speech, there is then a set of different circumstances in each individual area, in terms of both spend—lots of demand on adult social care in one place, but slightly less in others, and lots of demand on children’s services in some places, but less in others, depending on the geography—and the funding available. That is because of a complicated web of where councils started from; decisions that have often been made over many decades; the corporate approach that successive councils and their leadership have made; and reflections of need—however perfect or imperfect they may be. Can I say that that process is perfect? Absolutely not. Can I say that there will not be anomalies or challenges in it? No, because there absolutely will be.

My hon. Friend mentioned his concerns about areas with older demographics and the pressures that that puts on them. He makes a cogent case that rural areas, parts of which are more affluent, although they still contain areas of deprivation, are highly dependent on council tax. However, if there were urban MPs here—he compared his area to at least one such location—they would argue that their areas receive significant revenue from business rates, and Government are removing an element of that and distributing it elsewhere, including to places that are not urban. It is a very difficult, complex set of interactions. I absolutely accept that it is not perfect and that we need to continually look at it, but it seeks to reflect need, notwithstanding the complicated process by which it has got there.

On my hon. Friend’s point about whether there are opportunities to review the situation, there is always a need to look at these kinds of landscapes, particularly given the complexity and the fact that some elements of them have been around for a number of years. He will be aware—we have spoken about this previously—of some of the things that were started in recent years, such as the fair funding review.

On the financial settlement this year—I am not taking anything away from my hon. Friend’s point about the need to review these areas—having come through three years of significant difficulty in everybody’s lives, but particularly in the local government sector, we had to choose whether to make significant changes or offer stability. Through the provisional settlement, we have tried to offer a platform for stability, with significant additional funding, so that local authorities in the coming financial year—2023-34—have some breathing space after the tremendous work they have done post covid and during the inflationary period, which we hope has now peaked or will shortly peak. That will give them the opportunity to plan, think and look at how they can reform and do things differently to get ready for the years ahead.

We will always look at opportunities for review and change. Before Christmas, the Secretary of State indicated to the Levelling Up, Housing and Communities Committee that he wanted to do that, and I am doing it as a

new Minister. We are looking at what can and cannot be done in individual areas. I welcome the comments and thoughts of my hon. Friend and the hon. Member for Luton North about those kinds of changes, and we will look that in the coming months and years.

I want to make a small plea to my hon. Friend to see things in the round. Although I accept that it is important to zero in on areas of contention and problematic areas, councils should have a significant absolute-terms increase in revenue in the coming financial settlement, and there have also been significant grants, particularly on the capital side. I do not want to tell my hon. Friend things he already knows, but I want to read this into the record: there has been significant funding on both the revenue and the capital sides to Dorset in recent months through the community renewal fund and the UK shared prosperity fund, and I believe that an area near his constituency was successful in a levelling-up bid just a few weeks ago. None of that takes away from his points, but it is important to see the context in which this discussion is taking place.

I absolutely accept that these are challenging times, that no methodology is perfect and that there is a legitimate debate to be had about how local government finance supports all parts of our country, all demographics and all facets and characteristics, including rurality and other things that my hon. Friend outlined. I hope that, in acknowledging all that, we can also collectively recognise that there has been a significant increase in funding this year, which is likely to go to all areas, as outlined in the provisional settlement. I hope my hon. Friend accepts that the prioritisation of stability in this coming year is important, given the challenges we have gone through in recent years. I look forward to working with all Members, including my hon. Friend, to see what changes and improvements are possible in the coming months and years.

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