Local Government Finance

Manuela Perteghella Excerpts

Wednesday 11th February 2026 Commons Chamber

[Manuela Perteghella (Stratford-on-Avon) (LD)]

I am incredibly proud to have been a councillor until last year, because local government is the foundation of so much that matters in people’s daily lives. It keeps our streets clean, supports vulnerable families, funds social care, maintains roads, protects our environment, ensures that our children can get to school safely, keeps our bins emptied and keeps our potholes filled, but not everywhere. When councils are stretched to breaking point, it is residents who feel the strain.

I welcome the move to a multi-year settlement, which we have long argued for. Councils need certainty and to plan beyond a single financial year. That stability matters, but let us be clear: a longer settlement does not in itself fix a broken system. The Public Accounts Committee has warned that deficits could reach nearly £4 billion a year by 2027-28, and that is not sustainable.

On top of that, we now have rising demand, inflationary pressures, increases in the national living wage and the hike in national insurance contributions, and councils are expected to absorb all of this. Further, making any material changes—for example in the assumptions about the level of business rates pooling and effectively reducing councils’ funding allocation between the provisional and final settlement—will cause serious challenges for many councils, including Stratford-on-Avon district council, which could see a big cut of 5% or more of its total spending power. If I heard correctly, the Secretary of State pledged to refund those councils affected by this material change, and I would like those on the Treasury Bench to confirm that. Our constituents are the ones who are going to be impacted, and the provision of valuable local services will be affected.

I am deeply concerned about the impact on rural areas like mine. The shift to a need-and-demand model risks overlooking the real costs of delivering services across large, sparsely populated areas. Rural councils often receive less grant funding yet face higher transport costs, greater recruitment challenges and weaker public transport networks. That reality must be properly recognised in any fair funding formula.

In my constituency, I see the pressures on local government every day. Stratford-on-Avon district council, led by the Liberal Democrats, has shown what responsible local leadership looks like even in tough times. It has delivered the third highest recycling rate in England. It has rolled out natural flood management. It has installed solar panels on leisure centres to cut running costs and reduce emissions. It has allocated £600,000 to a cost of living mitigation fund to support our most vulnerable families. That is practical, sensible, community-focused governance. That is what can be achieved when councils are run competently and with a clear sense of purpose.

We can contrast that with the chaos we have seen at Warwickshire county council, now run by Reform. Last week, after a gruelling 10-hour meeting, the minority Reform administration failed to pass a budget. The Liberal Democrats put forward an alternative that would have invested £20 million in tackling child poverty, protecting youth services, improving home to school transport, and investing in infrastructure for the future. For an extra 39p a week, we could have protected services for thousands of young people and vulnerable residents. Instead, Reform doubled down on cuts that would hit families hard, including changes that could leave children walking up to five miles to school, often along unlit rural roads. Reform and the Conservatives combined to block that investment, and then still could not agree a budget of their own, leaving the council in limbo. This Tory-Reform stitch up is costing residents in Stratford-on-Avon and across Warwickshire. As we look ahead to local reorganisation in Warwickshire, these choices matter even more.

[Mr Andrew Snowden (Fylde) (Con)]

On the point about Reform councils and the promises they made and the reality of that, in Lancashire they are trying to balance the books by initially consulting on closing 10 care homes and day centres and narrowing that down now to just the day centres. Does the hon. Member share my surprise that Reform MPs are not here to defend their record on what they promised versus the reality of a Reform-led council?

[Manuela Perteghella]

Yes, the Reform Benches are empty, as we all can see and as the British public can see, and this is really important because, as I have said, local government is the foundation of our places. It gives us our civic pride in our areas and is on the frontline of delivering services, so this is really disappointing, and there is chaos in Warwickshire; we are still without a budget. Stratford-on-Avon district council has made a clear case for a south Warwickshire unitary authority that reflects the real communities and keeps decision making closer to residents. Reform is pushing for a single county-wide super-authority that would centralise power, moving it further away from local people. At a time when trust in politics is fragile, we should be strengthening local democracy, not weakening it. We must keep local government local.

Local authorities are ready to play their part in delivering growth, tackling the climate emergency, insulating homes, improving air quality and building the infrastructure that our communities need, but they cannot do so if they are permanently firefighting. If we are serious about having strong communities and a strong economy, we must get local government finances right and not defund rural councils. We need to support them, so that they can deliver for their residents, rather than leaving them to pick up the pieces of national Government failure.