Labour leader Keir Starmer commits to reforming council funding ‘straight away’

Labour leader Sir Keir Starmer pictured alongside shadow health secretary Wes Streeting
Labour leader Sir Keir Starmer pictured alongside shadow health secretary Wes Streeting
By Joe Locker, Local Democracy Reporter

Labour leader Sir Keir Starmer says he will reform council funding if his party is elected into power after Nottingham City Council declared itself effectively bankrupt in November last year.

Government commissioners were appointed to help run the authority in February, shortly after the Labour-run council issued a Section 114 notice amid a £23m in-year budget gap.

Speaking during a visit to King’s Mill Hospital on Monday, April 8, Sir Keir said should the Labour Party be elected into power, it would begin to reform council funding straight away.

“Many councils are in financial crisis and that is councils that are run by Tory Party, the Labour Party, because of the chaos and underfunding over many years,” he said.

“It is another to be added to the list of failures under this government. Almost everything is broken, whether it is the NHS, public services and now our councils. They touch it they break it.

“We will have to pick it up and fix it, if we are privileged enough to come into power.”

Nottingham was the latest in a lengthening list of councils declaring effective bankruptcy, including Birmingham City Council before it.

Sweeping cuts to jobs and services were then approved in March, owing to the significance of the financial challenges the authority is facing over the next few years.

While the £38m collapse of council-run Robin Hood Energy was cited as a reason for the authority’s poor financial resilience; reduced funding from Government, soaring inflation and increased costs and demand for social care have led to unprecedented pressures.

So much so the council could only set a balanced budget with exceptional financial support from the Government, whereby it has been given a £66m loan which must be paid back through the sale of assets.

One of the main issues raised by Nottingham councillors is the financial settlement provided by central government.

While the Conservative Government has been criticised for reducing its revenue support grant by almost £100m every year over the last decade, the nature of how funding is given is also a cause for concern.

This is because the financial settlement is provided just before Christmas and on an annual basis, which the council says is preventing it from planning effectively.

Sir Keir added: “There are things we can do straight away. The funding settlement should be over three years at least, that is what council leaders are saying to me.

“They could make much better use of their money and use it more effectively. We could do that straight away.

“We could reduce the pressure by making sure the economy is stable. This government smashed the economy, inflation went through the roof, that put a direct pressure on councils who spent a fortune on the effects of inflation and of course the Government has gone back on its promise for no-fault evictions.

“That means whichever council you are if someone is evicted and they become homeless or potentially homeless then that is another burden on council that could and should be removed.

“There are things we can do, but it is the same old story I’m afraid, which is 14 years of failure.

“Everything is broken and it will now fall to an incoming Labour government, if we are privileged to come in and to serve, to pick that up, pick the country up and move us forward.”

A Department for Levelling Up, Housing and Communities spokesperson said: “We recognise councils are facing challenges and that is why we recently announced an additional £600 million support package for councils across England, increasing their overall funding for the upcoming financial year to £64.7 billion.

“The Government is committed to reforming the local government funding landscape in the next Parliament to deliver simpler, fairer and longer settlements.”

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