In a move that could spark a rebellion within Labour’s ranks, MPs from the north-west of England are pressing Keir Starmer’s government to provide more funding for their local councils. The MPs, many of whom represent constituencies in the Liverpool city region, have written to the local government secretary, Steve Reed, urging him to rethink the recently announced three-year local funding settlement, which they claim unfairly penalises northern towns.
The letter, which has been bolstered by a similar plea from Steve Rotheram, the Labour mayor of the Liverpool city region, argues that the current funding allocation is based too heavily on housing costs, rather than the true drivers of deprivation, such as low incomes. This, they say, has resulted in a disproportionate amount of money being directed towards the South, at the expense of struggling northern communities.
“In Knowsley, where deprivation is driven by low incomes, the provisional local government settlement doesn’t meet the needs we face,” Annaliese Midgley, the MP for Knowsley, told the House of Commons last week.
Jim McMahon, the MP for Oldham West and a former local government minister, echoed these concerns, stating that “everybody accepts that the government has done a significant amount to stabilise local government and reflect that deprivation is a driver of cost and need.” However, he added, “where MPs see there is a gap is when they go back to their local authorities who are taking budgets to council that will see more cuts.”
The MPs are now warning that they could vote against the local funding settlement when it is put to a vote in the Commons, in an attempt to force the government’s hand. One MP, who spoke on the condition of anonymity, said the issue is “causing a lot of angst among north-western MPs, a lot of whom are facing a challenge from Reform UK at the next election and need their constituents to be able to feel the effect of the investment the government is putting in.”
The situation has been exacerbated by the financial pressures facing many local authorities, with dozens of councils facing real-term cuts in their funding from central government over the next three years. This has led to warnings that increasing numbers of councils will be forced to apply for “bailout” loans to prop up essential services, such as social care and homelessness support.
As the government prepares to defend its local funding settlement, it faces a growing chorus of discontent from northern MPs who are determined to secure a fairer deal for their communities. The outcome of this dispute could have significant political implications, both for Starmer’s leadership and the future of local government funding in the UK.
