My Lords, I thank all those who are taking part in this debate, and I remind the House that I am a vice-president of the Local Government Association.
We have debated local government funding and the impact of cuts in spending on essential public services on many occasions, but things are getting worse. There is a gap in funding in the face of rising costs and rising demand, and it is widening. In its commentary on the recent Budget, the OBR predicted a four-year squeeze for local government services. It said that local authority funding is due to fall from 7.4% of GDP in 2010 to 4.7% in 2028-29. Indeed, just two years ago, it was only 5.1%. The National Audit Office put it another way: between 2010-11 and 2021-22, the real spending of English councils was reduced by 29%.
Council spending has fallen in all services except social care. At the same time, council tax is having to carry a bigger burden. In 2010, council tax accounted for 40% of councils’ core spending power. It is expected to be 56% in 2024-25. We must conclude from this that the Government have passed on the burden to local council tax payers.
On 26 January, the noble Lord, Lord Markham, wrote to me after a discussion in this Chamber on the proportion of councils’ revenue spending on social care. He said that, in 2022-23, 69% of the discretionary service spending of councils with social care responsibilities was spent on social care of both adults and children. Some have a slightly higher figure than 69%; others, slightly lower. It follows that only 31% is available for everything else. It is simply not enough, and the Government have knowingly let, and are knowingly letting, it get worse. They have been forcing up council tax to meet the rising cost of social care.
Social care has two elements to it—children’s social care and adult’s social care. A few weeks ago, the Levelling Up, Housing and Communities Committee issued a report referring to local authorities’ financial distress and said that one cause was higher spending on children’s social care, with high agency costs, high placement costs and rising demand. I know well that the Government are trying to address that issue, but it needs urgent action and I hope the Government will do that. The number of looked-after children has gone up from 68,000 to 84,000 in the last 10 years. I remind the House that the Children and Families Act 2014 introduced new requirements for additional support, but that has never been properly funded and has not kept up with demand.
The Government’s White Paper on long-term reform of adult social care was published in December 2021. They said that they would set out their plans for adult social care by October 2025—four years’ delay. Meanwhile, the Public Accounts Committee recently said that adult social care demand is not being met. Sir Andrew Dilnot recently said that there has been “no serious addressing” of the problem. Many have concluded that this matter must be decided by all-party agreement, led by the Government. I am clear that that is the right approach. After consultation on an all-party basis, the Government should establish their policy for adult social care and then pay for it, rather than forcing closures of neighbourhood and community facilities and services that are used by everyone.
My Lords, I declare my interest as a vice-president of the Local Government Association. I congratulate the noble Lord, Lord Shipley, on securing this incredibly important debate today on local government finance.
Local authorities across the nation—small and large, rural and urban—continue to deliver the very best for the communities they serve. We saw this during the coronavirus pandemic, when local authorities rose to the challenge of distributing millions of pounds-worth of grants and loans to keep businesses afloat. Upon the Kremlin’s barbaric and illegal invasion of Ukraine, it was local government that stood up to the test of supporting well over 100,000 people who were settled into this country through the Homes for Ukraine scheme.
Further to this, I hope the House will note that local government has far more trust among the public than government departments in Whitehall. Research from the Association for Public Service Excellence confirms that three times as many people trust their local councils over national government.
It is, of course, Conservative-led councils that continue to deliver more for less across England. A fine example of this is Fenland District Council, in Cambridgeshire, which has yet again cut council tax precepts for the next financial year.
The recent uplift in the local government finance settlement, published earlier this year, was welcomed by councils. In particular, the work of Ministers in DLUHC to secure an additional £500 million towards easing the pressures in adult social care should not go unnoticed. However, if local government is going to be trusted to deliver more and better on behalf of the state, the state in turn needs to award local government with the package of fiscal devolution it deserves and needs to get on with the job for our communities.
Home ownership in our country is becoming an ever-increasing topic of discussion, not just in this place but outside. Local government can turbocharge housing delivery and increase home ownership, but it needs fiscal powers from the Government to support it in doing so.
My Lords, I readily accept that I am past my sell-by date, but there are times when speaking from your own experience just feels right. I was a London borough councillor from 1978 to 1998—a much shorter time than other noble Lords have chalked up. Over 20 years and five elections, the turnout in my ward was never below 60%.
That was then. Not everything was peachy. Householders paid rates; my noble friend mentioned business rates as well. I represented a newly built council estate—those really were the days—on the borough boundary. The rates on the large houses on the other side of the boundary—the other side of the road, indeed —were much lower because of the big differences in government grants to the two authorities. I gather that the reserves which the other authority was able to build up during the many years it was so favoured now have a similar effect on council tax.
The 60% turnout did not seem unusual; if anything, I would have hoped for more, given the effort that went into keeping in touch with local residents. We were able to consult about the level of tax rates—x% more would enable the expansion of such a service, x% less would mean this or that reduction; y% would allow for reduction here and expansion there. Referendums are not the equivalent and there is an understandable reluctance, I think, to spend scarce cash on an expensive exercise.
How different it is now. The whole budget, not just the bottom line, is so divorced from local decisions about tax that taxation and representation are largely detached. This is the particular reason I wanted to speak today. What has been happening and continues to happen regarding finances puts local democracy in jeopardy. There is almost no local discretion and, I suspect, no bandwidth to think strategically. Councillors have ambitions for their local communities; they have them for various different communities, such as users of this park, travellers to that school, supporters of a certain football club and the passengers on the 8.23 to Waterloo.
My Lords, I am grateful to the noble Lord, Lord Shipley, for securing this debate. As trailed by the noble Baroness, Lady Hamwee, I will indeed use this opportunity to highlight how the current crisis in local government finances is impacting on arts and cultural services, and the communities that enjoy and benefit from a thriving local cultural ecology.
The positive effects of arts and culture on place-making and local communities are well evidenced. Aside from the intrinsic value, cultural venues and services create jobs, attract visitors and support the wider local economy. Cultural programmes provide skills development for young people, connect with marginalised groups, engage communities in local issues and encourage active citizenship. Culture makes neighbourhoods more desirable places to live, with cultural spaces providing a resource in which people feel pride and a place where different parts of the community can come together. In short, arts and culture make for a better place to live, work and do business—all of which is very much the core business of local authorities. Indeed, much of this cultural activity is enabled by local authorities, which are the main public investor in arts, culture, tourism and heritage, allocating £650 million each year to libraries and £430 million to museums, heritage and the arts.
However, this long history of investment is under increasing threat. We have already heard about the pressures facing local government today: inflation, wage increases, pensions, the cost of living and energy, homelessness, the rising cost of adult social care, and increased numbers of children with special educational needs and disabilities. Analysis from the Local Government Association in October last year showed that English councils face, as we have heard, a £4 billion funding gap across the year—and that is just to keep services standing still. The extra funding announced for 2024-25 will help, but it will not bridge this gap.
My Lords, I thank the noble Lord, Lord Shipley, for securing today’s debate, and for the characteristically incisive way he introduced it. My noble friend Lady Hamwee need not be diffident about painting with a broad brush, because her broad brush, in the hands of someone with many years of experience, painted a picture of the threat to local democracy that our current system is posing. In many ways, that is probably the most important point that can come out of today’s debate.
I share my noble friend’s commitment to local communities. That is why, when the National Association of Local Councils asked if I would become its president, I was very happy to take on that role, because that town and parish council sector, which covers 91% of the country, is the first layer of local government and the one that faces these challenges on a very personal and day-to-day basis.
I want to make sure that that sector is not lost in today’s debate. It is interesting that, in the otherwise excellent House of Lords Library briefing, this sector does not get a mention. There are around 100,000 councillors who are volunteering their time in this sector, putting in, we estimate, 14.5 million hours a year—I sometimes felt that I worked that myself. They are working so hard to change and improve their local area. Unlike other tiers of local government, they do not have many statutory duties but they do have an array of discretionary powers, which they are using to deliver services in their area. Sometimes it is interesting to see these quite archaic powers, designed in a different age, being used to address very modern problems, such as loneliness, the climate emergency and the cost of living crisis. They are doing that on top of the more conventional activities, such as dealing with allotments, bus shelters, Christmas lights, open spaces and public toilets.
My Lords, it is a pleasure to follow the noble Baroness, Lady Scott of Needham Market, and to agree with her about the importance of parish and town councils. In travelling around the country, as I often do, I see so many of them stepping up to the plate where the larger-scale authorities—the principal authorities—are simply not able to continue as they do not have the funds. That is crucial. Keeping public toilets open, managing areas of grassland, and even keeping tourist centres open are the kinds of things I have seen.
Like other noble Lords, I begin by thanking the noble Lord, Lord Shipley, for securing this crucial debate. There is hardly anything more central to the declining quality of life in the UK—the broken Britain that we talked about when we were debating the Budget—than how much local government is struggling. I declare my interest as a vice-president of the Local Government Association and of the National Association of Local Councils.
In April, we are coming up to about 75% of councils making the maximum increase that the Government allow, according to the County Councils Network. That means a £99 increase for a band D average property, with bills going to more than £2,000 a year. At the extreme, things are absolutely desperate. The obvious example is Birmingham City Council, which is looking at a council tax hike of 21% over two years as it struggles to find savings of £300 million. This is in a context where councils and councillors are acutely aware of how the cost of living crisis is affecting so many of their residents, but we are in TINA land: there is no alternative. For councils to keep meeting even their statutory requirements—requirements that are put on them by Westminster, about which they have no choice—they have to put those increases in.
I suspect that, if one were to search this debate, “one in five” would be the phrase that comes up most often. I make no apologies for repeating the phrase, because one in five councils is at risk of going broke. That is 20% of councils in the country. This is an absolute crisis, yet our media is so focused on what happens here in Westminster, particularly in the other place. A media that focuses on London will fail to grasp the scale of the crisis around the country, and I am afraid I do not think the Government have truly grasped the scale of the crisis either.
My Lords, in my noble friend Lord Shipley’s excellent opening speech, he mentioned many of the public amenities that are now under immense threat due to this Conservative Government’s starvation of local government. These public assets—community assets—have been built, bought and improved over centuries and decades. I appreciate how lucky I was in my 15 years in local government in Somerset that we were able to plan and construct local amenities. Now, under this Government, starved of resources, local authorities will have little choice but to sacrifice these common assets, be they libraries, green spaces, public toilets or cultural centres.
As the noble Baroness, Lady Bennett of Manor Castle, just said, once amenities are gone, they are gone. She is right, and it puts me in mind of a well-known poem, written at the time of the Inclosure Acts, and just as relevant today:
“The law locks up the man or woman
Who steals the goose from off the common
But leaves the greater villain loose
Who steals the common from the goose”.
That is just what this Government are doing—they are stealing the common.
These common assets are irreplaceable, and the ones I want to highlight today are libraries. This possibly stems from my time at school and the only post I had—head librarian—led to a career in books. More importantly, libraries are a crucial element for everybody in intellectual levelling up. Nobody has put this better than Bobby Seagull, who many remember as the “University Challenge” champion who went on to become a City whizz-kid and then a maths teacher. He is, especially, a great advocate of libraries, as he explained when he came here to Parliament a while ago:
My Lords, I thank the noble Lord, Lord Shipley, for the opportunity to speak in this debate. Like my noble friend Lady Bull, I will talk about the arts and cultural services.
A good place to start is by quoting the briefing that the Local Government Association provided for the debate in this House on the arts in the name of the noble Lord, Lord Bragg, on 1 February:
“Councils have a key role to play—they are the biggest public funders of culture, spending over £lbn a year and running a wide range of other services. They are also place shapers and have a convening and supporting role in setting the context in which the arts can flourish. The arts are discretionary, but councils invest because they see the value to local people”.
One could of course add, “when they have the funding to do so”. The quote is valuable because it describes the intricacy of the relationship between the arts and the local community. On the one hand, the arts are a good in themselves in many different ways—they are something that local people can take pride in, and they may have a national or international reputation—but, on the other, the arts are also inextricably bound up in the identity of a local area. They are or can be a part of the character of that community.
How should all these varied arts be funded? I believe they should continue to be funded primarily through local government funding. That is still the most efficient and comprehensive means by which we can fund the day-to-day activities of the arts and other cultural services: efficient because local governments are the experts in their areas, and comprehensive because every area of the country is covered by local government and therefore much better at levelling up than the patchiness of the levelling up fund, whose purpose in any case ought to be properly understood as additional to the core funding of local government.
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I was surprised to hear the Secretary of State say, when the final settlement for next year was announced in January, that:
“The Government is committed to continuing to protect local taxpayers from excessive council tax increases”.
I found that a bit rich because, since 2016, the Government have been increasing council tax by 2% a year, compounded, to help pay for rising demand in social care. He went on to say that councils should set out how they will
“improve service performance and reduce wasteful expenditure, for example on consultants or discredited equality, diversity and inclusion programmes”.
The sums involved are very minor compared to the costs of social care. Anyway, in practice, the Government have forced local councils to employ consultants to write all the competitive bids for funding on which Ministers love to adjudicate.
Council tax is regressive and out of date, and there are not enough bands. Some 46% of homes in England—46%—are now charged a higher rate of council tax than Buckingham Palace, which, on band H in the London borough of Westminster, has a comparatively low council tax rate. I was grateful for the reminder about this in the 27 January edition of the Economist. Surely, we need more bands at the top end.
A lot has been said recently about Section 114 notices. We know that several councils face bankruptcy as they try to meet statutory demands and balance the books. One in five says that it is in danger of issuing a Section 114 notice in the next year or two. In the last six years, eight councils have issued Section 114 notices, but it is important not to confuse this issue with the few councils that have not managed their finances well or have made bad investment decisions. They are the exceptions; the real problem is the Government making decisions for local government to fulfil without making the money available to do it—hence all the cuts in a range of discretionary services, of around one-third to 40%, over recent years.
For example, a third of libraries have closed in the last 10 years. Temporary accommodation for people who are homeless now costs £1.74 billion; 104,000 households are in temporary accommodation. We have seen cuts in parks and green spaces, in culture, museums and theatres, in youth services, and in sports, leisure and swimming pools. We have also seen a drop in spending on preventive services that can save money in the medium to long term.
I heard in the news on Monday that half the local road network could fail within the next 15 years. The Local Government Association estimates that there is a £14 billion backlog in local road repairs. To take an example of the Government not funding things, the national living wage will apply in social care and that is excellent to see, but it needs to be fully funded; otherwise, council tax payers will have to make up the difference.
The question for this debate, and for this and all future Governments, is what to do. There is an urgent need for reform of local government funding, and it needs to be done with all-party agreement. We need long-term funding that is not based on competitive bidding. As we have seen, the levelling-up allocations are centrally managed with central deadlines, and only 10% have been spent so far, as the Public Accounts Committee told us last week. Not enough of the projects were “shovel-ready”, and local capacity has not been available because of cuts in funding, so there have not been enough people to do the work to deliver the outcomes. As I say, government deadlines have been far too strict.
What happens now is that we have one-off, sticking-plaster allocations of money. They are not enough, as the recent extra £500 million for adult social care has demonstrated. Local authorities are accused of having reserves that are too big. Let me say clearly that they do not. If I were a chief finance officer of a local council, I would be extremely worried about the projection that the OBR has given of finances for my council over the next four years, and I would want a healthy reserve in place. That is normal—strong reserves are normal for capital investment and for the rainy day that we may well have. Public money requires good stewardship, given the further cuts on the way.
Local authorities need greater freedoms. I have never understood why the Government are so determined not to allow local planning authorities to decide their own fees. Why on earth should they not be able to do that, and recover 100% of the cost of doing it?
We also have to encourage local authorities to invest to save. That requires a national discussion as to how you really can do that—there are things that can be done. If you invest to do something, you will save money in the long term.
We need an acknowledgement that council tax is regressive and needs reform. We need two bands at the top, and quite soon in my view, because otherwise more and more poorer people will pay a higher proportion of their income to support local services.
I have not mentioned business rates. We have had many debates on business rates in this Chamber, and perhaps that is why. It has become a national tax; it is no longer a local tax. I remember when, in my days as a councillor, business rates were managed by local authorities, which decided what the rates were, but that was a long time ago. I repeat what I said during the passing of the Non-Domestic Rating Bill: business rates have simply got too high.
The Government are failing to produce long-term settlements. For the last six years, we have had one-year settlements for local authorities. I do not understand why the Government cannot do better than that. It would really help people to plan.
The Local Government Association has told us that cost and demand pressures have now led to a £4 billion funding gap over the next two years simply to maintain the level of current services, not to increase them. That is a substantial sum of money, and local government finances will be in a precarious state unless action is taken.
I do not want us to end in a permanent state of crisis. With thinking and all-party discussion, that can be avoided, but I wish the Government would do a bit more on audit. The Audit Commission was abolished just over 10 years ago, and I have no doubt that it had suffered mission creep. Equally, I know that having a proper audit system underpinning local government, and feeding information to the Government about how things are going and where extra investment is needed, is really important. In your Lordships’ Chamber, I have previously welcomed the Office for Local Government, Oflog. It should be at the centre of all this but, to be honest, I do not know whether it is. We now have a huge gap in audit, which is starting to cause us some concern.
Finally, we need the fair funding review. We also need to reflect, as we used to, the needs element of local government spending, which has gradually over time been eroded. I hope we will have a helpful debate, and that this Government and any future Government will be able to take action on the things identified by noble Lords. I beg to move.
On fiscal devolution, what quick and easy wins could the Government award to councils? First, the backlog in dealing with planning applications has never really recovered post-Covid. In addition to the pandemic, the retention of staff in local government planning continues to be a challenge, as councils compete with the private sector and major infrastructure projects such as HS2.
To address this capacity gap, the Government should consider devolving the powers of planning fees directly to councils with responsibility for planning, as the noble Lord, Lord Shipley, said. While the recent increase in planning fees from the Government is welcomed, based upon figures from the 2020-21 financial year, 305 out of 343 were operating on deficits which totalled together £245 million. The ability to set planning fees internally by councils, based upon local need and demand, will help speed up the planning applications process and get spades into the ground.
While private home ownership is vital, we should not dismiss the benefits of social housing in supporting our more vulnerable communities in eventually getting on to the housing ladder. Councils have a great track record of building more social housing, yet with more fiscal devolution, local government can do an even better job at increasing social housing supply.
The Government confirmed that, with respect to the retention of right-to-buy receipts, councils would be able to keep 100% of their retentions for the 2022-23 and 2023-24 financial years. As reported in the Financial Times last week, the 100% retention of right-to-buy receipts has delivered an additional £200 million into delivering more social housing. It is therefore disappointing that, in the recent Budget Statement from the Chancellor, there was no indication of whether this initiative would be extended. I would be grateful if my noble friend the Minister could provide some details on this in her contribution to the debate.
Building more social housing is not just a massive win for our local communities, it is a financial win for government. For councils to build the next generation of social housing, they must have the fiscal powers necessary to get spades into the ground. The Government absolutely should commit to the 100% retention of right to buy receipts if they are genuinely serious about increasing housing supply in our nation.
On a completely different subject, I want to now talk about roads and highways. Many local authorities want to get back to basics and ensure that the state of our roads is vastly improved. As many local councillors—and, I am sure, Members in the other place—will testify, potholes continue to be one of the dominant subjects that constituents raise on the doorstep. My view on this is very simple: local government needs to have certainty around its funding, and multiyear financial settlements with respect to highways funding can be the answer to many of the issues we face on our roads today. National Highways is responsible for 4,500 miles of roads in England—just 2% of the road length in England—yet, unlike local government, it receives five-yearly funding allocations from the Department for Transport. Local government should be brought on a par with National Highways and treated as an equal, with multiyear financial funding settlements.
Another issue causing no end of misery, to our rural communities in particular, is fly-tipping. I am pleased that the Government through the National Fly-Tipping Prevention Group have committed £2.2 million in grant funding so that councils can reduce fly-tipping incidents through the installation of CCTV. In addition, local government has been leading the transformation agenda in catching fly-tippers. For example, Buckinghamshire Council has proactively used artificial intelligence to catch fly-tippers in key hotspots and reduce this awful crime. That said, many local councils anecdotally report that the fines they receive from catching fly-tippers simply do not cover the costs they incur in collecting fly-tipped waste. Very simply, I hope the Government will consider giving the powers necessary to local authorities to set their own fine levels, dependent again on local need.
In conclusion, I hope that my noble friend on the Front Bench will consider the four examples of fiscal devolution I have highlighted that could be extended to local government and once again I congratulate the noble Lord, Lord Shipley, on securing the debate.
It has always required agility and resilience, because politics is about balancing priorities and should be about being able to take preventive action. How soul destroying to have to keep saying, “We can’t, there’s no money”; spotting a need but knowing that there is no point in pursuing it, and knowing that local residents have decreasing confidence or trust in their local authority.
An unproductive, unedifying blame game does not foster good relationships. Residents—voters—must feel more detached: abandoned, even. In this situation, can local government attract the best candidates across a range of experiences and representatives of their local communities? There is a lot to be said about staff, too, but I will stick to my main point, save to say that the problems of recruitment and retention affect council services and contribute to the overall worrying picture. In addition, charities—the third sector—to which we have so long looked are not in a position to fill the gaps. I am now told that it is very rare to find people who work in local business among councillors. No doubt there are various reasons for this, but those informal links were so valuable.
As I have said, there is so little local discretion and so much is mandatory, the how as well as the what: how you do it, as well as what you do. Recently there has been an announcement about low-traffic neighbourhoods. Central government has said how local authorities should approach these but not said how they should pay for them or given them any more to pay for them.
My noble friend mentioned planning fees. He probably does not know that I was the chair of my local planning authority when we decided to charge all of £25 to businesses for advice on proposed developments. We were taken to court and we lost.
Local authorities are increasingly dependent on what they can raise locally, but this is increasingly restricted. I travel to Westminster on a road that has a yellow box junction which, because of the sets of traffic lights on either side of it, often traps traffic. It may be an urban myth but it is said to be the most profitable yellow box in London. I understand that the local authority does so well out of infringements in that yellow box that it is one of the very few that still offers free domiciliary care.
I would be frustrated now—to take one example which, judging from the speakers’ list, may get quite an airing today—if I were a member of a local authority which was cutting all spending on arts and culture, which I regard as essential and not an optional add-on. If I were not a councillor, in this context, would I want to stand? In fact, I would feel quite anxious at the prospect, at a time when councils are selling off the family silver—indeed, heading towards fire sales—and spending capital receipts on revenue. Those are receipts from assets paid for by the public and they will be lost from public use.
I am well aware that my references to local government finance are a bit simplistic and, at any rate, broad-brush, but my central point is absolutely serious. Our communities are not short of issues to get involved in, but I would guess that most noble Lords would argue that single-issue politics are rather different from the democracy which comes with responsibility and should come with power.
On these Benches, and around the House, we value local democracy. I came here in 1991, because my then party leader was able to make a single nomination and wanted our single new Peer to have had experience in local government and to make the point about its importance. I stood again in 1994 because the local mandate was the only democratic mandate I was able to seek. I am sure I am not the only speaker to have done that—in fact, I know that. My local community was very important to me. Would I want to do the same in 2024?
The now too-familiar reports of, at worst, bankruptcies and, at best, dramatic cuts, can no longer be seen as isolated incidents, but have to be acknowledged as systemic failure. Currently, some 19 councils across England are receiving exceptional financial support, which is more than double the more typical number—between five and nine—in this category since the onset of the pandemic. Local councils’ core spending power has seen a 24% real-terms reduction between 2010 and 2025. While much of this has been absorbed in new ways of working, efficiencies and staff reductions, it is inevitable that non-statutory services, such as arts and culture, will take a hit. According to a recent LGA survey, 55% of responding councils
“reported that cost savings would be needed in their sport and leisure service provision”,
with 48% reporting
“that cost savings would be needed within their library services”,
and over a third, 34%, reporting
“the need for cost savings in their provision of museums, galleries, and theatres”.
For cultural organisations, this crisis in local government funding sits alongside changes to the Arts Council portfolio and the ongoing impact of Covid, from which the sector has yet fully to recover. It also has to be set against a backdrop of the 10 years of austerity policy, which saw average local authority investment in culture reduced by nearly 37%. As a result, directly or indirectly, theatres, venues and arts organisations in local communities are facing existential crises—from Windsor and Maidenhead to Woking, Ipswich, Nottingham, Birmingham and beyond. Some have already closed; others are struggling to pull off a five loaves and two fishes-type of miracle to get them through the coming year. While London venues and organisations are certainly not immune, withdrawal of local authority support has a disproportionate effect outside London and other major conurbations, where there are far fewer alternative sources to fill the gap through, for example, corporate sponsorship.
The allocation of levelling-up funds to cultural projects has been welcome, although it is concerning to read in the recent report from the Public Accounts Committee in the other place that as at September last year, local authorities had been able to spend only 10% of the Government’s three levelling-up funds. Likewise, the announcement in the Spring Budget that theatre, orchestra and exhibitions tax relief will be made permanent was warmly welcomed, but it might be hard for some local communities to feel the benefits of theatre tax relief when their local theatre is boarded up.
What is needed is not one-off funding but long-term, sustainable and multi-year settlements that will enable councils to invest in the local cultural infrastructure and services that create thriving, dynamic environments for local communities. Without guaranteed funding, cultural activities suffer from an on-again, off-again effect which leads to community disengagement and uncertainty for organisations and the people they employ. In the end, it is local communities that suffer. Will the Government heed the call from the Local Government Association for multi-year settlements that allow councils to plan ahead and provide communities with the services they deserve?
Pitting arts and culture head-to-head against other local priorities and needs is never a good idea, particularly so at the moment, when the here and now pressures are so loud. Arguments about their longer-term impact on the economy, growth and jobs are understandably hard to hear.
Nevertheless, arts and culture play a major role in delivering for communities, and successful local cultural strategies—that is, strategies that are specific to the area and that work in partnership across different sectors—can deliver to multiple local priorities: skills, regeneration, education, employment or health. As Liz Green, the chair of the LGA’s Culture, Tourism and Sport Board, has written, local councils need the creativity of cultural organisations and their perspective on how things might be done differently, not just in cultural services but across the board. There are many good examples of this collaborative approach in practice, with a recent example being Culture Start in Sunderland —a city-based partnership spanning social housing, schools, the voluntary and youth sectors, and higher and further education, as well as culture—which aims to mitigate the impacts of growing up in poverty by enabling more children and young people to access the multiple benefits of cultural participation.
Strengthening and enhancing the local cultural offer strengthens and enhances local places and improves the lives of people who grow up, live and work there. It makes them more attractive to visitors and business, and more likely to attract funding from grant-makers and investors, all of which further enhances the local environment. There are many stakeholders who contribute to the positive benefits that this kind of local cultural ecology can deliver, but the underpinning certainty of local government funding has always been the catalyst that enables the change.
In that sector, the parish precept is usually the main and only dedicated source of income. In 2023, the total parish precept came to £708 million, which is 1.8 % of the total council tax requirement for England, with an average band D rate of £78. Unlike principal councils, local councils do not receive revenue support grant or a share of business rates, and they do not generally have access to central government funding. It remains a very strong feeling in the sector that parish and town councils should be able to apply for central government funding schemes on the same basis as principal authorities.
During the passage of the Levelling-up and Regeneration Bill, I put forward an amendment to address the situation where government said it did not have the powers, but disappointingly the Government did not agree. On a positive note, and I thank the Minister for this, the Government have extended the community ownership fund to allow applications from parish councils. In the short period of time since then, around £4.5 million has been allocated for community assets, such as a market, community centres, a library, parks, a skate park and a nature reserve.
I move on to trends in spending power and the impact of reductions. It is striking how investment by town and parish councils in their local area has changed over the past few years. In 2010-11, the total precept was 1.4% of the total council tax requirement for England, and, as I have said, this year it is 1.8%. In some cases, that is because the sector is doing more, getting involved in more things and being more active, and that should be welcomed and applauded. However, it is also because many parish and town councils have stepped up to take over services from principal councils, particularly those discretionary areas where principal councils feel they have no choice but to withdraw. It is alarming to hear warnings from bodies such as the LGA that government funding will lead to a £4 billion gap over the next two years. When coupled with the number of principal authorities issuing Section 114 notices, this will place even more pressure on parish and town councils, especially town councils, because otherwise they will completely lose those important discretionary services such as libraries and leisure centres, and support for community organisations, culture and the arts.
You can argue that it does not matter which bit of local government is paying for something. I would argue that it does matter, because facilities such as libraries, for example, are often used by a significant rural hinterland, and there is a danger that the local town council will end up footing most of the bill, whereas, at the moment, it is spread more widely, right across the local authority precept. It is simply not going to be sustainable for parish and town councils to keep on increasing their precept to provide much-needed investment in their area just to stand still and take up the slack that has been left by principal tiers of local government which have no choice. I think the sector would argue that we should have access to dedicated funding for some of those services, such as improving high streets, parks and leisure centres—the quality-of-life services that matter so much.
Despite increasing pressures on their budgets, town and parish councils have taken all available steps to demonstrate financial prudence when setting the precept. I think that has been recognised by the Government, who continue to defer setting referendum principles for that tier, which is welcome. However, I argue that no local authorities should be forced to hold referenda. We should not be having levels of intervention by the Government at this point. I very much agree with the noble Lord, Lord Shipley, and the noble Baroness, Lady Eaton, that finance settlements should cover multiple years. Local government has always been told that it should behave more like business; no business would operate on a one-year basis.
I conclude with two specific asks for the Government. The first is technical but important, and is for one specific reform to the audit regime. The limited assurance regime for smaller councils works very well, but there is a £25,000 threshold at which they enter the rather more costly and onerous category 1, and there is currently a backlog for that. If the Government would consider raising that level and introducing a matching transparency regime, it would relieve some councils of a huge burden. The second is more fundamental: that parish and town council should have the diverse range of funding opportunities they need to fund growing services, take local action on national priorities and help pick up where principal authorities are having to leave. This includes direct access to government funding, multiyear freedom to set their precept, no referenda, a share of business rates and the exemption of cultural assets.
I referred to the rise in council tax, but the proportion of money that councils get from council tax has risen from 40% in 2009-10 to 60 % now. Where else do councils get money from? Often, they can charge for certain services, such as leisure centres and parking, and they can generate income from the sales of property and from certain types of waste removal. But think about those services, and put them at the intersection of the cost of living crisis: yes, they can increase the cost of the local swimming pool or the gym, but that means that more and more people will not be able to access them.
We can think about the issue of sales of property. We have seen, since the election of Margaret Thatcher, the sale of 50% of what was publicly owned land—a large amount of that being council land. Once it is sold, it is not coming back. You close the library; you sell the building and the land. When times get better, you cannot bring them back—it is gone. That library is so much a part of central meeting places. Even as technology changes and IT comes in, it is a public space that could have been dedicated to public purposes in the future, but we have simply lost those spaces. Communities do not have places to gather any more.
It is also worth highlighting—I do not think anyone has picked this up yet—that we have seen austerity right across central government, cuts to Civil Service workers’ pay, and to the real level of benefits. That increases poverty and ill health, which puts more pressure on councils to provide services such as social care. This is literally a downward spiral in which we are trapped.
The list in the Library briefing is worth looking at; this picks up points from the noble Baroness, Lady Bull, and others. We have seen the following spending cuts from 2010-11 to 2019-20: cultural and related services cut by 37%; planning and development services by 37%; non-school education—we keep talking about the need for skills—down by 32%; housing services by 25%; highways and transport services by 24%, which picks up the point raised by the noble Baroness, Lady Eaton, about potholes and the general state of the roads; and environmental and regulatory services down 10%, just at the point where we are starting to realise what an incredibly parlous state our natural world is in and that it desperately needs to be boosted, in its own right but also to improve public health.
Many noble Lords will have received the briefing by the National Council for Voluntary Organisations, which raises the important point that we think about the cuts to council services and how much is lost—the libraries, the theatres, et cetera—but funding that local councils have given to charities and community groups has also been slashed, and that again is cutting away at the basic standard of quality of life in our communities. Almost three-quarters of organisations are not receiving enough funding to meet the demand for the services they offer. Nearly two out of five organisations have reduced the number of people whom they support. When you think about the Covid pandemic—several noble Lords have referred to the loneliness pandemic—and an ageing population, we are reducing the number of people being supported when it is clear that the need is increasing.
I come, briefly, to two final points—first, that council tax and business rates is a broken, wildly out-of-date system. The Green Party has long held, and continues to call strongly, for a land value tax, which would be levied on the annual value of land itself, excluding any structures or improvement. It follows good taxation practice, it would be cheap to collect and difficult to evade, and it would discourage the use of land for speculation. At the moment, land is an ideal speculative investment, and we can, I am sure, all point to examples where land is not used well, because someone is just sitting on it and waiting for its value to rise.
The noble Baroness, Lady Hamwee, talked about elections. Of course it would be lovely to have democratic elections with a single transferable vote system or similar, as there is in Scotland for local councils. It would be great to have local communities fully represented in the House of Commons. But what is interesting and worth noting is that there is a big shake-up happening in local councils: we increasingly see groups of different parties coming together to run councils, which is an exciting development.
“Growing up in financially challenging conditions in an east London council estate, our library was a paradise”.
More affluent areas are more likely to still have quality libraries that remain open and well stocked, but deprived areas will suffer multiple deprivations, and libraries will be one of the first of these. The Government are consigning a generation to poorer literacy and lower academic attainment.
Libraries are popular—they have 40 million visits a year, which is more than cinema and football combined. They are one of the most popular services that councils provide. In addition to their central focus on reading and literacy, libraries support a wide range of activities, which was particularly seen during the pandemic, including digital skills, warm hubs, job clubs, and access to financial advice and support. They are the ultimate community resource, yet public library funding in the UK has fallen by more than 30% in total since 2009-10, and 800 libraries have closed. At least 32 councils are exploring very significant cuts or closures—in some cases proposing to close over 65% of their branches. I hope the Minister will not dare to suggest that such cuts are a local government choice. She knows perfectly well that local authorities now have no choice, given that central government has subjected them, year after year, to real-terms cuts.
What answer are the Government giving to the worst-affected local authorities, struggling in the face of ever-diminishing central government funding? They are saying, “Sell off your assets”. The exceptional financial support framework will allow councils involved—I use the word “allow” in inverted commas—to use capital receipts from the sale of assets or borrowing to cover their day-to-day costs of this amount. Traditionally, libraries occupy buildings at the heart of their communities, where land values are higher—making them an obvious option to cash in on short-term capital at the expense of long-term value.
The Financial Times highlighted this recently when it said:
“The UK government is now considering loosening the rules for allowing councils to sell off assets. This is bad news for everything from libraries to swimming pools, town halls to toilets”.
We really are in a disgraceful state of affairs. A later verse of the poem I quoted is just as apposite as the first:
“The poor and wretched don’t escape
If they conspire the law to break;
This must be so but they endure
Those who conspire to make the law”.
The great tragedy of the last 14 years is that, not only for the arts, we have seen at least a partial dismantling of this inherently efficient and comprehensive system. The specific point about the arts in relation to the funding cuts, as the noble Lord, Lord Hall of Birkenhead, pointed out recently when interviewed by the Observer on these cuts, is that they have been a “canary in the mine”. The noble Lord said:
“What we learn in Birmingham will soon matter across the country”,
and we are seeing that in Hampshire, Nottinghamshire and many other councils. It is the arts and other cultural services such as libraries, community and leisure activities that have been the first to feel the effect of long-term cuts. Indeed, around seven years ago Nicholas Serota made the point that the biggest crisis in the arts was in local government funding. It was seven years ago too that we had a debate in this House on local government funding and the arts—for which the noble Lord, Lord Shipley, did the summing up for the Liberal Democrats—which was in effect a warning sign to the Government that, bleak as the picture was then, it was going to get bleaker unless the matter was addressed. As we know, it has not been addressed, with a cliff edge having been reached in some cases.
The Government have had all the warning signs, but the Secretary of State for DCMS, Lucy Frazer, recently gave an interview for the Stage in which she said:
“It’s disappointing when local authorities make decisions to cut the arts”.
What is of course far more disappointing is the refusal by this Government to take responsibility for a situation for which they are ultimately responsible. The evidence is in front of them: it is not about well-managed authorities or otherwise. It is always possible to pick out councils that can be understood as examples of good practice—or in some cases good fortune, as recipients of the levelling up fund—but that does not describe the overarching narrative across the country of decreasing funds and the cutting of services, and of the irreparable loss of infrastructure, including buildings, as others have referred to. It is this that Lucy Frazer and the rest of her Government refuse to acknowledge.
I applaud the Government for giving the arts and the creative industries such a prominent position in the Budget, and one hopes that prominence will continue. However, theatres, museums and orchestras will have a sense of relief, more than anything, that tax relief, which was originally increased to counter the effect of Covid on the arts, has been set permanently at a higher rate. That shows perhaps more than anything how much some organisations that have normally depended on local government funding have come to depend on what was originally a temporary measure.
Staying with the Budget, capital projects are welcomed and will not be turned down, but what the arts really need is that basic help with day-to-day funding for which local government has been key. As a colleague pointed out to me earlier in the week, the Budget is not a spending review.
I will touch on one other area, the nature of the arts themselves. It is impossible in this discussion not to bring in funding streams other than local government, such as the Arts Council, which has started to fund through the Let’s Create strategy much that would once have been funded by local government, such as community arts projects, side by side with professional arts and arts facilities. For a long time my worry has been where this leaves professional artists and performers. Both community arts and professional arts are important, but there is an increasing danger that the professional arts are being shut out. That needs to be addressed because it is happening due to local government cuts.
It has become clear that we do not have a strategy for the arts that includes local government funding. We need more joined-up thinking, including between DCMS and the Department for Levelling Up, Housing and Communities. On funding of the arts overall, we are still moving in the wrong direction. I understand that the Arts Council has been asked how it can now make further savings of 5%. This makes no sense. As the LGA says:
“Public funding is an essential part of the ecology of the arts and culture in the UK”.
The Arts Council found that in 2020, for every £1 generated in the arts and culture, an additional £1.23 gross value was generated in the wider economy. Our arts and creative industries are the growth area in this country. They stimulate growth, as my noble friend Lady Bull pointed out. It is high time we reinvested in them, not least at the hugely significant local government level.