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Public Services: Local Authority Funding

Volume 645: debated on Monday 23 July 2018

8. What assessment he has made of the viability of local authority funding for the maintenance of acceptable levels of public services. (906578)

Our local government finance settlement will increase resources for local government over the next two years because we recognise the pressures on local services, but it is right for decisions about funding priorities for individual local services to be made by local area representatives.

The Cabinet has followed your example by visiting Newcastle today, Mr Speaker, but rather than giving its members the welcome that they deserve, I came here to hear the Minister’s totally out-of-touch answer. Central Government funding for Newcastle has halved since 2010. The number of looked-after children has increased by a fifth since 2014, and the number of vulnerable adults has risen by the same proportion in the last year alone. Given a funding gap of £300 million in 2020 just to keep services running, how does the Minister think Newcastle can deliver good public services?

As we have discussed before, the hon. Lady’s local authority actually receives more funding per household than the average local authority similar to hers. Today of all days, I was hoping that she would welcome the meeting of the Cabinet in her area, the extra £1 billion for the northern powerhouse, and the continuing success of the Great Exhibition of the North, chaired admirably by my constituent Sir Gary Verity. In her area, the sun is shining, the visitors are pouring in, and the local economy is booming. It is a good time to be in the north-east, and that is being delivered by a Conservative Government.

I hope that one of those Ministers, in the course of this away day—which I am sure is a meeting of the utmost importance—will take the time to visit Newcastle University, which is a most admirable institution. They could benefit greatly from a visit. I mean that the Ministers could benefit, as much as the university.

I welcome the Government’s commitment to a fair funding formula, and I thank the Minister for meeting me and representatives of Leicestershire County Council. Will he confirm that the review that is under way will look at the balance of funding between districts and counties? After all, it is the counties that are bearing the burden of a growing older population and the growing burdens on children’s social services.

I can confirm that I have met representatives of my hon. Friend’s council regularly to discuss this topic, including just the other week at the local government conference. We received more than 300 submissions to the recent consultation on fair funding. That is one of the topics raised, and the Department is considering all responses with a view to replying later this year.

There is a great deal of concern in local government about the financial cliff edge that is facing a number of authorities. The Public Accounts Committee recently asked the Department to do two things: to explain by the end of September why it believes that local authorities are sustainable in the current spending round; and to agree with local authorities within 12 months a definition of financial sustainability and a methodology for assessing risk. Those are both important requests. Will the Minister ensure that his Department complies with them?

I thank the Chair of the Housing, Communities Local Government Committee for his question. As he knows, the Department is considering the Public Accounts Committee’s report as we speak. As for his broader question, the Department is constantly evaluating local government sustainability, and in the upcoming meetings, and ahead of the spending review, the topics that he has raised will of course be closely scrutinised.

How does the Minister justify an emerging system of negative rate support grants under which councils that have made themselves financially self-sufficient are now being told to make net contributions to the Government?

I am pleased to tell the right hon. Gentleman that the Government will be launching their consultation on negative RSG very shortly, and I look forward to his contribution.

Last week the Municipal Journal reported the Minister as saying that councils will be unhappy with the outcome of the fair funding review, so can he clarify just how unfair his review is likely to be and which types of council will be hardest hit?

What I can confirm is that the fair funding review will be a bottom-up fresh look at how we fund local government in this country. It is long overdue, as the current formula is 10 years out of date with over 120 different indicators. It is right that that formula is fair, transparent and objective, and I am sure all councils will have a fair crack at persuading me of their case.

I am very glad that the Minister is in such a good mood; he really is a very cheery, upbeat fellow who positively exudes optimism about all things and all around him. We are delighted to see him.

But it will not wash, Mr Speaker. The Tory-led Local Government Association is warning that the funding gap for councils is now due to grow to £8 billion and the Public Accounts Committee has damned the financial capability of the Ministry to sort out this mess. With Northamptonshire the first broken shire and other local authorities of all types teetering on the cliff edge, when, rather than managing down expectations about fair funding, is the Minister going to stand up for the sector and demand the resources our public services so desperately need?

If the hon. Gentleman had been at the local government conference just the other week he would have heard my right hon. Friend the Secretary of State describe to the sector exactly what this Government are doing to support them. We acknowledge the pressures on local government over the past few years; they have done a commendable job of maintaining high-quality public services in a difficult environment, and we will ensure that they continue to get the backing they need from this Government to deliver for all our local communities.