Local Government Finance Emergency

Chair: Lord Mohammed; Aide: Cllr Hannah Kitching; Hall Aide: Paul McGarry

Submitted by: ALDC
Mover: Zöe Franklin MP (Spokesperson for Communities and Local Government)
Summation: Cllr Bill Revans

Conference notes that:

1. In England, local government grants from central government have been subject to deep cuts in recent years, leading to a significant overall reduction in funding per capita.
2. Areas of greatest deprivation have tended to see the largest cuts in overall funding despite having the greatest need for the services that local government provides.
3. Increasing pressure from adult and children's social services, Special Educational Needs and Disabilities (SEND), home-to-school transport and temporary accommodation have meant cuts of up to 70 per cent in non-statutory spending.
4. The cumulative deficits in Dedicated Schools Grants (DSG), where the statutory override is due to end in 2027-28; the LGA has estimated that the sector's deficit will reach £5.0 billion in 2025-26.
5. Councils face increased cost pressures from inflation, rising pay, population growth and an ageing population.
6. Many councils are now in financial survival mode, with reserves depleted, surplus assets already sold and non-statutory services slashed.
7. Since 2018, seven councils have issued Section 114 notices, meaning that they are unable to meet their expenditure commitments; others are reported to be on the brink of issuing notices.
8. In 2025-26, 30 councils required Exceptional Financial Support, with a danger that emergency bailout deals are becoming normalised.

Conference further notes that:

1. Part of the rationale for local government reorganisation given by the Government was cost savings, but even the most optimistic savings projections from Local Government Reorganisation will not resolve the local government financial crisis.
2. Savings are likely to be achieved only in the long term while reorganisation costs are short term, while the process has consumed considerable financial and human resources.
3. Council Tax is a flawed taxation system, with taxation based on 30-year-old property valuations; the money raised is unrelated to actual local need or demand for services.
4. While the High Value Council Tax Surcharge seeks to tackle the under taxation of more valuable properties, the money raised will go to central government rather than local councils, with no guarantee that councils will see a net benefit.
5. While the Fair Funding Review offers help to some councils, others face considerable transitional pressure.
6. The multi-year nature of the Local Government Financial Settlement is welcome.

Conference believes that:

1. Local councils are a vital component in delivering both increased housing, including affordable and social housing, and economic growth.
2. Local services, under democratic control, delivered close to those who need them, results in more effective services at a lower overall cost.
3. Taxation for council expenditure must be fair and progressive, with the level set locally by democratically accountable councillors.

Conference recognises:

1. The outstanding work done by Liberal Democrat councillors and council leaders in innovating and delivering services to their communities under increasingly difficult financial circumstances.
2. The value communities place in Liberal Democrat councillors, demonstrated by Liberal Democrats successfully defending far more of their seats in council byelections than any other party.

Conference further believes that:

1. Any council having reduced funding because of the fair funding review must receive adequate transitional funding.
2. Government must deliver a long-term, sustainable solution to the DSG cumulative deficits and SEND funding it has promised.
3. A long-term solution must be based on a review of all the components of the funding system.
4. The overall level of funding for local government must be increased.

Conference therefore calls on the Government to:

1. Provide a sustained real-term increase in core funding for local government.
2. Implement a needs-based funding distribution through the Fair Funding Review with fully funded transitional protections so that no council faces destabilising year-on-year losses.
3. Deliver a long-term funding solution for SEND and DSG high-needs deficits.
4. Implement a comprehensive review of the local government funding system, with the objective of delivering a fair, sustainable, multi-year settlement that matches funding to need and reduces reliance on crisis measures.

Conference further calls on the Federal Policy Committee to ensure local government funding is within the scope of the policy work on empowering local communities set out in policy paper 161, Leading the Way. 

Applicability: England only.

Mover: 7 minutes; summation 4 minutes; all other speakers: 3 minutes. For eligibility and procedure for speaking in this debate, see pages 10-11 of the agenda. You can submit a speaker's card online here or in person.

The deadline for amendments to this motion is 13.00 Monday 2 March; you can submit amendments online here, see pages 9–10 of the agenda for more information. Those selected for debate will be printed in Conference Extra and Sunday’s Conference Daily. The deadline for requests for separate votes is 09.00 Sunday 15 March; see page 9 of the agenda for more information.