Motion made, and Question proposed,
That for the year ending with 31 March 2020, for expenditure by the Ministry of Housing, Communities and Local Government—
(1) further resources, not exceeding £13,222,573,000 be authorised for use for current purposes as set out in HC 2154 of Session 2017–19,
(2) further resources, not exceeding £5,087,100,000 be authorised for use for capital purposes as so set out, and
(3) a further sum, not exceeding £9,295,168,000 be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.—(Wendy Morton.)
I start by thanking the Backbench Business Committee for allowing this debate on this incredibly important matter. I thank the hon. Members for Hackney South and Shoreditch (Meg Hillier), for Sheffield South East (Mr Betts), for Birmingham, Ladywood (Shabana Mahmood) and for Newton Abbot (Anne Marie Morris) for supporting the application, along with all the members of the Public Accounts Committee. I also thank the hon. Members for Redcar (Anna Turley) and for Warwick and Leamington (Matt Western), who submitted similar applications that have been lumped in with this debate. I also give my thanks in advance to everyone who wants to speak today; I will be as quick as I possibly can.
Local government spending is a story of unsustainability and inequality. According to the Local Government Association, which is holding its conference as we speak, funding to local government and business rates have fallen by £4.1 billion since 2015. Councils have far less spending power, but here is the rub: our local councils are having to deal with a big growth in demand for key services. Taking into account the decrease in Government grants, subsidised a bit by the increase in council tax, our councils have lost nearly a third of their spending power over the last nine years, and key services are suffering.
We all know what that means, at its heart, for the most vulnerable in our communities. Since 2010 the number of homeless households has risen by 33%, the number of looked-after children is up by nearly 11% and the number of people aged 65 and over in need of care has increased by 14%. It is great that we are living longer, but central Government have not grasped the nettle.
The combination of with higher national insurance contributions, the apprenticeship levy and the national living wage means that councils are at breaking point. Given the major stresses on children’s services and adult social care, I will focus on those today, but there are many others, and I look forward to other Members making contributions about their local area.
For childcare and other local authority services, central Government have shifted funding away from a grant system and on to business rates. Shopkeepers, in particular, are now finding it difficult to carry on their business. Central Government have also failed to deliver on social council housing, which is an indictment.
I thank the hon. Gentleman for his contribution. In fact, spending on services has decreased by 19.2% in real terms, which is not sustainable.
In my local area, Vale of White Horse District Council is a good example. We won the council from the Conservatives in the last round of local elections, and now we have sight of the finances. I am sure this is not unique in the country, but there is not enough money to fund the basic statutory services that the council is expected to deliver. The council is therefore eating into its reserves at an alarming rate. Coupled with that, an outsourcing agreement that was meant to save the council £50 million, and in fact has saved nothing, is projected to cost the taxpayer money. We are in a dire situation in the Vale.
The situation in the hon. Lady’s area is mirrored in Harrow, where the council has lost over 97% of its revenue support grant since 2010 and is really struggling. Is it not therefore particularly sad that neither of the two Conservative candidates for the premiership are talking about these issues at their hustings?
I hope today’s debate will be a clarion call to them and others about the importance of local government in delivering key services.
The resilience of local councils across the country is a focus of the National Audit Office’s work, and it has real cause for concern. The message I have received from my friends at today’s LGA conference is twofold. First, we must remember that councils are multi-million pound companies, yet they do not know where their funding is coming from past next year. How on earth are they expected to plan without any sense of the medium term, let alone the long term?
Secondly, if we are to shift the burden from central Government to local government, income generation needs to be made easier. Across the country, I am not aware of a single council that has successfully used the referendum mechanism to raise council tax. This is not working. We need another way to make sure councils are properly funded.
When I was a candidate, I, too, fought against these cuts, particularly those to children’s services. As the hon. Gentleman knows, I am a teacher, and I was seeing the effect the cuts would have. Interestingly, the data show that some of that was fat that could be trimmed off. [Interruption.] Let me finish. [Interruption.] Just look at the transcripts from the Select Committee on Housing, Communities and Local Government. In 2012-13, there was an increase in efficiency, but I will concede that after that point the cuts should have stopped. The point of today’s debate is to move forwards. Having been elected in 2017, I hope the hon. Gentleman will join me in looking forwards and not backwards.
I will come back to the hon. Gentleman in just a second.
Let me move on to adult social care, because it is really important. The Chancellor’s extra £750 million for social care in 2019-20 falls drastically short, given that the funding gap for adult social care is expected to reach £3.6 billion by 2025, according to the Local Government Association. This is a vital government service and central Government responsibility is shared between two Departments. I have many questions for the Minister, but one is: where on earth is the adult social care Green Paper? The situation is no longer sustainable. The adult social care sector in England accounted for 1.34 million jobs in 2016-17, yet, according to the National Audit Office, it has been 10 years since a national workforce strategy has been published. Furthermore, 43% of those aged 80 or over in England in 2016 needed help with activities for daily living, yet only 20% actually received the help they need. Demand is increasing and less is being provided—and to fewer people.
I am not sure the hon. Lady will be quite so happy when she hears what I have to say about the matter. Again, this is typical of the Lib Dems, is it not? We see collective memory loss about what happened between 2010 and 2015, and them now washing their hands. Does she accept that the biggest cuts in real terms per year in adult social care happened between 2010 and 2015, and she and her colleagues in the Lib Dems bear equal responsibility for that?
I thank the hon. Gentleman for his point. As I say, I am looking forwards.
On adult social care, the Liberal Democrats are proposing—I would be curious to know whether Labour is planning the same—a penny in the pound on income tax to add to the social care budget, in order to sort out the short-term funding issues. That has to be just a short-term solution. The longer-term solution is not this tit-for-tat political to-ing and fro-ing; it has to be a cross-party effort to find a long-term settlement that will last for decades, not years.
I entirely agree with the hon. Lady on this. The Select Committees on Health and Social Care and on Housing, Communities and Local Government issued a joint report on the future funding of social care. One of its recommendations was a social care premium—an insurance based model like the German model. Would her party engage with that, on a cross-party basis, involving Conservative Members and Members on those Benches?
I absolutely agree with that. Those calls were led by my right hon. Friend the Member for North Norfolk (Norman Lamb), who has been working on this issue on a cross-party basis. We have to do this together or we are not going to do it at all.
I now come to children’s services, an issue that, as a former teacher, is very close to my heart. Councils are overspending on these services, too—they did so by £872 million in 2017-18. The Public Accounts Committee has reported that 91% of authorities overspent. We are talking about young vulnerable children here. Something odd is happening, because although the number of children in the population has gone up, increasing by 7% since 2010, the number of child protection assessments has increased by 77%, on average, across the country. Worryingly, however, the figures are really different depending on the area of the country, suggesting that best practice is not being spread. For example, Camden Council has decreased the number of children that it has in looked-after care but other parts of the country have increased this by more than 90%. What are the Government doing to ensure that what some councils are clearly doing right is being spread? Meanwhile 42% of all local councils are rated as good or outstanding by Ofsted—but that means 58% are not. That is atrocious. We need to make sure that councils are held to account. My understanding is that Ofsted is so overstretched that it has for the moment suspended the rating of local councils. Will the Minister clarify whether that is true?
The final thing I wish to talk about is prevention. I serve on the Public Accounts Committee, and my colleagues and I are interested in value for money for the taxpayer. I am deeply concerned that the changes to children’s centres and youth services are not delivering value for money. In fact, worse than that, they are failing the young people of our country. The decrease in the number of Sure Start centres in Oxfordshire has meant that we cannot reach the same number of families as we did previously.
Meanwhile, the head of Ofsted said in her annual report:
“The evidence suggests that these cuts to youth and other services are a false economy, simply leading to greater pressures elsewhere.”
The Minister will know that in 2015 the Government axed the Audit Commission. Who is looking after the money? When something is cut in one Department, what effect is it going to have elsewhere? I am told that the responsibility is now in the purview of the Ministry of Housing, Communities and Local Government, but it is not transparent. In the reports that the Public Accounts Committee has seen, it was not obvious that everyone knows what is going on. That is a key ask of the Minister: who is looking after the money? From what we have seen, not enough people are.
The lack of someone looking after the money has an effect on things such as the schools system. Schools have now become a repository for every other issue that has happened in local government, and we see the same with our police. I am sure many Members know of similar issues to those that I see in respect of special educational needs and disability funding: there just is not enough money adequately to support the children who need education, health and care plans. Why, when schools are already under funding pressure, are they being asked to provide the first £6,000 towards any plan? Surely it would make more sense that if a child has a need, that need is fulfilled.
Similarly, when are we going to see the Government address inequalities in the system, such as those relating to young carers? They are required in statutory legislation to undergo an assessment of what they need, but there is no legislation that follows through on that and says that they have to be provided with the things they have been assessed as needing. Who is dealing with those kinds of inequalities?
One pressure that the hon. Lady has not mentioned is homelessness. Although we on the Opposition Benches will not be surprised by the Government’s lack of additional revenue to tackle homelessness, does she not think it particularly odd that the Conservative party, which claims to be the party of the armed forces, is doing nothing about the scale of rough sleeping among veterans?
As I said at the beginning of the debate, we have seen a rise in homelessness. It has been a particular focus of mine on the Public Accounts Committee, and the hon. Gentleman might be aware of my campaign to scrap the Vagrancy Act 1824. We need to make sure that the fact that we are a compassionate nation is reflected in all parts of policy. I could not agree with his point more. As he rightly pointed out, there are many things that I have not touched on, but I am sure other Members will. This has just been a quick canter around the finances in the estimates.
I hope that the Public Accounts Committee’s reports on local government spending and sustainability are bedside reading for all Ministers, because they make recommendations that I sincerely hope Ministers will take seriously. When the Minister responds to the debate, please can we have answers on the following? First, where is the spending review? How on earth can we expect councils to plan for the medium and long term when they do not even know where next year’s money is going to come from? Secondly, where is the fairer funding review? The Government have moved the burden of taxation from central Government to local government, but the underlying inequity in the system still exists. Thirdly, linked to that, where is the business rates review? As was alluded to earlier, local economies are suffering because of a lack of joined-up thinking. Finally, a refrain that I hope and am sure others will continue: where is the social care Green Paper?
We need all four together before we can achieve genuine value for money in what local councils deliver. Anything else is a false economy. All of us see the knock-on effects of these Whitehall spending decisions in our postbags. We also see the desperation of people who come to us because they feel that their local councils have failed them. However, half the time, it is not local councils that have failed them; it is central Government. Local government is vital. It is the coalface—it is where real policy meets real people. I hope that today’s debate will be a clarion call. Local government may not always be sexy, but it is certainly significant. I thank all colleagues for being here and the Backbench Business Committee for enabling us to have today’s debate.
Order. There is quite a lot of time for the debate this afternoon, but, as the House can see, a great many people wish to speak. I hope that we can manage without a formal time limit, because the debate flows better without one. We can do so if hon. Members are courteous enough to speak for around eight minutes. If Members do that, everyone will have a fair and equal chance to contribute. If not, we will have a time limit.
I am grateful for the opportunity to catch your eye in this debate, Madam Deputy Speaker.
I pay tribute to the hon. Member for Oxford West and Abingdon (Layla Moran), who is a highly valued member of the Public Accounts Committee, of which I have the honour to be deputy Chair. It is clear from her speech that she is extremely knowledgeable about this area, particularly about education, on which she is the Liberal Democrat spokesman.
I also pay tribute to other Members who have helped to secure this really important debate. The reason it is so important is that local authorities are by far the largest devolved form of government in England. They deliver a range of vital services, such as education, planning and social services. The money devoted to local government, and therefore to the effectiveness of these services, is vital to the people of this country, which is why, for the first time in 27 years in this place, I wanted to speak in an estimates debate, but particularly in this one on the Ministry of Housing, Communities and Local Government.
It is a disaster for the people covered by a local authority area when it runs out of money and centrally appointed commissioners are brought in to oversee the finances, as we have seen in Northamptonshire County Council. We need to look very carefully at the role of section 15 officers, who have issued more than 114 notices of loss of financial control since 2010-11. We particularly need to encourage the Government to be intrusive in their inspection of local audits, because it is possible to spot when a local authority is beginning to get into trouble far sooner than was the case with Northamptonshire, thereby possibly avoiding bringing in the local commissioners.
As the hon. Member for Oxford West and Abingdon said, the finances of local government are fairly parlous at the moment—resources fell by 34% in real terms between 2010-11 and 2017-18. Paragraph 12 on page 9 of the National Audit Office report states tellingly that overspending and the use of resources were not fully financially sustainable over the medium term. I encourage my colleagues on the Front Bench to look very carefully at this whole matter.
Local government is now facing a funding gap of £3.1 billion by 2019-20, which is estimated to rise to a staggering £8 billion by 2024-25, according to the NAO. Local government spending is being stretched significantly as we face the demand for services way outstretching available funding. This year, for example, Gloucestershire County Council has had to raise its council tax in every district to make £21 million of savings to deal with the financial pressure. To simply keep up with the county’s demand for services, council tax payers now need to provide nearly £295 million.
Children’s social services are a particular worry in the county and across many education authorities. It is the No. 1 financial pressure on Gloucestershire’s 2019-20 budget, as the authority will spend an additional £16.3 million on the most vulnerable children and young people in the county. Ofsted made a monitoring visit to Gloucestershire’s children’s social services in April—its sixth monitoring visit since our local authority was judged to be inadequate in March 2017. It is promising to see that progress has been made. However, that progress was deemed to be slow, and we cannot continue to fail to provide good enough social services for our most vulnerable children and young people.
Throughout the country, 42% of children’s social services are rated good and we spend some £8.8 billion on them, but 91% of local authorities have overspent in this area and we need to understand why. We had the education debate yesterday, and although there is a record amount of money in education overall—rising from £41 billion in 2017-18 to £43.5 billion in 2019-2020—the problem is with distribution. That is the case for my local authority, and I suspect that some of my colleagues on both sides of the House who are in the f40 group would agree that the distribution of money is critical. For example, an authority such as Hackney is getting £6,500 per secondary place, yet some schools in Gloucestershire are below the fair funding amount of £4,800 per secondary place.
I apologise for intervening, as I have already spoken for a long time. I am a vice-chair of the f40 group. Does the hon. Gentleman agree that the current calls from the f40 are about not just distribution but quantum? The “Together for Education” event that took place across the way in Westminster on the weekend before last called for an extra £2.2 billion a year in the education budget, because the f40 group recognises that we can redistribute all we want but the quantum also needs to rise.
I accept what the hon. Lady says. The problem is that it is about not only the money that schools get, but the costs that central Government keep imposing on schools—pensions, the apprenticeship levy or other expenditures. The costs keep going up, so the amount that schools have to spend is squeezed every year.
The Government need to do two things. First, they need to consider the quantum, as the hon. Lady has said. Secondly, when they impose an additional tax or an additional cost on a school, they need to consider very carefully how that school’s budget is being squeezed. We want to give our children the fairest possible start in life, and allocating adequate resources to education is almost the most important thing a Government can do, which is why I feel so strongly about this issue.
I also feel strongly about children’s special needs. The amount that Gloucestershire is spending in this regard is going up and up. I am grateful to the Government for providing an additional £1.35 million this year and next to deal with the problem, but they need to understand the causes of the increased demand in special needs, and education, health and care plans. The Government probably need to ring-fence this budget so that we do not get into the situation that we did this year, whereby Gloucestershire County Council was going to top-slice its general schools budget by up to 0.5% to deal with the problem. It is currently entitled to do so, but that is not fair on schoolchildren in general, which is why the Government need to ring-fence this budget.
Local enterprise partnerships—where local authorities contribute a significant amount of money, certainly some of the expertise and some of the governance—are rather variable, as we discovered from the NAO report. Some work extremely well; some work far less well. Some are governed extremely well; some are governed less well. There is geographical overlap in some, but not in others. If the Government wish to deliver their industrial strategy to the best possible degree, they need to look at the whole matter of LEPs quite carefully.
The fire and rescue service in Gloucestershire is currently run by the county council, but there is considerable pressure from the Home Office to transfer it to the police and crime commissioner. We have already had one inquiry and the proposal was rejected, yet the police and crime commissioner still wishes to overturn the decision. I say to my colleagues on the Front Bench that a considerable amount of resource and effort is being wasted by continually bickering over this matter. The fire and rescue service, I say loud and clear, is well run in Gloucestershire. The county council supports it, as do, I think, most Conservative colleagues—certainly, I support it very strongly. It should remain where it is.
We need to get local government funding functioning properly. This is a really serious problem. The Government wish to move to a new form of funding—the core rate support grant—in local government in 2021. That means that there are vital decisions that they need to make quite quickly. The proposal is that councils should keep three quarters of the revenue, down from 90% originally, but fundamental decisions on how this will work are coming very late in the day. No council should be under financial pressure, because of the tier splits, to move to 75% retention. We need to decide what the distribution system should be. If Westminster Council, for example, keeps 75% of its rate support, it will be awash with money, whereas a council in the north that keeps 75% will be in severe shortage. The councils need to know. As the hon. Member for Oxford West and Abingdon says, it is only fair that the funding system for councils both for next year and the year after are made very clear fairly soon.
The other side of the coin is that the Government have a target for building 300,000 more homes each year. Councils will be able to do that only if they are properly incentivised by the council tax system. They need to be able to work out what that system is going to be. As part of the local government finance reorganisation, what will the incentives be for councils that want to expand their council tax base, as with the incentives to expand their business rate base? Again, the Government need to make some decisions on this. They need to tell us whether the new homes bonus will remain, and in what form, to give councils that incentive.
This is a huge field. I think I have cantered over some of the main areas, and others will do the same.
I thank the Library and the National Audit Office for the briefings we have had, as usual. Laraine Manley, the director of place at Sheffield City Council, has given me some information about housing as well.
The Housing, Communities and Local Government Committee has produced a number of reports over the years covering many of these areas. The whole remit of the Committee is unique in Government in that while the Ministry has limited budgets of its own to deal with certain specific issues, it has oversight of local government as a whole, including spending by other Government Departments. The Ministry is supposed to act as a glue that brings all that together. However, there are concerns, as highlighted by Amyas Morse when he commented that there are no evidence-based efforts in Government to reconcile the funding to local needs. That is really quite a dramatic statement to make. In other words, Government do not have a clue what local government should be spending. That is not a direct comment about the Minister on the Front Bench or his colleague; it is a comment about Governments over the years. There has not been oversight of local government or an assessment of what it needs. All we get is, every so often, a divvying up of the money that is available between different councils, or the new burdens rule where something new is added and a council will get a bit more to pay for it—a bit more out of the system.
The figures are there. We have seen a 50% cut in Government grant to local councils since 2010, the biggest local government cuts to any service—not denied, I think, by Ministers—and a 30% cut in spending power. The pressures on social care, both for adults and children, continue to rise. The Government’s response to our report on children’s services is out today, and I think they have accepted a lot of the problems that exist. There will be a lot more work to do on this. As care has taken a bigger slice of a smaller cake, all the other important services such as parks—which we have done a report on—highways and buses, libraries, environmental services and refuse collection are getting cut even more, by between 30% and 60%. I am really worried, as I have said before, that we are seeing a hollowing out of local democracy where, in the end, councils just become the messenger boys and girls doing what the Chancellor and the Secretary of State want on a very narrow range of statutory services. That is a real worry, and we should all take account of it.
In the end, councils can only do their best. They have done marvellously well with efficiency savings: we are now making real cuts to real services that are affecting real people. Yes, council tax has been put up in many cases, but that is a regressive tax. On business rates, in the end local authorities have virtually no discretion at all anyway.
There is massive uncertainty now. We may possibly have the four-year spending review—nobody is quite sure whether it will happen; I do not really think the Minister even is. The other day, the Chief Secretary to the Treasury seemed to indicate that it was not going to happen. As Gary Porter said the other day at the Local Government Association conference, local government is in a state of complete uncertainty—it has no idea at all what is going to happen from next year. Are we going to have a spending review for four years or for one year, because the four-year one will be postponed? If we have the one-year review, we cannot do the fair funding review because there will not be enough time for it to work through.
What is happening with the 75% business rate retention? Can that be done at the same time as all the other changes or will that be too much for local authorities to absorb? The Minister accepted at the Housing, Communities and Local Government Committee evidence session the other day that the business rate retention scheme is probably the most complicated part of a very complicated system. Can this all be brought together and made sense of? I have not yet mentioned the shared prosperity fund, which is somewhere out there, to be considered at some point. All those things give massive uncertainty to councils and councillors providing important services to the people who matter at the end of the day. Councillors are uncertain and so are the communities out there about what they are going to get as a result of the changes.
As the LGA and the Institute for Fiscal Studies have said, what is really worrying is the prospect that 90 councils will simply run out of money during the next spending review unless more is provided. Council treasurers are saying that; that is the situation. Councils have done terribly well, but they cannot carry on using reserves as they are having to now.
I turn to the issue of housing, which represents the other part of the money spent directly by the Department. Everyone wants to see us meet the ambitious target of building 300,000 new homes in this country. My personal view is that that cannot be delivered unless about half are provided by the public sector—councils and housing associations; historically, the private sector has never consistently gone above 150,000. If we are going to do that, it is not enough to say that we have lifted the housing revenue account cap and councils can start to build. I hope that they can, but Laraine Manley, director of place at Sheffield City Council, has spelt out the situation there.
We have a really ambitious council in Sheffield, including Councillor Paul Wood, the new cabinet member, and Councillor Sophie Wilson, who is down today to celebrate 100 years of council housing. Both want to build council houses, but the issue is not just the borrowing but the revenue to support the borrowing. That also matters. The revenue comes from rents. One of the most damaging things the Government did was to restrict rent increases on local authority and housing association homes in the last spending review. Sheffield City Council estimates that that took a startling £800 million out of its long-term business plan—money that would have gone into supporting new house building and important maintenance of existing homes. That figure is staggering. Although the rent increase in the next round will be the consumer prices index plus 1%, that will not be sufficient to build back the loss that has already occurred. At some point, the Government will have to consider greater freedom for councils and housing associations to raise rents to fund new building in the future.
Apparently, about 70% of the costs for building new homes will come from existing rents in the housing stock; the rest will come either from grants from Homes England or from receipts, although apparently receipts and grants cannot be used for the same home. The Government may also want to have a look at that—and, again, address the issue of why more right-to-buy receipts cannot go to councils to support house building in future.
Those are big issues, and the Select Committee will shortly do an inquiry into social house building and how we can ensure that the homes needed are actually built. That will be interesting.
Finally, I will mention the other big issue that we have to mention today: cladding on not just high-rise buildings, but high-risk buildings. The Government have so far put aside £400 million to take ACM cladding off social housing and £200 million for doing so in the private sector. I have to say that the social housing figure is not likely to be enough, and the private sector figure certainly will not be enough. More money will have to be found to get that cladding off and make those homes safe. The Government are now doing a review of 1,600 more properties with non-ACM cladding that may be just as dangerous. If it is as dangerous, it is going to have to come off, as the Minister for Housing has already said. If it has to come off, the Government will have to find the same money as they are doing for ACM cladding. If we add the ACM cladding budget of up to £1 billion to another £1 billion for other types of cladding, we are at over £2 billion. That does not even deal with the issue of materials that are not in those categories but are not of limited combustibility.
Under the changes the Government have made, they are insisting that those materials will not go on new buildings, yet they are saying that materials not safe to go on new buildings can still be left on existing buildings and that they will not help to remove them. I think there is a very big additional bill coming down the road, and when we see the estimates for the Department in one or two years’ time, they may well be very different.
It is a pleasure to follow the hon. Member for Sheffield South East (Mr Betts), and it has been a pleasure to serve on the Select Committee under his guidance for the last four years. I agree with many of the points he made, particularly the last stuff on cladding. We know that is a much bigger issue than is currently accepted, and we need to deal with it. It is interesting that he talks about local authorities not having rents capped when it is Labour party policy to cap rents in the private sector. I am not sure that is a very balanced approach.
I agree with many of the points the hon. Gentleman made about the spending challenges for local authorities. Clearly, there are huge spending challenges for local authorities and also for the national Government. It is my belief that we will have to address this stuff in a very different way. This is not a party political point, but Governments of all persuasions have balanced the books in this country only seven times—they have done so in only seven years—over the past 53 years. We cannot simply keep spending more than we are getting in, otherwise we end up with the £2 trillion debt, which is where we are.
I regret some of the spending pledges in our leadership contest at the moment, because we have got to run this country much more prudently. We have to be able to balance the books on an ongoing basis, and certainly to do so within a cycle. We have some massive challenges ahead that we will all have to accept: the cost of healthcare that we are going to provide; the cost of pensions that we are going to have to provide; and the costs of social care. As things are at the moment, all this is going to land on the taxpayer. It does not seem feasible that that situation can continue, particularly in the area of social care. We know there is a funding gap for local authorities of about £3 billion, which will rise to about £8 billion within five years, according to the LGA.
The Minister is doing a brilliant job in trying to get extra funds, and also in making sure that the funds are spread fairly across the country. The current funding formula is certainly not fair. My local authority has about 50% less spending power compared with some London authorities, for example. We need a fair settlement—one that is fair to everybody—but this has to be a rising tide that lifts all boats. If we do not put extra money into the system, we cannot provide a fairer funding system, as my hon. Friend the Member for The Cotswolds (Sir Geoffrey Clifton-Brown) said about school funding, and we cannot have some people losing out when everybody’s budgets are tight. We are going to have to find some more money for local authorities from somewhere if we are properly to address the fairer funding issue.
The biggest issues for my local authority, North Yorkshire County Council, are those involving children’s services and social care, which is what I primarily want to talk about. The difficulty with social care is that it has virtually zero correlation with the method of funding local authorities today or in the future. Moving to a system of business retention—the Minister knows I have reservations about such a system—means a finite amount of money for local authorities at a time when there is huge and rising demand for social care. There is no correlation between those two things. Local authority funding will be unsustainable. Either we find a new way of doing this, or local authorities will provide many fewer services in future.
The Select Committee considered social care twice. The first time, we went to Germany to look at the system there and then we conducted a joint inquiry with the Health and Social Care Committee. We settled on several recommendations, one of which constitutes the right solution, which is sustainable, scaleable and simple. It is the German system that was adopted in 1995. Before then, the German system was funded by local authorities. I am sure that they recognised that that was not sustainable, so they moved to a system of social insurance.
Everybody pays a small amount—just over 1% of people’s salaries, and the employer pays 1% of earnings—into a private insurance system. The insurance companies are not for profit—nobody makes any money out of the system. The levies are settled nationally, and the system also covers people with learning difficulties and disabilities. The system is simple and sustainable. Everybody pays a small amount so that nobody has to pay everything. That is the fairest part.
I am glad that my hon. Friend is talking about social insurance. I and many others have been arguing that the continental system of social insurance, particularly for funding health services, is probably the way forward. As our population ages, getting public support to pay for those services through general taxation becomes increasingly unsustainable. Personalising social insurance creates more support.
My right hon. Friend makes a good point. However, I believe that healthcare is different. Social care should be funded differently because everybody has a personal responsibility to provide for themselves in the future. Of course, people do not put money aside for many reasons. The system must be mandatory—that is the key—so that everybody puts some money aside even when times are tough. There is a threshold for people on low incomes, but the system means that people properly prepare for the future.
One of the biggest benefits comes when people are assessed as needing care. They can take the services of a charitable provider or the local authority, or decide to take the money. People who decide to take the money on a monthly basis can pay it to a relative or loved one to look after them. Another big benefit is therefore social cohesion. The system is about family looking after family, just as we used to do. We do not do that as much now. The system is good for society and for community. We saw that huge benefit when we went to Germany.
We have cross-party support for the idea. Both Select Committees—20-odd of us—reached that conclusion. It was one of the recommendations of our report, so we should work cross-party on it. There have been commissions on social care in the past, but when they report, the question is whether the recommendations are possible politically. If we put together our own parliamentary commission and reach cross-party consensus, I believe that we could deliver the recommendation.
The system has to be mandatory because there will not be an insurance market for it otherwise. That was the problem with the Dilnot recommendation. The scheme was not mandatory and therefore no insurance market developed on the back of it, so there was nothing available for social insurance. It is a great opportunity, which will cut the link between a potential huge future cost for local authorities, and our ageing population and the increased number of people with learning disabilities. Obviously, local authorities will have a huge part to play in directing services, but they will also be able to provide the other services that are critical for local people.
I am keen to work cross-party on the matter. I know that the Local Government Minister has regarded the proposal positively in the past and I am keen for the Department to give it a positive recommendation in the forthcoming Green Paper.
I would like to begin by addressing the remarks of the hon. Member for Oxford West and Abingdon (Layla Moran). I am sorry, but her party, the Liberal Democrats, were not innocent bystanders in austerity. They were active participants. She says she wants to look to the future—fine—but the effects of the decisions taken under the coalition Government are still biting today, not just in local government but across a whole host of Government policies. I am sorry, but people need to keep being reminded of that.
The National Audit Office and the Centre for Cities produced very robust reports on the effects of the cuts by the coalition Government and this Government to local government funding. Those cuts have been, as my hon. Friend the Member for Sheffield South East (Mr Betts) said, most severe in their effect. They have also not been very fair. For example, the most deprived areas in the north have borne the biggest share of the cuts, while areas such as Surrey and Wokingham have had few cuts that have had very little effect.
Durham County Council has faced massive cuts. Since 2010-11, its budget has been cut by £242 million. It has also been put at a disadvantage. As my hon. Friend the Member for Sheffield South East alluded to earlier, the Government have been moving funding from central Government to locally raised taxation. That puts authorities such as Durham at a huge disadvantage, because we have a low council tax base and a low business tax rate base. Some 50% of properties in County Durham are in council tax band A, so its ability to raise local taxation, even if it wanted to, is limited compared to others that have a larger and more diverse council tax base. If that was not bad enough, in addition to what is coming down the road with the fairer funding formula, County Durham will have to find another £39 million of cuts over the next four years. Under that strangely named fairer funding formula, County Durham loses an additional £10 million. Even though it is a deprived area, since 2011 it has already faced a higher than average core spending cut. Yet if we look at the average across the country, Durham is below average, so I do not know how that can be fair.
There is an idea, not just in local government funding but in education funding and everything else, that somehow every single part of the country is the same. We heard it from the hon. Member for The Cotswolds (Sir Geoffrey Clifton-Brown), who argued that the Cotswolds could somehow be compared to an inner-city borough such as Hackney. It is quite clear that deprived areas such as County Durham have a huge call on their resources from the two great drivers, adult social care and children’s care.
In 2018, there were 1,157 looked-after children in County Durham. Wokingham, which has not had the savage cuts that County Durham has had to face, looks after 141 children. We not comparing like with like. These are not services that councils can pick and choose from either; they fall under statutory provision. I have to say that Durham does them very well, but they create huge demands on the council budget that are not reflected in the support received from central Government. The cut in core spending has been dramatic in County Durham. Government figures show that the average core spending per dwelling is £1,908. In Durham, it is £1,727. In Surrey, which I would argue is a little bit more affluent than County Durham, it is £2,004. If we were brought up to even the England average, County Durham would get an additional £44 million.
This is about not only the savage effects of austerity on local government, but the pork barrel way in which the Government have distributed the money, clearly favouring areas that have supported the Conservative party and its coalition partners in the past, and punishing northern councils. In addition to the cuts that have taken place already, we have the public health funding formula, on which I led a Westminster Hall debate a few weeks ago. How can it be right that County Durham will lose £19 million a year—35% of its budget—while Surrey County Council increases its public health budget by £14 million a year?
Those funding decisions are clearly designed to support certain areas. [Interruption.] The right hon. Member for Gainsborough (Sir Edward Leigh) chunters from a sedentary position, but the facts are there in black and white. It has been a deliberate policy of this Government since—[Interruption.] Oh, he has got tired and gone off for a sleep. Clearly, as my hon. Friend the Member for Sheffield South East said, we need not only to look at fairer funding for local government but to ask what we need it to do. Like him, I feel that we will end up in a situation where some councils go bankrupt—some already have—and others struggle on delivering services, while being blamed by the Government for not doing so, when they have limited ability even to raise council tax locally.
In the 1980s, when I was first elected to local government, the Conservative party was a proud party of local government. It actively supported local government, cared about it and, as my hon. Friend said, thought it was an important part of the glue of democracy and of how we provided for communities. Alas, that seems a distant past: as I said, local government clearly will not be a priority for whoever wins the Conservative party leadership contest. This cannot go on, or we will end up in a situation where the people we were elected to serve suffer and councils throughout the country become unsustainable.
It is a pleasure to follow the right hon. Member for North Durham (Mr Jones). I normally agree with him on so many things, but since he touched on the Conservative party leadership contest, let me say that there is a hustings for Conservative councillors taking place at this very moment at the Local Government Association conference. Of course, they are at the forefront of public service and our local communities, and they are proud Conservatives in the role they play in local government. I had better declare an interest: I am married to a Conservative councillor, so I will double down and reiterate that point.
I think all Members would agree that local government stands at the forefront of the delivery of so many services across our country, and that so many of our constituents depend on those services. I think it is fair to say, on the basis of the comments we have heard, that we all know there are challenges with that across our constituencies. It is appropriate that we should debate local government and the MHCLG estimates on the day that the Local Government Association holds its conference in Bournemouth, because councils are responsible for the delivery of so many vital services in our communities. I want to touch on a number of them, including housing, adult social care and supporting children with special needs, with reference to the challenges of growing demand.
Much of this has been mentioned already, but I would like to give some examples from Essex, where we also have funding pressures. It is not a policy of discrimination, if I may say so in reply to the points made by the right hon. Member for North Durham. Despite facing a tight squeeze on the funds they receive from central Government—a squeeze that started before 2010—local authorities have worked hard, and we should pay tribute to all councils, whatever their composition, because they have all worked hard to balance their books.
We know that efficiencies have been made. We know that local authorities have been innovative: services have been shared, procurement strategies changed, and some services reduced or changed. But rising demand has put councils at a tipping point where they now need some increases in resource from central Government, certainty about medium-term settlements and more flexibility over the powers they have and the ways they can generate income.
In the amazing and incredible county of Essex, the county council has delivered £311 million of savings over the last four years, a significant sum, and it is working to make a further £176 million of savings by 2021-22. The reason for those savings is to ensure that resources are naturally focused on investing in adult social care and the council’s outstanding children’s services. It received an outstanding Ofsted score, and I am very proud of the council for its sheer determination and the work it has done to receive that score. But the savings target is a stretch, because there is little left to cut. There is little more that the council can slice off because demand on services is growing at a startling rate. For adult services, we see a growing number of service users who use services for longer and have more complex needs. Over the next decade, the number of residents in Essex aged over 80 will rise by 60% and the number of those aged over 90 will double. There are also growing numbers of adults with learning disabilities who we want to support as much as possible. That is the right and compassionate thing to do, and we want to provide fairness and opportunities in doing so.
We must see the Government do more to give councils such as Essex the resources to meet these needs. We also need to see the Government recognise that our councils need more resources to support children’s services and those with special needs and disabilities. The hon. Member for Oxford West and Abingdon (Layla Moran) also mentioned that in her opening remarks, and that touches on education, health and care plans too. While councils’ budgets have been squeezed, they have had to provide for more services and new responsibilities, and it is right that we all recognise that.
The introduction and roll-out of education, health and care plans has caused a 35% increase across the county in the number of pupils covered by EHCPs in the four years between 2013-14 and 2017-18. It is right that we recognise the impact that is having on budgets for supporting children with special educational needs, because it has not been met by the high needs funding block.
Councils now face the challenge of carrying deficits and they do not know what the Government will do to address that. In Essex, the deficit is now £15 million and it is set to double. Across the country, it could hit £1.6 billion by 2020-21. That challenge needs to be addressed. We have all heard about funding reforms and we have all participated in many debates and presented the issues to Ministers, stressing that those matters will have to be addressed through the comprehensive funding review and fair funding review, when they come. Those reviews must deliver genuine reform. We cannot tinker around the edges any more.
The process must include addressing the regional inequalities that other hon. Members have mentioned in funding for councils such as Essex. Despite the growing levels of demand on services, Essex is underfunded compared to many other areas. In Essex, the funding level is £271 per person per year for services, whereas the figure elsewhere is much higher, doubling to £563 per person in parts of London. As a result of those pressures, the council is looking at making very difficult decisions just to close the £176 million funding gap.
At the moment, the council is consulting on proposals to change library services, which could lead to seven of the eight libraries in the Witham constituency closing if community management proposals do not come forward. I should add that that is not the sole answer when it comes to addressing library services. The total budget for libraries is about £13 million, and, while there may be some merit in looking at ways in which to bring more community management and involvement into our libraries and modernise services, the potential impact on our communities is significant. I do not think anyone in the House can dispute that, especially given that reductions in the libraries budget will make barely a dent in the £176 million savings target.
No one will be surprised to learn that I have met many residents throughout my constituency who are campaigning passionately to save our libraries, including those in Wickham Bishops, Kelvedon and Coggeshall. They want those vital services and facilities to remain open. I hope that the Government will reflect on what they can do in the long term to continue to safeguard the community lifelines about which so many of us feel so strongly.
The issue of planning and development is highly controversial in many parts of the country, but it is incredibly controversial from an Essex perspective. We want to see communities, not housing estates, being built. In Essex, and especially in my part of Essex, we know that the building of new homes is absolutely right because it gives families more security, including financial security, but we are aware of the challenges that local authorities face in respect of the five-year land supply.
My communities are open-minded about development, but they are frustrated by a lack of infrastructure and a lack of support. We must be radical in our use of, for instance, the new homes bonus to support more infrastructure, and change the way in which we support local government funding across the country.
It is an honour to follow the right hon. Member for Witham (Priti Patel). Being married to a councillor, she will appreciate most acutely the tough decisions that councillors must make. Let me begin my speech by thanking councillors of all political parties for their work. Looking around the Chamber this afternoon, I see many Members who I know have served as councillors, in senior leadership roles or as back-benchers. I believe that one of them is still serving as a local authority member today. No councillor stands for election to deal with a five-year budget forecast. They do so for good reason, to help the local communities. We should always remember that, regardless of the decisions that they are forced to make.
That leads me neatly to the main points that I want to make. The hon. Member for Oxford West and Abingdon (Layla Moran) began by talking about the overall global figures that are affecting local government finances. The speeches that we have heard from Members on both sides of the House today have shown that every Member, everywhere, has a series of problems that can be attributed to the way in which the local authority is either run or funded. I agree with the hon. Member for Thirsk and Malton (Kevin Hollinrake) that when this is fixed, a rising tide will lift all those problems. Sadly, however, that rising tide will simply drown some of them, either because they cannot keep pace or because they are already enmeshed in problems that no amount of additional funding will solve.
What we need to think about—and I offer this as a radical suggestion which I hope the Government will consider—is moving away from the idea that we fund councils, fund the police service and fund clinical commissioning groups, and adopt a place-based approach to the way in which money goes into a community. One of the things that we do very well on the Public Accounts Committee is following the taxpayer pound. We have noticed continually that consequential impacts of a decision by a clinical commissioning group will drive up the costs of a service in a local authority. The decision by a police commissioner to close a police station—as is happening in Stoke-on-Trent—pushes up the incidence of antisocial behaviour. It will then be said that it is the council’s responsibility. Littering because of the lack of a recycling service will become detritus, with bricks left on streets. It becomes vandalism.
So many things happen not because of local authority funding, but because of the way in which we fund our entire public service. If the Government and, I hope, our own Front-Benchers—who I can see are listening—would seriously consider that place-based funding, we could eradicate some of the problems without necessarily having to throw lots of money at them. I know that that will not be easy, but if we are serious about a sustainable long-term public sector, we are going to have be honest about it.
The same goes for our social care funding arrangements. The National Audit Office report shows that 80% of social care budgets are overspent. I am pretty sure that if the Ministers at the Dispatch Box were to design a system today for funding adult social care, they would not say, “Let’s take the value of a property from the 1970s and its total value across an entire geographical area determined by a review in the 1970s and say that incremental increases of 2% every year is the best way to fund adult social care.” It is the way that we do it, but it is not the way we would design. If we are genuinely serious about tackling the funding issues in local government, we are going to have to look at the way in which we fund these things long-term and not simply tinker at the edges hoping to massage the figures so that marginal constituencies in one part of the country are better off at the expense of safer constituencies for Opposition parties elsewhere, which is what we talk about in fair funding formulas if we are being brutally honest.
My hon. Friend is making an interesting point about Total Place and how we should approach things, and we had some evidence on that in our recent Select Committee inquiry into local government funding. Does he accept however, that in order to hold that all together we need some local accountability, so we ought to be looking at how we devolve some of those powers to local government, and with it a better system of funding, as my hon. Friend has rightly said?
I thank my hon. Friend for that and for presciently leading on to my next point, which is about how devolution settlements work and the myriad different settlements that we have, across England predominantly, with city deals, local enterprise partnership arrangements or mayoral combined authorities. That means there are lots of arrangements we can look at to find best practice and then share it. There are examples of mayoral authorities dealing with their housing crisis in clever ways which traditional two-tier local authority areas have neither the capacity in their staff base to do, to be candid, nor perhaps the demand in their local areas for.
If we are to have that accountability structure, there needs to be a greater role for the Department, whatever it might be called. Civil servants from the Ministry of Housing, Communities and Local Government were asked a very simple question at a recent appearance before the Public Accounts Committee: “You say local authority funding is sustainable; what is the matrix by which you make that assessment?” The civil servants were very good at answering some questions, but were unable to give us an exact demonstration of how they make that decision. The NAO disagreed with them on a fact-based, evidence-based assessment, yet when that question was put by numerous members of the Committee, some more vociferously than others, they were unable to give us a clear explanation of how they make those sorts of determinations. If we are going to be serious about the way in which local government is funded, there has to be strong overview and oversight by Departments, but we also need to trust local government.
Local government has been given a series of new responsibilities. I was a councillor and I know that local authorities welcome new responsibilities because it allows them to flex their muscles and do things in an imaginative and innovative way. However, they are restricted in how they are able to deliver them—they find themselves straitjacketed—and they suddenly find themselves carrying unnecessary burdens in order to deliver something that they know they could do better if they were allowed to. They do not make a hash of it but they end up not reaching their full potential.
My hon. Friend is making some good points, but does he also agree that one of the Government’s mistakes in terms of devolution is holding to the idea that that can be done only if there is a mayor? That has led to some very strange situations. For example, in the north-east we have a hotch-potch of different responsibilities in different areas.
I entirely agree, and the same goes for LEP boundaries. If we are going to do this, there has to be a way forward that fits local area needs.
According to the NAO, £6 billion is currently tied up between section 106 agreements and the community infrastructure levy. That is a huge amount of money, but the CIL aspect of that cannot be spent on building new affordable housing because it is for low-level infrastructure. I urge the Minister to review that. It is a pot of money that exists in local authorities that could be unlocked to readily transform the way in which our local authorities work.
At its best local government is flexible, lean and hungry to do things, but that agility is fast becoming fragility, and I fear that if there is one more knock to the system everything will shatter.
Thank you for this opportunity to speak in the debate, Mr Deputy Speaker, and it is a pleasure to follow my fellow Public Accounts Committee member, the hon. Member for Stoke-on-Trent Central (Gareth Snell). We debate many of these things on a regular basis. I congratulate the hon. Member for Oxford West and Abingdon (Layla Moran), who is also a member of the Committee, on having organised this debate and ensuring that it occurred. I want to talk about a couple of points, primarily about policy perspectives relating to housing and planning, which my right hon. Friend the Member for Witham (Priti Patel) also mentioned.
Before I do that, I should like to refer gently to the points raised by the right hon. Member for North Durham (Mr Jones). I do not want to get too political, but the problem with baselining everything at 2010 is that we all know in our heart of hearts that that is not the right place to start. I know that from the perspective of local government, because I was a councillor for four years before 2010 and I can recall the amount of money that was sloshing around in the system. Quite frankly, there was too much money in the system because some councils did not know how to spend it and were certainly not spending it effectively. We have to be careful when we go back to those kinds of baselines, not least because that arrangement was unsustainable on a national level and inopportune in many areas at local level.
Moving on to the policy points, I have a couple of suggestions for my hon. Friends on the Treasury Bench. One is about an issue that deserves greater attention in housing policy. The other about is fracking, which is a favourite interest of mine and which many Members are already bored by. On housing, I know from debates such as these, from discussions in the Select Committee and from watching what is happening across the midlands and the north of England that the national planning policy framework—useful though it is in many areas—is becoming a somewhat blunt tool in other parts, particularly around housing. We see the emphasis on house building, particularly in the midlands and the north, which I welcome. I welcome the 217,000 houses that were built last year and the 35,000 housing starts in the first quarter. We can also see the huge pipeline of planning permissions that has built up to an average of 350,000 a year over the past few years.
The policies are obviously working, but we have to ask ourselves whether they are becoming a slightly blunt tool. Areas in the midlands and the north are being asked to take large swathes of housing, but if we look at the best proxy for housing, which is house prices over the past 10 years or so, we see that there has been either no increase in house prices or a real-terms house price drop. I would like us to consider moving the national planning policy framework towards a more regional approach. We obviously have a problem in the south-east and around London, and it is absolutely appropriate that we should address that, but in other areas we might need to think again.
I shall move on to fracking, as I do on a semi-regular basis in this place. The reason that I bring it up regularly is that I do not think everyone in this place really understands the consequences of our fracking policy and where it might end up. If we do not understand it now, we run the risk of facing some very large bills in the future, along with the significant impact on many communities including mine, where we have a fracking application in Marsh Lane at the top of my constituency. No one in Government has ever been clear on what the purpose of fracking is.
One of the problems that I have considered when thinking about fracking is that if we do it at scale, the impact on the environment and the countryside will be huge, but if we do not do it at scale, the benefit will be so small as to make it not worth pursuing.
I will absolutely take your steer on this, Mr Deputy Speaker.
The key point that I was coming to, without getting too generic about it, is that we do not yet know the outcome of the consultation that the Ministry of Housing, Communities and Local Government ran last year on loosening the planning rules around permitted development and the national significant infrastructure project. I would be very keen to see that outcome. We can discuss my wider concerns about fracking at another time, but I really hope that we can determine that this will not go ahead, because in communities such as mine, it is not wanted.
I do not want to upset Mr Deputy Speaker, but this is a very relevant issue, because fracking is part of local planning policy. Can I invite both my hon. Friend the Member for North East Derbyshire (Lee Rowley) and my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake)—
Can I help by saying that I still make the decisions? I do not want this to descend into a debate purely about fracking. It can be referred to in passing, of course, and I recognise the planning implications, but I do not want to get into a full-blown debate on fracking. I will still make the decisions.
I certainly do not want to debate the matter with you, Mr Deputy Speaker, because you are obviously in the right, but I would just like to invite my hon. Friends to my constituency. I do not believe that fracking will industrialise the countryside. Some 90% of my constituency is covered by petroleum exploration and development licences, and fracking is perfectly compatible with current gas exploration in my constituency. Please come and see it.
I thank my hon. Friend for his intervention, and I will move on from this subject quickly, having made my points. I hope that those on the Treasury Bench will consider my points about fracking, decommissioning costs and the NPPF.
There is an awful lot of discussion about the distribution of money, and I recognise that Derbyshire County Council, which is ably led by Barry Lewis, and North East Derbyshire District Council, which is now Conservative-led for the first time in 40 years, are now having to grapple with many of the issues talked about in this debate. I accept that there is a real debate about distribution, but there is also a debate about the overall funding envelope for local government.
As a member of the Public Accounts Committee—there are many esteemed colleagues in the Chamber who are or have been members of the Committee—I know that it is charged with looking at value for money in the public sector, and we regularly see millions or billions of pounds not being spent effectively or efficiently or not securing the correct outcomes. If we lose that from the debates around topics such as this, we lose a key part of what we should be doing as Members of Parliament. We should be discussing not only how much we spend, but what we spend, where we spend it and what the outcomes are. That focus on outcomes has been lost in political discourse since at least 2017, if not before, and I hope it returns not just to this debate, but to wider British politics as a whole.
It is a pleasure to speak in this debate, and I want to focus my remarks on housing. However, before getting on to that topic, I want to make a few other points, starting with the financing of local government as a whole, which my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) described so well. We need to take a serious look at how we fund local authorities and at the demands we place on them. We know that the business rate system is broken, which harms businesses and means that we are not getting the local economic growth that we need to see business thrive. We are also seeing more and more online businesses, which also has serious consequences as well. We must review the business rates and council tax systems and seek a much fairer system of funding local authorities.
We also need to determine what local authorities are there to do. Over my short time in this place, more and more of that determination is being done at Westminster, but then powers have been taken away and councils have not been given the necessary resources. In effect, we have seen risk shifted on to local authorities, but they have not been given the resources to address their needs. That cannot be the right way forward, so we need a review ahead of the comprehensive spending review, because how can we have a spending review if we do not know what we are spending or how are we going to fund it? Time is short, and I say to the Minister we need to get a move on because local authorities are struggling. We can see that in how services are being cut in our areas, and we have heard about the severe impacts on local communities from right across the Chamber today.
I also urge the Minister to look at youth services. We do not have a statutory youth service, and that is having a massive knock-on impact on all sorts of other services. A place-based approach is important so that we can understand how to move prevention up local authority agendas. I urge the Minister to examine how we can fund a youth service, because we know that prevention makes such a difference and, ultimately, is cheaper than having to address the effects of things going wrong.
I also urge the Minister to look at the high-needs education budget within a wider scope, as we need to get this right. Local authorities are having to provide that resource, but my local authority is in deficit as a result—£760,000 last year, and a predicted £1.3 million this year and £1.9 million next year. This is about funding services for the most vulnerable people in our communities, our young people, to ensure they have the best chances in life. I therefore urge the Minister to ensure it is properly funded come the comprehensive spending review.
I am sure all hon. Members are frustrated that the Government have promised us so many times that they will address social care. After Dilnot in 2011, we were promised a Bill in 2012, but it never emerged. Seemingly on an annual cycle, we are promised Green Papers, White Papers and all sorts. We have to remember these are just discussion documents, not action plans, yet nothing has emerged. We have a real social care crisis.
I disagree with the hon. Member for Thirsk and Malton (Kevin Hollinrake) on how we should approach social care, because I believe we need a much more therapeutic approach. The relationship with the health service is therefore important, and funding social care and providing security, particularly for older and vulnerable people, needs to be a priority for this Administration. We cannot wait.
I asked a question the other day, and we now know we will not have the Green Paper before the summer, which means we are just kicking the can further down the road. Of course, older people are struggling to fund their social care needs at the most vulnerable time in their life. That just cannot be right, so I urge the Minister to ensure social care is properly funded. Personally, I would prefer to see a more universal approach to social care, and I believe that joining it up with the national health service would be the best way to deliver it.
I return to housing through the prism of what is happening in York Central. It is fair enough that the Government have an ambition to build 300,000 housing units, not that it will be easy to deliver, but frankly their target is of no use whatsoever if those units will be second homes and assets for investors, not homes in which people can afford to live. It is a shame that the Minister is not listening, because this is crucial to the development and growth of our city.
The reality is that the housing being built at York Central will not be affordable to the residents of York. We have a housing crisis in our city because, over the years, successive councils have not built the houses our city needs. As a result, people who are desperate for a home are constantly coming to my surgery, and all I ever get back from the council—a Lib Dem administration—is a letter saying, “We do not have enough houses.” Yet, time and time again, the council passes planning applications to build luxury apartments worth £300,000 to £500,000, which nobody in my city can afford as it is 11 to 19 times the average wage.
We will therefore see all these housing units being ticked off on a chart, which the Government can quote and say, “Look at how many houses we have built.” But they are not homes in which people can afford to live, so they will move into the private rented sector or they will be assets or weekend homes. They are not the homes we need.
The imbalances we have in York are having a massive impact on our care sector, because care workers and people working in the NHS cannot afford to live in our city. We have more than 500 vacancies, which is skewing the whole economy in the private sector and the public sector. It is simply a broken system, and it has to be addressed.
The local authority has paid £10 million up front into the York Central site, with potentially another £35 million of borrowing—money the council will not see, but from which developers will benefit. This will therefore have a massive negative impact on people living in York. I understand the housing infrastructure fund was important for unlocking the site, because it is a rail-locked site, but what are we unlocking it for? The reality is that the plans were predicated on the local authority being able to generate resource from the enterprise zone, which is fair enough in itself, but when the size of the enterprise zone is reduced by a third, it is not going to be able to get its revenue from business rates, which was predicted at £133 million. Therefore, the income will be reduced, which means that the return to the local authority will be reduced and the maths simply does not work for anyone but the developers, who are clearly laughing at the Government’s decision to press ahead with this.
Ultimately, local authority money has been put into this site and will not be seen again by the people of our city. That cannot be right, so we have to look at how local authority money works together with other revenue streams to bring benefit to local people. Putting local needs at the heart of this is really important. Why is it so important for our city? I have already mentioned that this housing is unaffordable, but the impact of this is a reduction in the opportunity for the local authority to grow the economic base of our city. As a result, less revenue will come into our city, which will be seriously detrimental in the long term. We have a once-in-a-lifetime opportunity to build York as a city for the future, so I urge the Minister to look at these funding streams once again.
I welcome the opportunity to contribute to this debate; we are discussing integral parts of policy for the key regeneration of towns such as Fenton and Longton in my constituency. Both towns have high streets and markets that rely on increased footfall to secure their future. That means unlocking derelict brownfield sites around our towns for more housing that residents need, attracting new businesses into empty units, and improving facilities and the sense of destination for visitors.
Retail sales have been falling and high street stores have been closing. First, from out-of-town retail parks, and now from online retailing, our town centre are increasingly feeling the squeeze. Online now makes up just under 20% of retail sales, according to the latest figures from the Office for National Statistics. That percentage will likely continue to increase, and the high street needs to adapt if we are not to lose these important centres. It must be helped to adapt by the policies of the Ministry of Housing, Communities and Local Government.
Last week The Daily Telegraph reported that one in three shops that close in the current market will not reopen as shops in the future. It is clear that our town centres can no longer be so dependent on retail to survive as they once were. It is essential that we attract new and innovative uses; we need to see more people living in our town centres and a range of different businesses moving in to fill empty spaces. It would be fantastic to see these properties, many of which make up the rich and historic fabric of our towns, brought back to life. There is a high demand for small and medium-sized business units, and there is no reason why these properties could not be converted, especially for new start-up businesses and footloose digital businesses. We must incentivise property owners to convert their premises to alternative uses, and remove the barriers and restrictions that currently exist. Our use-based planning system needs to be aware of these trends and be flexible in response, not getting too bogged down in restrictive use categories that threaten the future of our high streets. Why should we not relax class uses on all our empty town centre properties? The perfect plan cannot be the enemy of the demanded good. That also includes flexibility for temporary and pop-up ventures.
We also must see the investment that is so vital for the future of our town centres. In a property market such as that of Stoke-on-Trent, with many Victorian town centre properties in a poor state of repair, owners may find themselves investing more in converting and renovating than the property is actually worth. This is where it is essential that our bid to the future high streets fund for Longton is successful. Prior to the announcement of this fund, I lobbied Ministers in Her Majesty’s Treasury to create just such a fund, directed at our town centres. Our bid for Longton must receive some of this funding, and I urge Ministers to throw their weight behind it. Without future high streets funding, many properties in the town centre are likely to continue to remain derelict and the town centre will continue to decline.
It is also extremely important that we see stronger towns funding directed at towns such as Longton and Fenton and across my constituency. These are parts of the country and communities that have previously felt left behind but that have huge potential to blossom, with the right support. These towns must be given the chance to thrive again, and to be the beating hearts they once were. Perhaps they will no longer be the bastions of retail they once were, but there are so many other exciting possibilities. That might mean more pop-up art installations or performances, fringe festivals, or have-a-go activity weekends. For example, this weekend the iconic Gladstone Pottery Museum in my constituency will host the ninth annual Longton beer festival, which is certainly an event that I look forward to participating in.
Longton’s visitor economy used to be sufficiently robust to support three hotels in the town centre, but unfortunately that is no longer the case. So much is still unique and different about our town centres, and if that was lost it would leave our communities much worse off and damaged. That is why the Longton heritage action zone is so important, to preserve what is historically unique and to make best use for the future. Increasing the footfall in our town centres and recharging our tourism economy is a key aim of the heritage action zone that Stoke-on-Trent City Council is taking forward with Historic England. The council is refurbishing the old town hall as a local service centre, and the fantastic Victorian market hall is also receiving investment, including new public toilet facilities.
We also see private investment coming into Longton, with a number of new retailers having set up recently, and the Exchange shopping precinct has invested in the refurbishment of the main retail complex, which will help to bring much-needed increased footfall into the town centre. We must continue to build on such successes.
The old town hall in Fenton is being brought back into use, thanks to the owner, Justin Meath Baker. A whole range of new businesses are moving in, and the local centre is due to relocate there soon. In addition, planning permission has recently been granted for a £17 million mixed community housing development right in the centre of the town, alongside the £8 million new build scheme that is already under construction for sheltered housing. Like many cities, Stoke-on-Trent is attractive to people who increasingly value town-centre urban living, and we have, of course, six historic market towns to choose from.
Although period properties are attractive for residential use and create a real sense of place by saving historic architecture, the upfront cost of converting historical buildings to residential use, or of modernising much of the Victorian terrace stock, has often unfortunately proven too costly. In low-value markets, sales for more than the property value can often be realised. The wider context of a high-supply, low-demand Victorian terrace market has previously undermined confidence in the market for building specific types of new housing more suited to the 21st century. There can be an imbalance: we see high demand for certain types of housing locally that currently is not being met by the local market. For example, Stoke-on-Trent is probably the only city in the UK of its size that does not really have a strong, functional private rented sector apartment market. We need more developers to take the risk, because we do have the demand for flexible styles of living, what with two universities and one of the largest hospitals in the country.
The council has been doing some excellent work to disrupt the market, to tempt new types of housing development into the city and get brownfield sites developed. When developers do progress sites, those sites now under development have seen high rates of sale, with properties on new build sites throughout the city selling much quicker than was initially expected. We must do more to help to meet the growing demands, and especially to see the redevelopment of the brownfield sites in and around our towns that suffer from the additional costs of previous industrial use. There is no justification for demand to be suppressed. We must give the market the confidence to invest in housing products such as PRS and executive homes, which investors would not always be willing to do in markets such as Stoke-on-Trent.
In 2015, Stoke-on-Trent City Council secured housing zone status, making it one of 20 pioneering authorities outside London. As a result, the council has worked with developers to activate schemes on stalled sites to deliver new homes. Not only is this enhancing the local housing offer, but it is boosting confidence by testing and proving the market for such homes. I would like to see much more dedicated funding available for a broader range of developers who are dedicated to bringing empty retail space into residential use. That could really help to meet local housing needs. There has been an unwillingness for the private sector to take the risks needed where the market is untested and of lower value, so market-making measures are needed to help to de-risk development. I very much welcome the engaging approach that the Department has taken to confronting such challenges, and hope that we see that approach continue.
The Ministry of Housing, Communities and Local Government is a key ministry not only because of its funding but because of what its policies can enable and facilitate forward-looking local authority leaders—like our fantastic new council leader in Stoke-on-Trent, Councillor Abi Brown—to achieve locally. The work we have done in Stoke-on-Trent has seen Conservatives top the poll in the local elections for the first time ever, doubling the number of Conservatives on the council. I congratulate every single one of our new and re-elected Conservative councillors in Stoke-on-Trent. We need to continue to develop our proposals and to improve our communities, so that we see the city move forward.
It is a pleasure to follow the hon. Member for Stoke-on-Trent South (Jack Brereton). I appreciate some of the points that he made, particularly on social housing and on how Stoke is taking on the same challenges that face so many of us.
I thank the hon. Member for Oxford West and Abingdon (Layla Moran), who is currently not in her place, for securing such an important debate. I am obviously delighted to support her as I, too, put in to speak in the debate.
Clearly, local government faces huge challenges. As my hon. Friend the Member for Sheffield South East (Mr Betts) said, the cuts faced by MHCLG have been far greater than those faced by any other Department. It is our local authorities that have borne the brunt of austerity as, of course, have our communities with the cuts to so many of their services—whether it be the hostels provided for those coming out of prison or the Army or those who are victims of domestic abuse. Certainly, we have seen significant cuts in Warwickshire. We have seen cuts to children’s services; closure of children’s centres; cuts to waste and recycling; cuts to fire and rescue services; cuts to our libraries—and the list goes on.
I want to concentrate the rest of my remarks on social housing. As chair of the Parliamentary Campaign for Council Housing, I have been pressing for more social rented housing since I arrived in Parliament. It is well understood that we are facing a housing emergency: 277,000 people are homeless; 1.1 million households are on waiting lists; and young families spend three times more on housing costs than they did 50 years ago. Just 6,000 social rented homes were built last year. Warwick District Council, which more or less overlaps my constituency, has built just eight social rented properties in the past four years, despite the fact that 2,000 people were on the waiting list.
I have been making my case ever since I arrived in this place, and I regard housing as the No. 1 priority for all of us in this House. We must fix this housing crisis. Shelter reports that 3.1 million homes need to be built in the next 20 years to meet the demand of those at the sharp end of housing need, particularly the younger trapped renters and the older renters, too. Back in the 1950s, in response to Churchill’s challenge, Macmillan, as Housing Minister, built 200,000 council homes. Meeting the housing need will happen only with significant investment in social rented council housing.
It is social housing that is desperately needed. Since 1980, house building in this country has been distorted by various policies, which have resulted in an average of just 25,000 social homes being built a year, compared with 125,000 during the post-war period. That is a loss of 100,000 units per year—4 million in total. The question that I want to put to the Minister is simple: how best can we use that £8.5 billion allocated to housing and planning? That is a significant sum and accounts for 80% of the total MHCLG budget.
This year, the Ministry of Housing, Communities and Local Government estimates that it will spend £3.9 billion on affordable homes—although that is often a misnomer. As well as home ownership options such as part-buy, there will also be social rented housing. To put this into context, back in 1953, in one year alone, the then Conservative Government invested £11.35 billion at today’s prices. Clearly, we are not doing enough. From speaking to Members across the House, I have learned that there is widespread support for increasing the budget. Where we differ is the proportion that should be spent on social housing, and there is real clear blue water between us on how that should be funded.
This call for a massive increase in social rented housing is echoed by Shelter. In its report produced by the Social Housing Commission, it concluded that there was a need for 3.1 million homes over a 20-year period, equating to 155,000 homes a year, of which I believe 100,000 at least should be council houses. I proposed that to the House on 13 June, and it was supported. This number is not pie in the sky; it was supported by my right hon. Friend the Member for Doncaster North (Edward Miliband) and, indeed, by Baroness Warsi. The only way councils will hit these kinds of numbers is through grant funding direct to councils, ring-fenced for building social rented housing. London Economics estimates that £10.7 billion is needed per year—less in real terms than the figure that was being spent in 1953.
It would be easy to think that the lifting of the local authority borrowing cap will be sufficient to provide the funding needed, but it will not. Don’t get me wrong—the lifting of the cap is very welcome, although long overdue. However, it is estimated to result in only £3.4 billion of investment in building council homes over the next four years. What is fundamentally wrong with the provision of housing is that too much money is being spent on the wrong schemes. The Help to Buy scheme falls within the remit of MHCLG. In my view, this scheme is totally the wrong priority and is simply being used to maintain inflated house prices and the bloated profits of house builders and developers.
This year, the Help to Buy scheme will once more account for the largest share of housing spend at £4.1 billion. The National Audit Office reports that two thirds of this—£2.7 billion—is in effect being used to subsidise homebuyers who could have bought a home without it, and one in 25 of those homebuyers had household incomes of over £100,000. Surely it would be better to use the £4.1 billion to build 40,000 social rented homes instead. Beyond MHCLG, there is of course the massive £21 billion being used on housing benefit annually. Again, surely this budget would be better utilised building social rented housing and realising those assets, rather than fuelling the private rental sector at the taxpayers’ expense.
I have quite a lot of sympathy with my hon. Friend’s point about the Help to Buy scheme, particularly with regard to the NAO report. Does he agree that, whatever different views there might be, the Government should at least do an evaluation of the Help to Buy scheme before they embark on a further phase of it?
My hon. Friend always makes an important point, and his knowledge of the sector is unsurpassed. He is absolutely right that we should suspend the scheme and think about how the budget should be used urgently to kick-start a social rented programme.
I say all this because of the pressing and urgent crisis of homelessness and rough sleeping. My hon. Friend the Member for York Central (Rachael Maskell) gave us an example of what this crisis looks like across our communities, as our housing markets are distorted by developers. Lord Porter put it very well when he said that a good home provides a good chance of good health, good education and good lives. The reality is that, without good homes, we are seeing a huge increase in social and health-related issues, all of which add to the already great burdens faced by our local services and thus our local authorities.
Local government faces huge challenges indeed: the rising costs and numbers related to children’s services; the crisis that is the unsustainable pressure brought by adult social care; the closure of hostels; the cuts to welfare services; and the closure of children’s centres, libraries and fire stations. But I would assert that the desperate need for social rented housing is at the core of so many of the problems we face. To that end, I urge the Minister to reconsider the allocation of budgets, to slash the support for and suspend Help to Buy, to lay claim to the housing benefit budget and to use that money to kick-start the industrial-scale social housing that our society desperately needs.
It is a great opportunity to speak in this important debate, and a pleasure to follow the hon. Member for Warwick and Leamington (Matt Western).
Local government is at the heart of what we all do as constituency MPs. We are all put on these Benches to stand up for our local communities, and that has certainly been at the centrepiece of all my campaigns and everything I have done since I have been lucky enough to represent the wonderful new town of Redditch.
The context of this debate has been articulated clearly by many Members: spending had to be constrained, for all sorts of reasons, by an incoming Government in 2010. That seems like a long time ago, but in financial terms it is really a very short period. Difficult decisions had to be made. Local and county councils have been at the frontline of some of those decisions with the priorities that had to be set. Some of them have done an extremely good job under very difficult circumstances. My hon. Friend the Member for North East Derbyshire (Lee Rowley) pointed out that we must always think about efficiency and how we are spending hard-working taxpayers’ money. I pay tribute to the work that has been done in Redditch to that end. I will therefore focus on the needs of Redditch and what we are doing in the local area, and then touch on adult social care.
I have been proud to work, together with my colleagues, on a campaign that we call Unlock Redditch, which is about releasing the potential of our town. It is a new town that faces challenges similar to those in other communities up and down the country. I very much thank our local council officers and the wonderful team of colleagues led by Councillor Matt Dormer, who has been successful in bucking the national trend in election results for the last three elections in a row. We have made gains on our local district council, which is doing an absolutely immense job in championing the needs of our area. In recent times, plans have been put forward to build over 600 new council homes, mostly bungalows. This is the first council house building programme in Redditch since 1998. Account has been taken of the needs of some of the most vulnerable groups in society. A new policy has been brought in to exempt care leavers from council tax. We are working very hard on our future high streets fund bid. We are also bidding for heritage action zones funding. I see the Minister is taking notes. We really want this bid to be successful.
Although we are a new town, we are built around a historic core. We have a beautiful church in our town centre surrounded by a lovely green. It is an attractive place for people to come to, but, like most areas, it needs just a little bit of TLC. That would really boost our town’s chances of being at the forefront as a tourism destination for leisure and shopping, helping to lure people away from the charms of inner-city Birmingham and Solihull—because, after all, who wants to go there when they could go to the Kingfisher shopping centre in Redditch? Of course, you are very welcome yourself, Mr Deputy Speaker. I know you have many friends in Redditch, and they would be pleased to see you there. We have also been successful in implementing grants from the LEP. We want to see our train station redeveloped and the line dualled so that we can much more easily travel into Birmingham for leisure and for work.
I want to say a little bit about adult social care. It is common knowledge that the pressures on adult social care are causing immense difficulties, and it is no different in Worcestershire. Our county council is spending some £187.7 million on the social care budget generally, a large proportion of which is on adult social care. When I came into this role—I have been an MP for only two years—I remember having my first meetings with Worcestershire County Council and being told that the county used to have so-called £1 million families who, due to a combination of needs, needed £1 million-worth of support. There were a few of those families, and of course that placed pressure on services. Now we are seeing more so-called £10 million families. Need is always rising, and these families are the most vulnerable. They have a complex picture of needs, taken together, whether to do with housing, multiple disability or education and schooling. Such a family must have the support that we all want them to have, but it becomes much more difficult to meet the ever rising level of demand.
We have often attempted as politicians to answer the conundrum of doing more on social care. Frankly, that was an absolute disaster in the 2017 election—I think we can all be honest about that. We tried to come up with policies to tackle the issue, as we needed to do, but the heat and light of an election was absolutely the wrong time to do it. It became a political football and a toxic issue. It was utterly the wrong way to do it. We must get together across the Benches—I think there is an appetite for that—to look at things such as the German model, advocated by my hon. Friend the Member for Ayr, Carrick and Cumnock (Bill Grant). I have learned a lot from my hon. Friend. We have to think about how to harness the wealth locked up in people’s homes and how we contribute as a society to making this the best country in the world at taking care of elderly people.
I am sure that our two leadership candidates are watching this debate—they have nothing better to do. I absolutely believe that both of them will focus on adult social care. They, like all of us, will have constituents with such issues in their surgeries and affected family members. I have spoken about my mother’s dementia—a catastrophic illness, and the care costs can escalate. Our next Prime Minister has to have adult social care on the agenda. Whoever makes that a priority will receive my full support.
I deliberately left it late to put in for this debate, Mr Deputy Speaker; I thought that if we were voting, I might get a good audience. I hoped that that audience might include my right hon. Friends the Members for South West Surrey (Mr Hunt) and for Uxbridge and South Ruislip (Boris Johnson) so that I could take one of two opportunities. Option A was that I could try out for any ministerial posts available in the next couple of weeks; option B, if I was not that lucky, was maybe to lobby about some of the things I have been particularly interested in.
I am sure you will be aware, Mr Deputy Speaker, that on 26 June last year, the all-party parliamentary group on excellence in the built environment, which I chair, recommended that there should be a new homes ombudsman—better redress for home buyers. Someone buying a new house for a couple of hundred thousand pounds who finds there are problems with it has fewer rights than if they had bought an electric kettle. My all-party group recommended that and, quick as anything—12 months later, almost exactly to the day—the Government launched a consultation on that very topic. I could have saved them the trouble; they could simply read the APPG’s excellent report and we could just get on with it. If all goes really badly for me in future, maybe I can apply for the ombudsman job instead.
It is important for us to think about safety. There is a lot of talk post-Grenfell about ACM materials, but the excellent Nathaniel Barker from Inside Housing did a report recently highlighting that in March last year 44 councils had fire doors that were non-compliant or possibly non-compliant. Twelve months later, half those councils have not changed a single door. How often do we walk in and out of buildings and see that compartmentalisation has been affected because somebody has put through central heating or wiring and affected the integrity of the building? Fire doors might be propped open or their intumescent strip is faulty in some way. Let us not just focus on ACM materials, but also on the relatively simple stuff that we all see every day. Let us make sure that all fire doors in all buildings are compliant. That was an excellent report from Nathaniel.
The Government could also do something a little more simple on improving safety: they could endorse my private Member’s Bill that suggests that there should be carbon monoxide detectors in all new builds and privately or socially rented homes, so that we can protect people.
However, I wanted to spend most of my speech haggling with the hon. Member for Warwick and Leamington (Matt Western). I agree that Help to Buy is not as effective as it could be, but I disagree about the natural heir to the scheme. In my humble opinion, shared ownership is the future. If we replaced Help to Buy, an extra 15,000 houses could be generated in demand for shared ownership. If someone wants to buy a £230,000 property unaided, they need to be earning about £47,000 a year. If they are buying it through Help to Buy, they need to be earning about £38,000 a year. However, if they buy it through 25% of shared ownership, they could be earning as little as £21,000 a year. For people in my constituency, where the average income is about £27,000 a year and the average property price is £127,000, shared ownership is the future. It is a great way of getting people on to the property ladder. They can access it with relatively low incomes and a relatively low deposit, and it is the best way to establish a home-owning democracy.
That was a whistle-stop tour, Mr Deputy Speaker, but thank you for your time.
We have had a thorough and full debate, and I think quite a thoughtful debate from those on both sides of the House. I add my thanks to the Backbench Business Committee for choosing the topic of Housing, Communities and Local Government for this estimates day debate.
I thank the hon. Member for Oxford West and Abingdon (Layla Moran) for the way in which she opened the debate. She set out a very real concern that is felt across all parties in this House about the impact of a decade of constraints on local government and the effect that that is now having on our public services. However, it would be remiss of me not to say that she and the Liberal Democrats displayed a little bit of collective amnesia, because they were in government between 2010 and 2015. It does seem that “Sorry” is the hardest word. In her defence, she said that she campaigned against these cuts as a candidate, but her Ministers slashed and burned many of the services she referred to. The crisis in local government today, the crisis in adult social care today and the crisis in children’s services today have their roots in the coalition years, and the Minister for local government was a Liberal Democrat—he is now Lord Stunell of Hazel Grove—although he occasionally got locked in the Opposition Lobby in votes, which is perhaps why he was very quickly moved.
I want to pay tribute to the other contributions: from my hon. Friend the Member for Sheffield South East (Mr Betts), who is the Chair of the Select Committee and brings so much knowledge to these debates; from my right hon. Friend the Member for North Durham (Mr Jones) and my hon. Friends the Members for Stoke-on-Trent Central (Gareth Snell), for York Central (Rachael Maskell) and for Warwick and Leamington (Matt Western); and from the Conservatives, the hon. Members for The Cotswolds (Sir Geoffrey Clifton-Brown) and for Thirsk and Malton (Kevin Hollinrake), the right hon. Member for Witham (Priti Patel), and the hon. Members for North East Derbyshire (Lee Rowley), for Stoke-on-Trent South (Jack Brereton), for Redditch (Rachel Maclean) and for Walsall North (Eddie Hughes).
I want to echo the right hon. Member for Witham, who mentioned that she is married to a councillor. It would be really remiss of me not to mention that I, too, am married to a councillor—Councillor Allison Gwynne—on Tameside Metropolitan Borough Council. I am incredibly proud that both my councils have, since May, had a female leader. The councils are very ably led by two incredible Labour women. Councillor Brenda Warrington, the leader of Tameside, has been joined by Councillor Elise Wilson, the new leader of Stockport Metropolitan Borough Council. They are both doing great work. I also want to thank all our dedicated council staff and councillors of all political persuasions and none for the incredible work that they do in making sure our communities are looked after. While they have continued to work hard and to lobby for the resources they need to do their job, they know—and we know actually—just how hard that job has become over the last few years. The debate has put out the message in various ways, but it is the same on both sides of the House: increasing concern about the growing crisis in local government funding and the huge cost pressures, particularly in children and adult services.
The consequence of the cost pressures in those people-based services is that the place-based services—the neighbourhood services—are squeezed. The conundrum for local councillors is that most people think that their council is there to deliver the place-based services. They are the things that they see: bins being emptied, streets being swept, parks being maintained, libraries being open and youth centres existing. Those services are squeezed to pay for the pressures in children and adult services.
I will rattle off a few figures: 763 youth centres and more than 700 libraries have closed, and Sure Start has been cut in half, since 2010. Yet local government is the beating heart of our communities. Our councils keep our streets cleaner and safer, protect the most vulnerable in society and maintain our green spaces. When we inevitably grow older, we hope that our councils will be there to provide the services to give us dignity in old age.
As my hon. Friend the Member for Stoke-on-Trent Central said, we should work towards Total Place. The previous Labour Government were keen on developing the notion that all public bodies, across the public sector, should work towards the same strategy and outcomes, and ensure that there are proper joined-up, people-based services. Our councils are the lynchpin of providing cohesive, joined-up public services, whether housing, police and crime prevention, leisure services, youth services or public health, which widens into the national health service.
I understand that the hon. Gentleman’s preference was not for making cuts to local authorities over the past few years, and he makes a good case for that. However, faced with the challenge in 2010 of balancing the books against a backdrop of £153 billion annual deficit, where would he have made the cuts?
The hon. Gentleman should realise that we are almost a decade into austerity and local government has taken the biggest hit of any Department. There is a reason for that. It is easy to pass the blame from Whitehall to town and county halls throughout the country. The Conservative Government have hung the hon. Gentleman’s councillors as much as Labour councillors out to dry.
I will not give way just now.
In the past decade, local government in England has lost 60p out of every pound that the previous Labour Government invested in our communities, in local services, in the glue that binds our communities together. The estimates debated today will sadly offer no relief to local government. The only major change from last year in the funds for local government is for business rates relief. Although it is welcome that the Government are compensating local government for that policy, it is necessary only because the Government have refused to undertake a fundamental review of business rates for which many have called. I am proud to say that the next Labour Government will conduct such a review.
Although the Minister can speak today about increases in local authorities’ spending power in this year’s settlement, it is all smoke and mirrors. Any increases are possible only if all councils increase their council tax by the maximum possible, which would mean eye-watering, inflation-busting tax increases for ordinary households. Council tax now equates to 7% of the income of a low-income family, compared to just 1% for a high-income family. That is not only unfair, but economically incoherent. The poorest areas, those that need the most resources to cope with the growing demands on children’s services and adult services, will never be able to raise the money they need. My right hon. Friend the Member for North Durham made the point that far less is possible in those areas than in the more well-off areas of the country.
I do not make that point to argue that we should be robbing some areas to fund others, but the fact is that all councils are now struggling and I would guess that that is not lost on the Minister. I hope that he will now be interested in solutions to the problem, because there is a growing chorus of concern from those on the Government Benches behind him. We are seeing a reverse redistribution of funding: a shift away from spending on local services that is based on need and deprivation.
Let me just remind the Minister that, while the Tories have in some cases actually seen spending increases, nine out of the 10 areas that have seen the largest cuts are Labour controlled: Hackney, £1,406 less per household in spending power between 2010-11 and 2019-20; Newham, £1,301; Tower Hamlets, £1,264; Knowsley, £1,057; and Southwark £1,014. Those are eye-watering numbers. Then we look at the other end of the scale: Maidstone, a £678 drop; Tewkesbury, £5.31; Vale of White Horse, £4.12; Tonbridge and Malling, a £4.18 increase; Stratford-on-Avon, a £7.45 per household increase; Uttlesford, a £7.66 increase; Horsham, a £15.68 increase; Wokingham, a £39.31 increase; and the Isles of Scilly, a £336.78 increase. That just is not fair. Not one council that has seen an increase in spending power from 2010-11 to 2019-20 is a Labour council.
What was in this year’s funding settlement? Unfortunately, I am not able to speak today about what the funding situation will look like next year because nobody knows—no one on the Opposition Benches, no one in local government, not even the Minister. Councils would normally have started their budget setting planning process, but they remain completely in the dark about how much funding they will have next year. The Government’s intention was to implement a fair funding review and to increase the percentage of business rates retained locally from April 2020, but the Tory leadership contest has thrown that plan up in the air. As the Chief Secretary to the Treasury told the Lords Economic Affairs Committee earlier this month:
“The plan was to launch the spending review just before the summer recess…I would suggest that’s unlikely given the current timetable of the Conservative leadership election.”
If that is not the case, I recommend that the Minister use this opportunity to set the record straight. I know that everyone in local government would welcome clarity. We need that certainty. Is there going to be a spending review? Is it going to be for four years? Is it going to be for one year? The Minister needs to give clarity.
What we do know from a survey published today by the Local Government Association is that one in three councils is worried that it will be unable to provide the statutory services by the end of this Parliament. That would include services such as: preventing homelessness; ensuring that vulnerable children are safe; ensuring quality of life for all adults; and dignity in old age. We know from the same survey that year-on-year cuts and an unprecedented rise in demand for these services have resulted in one in five councils being concerned that it will not be able to balance the books this year.
In closing, I would like to repeat the words of the Conservative Lord Porter, who said earlier this month:
“If the Government think the policy going forward is to spend all your reserves, and then we will find some new money…after you have spent all your reserves,”
the Secretary of State is going to have to
“explain to the public why those people died because the money was not available… It is always about understanding the cost of everything and the value of nothing.”
Never has a truer word been said. That is the reality, and I genuinely hope that the Minister, whom I respect greatly, will get a grip on his two leadership want-to-bes and insist that they start to fix the decade of neglect and cuts that our communities and local government have endured.
It is a great pleasure to conclude this debate, which I agree with the hon. Member for Denton and Reddish (Andrew Gwynne) has been very thoughtful. I congratulate the hon. Member for Oxford West and Abingdon (Layla Moran) on opening it and thank the Backbench Business Committee for securing time for us to discuss a subject that is close to my heart. She can rest assured that the latest report of the Public Accounts Committee on local government sustainability is bedtime reading for me; I have it with me at all times. I thank all hon. Members who contributed to the debate.
We are all here because we value and recognise the invaluable work conducted by councils up and down the country. I join all hon. Members on both sides of the House in paying tribute to our hard-working councillors, and I thank them for everything they do for our local communities. Let me also take this opportunity, on the first day of the Local Government Association conference, to thank the noble Lord Porter for his tenure as chairman of the LGA. He is a genuine giant in the world of local government, he has been a strong champion for the sector, he is respected across the spectrum, and I know he will be sorely missed.
Shortly after I became local government Minister, Lord Porter’s successor, Councillor Jamieson—whom I wish every success too—handed me a document that contained an incredible statistic. He had calculated that councils provide an amazing 800 different services. They really do touch every aspect of our lives as citizens. We heard about a range of those services today.
I will try my best to answer as many of the queries that were raised as possible. Many of them relate to areas that are not my direct responsibility but that of our fantastic Housing Minister. I am pleased to say that he has been here for most of the debate and has heard and absorbed all those queries. With his tagline “more, better, faster”, I know he is relentlessly committed to ensuring that everyone has a safe, decent and affordable home to call their own.
As I reflected on those 800 different services from where I stood, I came to see that there were three major, overarching areas for which councils have responsibility: driving economic growth; helping the most vulnerable in our society; and building strong communities that we are all proud to call home. I am pleased to say that this Government are supporting councils to do all three.
Before addressing the various points that were made in the debate through the prism of those three areas, I want to acknowledge that, of course, local government has been through a challenging period financially. I do not disagree with that; it would be wrong to do so. I agree that the balance of spending has shifted from non-statutory services to statutory services, and it is right that that is addressed in the upcoming spending review. Members can rest assured that, working with Departments such as the Department for Education and the Department of Health and Social Care, we are providing an evidence-based and robust account to the Treasury to inform those spending review conversations.
It is important to note why local government was put in that position. As my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) pointed out excellently, it is incumbent on all Governments to balance the books. The task this Government inherited was significant. As my hon. Friend the Member for Redditch (Rachel Maclean) pointed out, local government had a difficult set of circumstances to deal with. It made some difficult decisions and did extremely well. I join my right hon. Friend the Member for Witham (Priti Patel) in saluting not just her husband but the entrepreneurship of all local councillors up and down the country in responding to that climate. They truly have done us proud.
I agree with the hon. Member for Oxford West and Abingdon that at this point we should look forward, and I am pleased to say that the tide is turning. This year, local councils will have access to over £46 billion in core spending power. That represents not a cut or a fall, but a 3% cash increase on the funds available last year, and a real-terms increase in money available to councils to spend on services.
We heard from Opposition Members about the burden of council tax. The Government and this side of the House will always be on the side of hard-pressed taxpayers, and determined to keep council tax as low as possible. Since the coalition Government came into power in 2010, council tax has risen at an average of just over 2% per annum. We can all remember that under the last Labour Government council tax doubled, going up at a rate of more than 6% every year. Our residents need to know one thing: if they are focused on low council tax and better services, it is a Conservative Government that will deliver them.
A recurring theme in the debate—it was raised by my hon. Friend the Member for The Cotswolds (Sir Geoffrey Clifton-Brown), the hon. Member for Oxford West and Abingdon, and the Chair of the Select Committee—was governance. They were right to raise that issue. Like me, the hon. Lady was not here during the coalition Government, but they decided to abolish the Audit Commission and replace it with a more decentralised framework for oversight and accountability. The Secretary of State confirmed at the LGA today that the Department plans to enhance its role in oversight and leadership of the local authority governance system. His aim is to be able to spot problems more easily and sooner, to support councils and to protect our residents. The Secretary of State is committed to outlining to the Public Accounts Committee by the end of the year the specific steps that he will take in that regard. I know that that is something that many hon. Members have raised today and I hope they will be reassured by that. In conjunction with that work, the Secretary of State has committed to a review of the local audit framework. Again, he will report soon to the Public Accounts Committee on how that should be achieved.
My first theme is economic growth. The money that funds our public services has to come from somewhere, and the only sustainable way to generate those funds is to drive economic growth. Councils play a critical role in that, incentivised and supported by central Government. Our business rates retention scheme means that every authority in England stands to reap the rewards of increased growth in business rates income and will be able to use those rewards to invest in their local economy and community. Through business rates retention, councils now have access to nearly £2.5 billion in additional funds, on top of their core spending power, to fund local services.
Our successful 75% business rates retention pilots were incredibly popular, and 14 pilots are now in operation, benefiting over 100 different local authorities. My hon. Friend the Member for North East Derbyshire (Lee Rowley) reminded us of the importance of all councillors embarking on a journey of efficiency to ensure that their taxpayers’ money is spent incredibly well. Where we can find those efficiencies, we absolutely should.
The Government are championing authorities that are putting digital innovation at the heart of their service delivery and transformation and efficiency programmes. That has the potential to be hugely significant, which is why our new digital declaration is so important, and that ambition is backed by a £7.5 million local digital innovation fund. That is funding projects that have the potential to save money and transform services on the ground. The programme is also providing digital leadership training for hundreds of senior councillors and officers up and down the country, building the local government leaders of tomorrow.
I turn next to councils’ crucial role in helping the most vulnerable in society, and again the Government’s record is strong. We fully back councils that are on the frontline in helping those in need, supporting children, the disabled and the elderly.
My hon. Friend has referred to the role of councils in protecting the vulnerable. Does he also recognise that since health-visiting services were passed to them, the number of health visitors has fallen by more than 2,000 nationally—which is not helping young people to get a good start in life—and addiction services have been massively reduced, which means that deaths from alcohol and morbidity from alcohol-related diseases are on the rise? Will he please undertake to review the basis of the commissioning of those services and consider returning them to the NHS, where they belong?
I am not sure I agree with my hon. Friend that it would be right for public health responsibility to be returned to the NHS. Local government does not believe that it is right, and since local government has taken on ownership of public health, all the outcomes that I have seen have improved and been delivered more effectively. The Secretary of State recently commented on that. I appreciate the hon. Gentleman’s broader point, and of course it is important for delivery to be carried out well, but I think that the track record is in local government’s favour thus far.
I take a different point of view. When public health was the responsibility of the NHS, the money was kept within the NHS budget, and increased each year in line with NHS funding. Since the transfer to local government, the funds have been cut substantially in real terms. Let us return public health funding to a level at which local government will really deliver.
I think we are talking about two different issues. One is the issue of who is responsible for delivering public health, and I am strongly in favour of local government’s continuing responsibility. As for the budget, the Chairman of the Select Committee will know that it is ring-fenced. As that is rolled into business rates retention, it is of course right for there to be a proper governance and assurance mechanism.
The most recent Budget provided £650 million in new funding to help councils respond to pressure on both children’s and adults’ social care, and we have heard much about that today. It comes on top of the billions of pounds of extra funding in previous Budgets for adult social care, and it is starting to make an enormous difference on the ground. The number of delayed transfers of care has fallen by 50% since the peak, and 93% of councils agree that joined-up working with the NHS through the Better Care Fund is improving outcomes.
The hon. Member for Stoke-on-Trent Central (Gareth Snell) set a good challenge for Governments to follow when he spoke of place-based funding. The improved Better Care fund is just one aspect, but we should clearly aim to do more in that direction, pooling budgets locally among different agencies when it makes sense. Manchester is the most evolved model in that regard, and I have enjoyed getting to know the team there and seeing the results that its work is having.
My hon. Friends the Members for Thirsk and Malton (Kevin Hollinrake) and for Redditch (Rachel Maclean) talked about the importance of a long-term solution. That is not my remit, but I hope that the Secretary of State is giving good consideration to the joint work of the two Select Committees on a social insurance model. The hon. Member for York Central (Rachael Maskell) reminded us that prevention is better than cure, and I fully agree with her.
I am very proud of the work that our Department has done in leading the highly successful troubled families programme, which has supported more than 400,000 families through an innovative early intervention model utilising a key worker and a whole-family approach. The results have been excellent. Children have been saved from going into care, people are coming off benefits and going into work, and crime and antisocial behaviour have been reduced. Ultimately, families are becoming stronger. It is a privilege to meet the people who are executing the programme on the ground, and those visits are some of the most humbling that I make. I know that that programme, and those workers, are making an enormous difference to the lives of some of our most vulnerable citizens.
Finally, let me touch on the work of councils in supporting strong communities. I agree with my hon. Friend the Member for Redditch about that. The Government see it as a critical task, and we are helping councils to build cohesive, safe and local communities up and down the country—places that we are proud to call home. We have provided additional funds to enable councils to build cohesion in areas on which migration has had a particular impact.
We have worked with my hon. Friends the Members for Redditch and for Stoke-on-Trent South (Jack Brereton) to come up with various support schemes for the high streets, which are now worth more than £1.5 billion. We have helped councils to make improvements to local roads—the essential arteries of our community life—with a £420 million fund to deal with potholes. We have provided new money for parks and green spaces, which has brought about the creation of more than 200 “pocket parks”. Those little havens of greenery make all the difference to the community, especially in the more deprived areas.
Just those few examples demonstrate the breadth and depth of our commitment to helping local government to build vibrant and cohesive communities in the places that they serve. Whether they are driving economic growth, caring for the most vulnerable in society or building stronger communities, local councils across the country do an amazing job. That is what makes it such a privilege for me to have this role, and to champion local government in Whitehall and in Westminster. Local government deserves our backing, local government is getting our backing, and I commend the estimates to the House.
Question deferred (Standing Order No. 54)
The Speaker put the deferred Questions (Standing Order No. 54).
Department for International Development
That, for the year ending with 31 March 2020, for expenditure by the Department for International Development—
(1) further resources, not exceeding £3,631,122,000 be authorised for use for current purposes as set out in HC 2154 of Session 2017–19,
(2) further resources, not exceeding £1,923,101,000 be authorised for use for capital purposes as so set out, and
(3) a further sum, not exceeding £5,760,680,000 be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.
Department for Education
That, for the year ending with 31 March 2020, for expenditure by the Department for Education—
(1) further resources, not exceeding £35,024,055,000 be authorised for use for current purposes as set out in HC 2154 of Session 2017–19,
(2) further resources, not exceeding £15,813,820,000 be authorised for use for capital purposes as so set out, and
(3) a further sum, not exceeding £48,195,607,000 be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.
Department for Work and Pensions
That, for the year ending with 31 March 2020, for expenditure by the Department for Work and Pensions—
(1) further resources, not exceeding £48,180,879,000 be authorised for use for current purposes as set out in HC 2154 of Session 2017-19,
(2) further resources, not exceeding £362,104,000 be authorised for use for capital purposes as so set out, and
(3) a further sum, not exceeding £49,265,200,000 be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.
Ministry of Housing, Communities and Local Government
That for the year ending with 31 March 2020, for expenditure by the Ministry of Housing, Communities and Local Government—
(1) further resources, not exceeding £13,222,573,000 be authorised for use for current purposes as set out in HC 2154 of Session 2017–19,
(2) further resources, not exceeding £5,087,100,000 be authorised for use for capital purposes as so set out, and
(3) a further sum, not exceeding £9,295,168,000 be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.
The Speaker then put the Question on the outstanding Estimate (Standing Order No. 55).
Main Estimates 2019-20
That, for the year ending with 31 March 2020—
(1) further resources, not exceeding £201,202,413,000 be authorised for use for current purposes as set out in HC 2154, HC 2173, HC 2180, HC 2181, HC 2182 and HC 2183 of Session 2017–19,
(2) further resources, not exceeding £24,106,601,000 be authorised for use for capital purposes as so set out, and
(3) a further sum, not exceeding £171,642,347,000 be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.—(Rishi Sunak.)
Ordered, That a Bill be brought in upon the foregoing Resolutions relating to Main Estimates 2019-20;
That the Chairman of Ways and Means, the Chancellor of the Exchequer, Elizabeth Truss, Jesse Norman, John Glen and Robert Jenrick bring in the Bill.
Supply and Appropriation (Main Estimates) (No. 3) Bill
Presentation and First Reading
Jesse Norman accordingly presented a Bill to authorise the use of resources for the year ending 31 March 2020; to authorise both the issue of sums out of the Consolidated Fund and the application of income for that year; and to appropriate the supply authorised for that year by this Act and by the Supply and Appropriation (Anticipation and Adjustments) Act 2019.
Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 414).