Lord Fuller (Con)

My Lords, since the Great Reform Act of 1832, local authorities have been an integral part of our nation. Joseph Chamberlain unleashed the powers of municipal entrepreneurialism in the 1800s, bringing gas and clean water to the growing metropolis of Birmingham. A new council in Stevenage was created for the first new town, complete with a traffic-free zone opened by Her Majesty the Queen; I know that the noble Baroness, Lady Taylor of Stevenage, has done her bit to shape that town since. To bring us right up to date, the leader of Cornwall Council—another Taylor: my friend Linda Taylor, who has announced that she is stepping down in May—has championed a space port in her county. I congratulate her on those efforts and thank her for her service to the local government family. All those activities are about the 140 things that local authorities do for every family in every street and in every neighbourhood. For the past 14 years, I have been a vice-chairman of the Local Government Association’s economy and resources panel. Alongside the noble Baroness, Lady Taylor, I led all the district councils in England for our respective parties during Covid, and I remain a councillor, so I know that council finances in England are under pressure like never before. Reductions in grant funding, increases in the scale and complexity of service demand, and the recent spike in inflation and wage costs have created the perfect storm for our town halls. The fundamental challenge facing the sector is that cost and demand pressures are rising faster than funding. Although inflation has fallen steadily since its peak in 2022-23, significant cost and demand pressures remain in the system in council services. In essence, council revenues tend to grow linearly with the growth in the wider economy; lately, however, costs have grown geometrically in councils, with the demands from homelessness, children’s social care, adult social care and home-to-school transport growing fast and likely to get even worse. The Covid overlay is, of course, a further aggravation. There comes a moment where the lines of income and demand diverge so much that the gap becomes unbridgeable. That moment was already upon us before the national insurance announcements, and I want to explain its serious and consequential effects. Of the 140 activities undertaken by councils, three are responsible for nearly two-thirds of all the cost: social care in adults and children, and special educational needs. These pressures have seen the greatest increase in cost. We should get some numbers on the record for the Minister. Increases in cost and demand in adult social care have risen by £3.7 billion—that is, 18%—in the five years since 2019. Spending on children’s social care has increased by 25.7% in real terms in the five years from 2019 to the current year. Growing numbers of children with education, health and care plans mean that money spent on home-to-school transport has risen by 62.7% in the five years to this year. Taken together, the increased demand for services for children with special educational needs and disabilities results in an unexpected current account deficit of £5 billion this year for those services.