Sir Keir Starmer has told councils that they will not be getting extra cash for his levelling-up plans because there is no “magic money tree”.
The Labour leader argued that he could fulfil Boris Johnson’s vision by working better with local authorities and mayors, despite acknowledging that “there isn’t enough money” for councils currently.
Council leaders privately said this was “not credible’ and predicted that Labour would be forced to find more money to deal with a situation where one in five local authorities say they are at risk of bankruptcy.
• Keir Starmer and Angela Rayner vow to revive levelling up
Launching Labour’s local election campaign in Dudley, Starmer said that “levelling up is a good ambition for Britain”, as he embraced Johnson’s goals while castigating the Conservatives for failing to deliver them.
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Starmer said that “of course it struck a chord” when Johnson promised to boost growth outside London and restore local pride, but argued: “People say to me the worst that you can do in politics is to prey on people’s fear. Yet in some ways preying on their hopes is just as bad, and that’s what the Tories did with levelling up.”
Accusing Rishi Sunak of “treading water” by refusing to hold a May general election, Starmer referenced David Cameron’s infamous 2015 election slogan warning of “chaos with Ed Miliband” to say the choice this year would be “stability with Labour or chaos with the Tories”.
He argued that Labour plans for more devolution and using a “more dynamic state” to encourage private investment would allow the economy to grow through better infrastructure, skills and planning locally. Boosting the productivity of towns and cities outside London to match international counterparts would grow the economy by £38 billion to £55 billion, Labour argues.
However, Starmer refused to pledge more public money for regional development and said: “I can’t pretend we can turn the taps on.” Acknowledging the “appalling situation” in local government, Starmer accepted: “Councils of all political stripes are struggling with the lack of funding they’ve had over a prolonged period.”
But challenged to pledge extra funds, he said: “Can I stand here and pretend to you that there’s a magic money tree that we can waggle … the day after the election? No.” He continued: “Of course I want to invest more in our public services and our public places and our local authorities. We’re going to have to work hard to do that. I can’t pretend we can do that on day one.”
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Starmer blamed the Conservatives for the lack of spare cash and said they were using budgets to “salt the ground for an incoming Labour government” by allocating extra money for tax cuts — backed by Labour — rather than public services. He pointed to the “shocking” fact that only 10 per cent of £10 billion in levelling-up funds had been spent and said better management would free up “a huge amount of money”, arguing that longer-term funding settlements would allow councils to plan better.
“In so far as we can unlock the money that is not being unlocked, the 90 per cent; in so far as we can change the funding formula, so it’s three years not one year; then yes, we can do more for local authorities,” Starmer said.
The party’s levelling-up plan warns of a “long, hard slog to rebuild local government” and Starmer said: “The only way through this is to have a better funding settlement and to have those plans in place to grow the local economy.”
He is promising to hand over transport, skills, housing, planning, employment and energy support to mayors and tell all English councils not covered by existing devolution deals to band together to form one. “Devolution is absolutely essential for taking on regional inequality. Democratic issues are better made by local people with skin in the game,” Starmer said.
Pete Marland, of the Local Government Association, said: “The amount of funding available to councils is out of line with the requirements on them. As well as needing to address this, any incoming government needs to give urgent attention to the entire system of funding local government.”
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But he backed Starmer’s reforms, saying: “Multi-year settlements would allow councils to plan ahead and help to deliver against national priorities such as economic growth, housing, net-zero support for families and children and improved health.”
