Labour MPs Demand Increased Funding Amid North-South Divide

Keir Starmer is facing a potential rebellion from Labour MPs in the north-west of England, who are urging the government to increase funding for their local councils over the next three years. A coalition of MPs from the Liverpool city region has formally written to Steve Reed, the local government secretary, challenging the recent three-year funding settlement. They argue that it unfairly disadvantages northern communities, which already struggle with economic challenges.

The letter, supported by Steve Rotheram, the Labour mayor of the Liverpool city region, calls for more financial resources to be allocated to towns like Wigan, Warrington, and St Helens. The funding settlement is set to be voted on in the House of Commons, with some MPs warning they may oppose it to push for changes.

Anneliese Midgley, MP for Knowsley, expressed her concerns in the Commons, stating, “In Knowsley, where deprivation is driven by low incomes, the provisional local government settlement doesn’t meet the needs we face.” This sentiment reflects a growing discontent among north-west MPs as they prepare for the upcoming elections, particularly amidst challenges from the Reform UK party.

Concerns about the fairness of the funding distribution were echoed by Jim McMahon, MP for Oldham West and former local government minister. He noted that while the government has made strides to stabilize local authorities, many are still facing budget cuts due to rising demands for essential services such as children’s services and adult social care. McMahon has called for an additional £400 million each year to be included in the recovery grant for councils with the highest needs.

The inclusion of housing costs in the deprivation index has been a focal point of criticism from northern leaders. Stephen Houghton, the Labour leader of Barnsley council, remarked, “The inclusion of housing costs in the deprivation index has moved money that should have been going to the north back to the south.” This adjustment has sparked frustration among local leaders who argue that their areas are penalized despite high levels of deprivation.

Recent calculations by the Special Interest Group of Municipal Authorities, which represents 49 urban authorities, indicate that many councils will face real-terms cuts in their funding from central government over the next three years. A separate analysis by the Local Government Association revealed that around 15 top-tier councils and 115 district councils in England, particularly in London and the south-east, will also see reductions in total funding.

As financial pressures mount, local authority leaders warn of a troubling trend as councils attempt to avoid insolvency. Last year, a record 30 councils in distress relied on Exceptional Financial Support (EFS), totaling £1.5 billion. More councils are expected to seek similar financial aid this year due to rising demands in social care and homelessness.

Louise Gittins, chair of the Local Government Association, emphasized the urgency for government intervention, stating, “The government should urgently provide additional new funding to protect councils from real-terms cuts and work with councils on deeper, long-term reform so local services remain financially sustainable and communities get the support they need.”

As the debate over the funding settlement intensifies, the outcome of the Commons vote may determine the future of local governance in northern towns, highlighting a significant north-south divide in funding and resource allocation.