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Local Government Finance (Tameside and Oldham)

Volume 597: debated on Tuesday 23 June 2015

I beg to move,

That this House has considered local government funding in Tameside and Oldham.

I want to use this opportunity to highlight the impact of the drastic and unfair cuts to local authority spending on local people and public services in my constituency. I also want to set out a better way.

Since 2010, the Government have cut cash funding to Tameside Council by just over 41%, forcing it to cut its budget by £104 million—more than half. The council has lost 1,700 jobs, almost half its workforce. A further £24 million in cuts is now set for 2015-16 and another £14 million for 2016-17. Together, that total of £142 million in cuts amounts to a real-terms equivalent of 53% of the total budget and more than twice Tameside’s council tax income.

I congratulate my hon. Friend on securing the debate and on her tremendous contribution since being elected. As a former Tameside councillor, I could say much about our local government funding settlement, but the fundamental point I wish to register is that we want local authorities to continue to be the deliverers of core public services—I do, and I think there is consensus for that. However, the local government settlement system for areas such as ours is simply not sustainable.

I believe there should be an incentive system—a way of rewarding councils for house building, economic growth and so forth—but there must also be a floor to ensure that vital, core public services are met. In Tameside, we are very close to falling through that floor.

I thank my hon. Friend for illustrating what I am trying to portray. Some fantastic councils up and down the country are facing genuine difficulties.

Oldham Council, which is also within my constituency, has done even worse than Tameside Council. It has been forced to cut £200 million from its public services since 2010—the second-largest cut in Greater Manchester. Taken together, my two boroughs have already lost from their public services more than £300 million—that is, incidentally, the annual cost of running the royal household.

Across Greater Manchester, local councils are making almost £450 million of cuts, which comes after 15,000 jobs were lost from our town halls after the last round of budget reductions.

I, too, welcome my hon. Friend as the Member of Parliament for Ashton-under-Lyne. Like my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), I served as a Tameside councillor before entering this place.

The situation is worse than the picture my hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) is painting, because such reductions in council spending have an impact on wider public services. For example, the cut in adult social care budgets has had an enormous impact on the ability of the NHS in Greater Manchester to deliver quality health services.

My hon. Friend is absolutely right that the impact will be felt across all the public services, which are struggling with their own cuts.

Local government is facing the biggest challenge in its history. Spending as a proportion of GDP is forecast to fall from 4% in 2010 to less than 2.5% in 2019, according to the Office for Budget Responsibility.

I congratulate my hon. Friend on securing this important debate. One of the consequences of the cuts she is experiencing, apart from the fact that they are disproportionately affecting areas such as Greater Manchester while more affluent areas are receiving increases, is the long-term effect on life expectancy, about which there is a solid evidence base.

My hon. Friend is absolutely right. After five years of austerity, it is becoming increasingly difficult for well-run councils such as Tameside and Oldham to protect the most vulnerable from the impact of Government policies.

Demand for core services, particularly in social care—formerly, I worked in home care—continues to rise steeply, while funds are being drastically cut. Who will pay the price for the mismatch between the demand for services and the resources available to fund them? Will it be the 5,000 adult care service users in Tameside who have a physical difficultly, a frailty or a sensory impairment? Will it be the 4,000 people who use reablement services to help them live at home, or the people the council supports by providing nursing or residential care? Will it be the 1,300 mental health adult social care users, the 556 adults receiving learning disability services or the 410 vulnerable looked-after children in Tameside? What about the 1 million telephone callers to the council every year? Should staff just ignore the ringing phone, stop cleaning the 715 km of highways and footpaths every month, stop emptying the 45,000 wheelie bins and forget the 140 tonnes of street sweeping and the 290 tonnes of litter per month?

The Local Government Association believes that by 2020 the money available to fund some basic but essential council services, which we all rely on, will have shrunk by 90% in real cash terms. More than 60% of council spending will be on adult and child social care. Local authorities up and down the country are facing difficult choices.

My local authority, Salford City Council, is in a similar situation: up to £4.7 million is going to be cut from adult services alone. Its Labour mayor has tried to limit the effect of such swingeing cuts by implementing the living wage and employment standards charter, supporting local people into work with free nursery care and raising £5 million from the proceeds of crime.

Thank you for that guidance, Ms Dorries.

Does my hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) agree that we need a fairer funding settlement for the whole of Greater Manchester, based on the real needs of localities?

My hon. Friend is right. I know her constituency well enough to realise that there is much more that unites us than divides us, not least on the issue of needing funds to provide basic services for our constituents.

Of course, not every local authority is facing the same agonising choices. Analysis by the all-party Local Government Association has shown that Labour local authorities have suffered average losses of £108 per person in spending power, while Tory councils have lost just £38 per head. Is that the Government’s one-nation Britain? Of the 50 worst-hit councils, 43 are Labour-run; of the 50 least-hit councils, 42 are Tory-run.

Even using the Government’s own carefully constructed figures on spending power, the unfairness is stark. Tameside has seen a 3.6% cut in spending power for 2015-16 alone—a cut of £74.77 for households in my constituency. Meanwhile, Oxfordshire’s spending power has risen by 1.3%, and Cheshire East’s has risen by 1.5%. Let us be clear: households in my constituency have lost almost £75 each, while households in Witney have gained almost £22 and those in the Chancellor’s Tatton constituency have become £25 richer. The number of food banks in Tameside has increased sixfold under a Prime Minister and a Chancellor who are busily feathering their own nests.

The Chancellor has announced a so-called stability Budget on 8 July, which will contain another £12 billion of cuts that will no doubt hit out-of-work benefits, disability allowances and personal social services. Inevitably, local government services will be hit once again.

The Independent Commission on Local Government Finances said today that councils are already at a cliff edge, which means that everyday services may not exist for much longer. People who depend on council services are already teetering on the edge of that cliff, and the Chancellor’s so-called stability Budget will push them over.

Tameside Council is forecasting that £4.5 million of cuts will be made to social care by the Chancellor’s stability Budget. Cuts to benefits would add another £4.5 million of extra pressure on council services. One cannot be taken without the other. Those cuts come on top of the £1 million cuts to public health services already announced in Tameside. The total in-year cut for Tameside will be up to another £10 million, and the situation in Oldham is exactly the same.

We are not alone. Sheffield Hallam University estimates that the Chancellor’s £12 billion of welfare cuts will take £5.2 billion a year out of the pockets of families in the north. Coincidentally, almost the same amount is lost in tax evasion every year. I look forward to the Tories pursuing multimillionaire tax avoiders with the same fervour as they are punishing poor working people, but I am not holding my breath.

I have no doubt that Tameside and Oldham Councils will continue the difficult work of managing the cuts and tackling the enormous challenges they face, but I fear that, for all their best intentions, many local people will inevitably suffer. There has to be a better way. I know that many Government Members genuinely believe in local democracy and local government, and will join me in congratulating Tameside, Oldham and many other local authorities for their work in stimulating private-sector investment, creating decent jobs, providing strong civic leadership, innovating services and being prepared to do things differently.

All that is at risk if local government services continue to be the whipping boy for austerity. That is why we need a new settlement for local government in our country. Devolution and more local decision making will undoubtedly play their part and I welcome the progress made, particularly in the development of the northern powerhouse. However, devolution is only part of the answer; in itself, it will not solve the funding crisis and cannot be used by central Government as an excuse to transfer responsibilities.

My hon. Friend shares my keen interest in the devo Manc proposal. In light of the facts she set out, there is concern—among northern MPs, in particular—that Ministers see it as a chance to palm off the blame rather than hand down the power. Does she agree that, whatever the final shape of local government in Manchester, resources much match responsibilities?

Once again, my hon. Friend hits the nail on the head. She anticipates my next point. If the northern powerhouse is to succeed, it cannot be used as a Trojan horse for more cuts. There must be a fairer settlement for local government: a settlement where reductions in spending do not fall on the most vulnerable in society and the places where they rely on a strong public sector; that puts public need first; that takes a place-based approach to finance, ending the madness whereby cuts to preventive local government services only fuel increasing demand for more expensive NHS treatment; and that helps to cut the appalling gap in outcomes between the most affluent and most deprived areas, ensuring that everyone has an equal chance to get on in life, regardless of where they started.

It is a pleasure to serve under your chairmanship, Ms Dorries. This is the first opportunity that I have had to welcome the hon. Member for Ashton-under-Lyne (Angela Rayner) to the House. I congratulate her on securing the debate and commend her on her speech about the situation in Tameside and Oldham. She and her colleagues are not necessarily enthusiastic about what is happening in her area as a result of the northern powerhouse talks, but I certainly take her comments today seriously.

The way local government is funded is extremely important and creates a great deal of debate. Thanks to the Government’s long-term economic plan, the deficit is falling, the economy is growing and employment is at a record high. The Government are putting public finances back on track. The past five years have seen huge changes in the way in which councils operate. Local government accounts for almost a quarter of total public expenditure. It was therefore inevitable that local government would have to play its part in reducing the deficit, but it has done so efficiently and effectively, delivering sensible savings while protecting front-line services. In fact, public satisfaction with local government services has increased or been maintained across the country over the past five years. That illustrates how successful councils have been. However, the job is not yet done, and the next five years will present further challenges. The Government still need to take difficult decisions about local government funding, to ensure that the public finances are on a sustainable path, and councils will need to continue to play their part.

I will in a moment, but I will make further progress first.

For Britain to be truly successful, every part of the country must thrive. With the 2015-16 settlement, the Government attempted to be fair to all of our great cities, counties, rural shires and coastal communities. The overall reduction in local authorities’ spending power in 2015-16 is 1.7%. When taking account of the funding provided to support local transformation, the overall reduction is lower still—1.5%. To answer one of questions from the hon. Member for Ashton-under-Lyne, those authorities with the greatest demand for services continue to receive substantially more in funding. Only London and the north-east have higher spending power per household than the north-west.

I will give way in a moment.

Just to put that in context, in Oldham the spending power per household is £2,400 and in Tameside it is £2,070, against a national average of £2,086. Furthermore, we have ensured that no council will face a loss of more than 6.4% in their spending power in 2015-16, the lowest level since we started out on the road to recovery.

During the past five years there have been unavoidable changes to local authority funding from central Government. We have ensured that these changes have been applied fairly and sustainably.

I will give way in a moment.

Through our reforms to the local government finance system, we have established a basis for a more self-reliant local government, and a sector that is less dependent on Whitehall and is instead increasingly confident in using the tools and incentives that we have provided to grow local economies.

The Minister talks about a fair funding settlement, but does he not appreciate that, because of their make-up, local authorities have different needs from and demands on services? Tameside and Oldham, for example, are grant-dependent because the council tax base is low and their ability to raise additional finance is therefore limited.

I understand what the hon. Gentleman says. That is why the north-west—particularly the Oldham area—has greater spending power than many other parts of the country. However, he undersells his area’s potential to raise revenue locally, through additional council tax and business rate retention. Councils have a greater stake in stimulating local growth. Authorities throughout the country are benefiting from greater powers in this sense, including—

I am going to make progress.

Councils benefiting from those powers include Newcastle, Sunderland and Northampton, which had the greatest growth in business rates retention in 2013-14, as a result of enterprise zones and new development deals. Authorities’ own estimates for 2015-16 show that 94% are expecting growth in their business rate income, above the level of assumed growth of £544 million in total. In response to the point made by the hon. Member for Denton and Reddish (Andrew Gwynne), I remind him that Oldham and Tameside forecast growth of £1.8 million and £2.4 million respectively, putting both councils in the top 100 authorities in England in terms of additional income.

I will give way in a moment. I am just going to finish this point.

As those authorities are members of the Greater Manchester and Chester business rates pool, which benefits from a zero levy, they will avoid paying any levy on the additional income that they bring in.

Can we get to the real point of this debate, which is that Oldham in particular, which I and my hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) represent, is having to take a £200 million cut by 2017, as she said? In this current year, it is having its spending power cut by 4.3%, whereas Oxfordshire, which happens to contain the Prime Minister’s constituency, has an increase of 1.3%, and Cheshire East Council, which happens to contain the Chancellor’s constituency, is having a 1.5% increase. Does that not clearly indicate a flagrantly politically partisan distribution of resources between Tory areas, where the need is less, compared with Labour areas where it is far greater?

I should say to Opposition Members that I will not take any further interventions after the right hon. Gentleman’s lengthy contribution. He needs to put this matter in the context of the authorities that he mentioned having far less spending power than those we are discussing in this debate.

The other way that the areas in question will no doubt benefit is through the new homes bonus. Councils benefit directly from the number of new homes built in their area and from bringing empty property back into use. We have provisionally allocated £1.2 billion of new homes bonus funding to local authorities in England for 2015-16. Of that, Oldham will receive £2.1 million and Tameside £3.5 million. Since the scheme began, local authorities have been rewarded with a total of £3.4 billion.

As well as growing their economies, the best authorities are transforming how they do business and demonstrating innovation, including in how they work with local partners. We are supporting them as they do so, helping them to achieve savings and, perhaps most important, improving outcomes for the people who use local services.

In November, the Government announced the 73 projects that were successful in bidding for the transformation challenge award. The projects will receive £90 million to improve services and ultimately will save the public sector more than £900 million. I would like to give several examples, particularly one in Manchester, but I do not have time to do so during this debate.

One critical area where the Government must work with councils to transform services is adult social care. I hear what the hon. Member for Ashton-under-Lyne says about her experience and I am sure that the House will welcome that experience. The Government are clear that the NHS and social care services must work together and move away from operating in financial silos. They must secure the best possible value from the local funding available for health and care in order to improve people’s lives. The Government are committed to making that happen, but just putting more money into the system is not the answer, despite Opposition Members’ comments. We need radical reform of how health and social care are delivered. The better care fund provides a new approach to protect social care services, breaking new ground in driving integration between health and social care.

Despite the challenges that I have mentioned, most local authorities have coped well. Most authorities froze council tax in 2015-16, helping people with the cost of living. The Government once again provided additional funding equivalent to a 1% council tax increase to help them to do so. This was the fifth successive year of freeze funding provided by Government, bringing the total package to £5 billion. That has helped to reduce council tax by 11% in real terms since 2010, with the average band D household saving up to £1,059. That is in stark contrast to the 13 years of Labour government, when council tax bills doubled.

I cannot, due to the length of the interventions that I took previously.

The financial constraints facing councils make it even more important that we deliver on our critical agenda of devolving power to local places and local people. That is one of the most exciting agendas in local government at the moment. Local government should no longer think of itself as a manager of central programmes, but should embrace its new power and responsibility.

The Government’s commitment has been demonstrated by the inclusion—the hon. Member for Ashton-under-Lyne will have seen this—of the Cities and Local Government Devolution Bill, which has started its progress in the House of Lords. Alongside the Bill, we will be talking to councils about their ideas for devolution, so that we can agree deals that make devolution a reality. The Government want the process to be bottom up and recognise that the right approach will be different in every area. We want to devolve power to cities, rural areas and neighbourhoods. The Bill will bring about the most far-reaching decentralisation of power in living memory and in particular will create a northern powerhouse with Manchester and other northern cities. It will create a directly elected mayor responsible for co-ordinating significant powers and budgets across transport, back-to-work support and health and adult social care.

Last November, Greater Manchester and the Government agreed a devolution plan that saw powers over transport, planning and housing transferred from central Government control to the Greater Manchester combined authority. In February, building on that, 10 local authorities, including a number that Opposition Members represent, came together with 12 clinical commissioning groups and NHS providers in Greater Manchester, along with NHS England, and agreed that from April 2016 they would take joint control of the estimated £6 billion health and care budget in the region. That will enable Greater Manchester to be freer to respond to what local people want, using experience and expertise from across government and the NHS to help improve outcomes and change the way in which public money is spent.

There is little doubt that the next five years will bring further financial challenges but, with the spending review approaching, hon. Members will appreciate that I cannot say much more about our financial plans today. The Government wish to work constructively with local government on these issues, and we are ready to listen to the views of councils.

Question put and agreed to.