Three things we learned from Rishi Sunak’s Liaison Committee appearance

Rishi Sunak’s claims about local government finance don’t stack up

The prime minister dismissed the committee’s concerns about the parlous state of local authority finances, pointing to substantial increases in funding since 2019 and support for adult social care as evidence that the government has done its part in funding local government. There is some truth to this. Local authority core spending power – the amount that they can spend on services – has risen by 16.3% in real terms since 2019/20.

However, that funding injection follows a decade in which core spending power fell by roughly a quarter in real terms. In that context, recent funding uplifts are welcome but still leave councils approximately 10% worse off than they were in 2010/11.  

That cut might have been manageable if local authorities had not also faced rising demand for some of their most expensive services: adult and children’s social care, homelessness services, and special educational needs and disability (SEND) services. The recent rises in funding are less the result of largesse from government, and more the unavoidable reversal of cuts that have proved to be politically unsustainable. 

Despite Sunak’s protestations, his government knows that local government finance is in a critical state. The Department for Levelling Up, Housing and Communities (DLUHC) has extended the use of what it calls “Exceptional financial support” ⁷ Local Government Association, Provisional Local Government Finance Settlement 2024/25: On-the-day briefing, 18 December 2023, www.local.gov.uk/parliament/briefings-and-responses/provisional-local-government-finance-settlement-202425-day  for local authorities – which typically means allowing councils to sell assets to cover day-to-day spending – for 2023/24 and 2024/25. So far the government has provided 18 local authorities with this form of support worth £1.4bn in 2024/25 ⁸ Department for Levelling Up, Housing and Communities, Exceptional financial support for local authorities for 2024-25, 29 February 2024, www.gov.uk/guidance/exceptional-financial-support-for-local-authorities-for-2024-25  – a real terms increase of 58% compared to 2023/24. 

That support has likely meant that fewer local authorities have issued section 114 (or ‘bankruptcy’) notices than otherwise might have, but this kind of funding is not sustainable; councils can only sell assets once, while demand is ongoing.  

Only the government is to blame for uncertainty over spending plans  

Despite repeated questioning from the committee, Sunak avoided providing clarity on how topline spending plans will translate into departmental settlements after March 2025. He said that annual spending increases have “not been divvied up into various departments, and that is what spending reviews are for. Necessarily, government will prioritise at that moment”.  

This would be a more convincing argument if it was impossible for his government to provide more details. But that is not the case. The government has made a choice to provide headline spending increases (approximately 1% annual real terms increases in day-to-day spending) but not to provide details about how those plans break down at a departmental level. With a potential autumn election, it would be possible for the government to run a single-year spending round over the summer, even if that would have been overturned by an incoming government. There is a good reason the government didn’t do this: providing spending details would reveal politically unpalatable outcomes and allows them to cut taxes in the short-term while still meeting their debt fiscal rule.

There are two potential paths for the government with the current post 2024/25 spending plans. Either it can meet its commitments on the NHS, childcare, defence, and foreign aid and consequently impose real terms cuts of -3% per head per year on areas such as local government and the criminal justice system. Or it can distribute spending more evenly and break those commitments. The true reason for not clarifying spending allocations is because doing so would shatter the fiscal illusion that Sunak and his government have worked so hard to create, and on which he hopes to fight the election. 

The Liaison Committee will look very different after the general election 

Five of the 14 committee chairs who participated in this week’s Liaison Committee meeting have announced that they will leave the Commons at the end of the parliament. Overall, 10 of the 33 serving select committee chairs currently plan to stand down, representing the largest cohort of retiring chairs since 2010.

This exodus of talent from the green benches – with 99 MPs due to depart at the next election – risks undermining scrutiny of whoever forms the next government. It also poses yet another challenge to the select committee system, already beleaguered by poor attendance and a rapid turnover of chairs, with the defence committee having had three chairs in the last six months alone. New MPs and experienced hands alike must work quickly in the new parliament to plug these gaps if they are to hold the next government to account.