Rachel Reeves has faced warnings that she “failed” to back English councils in the spending review, including authorities which are effectively bankrupt.
Woking MP Will Forster called on the Chancellor to “justify” a “lack of investment” into local government, and Tory Lewis Cocking said Labour’s spending plans were “devastating” for the sector.
The Treasury will pump an additional £3.4 billion per year into councils by 2028/29, compared with 2024/25, which combined with yearly council tax rises is set to boost their spending power by 3.1% in real terms.
But Mr Forster warned that “in the detail of the statement”, the Government “is only investing an extra 1.1% in local government next year and the year after”.
The Liberal Democrat MP told the Commons he was “very disappointed” with the Chancellor’s statement and asked: “What does the Chancellor say to councils across the country and to my constituents of Woking to justify that lack of investment?”
Ms Reeves replied: “Well, that’s real-terms increases in spending every year, that this Labour Government are giving to local authorities.
“And that compares to the Conservative-Liberal Democrat administration from 2010 to 2015 that cut real spending by 2.9% every year, so I’m much happier to stand on my record as Chancellor than what the Liberal Democrats did when they had a chance of being in government.”
Woking issued a section 114 notice two years ago, in June 2023, when it faced having to plug a £1.2 billion deficit.
Billpayers in the Surrey borough faced a 9.99% council tax rise the following year.
Mr Forster, who is a member of the Commons Housing, Communities and Local Government Committee, told the PA news agency: “In today’s spending review, the Chancellor has failed to invest in local government – and she is refusing to acknowledge the harm this will cause.
“In my constituency of Woking, our local authority has already gone bankrupt, I fear more will soon follow. Following the former Conservative administration bankrupting Woking, we have seen public toilets close.”
He called on the Government to “support councils more”.
The spending review which Ms Reeves fronted on Wednesday pledged “wider reforms” which “will ensure funding is effectively targeted, based on an updated assessment of need, and will consolidate funding to give local authorities greater flexibility to innovate”.
Local government reorganisation will “improve the join-up between local services, enabling councils to deliver services more efficiently”, according to The Treasury.
Conservative MP for Broxbourne Mr Cocking, who is also a member of the Commons committee, described the spending review as “devastating”.
He said: “Councils that are going through local government reorganisation, where councils that have been run really well, are going to be potentially lumbered into new super-unitary councils, with councils that haven’t managed their finances well”.
Mr Cocking said that where authorities merge, “you’ll find that residents that have got sound council finances, have had good services, are now going to be subsidising areas that have made bad decisions”, and added that the spending review failed to compensate for this.
Surrey’s district and county councils are set to merge, with new single-tier authorities taking on town hall functions, as part of the Government’s push towards “unitary” councils throughout England set out in last year’s English Devolution White Paper.
