Ministry of Housing, Communities and Local Government
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The Minister for Local Government and English Devolution (Jim McMahon)
I begin by thanking my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi), the Chair of the Select Committee, for opening the debate with her usual diligence and, rightfully, her challenge. I also pay tribute to all the other members of the Committee who were in the Chamber today for the work that they do throughout the year. It is often unseen, and maybe even unsung, but it is appreciated and it makes a huge difference to the functioning of a good Government.
The wide range of contributions today demonstrates the significant interest in the vital work that the Department does in driving positive change to the lives of many working people. On behalf of the Deputy Prime Minister and my fellow Ministers, I also thank departmental officials for their tireless work and dedication over the last year. They are working solidly to ensure that we get these reforms through, that we sort out the funding foundation and that we deliver the ambitious plan that we set out for this Government.
Turning to this debate, the Chancellor took decisive steps to stabilise the country’s financing, to back growth and to rebuild every region across the country, repairing the damage felt by working people, communities and businesses after a decade and a half of stagnation. The Government must now use every tool at their disposal to ensure that we turn that tide. The new investment rule is a bold but important tool, a move that has freed up an extra £113 billion of investment over the next five years, including for schools, hospitals, roads, green energy and, of course, housing. This will deliver good jobs, as highlighted by my hon. Friend the Member for Loughborough (Dr Sandher), because housing is at the very heart of this Government’s commitment.
I am delighted that we have increased the budget for the affordable homes programme by £400 million this year. Indeed, 2025-26 has the biggest annual budget for affordable housing in over a decade. This shows what can be achieved, but our efforts will not stop there. The spending review announced a new 10-year affordable homes programme with £39 billion of new investment, alongside a 10-year rent settlement and £2.5 billion in low-interest loans for social housing providers. This will address many of the concerns raised by my hon. Friend the Member for North East Hertfordshire (Chris Hinchliff). This is a generational intervention, but do not just take my word for it. The National Housing Federation was clear that this is
“a transformational package for social housing and will deliver the right conditions for a decade of renewal and growth.”
We have heard from many friends across the Chamber, including my hon. Friend the Member for Milton Keynes North (Chris Curtis). He echoed the Deputy Prime Minister, who has long argued that social and affordable housing is a bedrock of opportunity. The homes that we build now will house families for many generations to come, giving them a safe, decent and affordable place to call home, keeping communities together and investing in the most fundamental right that the people of Britain rightly expect. That is why this is so central to the Government’s work and one of our defining missions.
Alongside building new homes that are safe and decent, this Government are taking real steps to ensure that all existing homes are safe, too. In response to the final report of the Grenfell Tower inquiry, we made firm commitments to accelerate the pace of building remediation and we are backing our words with action. We have increased funding for building remediation by £553 million in 2025-26, and we are taking our annual funding to over £1 billion for the first time. We are also making over £1 billion available for new remediation funding. Over the coming years, social housing landlords will see the benefit and this will bring to an end the unfair two-tier system that has treated social housing tenants as second-class citizens for far too long, as highlighted by my hon. Friend the Member for Kensington and Bayswater (Joe Powell).
Supporting the most vulnerable in our society is at the heart of our Department’s work, so we are pleased that we are making record investments into our homelessness system this year, including a £233 million uplift that will take homelessness funding to over £1 billion in 2025-26. Alongside this, we have increased funding for the local authority housing fund by £100 million this year, allowing councils to invest in the long term by increasing their stock of temporary accommodation. This will allow us to begin to bring to an end the use of unsuitable and expensive bed and breakfasts to house families.
It is a matter of national shame that over 165,000 children live in temporary accommodation. Many of those kids are away from school and their friends and are often in accommodation that none of us would choose for our own families, as my hon. Friend the Member for Welwyn Hatfield (Andrew Lewin) rightly said. I say to the House that if it is not good enough for our own children, it is not good enough for any child, and we will address this scandal head on.
I assure the House that the Government are under no illusions of the scale of the financial challenge that our councils face. I know the difference that councils can make, having had the honour of serving as a councillor over many years. That is why we are absolutely committed to working in partnership with the sector to rebuild local government from the ground up so that it is fit, legal and decent, getting ahead of the crisis management and delivering better outcomes for the people we were all sent here to represent.
The recent spending review provides an extra £5 billion of new grant funding in the next three years, including £3.4 billion of new grant funding to be delivered through the local government finance settlement. We are going even further by fundamentally reforming the local government finance system. The current system is an outdated model that means some places face neighbourhood decline. It hits at the heart of what it means to live a decent life in a good place. To add to that, the escalating cost crisis in adult social care, children’s services and temporary accommodation makes matters even worse. It is not fair for outcomes or for councils either. Although the previous Government said they understood this, they failed to take the action needed to address it—we will not make the same mistake.
The fair funding review 2.0 consultation, launched last week, sets out the heart of the matter. We will take into account the real cost pressures being felt in key areas, as highlighted by my hon. Friend the Member for Bexleyheath and Crayford (Daniel Francis). We will also take into account remoteness, as rightly identified by my hon. Friend the Member for Shrewsbury (Julia Buckley), as well as deprivation, the ability to raise council tax locally, daytime visitor numbers, temporary accommodation cost pressures, and much more. Coming to the point rightly made by the Liberal Democrat spokesperson, the hon. Member for Mid Dorset and North Poole (Vikki Slade), the cost of labour in areas will also be taken into account. When Members see the fair funding review, I hope they will see that we have taken into account those cost pressures being felt in every local authority, and that we have done this with integrity, because it means a lot to ensure that we finally get a system right that for too long has, frankly, been broken.
All these measures are being supported by the first multi-year settlement in a decade. The importance of that was set out by many Members, but in particular by the hon. Member for Bicester and Woodstock (Calum Miller), who spoke about the stability needed and ensuring that councils have that firm foundation. A fair funding formula needs to do just that, and this is a promise delivered.
This Government have made choices, and we are open about those choices because they have allowed us to make the record investments that I set out earlier. One of those choices was to reform the inefficient, ineffective and outdated local growth funding landscape. As such, we are continuing the UK shared prosperity fund at a reduced level of £900 million for one financial year for transition, before we move to a model of targeted long-term local growth funding, as confirmed at the spending review. Deprived communities and mayoral regions will see the benefit. The north and the midlands will also benefit—their potential has been untapped for too long. Overall investment in Scotland, Wales and Northern Ireland will be protected, and communities will have genuine control of where funding goes for their areas for the first time in a long time.
We are making significant investments in the things that matter to local people—in social and affordable housing, in building safety, in homelessness and in local government. For far too long, we have seen the erosion of the things that make places safe, clean and decent and that give pride of place, because the previous Government did not take on the challenge in the way that was needed. We are not willing to do that. We are not willing to stand by idly while the system falls over, outcomes get worse and, in the end, costs escalate to the point of crisis. We are fixing the foundations, getting on with the job and finally giving our councils and communities the justice that they deserve.