House of Commons
Monday 25 January 2021
The House met at half-past Two o’clock
[Mr Speaker in the Chair]
Virtual participation in proceedings commenced (Orders, 4 June and 30 December 2020).
[NB: [V]denotes a Member participating virtually.]
Oral Answers to Questions
Work and Pensions
The Secretary of State was asked—
Disabled People: Support for Shielding
People who are advised to shield and are unable to work from home may be furloughed. Those who are not furloughed may be eligible for a range of other financial support, including statutory sick pay and new-style employment and support allowance, both of which remain payable from day one of a claim. Where eligible, a claim may also be made to universal credit.
Many disabled people are on legacy benefits, which of course means they have not had the £20 a week universal credit uplift that has been made available. As the Government did not vote against our motion last week to retain that payment, I presume that they understand the value of retaining it, so will they now do the right thing and ensure that all disabled people have access to that extra cash?
We have shown as a Government the support we are providing, including over £9 billion of extra welfare support. Those on legacy benefits will have benefited from the annual uprating. Depending on individual circumstances, if a claimant would be better on universal credit, they can look to transfer over.
There are 2.2 million people who are having to shield. Many disabled people cannot work from home and do not qualify for furlough, and sick pay is only £95.85, which does not even come close to the definition of doing what it takes to look after people, which the Prime Minister tried to use on Thursday. May I push the Minister not to give the same tired answer about what he has done for other people but to answer the question that my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) has just asked? When are the Government going to give support to disabled people so that they can be protected and stay at home?
The level of statutory sick pay is just part of the safety net; people may also be eligible for new-style ESA or universal credit, and for those disabled people who are looking to work from home, we have extended the support that is available through Access to Work, allowing for people to have additional support for their needs or equipment. That is something that we will keep in place beyond covid.
I thank the Minister for his response, but it was not very satisfactory, so I will give him another opportunity to give a more concrete answer. When will he end the discrimination against disabled people and offer the same uplift that universal credit claimants have been given to legacy claimants on employment and support allowance and jobseeker’s allowance, which disproportionately support the disabled?
Further to the principle that if a claimant could be better off on UC than on legacy benefits they have the ability to apply to go on to UC, as a Government we have increased support for people with disabilities through the main disability benefits by an extra £3 billion in real terms since 2010. We are proud of our record.
But people claiming severe disability premium cannot switch to universal credit; they are not allowed to. The costs facing many in that group have increased by more than average during the pandemic. Why is that particular group denied the £20 a week increase?
The SDP gateway comes to an end in a couple of days, so those claimants will also be able to see whether they would be better off under universal credit. However, as I said, it is part of the wider support available, and those with disabilities in particular will have benefited from the annual uprating increases in disability living allowance, personal independence payment and attendance allowance. That is how we have delivered the additional £3 billion-worth of support in real terms for those with disabilities and health conditions.
May I just say how utterly disappointing it is still to have no uplift to legacy benefits 10 months into this crisis? Since the start of the pandemic, shielding people have been an afterthought. The increased costs they are facing are doing untold damage to their lives, and the Government’s solution of claiming statutory sick pay is woefully inadequate. Will the Government finally do the right thing and ensure that shielding people and people having to isolate are furloughed? Guaranteed furlough from day one would help people stay home and support businesses up and down the country.
I would hope the shadow Minister welcomes the continued and extensive support the Government have provided through schemes such as furlough, the additional £9 billion in welfare support, and, specifically for those who are clinically extremely vulnerable, the second £32 million additional support provided through local authorities to help those following the shielding guidance. In these critical times, certainty is vital. Perhaps the shadow team should reflect on that with their random decision to try to cancel universal credit, which has stood up so well to support those people in the most need during these unprecedented times.
The proportion of individuals capped remains very low in relation to the overall UC case load and exemptions continue to apply. There remains a statutory duty to review the cap within this Parliament. However, we are in an unusual economic period, and any decision will need to consider potentially counter-intuitive and shifting trends.
I thank the Minister for that answer, but at a time when all of us know constituents who are struggling through the crisis which has brought them such hardship through no fault of their own, are the Government really going to impose the benefit cap on tens of thousands of families with children when the so-called “grace period” comes to an end? Is that really true? If it is, can she tell me this: how is that fair?
The benefit cap provides fairness for hard-working tax-paying households as a clear incentive to move into a job where possible. Universal credit households are exempt from the cap if the household earnings are at least £604 a month. I reiterate to the House that the amount of individuals capped remains very low in comparison to the UC case load, at around 3%.
Covid-19: Child Poverty
Her Majesty’s Treasury’s analysis has shown that the Government’s comprehensive £280 billion response to the pandemic, including a temporary and emergency £6 billion increase to welfare support specifically designed to help low-income families, has supported the poorest working households the most, with the poorest 10% of working households seeing no income reduction.
It has been clear from what Department for Work and Pensions Ministers have said to the House and in the media that they understand the real difference the £20 a week universal credit uplift has made to some of the poorest families. Given that we know withdrawing that uplift will plunge huge numbers of people into poverty, including 300,000 children, why are Ministers having such a difficult time persuading the Chancellor to do the right thing by the poorest families and tackling child poverty?
We are in active discussions with Her Majesty’s Treasury regarding the £20 universal credit uplift. No one in this House wants to see anyone in poverty. I understand the hon. Gentleman’s ask and it comes from the right place, but I would just push back a little and say that, over and above the £100 billion we spend annually on benefits for working-age people to support those facing the most financial disruption throughout this pandemic, we have invested several billion pounds more. The Chancellor of the Exchequer has an unenviable task, but I point out to the House that my right hon. Friend has a proven track record of stepping up and supporting the poorest and most vulnerable in our society. I have no doubt he will continue to do so.
I understand, without a shadow of a doubt, that the Minister cares deeply about this issue, but I listened to the Secretary of State this morning on broadcast media saying that she was not able to set a particular date because of the active conversations in the Treasury. The Minister just gave the same answer to my hon. Friend the Member for Ilford North (Wes Streeting). Why is the Chancellor not listening? Is he tin-eared on this issue? We are talking about 600,000 extra children in poverty since this Government came into office in 2010. The £20 uplift provides certainty and these people need that security desperately. We cannot be a nation where there are more and more children living in absolute poverty, and more and more families living without savings. That simply is not good enough. I ask the Minister to challenge the Chancellor and ensure we stop more children going into poverty.
As I have said, the universal credit uplift is still in place for the remainder of this tax year. Discussions remain ongoing with Her Majesty’s Treasury, and a decision on the future of the universal credit and working tax credit uplift will be taken by the Chancellor of the Exchequer in due course.
But the number of children in poverty has increased by 600,000 after housing costs since 2010, and that has been in substantial part due to the £9 billion that the Government have withdrawn from social security since 2015 alone. The universal credit uplift and other measures taken since the beginning of the pandemic will have reduced the number of children living in poverty to 300,000, but can the Minister confirm that if the Government proceed with ending the £20 UC uplift, together with rising unemployment, that will mean, by the end of this Parliament, that they will have seen 700,000 more children cast into poverty than at the beginning?
We take the issue of poverty, and tackling poverty, incredibly seriously, and as I made clear, active discussions are ongoing with Her Majesty’s Treasury. But I have to say that I fundamentally disagree with the approach of Labour party: simply throwing money at our benefits system—an approach that, under the last Labour Government, left a generation trapped on benefits, trapped in poverty and incentivised not to work by punitive cliff edges in the legacy benefit system. We will not be going back to those dark old days. We know that work is the best route out of poverty and, under universal credit—our modern, dynamic, agile system—work always pays.
Tackling poverty and levelling up opportunity will always be a priority for this Government, while using universal credit, which works for the labour market, to encourage people to move into and progress in work. There are several measures of poverty in the annual publication “Households below average income”—which is based on the annual family resources survey—of which absolute poverty before housing costs is the measure on which the Government most focus. Since 2010, 400,000 people have been lifted out of absolute poverty, including 100,000 children, and additionally, the rates of combined material deprivation and low income for children were at their joint lowest, at 11%, in 2018-19.
Child poverty is a disgrace in the UK and it is strongly linked to welfare payments. Quite clearly, more people are going to be pushed into poverty if the Tory Government continue with their planned cut to the £20 uplift in universal credit and the working tax credit. Ministers have ducked this all day, but given that the Government did not vote against the motion last week, they have a duty to honour that motion, so will the Secretary of State confirm what discussions she has had with the Chancellor about retaining the vital £20 uplift?
I updated the House in November and did say that we would be reviewing this in the new year. That is exactly what we are doing, and I am actively considering with the Chancellor the best way to continue to try to support people who are impacted on strongly by the economic impacts of this pandemic.
Between November 2019 and November 2020, the number of universal credit claimants in Aberdeen South had risen by 188.7%, and any move to cut the £20 universal credit uplift would have a catastrophic impact that would ultimately exacerbate poverty levels. So let us try again: can the Secretary of State confirm that she has made personal representations to the Chancellor on maintaining the full £20 uplift, and if so, and he chooses to ignore her, will she resign?
As often happens, as the hon. Gentleman will know from the Scottish Government Administration, Government Ministers tend to have discussions about policy while they are considering it. It is important, recognising the scale of the support that the Government have given to families, businesses and so on, that we continue to make these important decisions based on evidence in a competent, considered and compassionate way. That is exactly what the Chancellor and I will be doing in our recommendations for the Prime Minister.
Unless the universal credit and working tax credit uplift is made permanent, a further 60,000 people in Scotland, including 20,000 children, will be pushed into poverty. If this support is not extended beyond March, and if tackling poverty is a priority for the Secretary of State’s Government, as she says, will she set out what alternative and additional measures her Government intend to bring forward to tackle child poverty, which shamefully still affects 30% of children across the UK?
I have already set out the approach and discussions that the hon. Lady can be assured I am continuing to have with other Ministers, including the Chancellor. It is fair to say that we are very conscious that one of the ways to try and help people get out of poverty is through the plan for jobs. While I am conscious that there are not lots of jobs at the moment—although we estimate that there are over half a million vacancies—we want to try and make sure that people are ready to take advantage of the opportunities, particularly when we have seen the number of workless households sadly increase.
The Secretary of State suggested that her approach to universal credit is evidence-based, yet the Government dismissed the Select Committee on Work and Pensions report on this issue. Then she described anti-poverty measures as a priority, yet removing the universal credit uplift would plunge 200,000 children across the UK into poverty. If the UK Government make the smaller one-off payment that has been suggested, it will provide no security and do nothing to help those who first claim UC after the payment has been made. Alongside the discussions on universal credit, has the Secretary of State suggested to the Chancellor any action to end the discrimination against those on legacy benefits who have seen their support rise by just 1.7% during the pandemic?
People on legacy benefits can transfer to universal credit, and the final barrier to that is being lifted this Wednesday. I encourage people to consider that move, because we are confident as a Department that the majority of people would be better off. I remind the House that Parliament voted to end both legacy benefits and tax credits and to move to universal credit because it is a welfare system that is agile and incentivises people to work when they can.
So no action on legacy benefits, which means that the active discrimination from the UK Government against sick and disabled people, who disproportionately claim them, will continue. Robert Burns said:
“Whatever mitigates the woes or increases the happiness of others, this is my criterion of goodness; but whatever injures society at large or any individual in it, then this is my measure of iniquity.”
If the uplift to universal credit is not made permanent, the Secretary of State will be presiding over a system that not only discriminates against disabled people but in which out-of-work support falls to its lowest ever level relative to wages, confirming Burns’s definition of iniquity. In that scenario, how in all conscience could she remain in post?
Tonight, many people right across the United Kingdom will be celebrating Burns night, recognising the strength of the poet and the prose he delivers. I am afraid that the hon. Gentleman’s comments fail to hit with me right now. The reality is that we have supported the welfare system with an extra £7 billion in the past year. We continue to spend more on benefits and we continue to spend more to try to help people back into work. This is a Government who are on the side of people, recognising the difficult situation that we face. As I have said before, as long as the Opposition keep trashing universal credit it will be no wonder that people do not realise that many of them would be better off moving tomorrow. I would encourage people to look into that.
Kickstart has got off to a flying start and I am delighted to inform the House that to date 120,000 kickstart jobs have been approved and 2,000 young people have already started. Around 10,000 jobs are available to young people now and I am expecting a further 33,000 or so to be placed fairly soon while we work with employers to finalise the detail of the job offer. We recognise that young people have been greatly impacted by the pandemic, which is why kickstart is such a pivotal part of our plan for jobs to help them secure a stable footing on the career ladder.[Official Report, 4 February 2021, Vol. 688, c. 7MC.]
Kickstart is a fantastic programme that has created 120,000 opportunities that will benefit young people in Heywood and Middleton and around the country, but of course the core jobcentre offering will be incredibly important as we move to recovery. What measures are being taken to ensure that that is available to people of all ages around the country?
My hon. Friend is right. While kickstart is the flagship of our plan for jobs, we are well on track to recruit the extra 13,500 work coaches. Throughout the pandemic and across the country, work coaches have continued to provide support directly and digitally. Helping people to get ready to get back into work is a top priority and that is why other parts of the plan for jobs, including stepping up the number of places on sector-based work academy programmes, boosting job entry targeted support and launching job funding support nationally this month, are how we are helping everybody to try to get back into work.
Today, the DWP announced that more than 120,000 kickstart jobs had been created, but the Secretary of State has said that 10,000 placements are available now, and the Financial Times has reported that it is because of the Secretary of State’s delays that the other 33,000 have not yet come on stream. How on earth can it be that fewer than 2,000 young people have started placements to date? This scheme was announced six months ago and over half a million young people are out of work. Is it not the Secretary of State who needs to move up a gear so that we can secure our economy and get our young people into the jobs that they need?
The hon. Lady is right to ask why only 2,000 people have started. We have had a record number of applications and we have actually created more job placements than the future jobs fund ever achieved. We are trying to turn that into job starts. There are certain things going on where we are trying to roll out those jobs around the country, but I can assure her that this pipeline of jobs, which will take us right through to the end of the year as we are taking on more, is there to try to ensure that we find people the right sort of kickstarter role. We are also making sure that, as well as having covid-secure arrangements, the training wraparound support is high-quality.
Covid-19: Welfare Support
Work coaches are empowered to support claimants through the best and most appropriate channels, whether online, by phone or in person, with jobcentres remaining open to those who need extra support and are unable to interact with us on the phone or digitally.
A number of my constituents in Southend West who suffer from mental or physical disabilities do not have access to computers or the internet. Many of them rely on in-person support in normal times, through places such as the citizens advice bureau or the wonderful Kings Money Advice Centre. With many in these vulnerable groups unfortunately now shielding, what assurances can my hon. Friend give me that support is being made accessible to those without online access?
My hon. Friend is a strong advocate for supporting his most vulnerable claimants and his local advocacy groups. As I have set out, we will look at the most appropriate way to communicate with claimants, including by phone or through advocates, where they do not have access to the internet.
We continue to engage with employers of all sizes to create high-quality placements for our young people to get their start on the employment ladder, and to make it even simpler, from 3 February we will remove the 30-job minimum for job applications, giving new applicants the choice to apply directly or via one of over 600 excellent approved kickstart gateways.
As you well know, Mr Speaker, South Ribble has many brilliant small businesses that are keen to provide a kickstart opportunity for a young person. For example, Mark Wright Landscapes got in touch saying that it was worried that it was too small to participate. In that instance, I was able to direct them to the great North and Western Lancashire chamber of commerce, which acts as a gateway. Will my hon. Friend join me in thanking that small business and encouraging others in Lancashire and beyond to create a job and give an opportunity through kickstart to as many young people as possible?
I would very much like to thank my hon. Friend for raising the opportunities for smaller businesses, and the great team at the North and Western Lancashire chamber of commerce for their hard work and the services they provide as a gateway organisation. This is helping many sole traders and employers in her constituency to support our young people to take up these kickstart roles, ensuring that young people have that vital wraparound support, getting them on to the career ladder and, above all, grasping future work opportunities.
With youth unemployment set to reach 1 million and 600,000 already unemployed, can the Minister provide some updates on how her Department will meet the 250,000 kickstart programme target that it stated it would meet? The numbers that the Secretary of State has set out today are worryingly low. Will she also consider removing the six-month requirement, where a young person has to be unemployed for six months before they qualify for the kickstart programme?
The young person needs to be on universal credit and working with our excellent work coaches. In respect of Hoxton and Poplar, which cover the hon. Lady’s constituency, we are recruiting 27 new work coaches in Hoxton and 67 in Poplar. Since the end of September, we have been working with the new Tower Hamlets youth hub, with local employers and gateways bringing opportunities. I encourage the hon. Lady to visit her local jobcentre to see what has happened there in the past year, because I do not believe she has visited and think that would put her mind at rest.
Covid-19: Youth Employment
This Conservative Government and I, as the employment Minister, are committed to providing support to help our young people to move into work and avoid the long-term scarring effects of unemployment, both during the pandemic and as we recover from its impact. Our plan for jobs includes an expanded DWP youth offer, kickstart and more than 100 new youth hubs to assist young people to move into meaningful, sustained employment.
Small and medium-sized enterprises in my constituency have raised concerns about the time it takes to apply for the kickstart scheme. What action is the Department taking to ensure that applications are processed as quickly as possible?
The Department worked at pace to launch the kickstart scheme in September, with the first applications open in November. Our aim is to take forward applications within one month, but it can take longer if we require additional information. We expect the situation to improve as we adopt processes and embed learnings from the thousands of employers and hundreds of gateways that have joined the scheme early on. My hon. Friend will be pleased to hear that the application from Fotofabric Ltd in his constituency has now been approved.
Covid-19: Careers Advice
Our plan for jobs is providing a range of vital, tailored employment support for all jobseekers who are looking to move sector; targeting support for those impacted by the pandemic; and linking into local recovery plans. The plan includes DWP’s job finding support, or JFS; sector-based work academy programmes, or SWAPs; job entry targeted support, or JETS; and our new restart programme. It will also utilise the forthcoming UK shared prosperity fund.
Back in 2013, my constituency of Delyn had an unemployment rate of 5.2%; thanks to successful aspirational Conservative policies, this was down to just 3% before the pandemic took hold, but now sits at around 6%. With some sectors—particularly tourism and hospitality—more severely impacted than others, will my hon. Friend confirm that, despite many things being in the hands of a Welsh Government who, I hope, are in their final months in power, the UK Government will continue to provide support and generate opportunities for my constituents to get back into work as soon as possible?
I am happy to confirm that DWP will continue to work hard to support people like my hon. Friend’s constituents. I know that the staff in his three local jobcentres are already delivering training, mentoring circles and kickstart prep courses with partners such as Google, Amazon and the Prince’s Trust, as well as working to develop new resources to help to support local jobseekers.
Benefits Recipients: Supported and Exempted Housing
Local authorities apply the “more than minimal” test as part of the process for determining housing benefit for supported accommodation. No assessment has been made of the effectiveness of the “more than minimal” test for care, support and supervision in housing benefit; however, we are reviewing the guidance for local authorities to help improve consistency in decision making.
The Minister and I have talked about this, so he will know that I have real concerns about the exploitation of vulnerable people in the supported housing sector by landlords who know that they can charge much higher rents by providing only “more than minimal” support. Will the Minister look at the regulations to see whether they can be tightened up? I know that pilots are going on and consideration is being given to whether we can regulate supported housing, and that might be one way to do it.
The hon. Lady is right to point out that work is under way in this policy area. The DWP Minister in the Lords remains responsible for the policy; she is offering to all MPs and peers a session on 24 February at which they can raise any areas of concern, so I will make sure the Lady is invited to that. We recognise that there are problem areas and I share a number of the hon. Lady’s concerns, but it is important to stress that the majority of supported housing is provided by well-run, registered social landlords with a strong social mission.
Vulnerable People: Essential Costs
The £170 million covid winter grant scheme is supporting disadvantaged people through the challenging winter months to the end of March with food and utilities. The first wave of funding was given to councils in November. The next tranche of payments is due next month and support for Northern Ireland, Scotland and Wales is already included in the pre-agreed Barnett funding. I have been pleased to see councils go beyond just issuing food vouchers. For example, in Telford and the Wrekin, where a large number of pupils had reportedly been going to school without a warm coat, some of the funding will help ensure that these disadvantaged children are warmly dressed for the cold winter months.
I thank my right hon. Friend for that statement. As well as providing those on low incomes with food boxes, the charity SOFEA in my constituency works with utility companies to try to drive down the costs of people’s bills, recognising that food is not their only challenge. I am hugely supportive of the covid winter fund, but does my right hon. Friend agree that what happens to those on low incomes is not just about what the Government do, and that we need all businesses to look at what more they can do to help drive down the cost of living?
My hon. Friend is absolutely right that all businesses can play a part. I praise those mobile phone and internet companies that have offered low-cost packages to people while they are on benefits. In particular there is the warm home discount scheme where my Department works closely with utility companies on data matching. Nearly 1 million eligible claimants received the £140 discount automatically and did not need to apply.
Does my right hon. Friend agree that, by providing funding to support families with children of all ages, including pre-school children, the covid winter grant scheme will give local authorities the flexibility they need to ensure that no child goes hungry this winter?
I completely agree with my hon. Friend. The terms of the condition of the grants to councils were clear that they needed to reach out to support children of all ages who are disadvantaged. Councils have the ties and the knowledge that make them well placed to identify that. I commend Shropshire County Council, which has received £850,000 over the scheme, for drawing on this information to target its support to help children of all ages, including pre-schoolers and care leavers who are exactly the groups that I hoped would also benefit from the support.
Too many pensioners face a harsh and challenging winter. Deep concerns about the high rates of coronavirus have been made worse by the effects of the severe weather and isolation from the usual networks of support. Will the Secretary of State reassure the House that the Government will take urgent action both to raise take-up of pension credit for those most in need and to take other steps to protect pensioners? The Government have dithered for too long, and they need to set out a comprehensive package of support for our vulnerable pensioners.
I welcome the hon. Gentleman to his place and congratulate him on his new role. On supporting pensioners, I genuinely believe that the Government have gone a very long way with the triple lock. We continue to see that boost with the basic state pension. He may not be aware of the extensive advertising in GP surgeries, post offices and similar that took place in 2020 to encourage people to take up the pension credit. We will continue to consider how that can be improved.
Covid-19: Universal Credit Roll-out
Since the start of the pandemic, the welfare safety net has been there to support nearly 6 million claimants. Parliament has voted for universal credit and to end legacy benefits. The nationwide roll-out of universal credit was successfully completed in December 2018, and we are committed to ensuring that those on legacy benefits move across in a safe and secure way.
I thank the Minister for his answer. It is quite clear that, during the coronavirus pandemic, alongside our massive vaccine programme and world-leading support of £4,000 a head—£280 billion in total—universal credit has been a real success. I praise the officials in Crook and Consett in my constituency for the work that they have done. Does the Minister agree that the last thing we should be doing is moving to scrap universal credit, which is a system that is really helping thousands of my constituents? Does this not show how out of touch the Opposition are, when this system is benefiting millions of people across the country at this incredibly difficult time?
I completely agree; universal credit is a modern, dynamic, agile and fairer welfare safety net, which, in the face of unprecedented demand, ensured that millions of people were paid in full and on time. This is a system that, by any measure, has passed the most challenging of tests, supporting nearly 6 million vulnerable people through this pandemic. There is little doubt that, had we relied on the legacy benefits system, we would have seen queues down the streets outside jobcentres, and long delays leaving families facing financial disruption without support.
Covid-19: Universal Credit
Thanks to universal credit’s modern, dynamic and agile system, it has effectively supported nearly 6 million people, with over 90% of new claimants receiving their first payment in full and on time. This is in stark contrast to the paper-based legacy system, which would have seen queues outside our jobcentres and would have buckled under the pressure.
I have seen for myself on visits to the fantastic jobcentres in Guisborough and Loftus how the teams there really value universal credit, and how it has helped to support people over the last turbulent year. Will my hon. Friend reassure my constituents that there is no question of universal credit going anywhere, and does he agree that the Leader of the Opposition calling for it to be scrapped is simply the height of opportunism and irresponsibility?
The universal credit system and tens of thousands of dedicated, incredible DWP staff have processed an unprecedented number of claims—over 3 million since mid-March. It is not just my hon. Friend who is saying this; the IFS slammed Labour’s pledge to scrap UC as uncosted, as well as,
“unwise…expensive, disruptive and unnecessary.”
The Government believe that work should always pay and we need a welfare system that helps people into work, supports those who need it and is fair to those who pay for it. Remember: no Labour Government have ever left office with unemployment lower than when they started.
Work Capability Assessment Referrals
Although face-to-face work capability assessments remain temporarily suspended, we are conducting paper-based assessments where possible. We have also introduced telephone assessments and are trialling video assessments. We closely monitor processing times, and are prioritising new claims and changes of circumstances.
In its latest briefing, the Child Poverty Action Group has highlighted the plight of universal credit claimants whose work capability assessments have been delayed indefinitely because they require a face-to-face assessment. These claimants have gone months without hundreds of pounds of extra support, which they need. What assurances can the Minister provide these claimants about when they will be able to access this element of universal credit?
We are doing absolutely everything we can to ensure that claimants are accessing the support as quickly as possible, which is why we introduced at pace telephone assessments and now video assessments. Wherever possible, we are also conducting paper-based assessments. We continue to do all we can, and we will return to include face-to-face assessments as soon as it is safe to do so.
Benefit Recipients: Heating Costs
Winter fuel payments of between £100 and £300 are provided to all those of state pension age. In addition, certain benefit recipients can also receive payments from the warm home discount scheme and the cold weather payment scheme. As mentioned by the Secretary of State earlier, we have introduced a covid winter grant scheme, which has made £170 million available to English local authorities.
Obviously the weather has been very cold and families are spending much more time at home, so I welcome all that additional support to help with heating. Will the Minister clarify whether the money is paid automatically or families must actively apply for it?
Worcestershire received £1.6 million to provide support to vulnerable households and families. This can be used to support the costs of heating, utility bills and various other items, and is available at the local authority’s discretion. Clearly, my hon. Friend should contact her local councillors and the leader of the local authority for further details.
Pension Credit Uptake
In February last year, we launched a nationwide campaign to raise awareness of pension credit and have continued to make that case throughout the past year, notwithstanding the difficulties of the pandemic. The Department for Work and Pensions is currently considering an internal review of communication products to identify further improvements in our messaging, with many more aspects to be pursued this year.
The Minister will know that uptake of pension credit has remained below 65% since 2010. Although, as he said, there was an awareness campaign in 2020, with good intentions, it was only 12 weeks long and partly occurred during the pandemic. Does he agree with me, and others, including the charity Independent Age, that rather than being one-off events, such awareness campaigns should be part of a wider long-term strategy and take advantage of new innovations and channels?
We plan to use existing Government letters on the attendance allowance and state pension, and other letters that the Government send out, to help to promote pension credit. We are also discussing a joint working arrangement with the BBC. We continue to make all efforts to try to promote pension credit.
Our kickstart scheme is putting the future of young people front and centre of our plan for jobs. I have already shared with the House that over 120,000 kickstart roles have now been approved, and we want to turn those into job starts. In addition to making it simpler for employers by removing the 30-vacancy threshold for direct applications, as was set out earlier, employers who cannot currently access kickstart at all—for example, sole traders with no pay-as-you-earn systems—can now join up through the gateway-plus model that is currently provided by the Federation of Small Businesses and Adecco joint venture. It is an exciting phase as we move up a gear.[Official Report, 4 February 2021, Vol. 688, c. 8MC.]
This weekend, Newcastle United fans food bank launched a virtual bucket so that fans can donate small sums online on matchdays to help to meet the massive increase in demand from hungry families. Will the Secretary of State congratulate the food bank organisers on their hard work and ingenuity, and explain to them why she will not cancel the cut to universal credit that will force many of the 16,000 claimants in Newcastle further into destitution, increasing debt, food poverty and demand for the food bank?
Of course I congratulate the organisation through the football club to which the hon. Lady refers: it is of great worthiness to undertake that. She will be aware of the support that has been ongoing and also the additional £170 million winter grant from which Newcastle City Council will be benefiting in order to help to make sure that no child goes hungry and every child stays warm this winter.
We have provided an unprecedented economic support package to protect and create jobs through the pandemic. For people who need to change careers, our sector-based work academy programmes—SWAPs—offer training, work experience and a guaranteed job interview to get those people ready to start a job, allowing them to learn the skills that employers in that particular industry look for. Alongside that, our flexible support fund has been boosted by an extra £150 million so that work coaches can help to support individuals facing redundancy through retraining and overcoming barriers to work.
As we have heard, last week this House voted that the Government should not proceed with the £1,000 cut to universal credit set to take place in April. That position is now supported by 280 MPs, more than 60 charities and campaign groups, and the majority of the British public. I have listened to the Government today, as ever, but, as it stands, that cut is formally written into official Treasury documents, and the Prime Minister has indicated that he thinks the cut should happen, but last week the Under-Secretary, the hon. Member for Colchester (Will Quince), said that it was too early to make the decision. Will the Secretary of State clarify what is Government policy on reducing universal credit in April, what criteria will affect the decision, and who in Government will ultimately make that decision?
As has been explained several times to the House today, and previously by my hon. Friend the Member for Colchester (Will Quince), the Government introduced a raft of temporary measures to support those most impacted by the covid pandemic. The hon. Member is aware of the statement I made to the House, where I said that the situation would be reviewed in the new year, and that is exactly what I am doing. I am working closely with my right hon. Friend the Chancellor as we consider the options on how best to support people through the pandemic.
I put it to the Secretary of State that she must give clarity to the millions of families this cut will affect. If she wished, she could give that reassurance now. I also ask for clarity on reports that the Chancellor is planning on giving a one-off payment to universal credit claimants, ignoring those on other benefits, and leaving the hundreds of thousands of likely new claimants expected this year with lower levels of support. Does the Secretary of State agree that it would be not only unfair, but a very poor use of public money to pay a lump sum to people on universal credit now, while cutting unemployment support to its lowest level for 20 years, just as unemployment is set to peak?
I can only more or less repeat what I said before. My right hon. Friend the Chancellor and I are actively working on proposals on how we can continue to make sure that we support people most badly affected by the pandemic. This is part of the discussions that are still ongoing, and I can assure the House that we are actively considering it and hope to make an announcement when we can, in order to give that certainty, as the hon. Member points out, to a number of people.
My hon. Friend is right to highlight the key role that pension scheme assets can play in tackling climate change. The UK is already leading the way on this issue, thanks to actions taken by the Government, but particularly by my hon. Friend the Member for Hexham (Guy Opperman), the excellent Minister for Pensions. In 2018, we introduced key environmental, social and corporate governance legislation for occupational pension scheme investments, and we have gone further with the pension scheme legislation that is currently awaiting Royal Assent. It makes the UK the first major economy to put assessing climate risk and disclosure into statute for pension schemes, a point that we will continue to reinforce as we run up to hosting COP26, and we encourage other countries to do likewise.
I thank the hon. Member for that question. As set out earlier, SSP is only part of the wide range of support that could be available, including universal credit, new-style ESA and support through local authorities. It will depend on each individual claimant’s circumstances. Wider SSP was increased as part of the annual uprating. As part of “Health is everyone’s business”, we continue to review the rates, structure and support provided through SSP.
My right hon. Friend raises an important issue. Within the last year, we have reviewed parts of the complaints process. I am also conscious that my noble Friend Baroness Stedman-Scott, who leads on this, has arranged for more resources to go into the independent case examiner. It would be helpful if my right hon. Friend could share with me or with the noble Baroness the precise details, so that we can investigate what has happened.
I am not sure which specific payments the hon. Gentleman is referring to. I have highlighted, as has the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Colchester (Will Quince), the warm home discount scheme. There are other winter grant schemes, which have specific criteria. If the hon. Gentleman would like to contact one of the Ministers in the Department directly, I am sure that we can look into that casework for him.
We are providing £15 million for local authorities to make discretionary payments to people not eligible for the self-employment income support scheme. The DWP has temporarily relaxed the minimum income floor for self-employed UC claimants affected by covid-19. The self-employed have also benefited from other parts of our support package, such as increased local housing allowance. However, I urge anyone who thinks they may need further support to check the benefits calculator on gov.uk.
We keep all policies under review, including the uplift to universal credit, which is under active discussion between our Department and the Chancellor of the Exchequer. I would gently push back on what the hon. Lady said and alert her to the fact that in 2020-21, we will spend more than £120 billion on benefits for working-age people. That is £120,000 million—around £1 in every £8 that the Government spend; three times the defence budget, and nearly as large as the NHS budget. We continue to support people throughout this country during the pandemic.
Let us head up to Andrew Percy in Brigg.
I thank my hon. Friend, who is a champion of real lived experience through his casework and his speeches in Parliament. I can reassure him that both the DWP health and disability Green Paper and the national strategy for disabled people will be shaped by those with real lived experiences. I know that, as a proactive Member of Parliament, he will be happy to host his own stakeholder engagement event with his local advocacy groups.
As already set out, this is part of the menu of support that people could benefit from, including universal credit, new style ESA and support provided through local authorities or, if they qualify, £500 through the test and trace scheme. But on the wider point, through “Health is everyone’s business”, we have covered a range of measures to look at reforming SSP. We will publish those findings shortly, but they will look at things such as the rate, the structure and the lower earnings threshold, as well as actually dealing with the issue that people are either 100% fit or 100% sick without any phased return to work, which is something we are determined to change.
In addition to the excellent work already being done at the Crawley youth hub in the town hall and the existing Jobcentre Plus, I am pleased that, as part of the DWP estates expansion and renewal programme, we will shortly open a new jobcentre at Forest Gate and a DWP response hub at Gatwick airport. As well as generating valuable employment opportunities, this will ensure that we can provide the support that individuals of all ages need in and around Crawley.
Sanctions are only ever used when someone fails to comply with reasonable and appropriate commitments without a good reason. Following the gradual reintroduction of conditionality in the claimant commitment, the UC sanction rate remains very low, at a record low level. I am happy, if the hon. Gentleman wants to raise this particular issue with me, to have a look at it, but, as I say, the sanction rate has very much been on a downward trend.
Mr Speaker, would you like to be a 3D animator, a disabled riding school assistant, a camera operator or maybe a trainee fencing coach? These are all kickstart roles that are available. We have made it simpler for employers to get involved with kickstart, cutting the 30 posts minimum threshold so those applying for any number of roles can now apply direct to the DWP. We have also made it easier for sole traders to sign up. We have had a great response, with over 6,500 employers stepping up to offer placements in different fields and sectors, as we have heard, and also to be crucial gateways.
First, let me say that I appreciate that many people are facing financial disruption due to the pandemic, and the Government have put unprecedented levels of support in place. As the hon. Lady rightly points out, legacy benefits are being increased by 0.5% this year, on top of the 1.7% last year. Legacy benefit claimants can make an application for universal credit, but what I would say is that I encourage them to check on one of the benefit calculators on gov.uk. Once they make an application to universal credit, their entitlement to legacy benefits will cease, so it is very important that they do check first.
The qualifying period for support for mortgage interest is in place because it is reasonable for homeowners to make arrangements with their lenders, to manage any loss of income for a short period, without the state needing to intervene. Homeowners struggling with mortgage repayments because of covid-19 should contact their lender as soon as possible to discuss what support may be available. At present, the Department has no plans to amend the qualifying period for support for mortgage interest, but I am happy to meet my hon. Friend to discuss the matter at length.
I will now suspend the House for three minutes to enable the necessary arrangements for the next business to be made.
[15th Allotted Day]
Council Tax: Government’s Proposed Increase
I have selected the amendment in the name of the Prime Minister.
I beg to move,
That this House calls on the Prime Minister to drop the Government’s plans to force local councils to increase council tax in the middle of a pandemic by providing councils with funding to meet the Government’s promise to do whatever is necessary to support councils in the fight against covid-19.
Right at the heart of the local government funding settlement, there lurks a rather nasty little surprise. What the Chancellor and the Secretary of State for Housing, Communities and Local Government trumpeted as an increase in funding for councils was nothing of the sort. Instead of the promised “end to austerity”, we got a Conservative council tax bombshell.
The Government made a choice to clobber hard-pressed families with a 5% council tax rise, after the Government’s mistakes led our country into the worst recession of any major economy. There are two big problems with that: it is economically illiterate to push up taxes while the economy is in crisis; and it is dishonest to trumpet the end of austerity when most councils will still be forced to cut services even after they impose the Conservative tax hike, because the rising costs of social care outstrip any increase in revenue, and the Government have done nothing about that crisis.
Will the hon. Gentleman please explain, if he does not think that councils should be increasing taxes, why the Mayor of London is proposing to increase his precept by 10%?
It was actually the Secretary of State for Transport who told the Mayor of London that he had to increase council tax. [Interruption.] Oh yes, it was. The reason there is a funding gap in London is that Londoners have done the right thing and followed the Government advice to keep covid-safe by keeping off public transport as much as they can. Transport for London’s revenues have therefore collapsed, but the Government have refused to provide the financial support to cover that problem. I imagine the Government thought they were punishing the Mayor of London ahead of the London mayoral elections; what they have actually done is punish Londoners, and that is wrong.
The Government’s message to council tax payers is: “Pay more but get less under the Conservatives.” Last March, as the country went into lockdown, the Secretary of State made a commitment to fund councils to do what was necessary to get communities through the crisis. He was right to say that—I give him credit for doing so—but just two months later, he broke that promise.
The Conservative-led Local Government Association estimates that councils face a £2.5 billion funding gap as a result of the lost income and additional costs of supporting communities through these unprecedented circumstances over the past year. The Government’s planned council tax increase will raise just under £2 billion next year. If the Government had not broken their promise on funding, councils would already have that amount available to them. Of course, the Government threw away £10 billion on crony contracts for companies with links to senior Conservative politicians. Just a proportion of that money would have plugged councils’ funding gap entirely.
The Government’s failure over the past year has left Britain with the worst recession of any major economy and one of the highest death rates in the world. Now, with their inflation-busting tax hikes, the Government are making hard-working families pay the price for Conservative failure, and the timing really could not be worse. The Tory tax hike will land on people’s door mats in the same month that over 2 million people come off the furlough scheme. Many of those people are worried sick about their future job security. Millions more are worried about their income falling. This is no time to clobber them with a tax hike.
The hon. Gentleman mentions recessions and bad timing for increasing council tax. When he was leader of Lambeth Council, he increased council tax in 2007 and 2008, during the economic recession. Why did he think it was okay to do so then?
I am glad the hon. Gentleman raises that, because when I won control of Lambeth Council for the Labour party in 2006, we took over from an administration, jointly run by the Conservatives, that had raised council tax by 33% over four years, and yet service performance was on the floor. I froze council tax, with no increase at all for two years, and despite doing so, we raised the performance of standards that were left on the floor by Conservatives and achieved an outstanding rating in every single category of children’s services. We did that because Labour Members understand value for money, while Conservative Members simply do not.
The proof of that is in what the Government are trying to do with the council tax rise this year. Families who are worried about paying their heating bills or putting food on the table simply cannot afford it. It will put them under even greater financial strain and it will hit high streets that, right now, are struggling to survive. Many local businesses are on their last legs financially after years of restrictions. These tax rises threaten to choke off spending, just as we need the economy to start opening up and motoring after the pandemic.
With the Government now in full retreat on the devolution agenda, there is still one thing they are very interested in devolving, and that is the blame for cuts and council tax hikes made in Downing Street. The Secretary of State tried to justify the tax hike by claiming he is giving councils a choice—I am sure he will repeat that at the Dispatch Box today—but the truth is he is not. The Government’s funding plans, published in December, include the expectation—an assumption, not an option—that council tax will go up.
Councils’ biggest long-term financial headache is how to pay for social care. As more people, thankfully, live longer, councils need more funding to offer frail older people the care they need to make the most of their lives, but the Government have cut funding over the past decade, forcing councils to restrict care, so it is available only to those in the most severe categories of need. On his very first day in office, standing on the steps of No. 10 Downing Street, the Prime Minister told the country he had a plan to fix the social care crisis. No one has seen a dot or comma of that plan since, so councils have been forced to keep cutting, because the Prime Minister’s plan does not seem to exist—unless the Secretary of State can tell us differently when he speaks at the Dispatch Box.
Let us not forget that because a council tax increase raises less money in poorer areas, the Government are deepening the postcode lottery for social care, instead of ensuring that every single older and disabled person anywhere in our country gets the care they need, regardless of where they live. This Government are not levelling the country up; they are pulling the country apart.
If we do not raise this money in council tax, it still has to come from somewhere. How would the hon. Gentleman raise it?
The Secretary of State has already given the hon. Gentleman the answer, and I am very pleased to repeat what the Secretary of State and the Chancellor said last March: they would fully compensate councils for the cost of getting the country through the crisis. A £2.5 billion funding gap is what they have left, according to James Jamieson, the Conservative leader of the Local Government Association. That is more than the amount that will be raised in council tax, and the hon. Gentleman can do the maths as well as I can. That would not be necessary if the Secretary of State kept his promises.
The costs of social care this year will rise faster than any additional income that is being made available to pay for it, so the only choice the Government are giving all our town halls is to put up council tax while families are still suffering the effects of the recession, or to cut social care during an unprecedented global health pandemic. That is no choice at all, and it is why the Government have got this so badly wrong.
Older people have suffered enough, thanks to this Government’s failures. Over a third of all covid deaths in the UK have been in care homes because the Government were too slow on distributing personal protective equipment, too slow on rolling out testing and too slow to act on hospital discharges that seeded the disease in those very care homes.
Councils need funding to pay for the care older people deserve, and not just during this pandemic. Hard-working families need support to cope with the hit that their incomes have suffered over the past year. Struggling high street businesses need the Government to encourage spending, not choke it off. Councils of all political colours will be forced to put up council tax this year, not because they want to, but because the Government have left them with no real choice. The costs of covid will have to be paid for, but not by raising taxes on people who cannot afford it at a time when their incomes are under so much strain and the pandemic is still raging.
Make no mistake: this is a Conservative tax hike made in Downing street and imposed on hard-working families after the Government’s mistakes left our country facing the deepest recession of any major economy. We will not secure our economy by choking off spending, we will not protect the NHS by denying older people the care they need and we will not rebuild our country by killing off our high streets. I urge the Government, even at this late stage, to think again and scrap their plans to force town halls to increase council tax at a time like this.
I beg to move an amendment, to leave out from “House” to end and add:
“notes that council tax doubled under the last Labour Government, but has fallen in real terms in England since 2010; asserts that council budgets are a local decision for elected councillors and mayors, but local taxpayers are now protected from excessive council tax increases, a policy opposed by the LGA Labour Group; disagrees with the Labour Party’s ‘Land for the Many’ proposals to hit hard-working families and pensioners with a new homes tax; notes that the biggest increases in council tax have been under the Labour Government in Wales thanks to their council tax revaluation and lack of referendum protections; welcomes the fact that Conservative councils set the lowest average Band D rates; and further welcomes the additional government funding of over £30 billion provided by the Government to support councils during the Covid-19 pandemic.”.
The Labour party position on this most important question is so inconsistent and contradictory that it is difficult to know where to start, but let me give a few basic facts to the House. The Leader of the Opposition thinks councils should not be given limited flexibility to decide themselves, locally, to raise their council tax rate. Yet, as we have already heard from my hon. Friend the Member for Kensington (Felicity Buchan), the Labour Mayor of London has decided to hike his share of council tax by 10%, while still finding the room to up his personal PR budget to £13 million, run by a £130,000-a-year spin doctor based in California. I am all in favour of working from home, but that really is quite a leap.
May we just leave London for a moment, because there is a real dissonance between what people pay in a big city such as London and what people pay and get back in a rural area such as West Lindsey, with which my right hon. Friend is very familiar? We pay slightly more and we get a lot less— sometimes not even a street lamp; maybe a rubbish collection every two weeks. So can he address this real issue on behalf of rural people and say what he is doing to help us in rural areas?
I certainly can. My right hon. Friend is fortunate to have a good Conservative council and it will benefit from the largest ever rural services grant in the settlement, which will give more money to help deliver the sorts of services that his constituents will rely on in a very rural part of the country.
The shadow Communities Secretary as leader of Lambeth Council hiked council tax by more than £100, including a 5% rise at the height of the unemployment crisis presided over by the last Labour Government. Yet today he believes that councils should not even have limited flexibility to do the same. Labour leaders in local government do not want limited flexibility to increase council taxes; they want to abolish the right of local people to veto excessive tax increases altogether, so that they can increase taxes by as much as they want. We all know where that leads for Labour councils: while council tax has fallen under the Conservatives in real terms since 2010, the last Labour Government presided over a doubling of council tax and, in Labour-run Wales, it is trebling.
Perhaps the Leader of the Opposition should pick up the phone, check in with his own local leadership from time to time and get their ducks in a row before opposing the very same flexibility that their councils are the greatest advocates of. From Leeds to Telford to the Wirral to Sefton, the A to Z of Labour local councils have demanded that we allow them to increase council tax “without limit”. They describe in their responses to the local government settlement that keeping their tax-raising instincts in check is frustrating, “an imposition”—not an imposition on tax payers, I hasten to add; they barely get a look-in. It is all there in black and white in the Labour councils’ responses to the local government settlement.
The Secretary of State may want to correct the record, because actually I froze council tax, with a zero increase, the year following the crisis in 2007-08 and the year after that as well, but does he recognise that it is the Conservative leader of the Local Government Association, James Jamieson—a councillor I am sure he knows very well—who has called for the cap to be lifted for council tax increases and for a referendum to be abolished, not the Labour party Front Bench?
Mr Jenrick, you moved the amendment. I presume that you did not wish to. Could you withdraw the moving of the amendment?
Yes, I am happy to withdraw it, Mr Speaker.
I will come on to the remarks of the LGA in a few minutes, if I may, but the hon. Gentleman cannot have it both ways: he cannot say that he is unhappy that we have imposed a cap that provides limited flexibility for local councils to decide of their own volition whether to increase council tax or not, and that he wants the cap lifted altogether so councils can increase it without limit, which seems to be the consensus among his own local government leaders.
Perhaps the hon. Gentleman could check in with his own council in Croydon, a council that in its consultation response to the Department on last year’s finance settlement said:
“we are disappointed that the ability to increase locally determined Council Tax has been reduced and that”
“can…only be increased by 2%”—
directly contradicting the hon. Gentleman.
How are these councils actually performing? Croydon is a council that has found itself in £1.5 billion of debt, the only council to go bust in 2020, following the collapse of its housebuilding company, Brick by Brick, which may not have proved to be very good at building, but did prove to be extremely good at owing people a lot of money. The problem is that Labour in local government today is a catalogue of failure, dysfunction and waste.
In Nottingham, the party opposite blew £38 million on a failed energy company and made 230 of its employees redundant over Skype, before rewarding themselves with a backdated pay rise. Robin Hood Energy, they described it. Well, Robin Hood stole from the rich, but Labour’s Robin Hood just stole from everyone.
Up in Durham, the council, at the height of the pandemic, approved a new 3,500 square feet roof terrace on its £50 million county hall. Merton Council reportedly set up a building company with a £2 million investment, only not to deliver a single home. The council leader said it was designed to make money, but he had built in—I kid you not—jumping off points. It turns out that there was no parachute for local residents. Labour Warrington has debts of least £1.6 billion. After Bristol City Council’s socialist energy company went bust, Warrington’s own version, Together Energy, decided it would be a good idea to buy it and then, of course, got into financial difficulties itself. Hackney Council planted thousands of trees, only for them to die due to neglect—literally, Labour dead wood.
Even the Labour Local Government Front Bench keeps up the tradition, inexplicably taking two shadow Secretaries of State to do the job of one actual one. The shadow Housing Secretary freely admits to reporters that she has no policies. The shadow Local Government Secretary reportedly rebuked a colleague in the shadow Cabinet for trying to develop some. From what we have heard today, perhaps it would have been better if he had taken his own advice. His first attempt after nine months has fallen apart at the slightest interrogation. Labour councils themselves want to raise taxes locally at or above the flexibility we are proposing. Labour and Liberal Democrat councils consistently have higher council taxes than Conservative councils. Labour councils consistently underperform Conservative councils. Whether it is Croydon or Nottingham, they are consistently letting down their local residents.
May I add to the Secretary of State’s list? In Birmingham, the city council originally budgeted £2 million to move a bus depot. That escalated to £16 million, which local people are going to have to pay, all to achieve a move down the road of only 300 metres. Is that not just a perfect example of Labour incompetence in local government?
There are many examples I could cite from Birmingham City Council, but I do not think time allows me to do that.
Let us contrast this Government’s approach to protecting the interests of local tax payers with that of Labour. In one year alone, the last Labour Administration oversaw an increase in council tax by a staggering 12.9%. In comparison, as we have said, since 2010 this Government have implemented five years of council tax freezes, under which the great majority of councils did not increase council tax at all. In retail price index terms, council tax is lower than it was in 2010. We have introduced legislation to end crude and universal top-down capping, ensuring significant council tax increases can be implemented only through a referendum, giving local tax payers a right to veto excessive tax increases.
Across the country, Conservatives charge the lowest taxes. We see this on the ground wherever we look. In the Leader of the Opposition’s constituency, in Labour-run Camden, council tax is three times as high as in neighbouring Conservative-run Westminster. As I am sure the hon. Member for Croydon North (Steve Reed) can testify, residents in Labour Merton and Lambeth pay almost twice the council tax of residents living just one or two roads away in Wandsworth. The Mayor of London has presided over a rise in council tax every year he was elected. To put that in perspective, when the Prime Minister was Mayor, he reduced the amount of council tax he charged Londoners by almost 11% during his tenure. In his last year alone, band D households in the 32 London boroughs saw their Greater London Authority council tax charges fall by 6.4%. Across the country, Conservative Mayors, whether Andy Street in the west midlands or Ben Houchen in Teesside, are continuing that tradition: low on taxes; high on leadership and delivery.
The provisional local finance settlement, which I announced to the House on 17 December, set out our proposals to increase the core spending power available to councils by 4.5%, a significant and real-terms increase. That comes on top of a 4.5% real-terms increase this year—a settlement the Labour party considered so good that, for the first time in living memory, it did not even oppose it. In total, we expect core spending power for English councils to increase from £49 billion this year to £51.2 billion next year, in line with last year’s increases and recognising the resources that councils need to meet extraordinary pressures while maintaining the essential services they provide.
The measures I proposed will provide an additional £1 billion of funding for adult and children’s social care. We have also confirmed that we intend to roll forward last year’s £1.4 billion of social care grant and continue the 2020-21 improved better care funding at £2.1 billion. We are considering responses to the settlement consultation and will return to the House to set out the final funding package for local government in the very near future.
The shadow Secretary of State has suggested to the House today that this Government have not delivered on our commitment to communities during the pandemic. This past year has seen the largest ever injection of in-year cash to the local government sector. Taken together, we have provided over £36 billion of support to and through local government in response to the pandemic. To put that in context, in 2019-20 the entire council tax take for the whole of England was £31.6 billion—less than we have provided in year to and through local councils this year alone. Local authorities have received £8 billion in direct funding, with a further £3 billion extra already announced for 2021-22, and we forecast adding an additional £1.2 billion to that from schemes to compensate for lost council income from sales, fees and charges.
That takes the total additional funding provided to local authorities to over £12 billion, £2 billion more than the sum the Local Government Association called for at the start of the pandemic—the sum the shadow Secretary of State himself estimated to be the cost to councils of covid at the time. We know today that we have provided £1 billion more than local government has self-reported to my Department as covid-related costs throughout that period—£1 billion more than even councils have told us they have spent and need. Let us be clear that when the Prime Minister, the Chancellor and I promised to support local councils and the communities that rely on them, we meant that promise, and we have delivered on that promise.
Since the start of the pandemic, we have mobilised our welfare system like never before, with generous income support schemes, mortgage holidays, support for renters, a £500 million local authority hardship fund, a £170 million covid winter grant scheme and much-needed help with utilities. To support local economies, we have provided £12 billion in grants to thousands of businesses the length and breadth of the country, and a business rates holiday worth around £10 billion to local retail, hospitality and leisure sectors. We have operated a major reimbursement scheme for lost council income, recovering billions of pounds from car parks, leisure centres, theatres and tourist attractions—money that will go to help councils move forward and recover.
That is not even to mention £4.6 billion of un-ring-fenced grant support to councils, £1 billion through the infection control fund, £1 billion through the contain outbreak management grant and £300 million via the test and trace service support grant. I could go on and on: 5 million food boxes delivered; 2 million shielded people protected through councils; and, of course, 33,000 rough sleepers brought in off the streets under the world-class Everyone In programme, and given the chance to rebuild their lives. That is central Government and local government working together through a unique pandemic to support millions of people across the country.
Local government has been—and remains—at the forefront of our response to covid-19. This Government are proud to stand shoulder to shoulder with local government in its hour of greatest need: with the officers, the teachers, the refuse collectors, the care workers, and the environmental health officers enforcing our regulations. For all that they have done, we salute them and thank them on behalf of our communities and our country. We owe them the stability, certainty and flexibility to plan for a brighter future ahead, and that is exactly what we have done, what we will do and what we will always do for them.
Our communities have never needed good council leadership more than they do today. Whether it is in Croydon or in Nottingham, across the country the reputation of too many Labour councils is, frankly, rotten. We take no lectures from the Labour party, which presided over eye-watering increases in council tax throughout its time in office, and whose economic mismanagement in local government has been laid painfully bare for all to see. The reports of those councils—Croydon and Nottingham—spell it out: mismanagement; waste; poor public services; and, yes, higher council taxes. There is a toxic legacy of debt and dysfunction, not just for today but for future generations. And where, frankly, was the shadow Secretary of State? Where was his denunciation of Croydon and Nottingham? He was silent. He was invisible. His famous Twitter account was as uncharacteristically quiet as that of Donald Trump—no leadership when the country needed it.
While we have reduced council tax in real terms under our watch, Labour has increased it time and again. While we have been clear that we have a plan to protect local councils and that we care about local council taxpayers, Labour has perfected the art of saying nothing at all. Frankly, council taxpayers across the country deserve better than this absurd and hypocritical debate from the Labour party, and they will have the opportunity to say so in May.
For the avoidance of doubt, the Secretary of State has not moved the selected amendment. The Question before the House remains that already proposed, as on the Order Paper. I remind hon. Members that a time limit is in effect for Back Benchers. The countdown clock will be visible on the screens of hon. Members participating virtually and on the screens in the Chamber. For hon. Members participating physically in the Chamber, the usual clock in the Chamber will operate. I am going to start with a four-minute limit. I call Peter Dowd, up in Liverpool.
Listening to the Secretary of State, it seems that everything is fine in local government, and local authorities have all the money and resources they need. Well, the Local Government Association does not say that, the Institute for Fiscal Studies does not say that, council leaders do not say that and Tory MPs—the ones who have a spine, anyway—do not say it. The Secretary of State consulted local government given the dire circumstances, and local government gave a view about council tax; it is entitled to do that.
The year 2021 marks 40 years since I was elected as a Merseyside county councillor, and now we have the city regions. Those councils were abolished by Mrs Thatcher—mainly because they stood up to her—and the beginnings of the first stage of austerity began. It seems that nothing much changes in 40 years. I continue to see local government bear the brunt of cuts and policies of retrenchment in the light of the Government’s inability to see beyond the confines of Westminster and Whitehall. Not content with making a hash of virtually every policy decision and initiative in relation to covid—I use the words “policy” and “initiative” with a certain amount of caution—they continue to dump on local government.
When I was the leader of Sefton Council, I often referred to the overall balance experienced and witnessed among local councils across the country. As early as 2010, my council had in-year cuts to funding—for example, for neighbourhood renewal funds— and things simply got worse that after that stage. As time went by, my authority had cut after cut after cut. When I first came to the House in 2015, five years into austerity, I heard one Conservative Member express surprise at and bemoan the fact that his local police authority was supposed to find savings that year—it was as though he was some sort of Rip Van Winkle who had just woken up. The shadow Secretary of State, my hon. Friend the Member for Croydon North (Steve Reed), is a former council leader, like me, so has witnessed the impact of continued retrenchment in local council finance. That is the responsibility of the Government, not local government.
Meanwhile, as the unprecedented crisis in local government goes into even deeper and darker places and councils struggle to provide the most basic of services, the Secretary of State should be concentrating on the wellbeing of the living, not on the wellbeing of inanimate objects and issues such as the removal of statues in various areas. It is a diversionary tactic; I am sure the Secretary of State could have come up with something a tad more imaginative than that.
Allowing and expecting councils to increase council tax by 5% will mean very different things for households in different parts of the country. Although the percentage increase is uniform throughout the country, the starting point in absolute terms is very different. It is important to take that into account. If we follow the Chancellor’s assumption that councils increase tax by the maximum allowed, for band D householders in the Sefton Council area, the tax will go up in April by £99 for 2021, compared with £54 in Westminster and £55 in Wandsworth. Is that fair? No, it is not.
I have a number of questions for the Secretary of State. With the UK having experienced the worst recession of any major economy, does he really think that now is the time to raise council tax? Does he recognise that most councils will simply have no choice but to raise council tax to preserve crucial services such as adult social care and children’s social care? What assessment has he made of the impact on the economic recovery of taking £90 out of the pockets of families? Frankly, is it not about time that, instead of bowing down to the Chancellor, the Secretary of State stood up for local government and said, “Enough is enough”?
It was my great privilege to serve as the Local Government Minister for the first six months of our response to covid-19, and am I am grateful to have this opportunity to commend the whole sector for its response. I witnessed three things in my time at the Department that are particularly relevant to today’s debate. First, I witnessed the absolute sincerity of my right hon. Friend the Secretary of State, and all in the Department, in respect of the Government’s commitment to provide all the support that the sector needs throughout the pandemic.
As we heard my right hon. Friend say in his speech, the gap between what many leaders say and what the sector then self-reports to the Department is often profound. Throughout the spring, we faced real concerns about the number of councils that might need to issue section 114 notices to declare themselves effectively bankrupt; as we have seen, that has not transpired. It has not transpired for a reason: namely, the effective and highly tailored support schemes that have been put in place alongside direct grant support. We should not underestimate the complexity of the local government landscape and the need to respond to the different challenges that face different types of council in different parts of the country. That response has been accomplished, and councils have worked admirably and been able to get on with delivering their important work.
Secondly, I saw the exceptional knowledge and dedication of the local government finance team in the Department. The team’s staff live and breathe the work and the recommendations of Ministers reflect the hard work that they put in in direct conversation with council finance officers. We have struck a fair balance, apportioning the costs of our response to covid-19 between central and local government. Most reasonable people would accept that that is the only realistic route through the current situation.
Thirdly, we need to recognise that local authorities clearly have important responsibilities, too. Some authorities have been hit hard over the past year by factors that are legitimately outside their control. Some, such as Bath and North East Somerset Council, have been affected by factors relating to covid; others have been affected by issues such as cyber-attacks—I know that Ministers are working hard to resolve the situation at my local authority, Redcar and Cleveland, at pace. Such authorities must, and will, be supported.
However, other authorities have made seriously poor decisions for which they simply cannot attempt to blame central Government. The Secretary of State has already referred to the situation in Croydon and the reverse Robin Hood scenario that has played out in Nottingham. The sheer brass neck of the shadow Secretary of State in tabling today’s motion is genuinely astonishing, given that it is overwhelmingly Labour councils that have failed. I could go on: Bristol, Southampton and Brent, and the situation presided over by the Mayor of London, that master of evasion, which deserves to be punished by the electorate in May. It is of course the Labour group on the Local Government Association that is so keen to abolish the referendum lock, which is the only thing that in practice stands between ratepayers and exorbitant tax rises, so for the Opposition to initiate today’s debate is, I am afraid, pretty rich.
The Government have put in place an unprecedented package of support. What councils do beyond that is, rightly, a matter for them. This Government and Conservative-led councils will focus on getting the basics right: prudent financial management, driving down costs and waste, delivering high collection rates and supporting the truly vulnerable. I would note in this regard the extra £670 million next year that the Government have allocated to address the council tax hardship, which follows the £500 million for the same purpose this year. We have local democracy in place for a good reason. Councils control important aspects of our lives and should be accountable for that. Central and local government together have to meet the costs of responding to the pandemic, and for that reason, the quality of local decision making matters enormously.
It is clear from the tone of the debate so far that Conservative Members have an ideological aversion to local government and local communities making decisions for themselves. The impact of covid-19 leaves a £50 million hole in Manchester City Council’s budget and a £37 million hole in Trafford Council’s budget for 2021-22. Both local authorities, which cover my constituency, are stuck between a rock and a hard place, being forced by the Government to propose increases to council tax in the middle of a pandemic. The savings options being considered by both local authorities will protect frontline services where possible. However, the tough options of cuts and savings are still hard to stomach.
Last week, communities in my constituency were affected by Storm Christoph, with residents being evacuated from their homes because of flood warnings on the River Mersey. The response by Manchester and Trafford local authorities was second to none, and I praise them for their outstanding response. Unfortunately, when the Prime Minister visited the Mersey valley last week, he failed to understand that those outstanding responses by the local authorities involved will become harder in future because of the depth and breadth of the cuts he is proposing. Communities at risk of flooding must not be let down because of inadequate resources. We must not let that happen at any time in the future.
Trafford Council has a funding gap of more than 20% of the size of its revenue budget for next year. It has also spent £50 million more than its £175 million revenue budget for this year. This demonstrates the scale of what local authorities such as Trafford are handling in excess of their usual workload in their response to covid-19, and with income streams falling, the demands on statutory services remain. The council tax hike will hit families in Wythenshawe and Sale East hard, when so many are worried about their future, the future of their jobs and how they will get through the next few months, particularly in a community such as mine, where tens of thousands of jobs are dependent on aviation at Manchester airport. With the Government not having given any specific aviation deal, many families in my constituency remain worried. The Government need to recognise that local government needs to be properly funded and that Manchester and Trafford residents must not be hit with a rise in their council tax bill and deterioration in their services.
Greetings from the land of King Alfred. We are doing well down here, and I am delighted to be able to join this debate. Very few people in Somerset will burst into song when their council tax bills arrive. I will say that the tax collectors on our four district councils spend their share of the money with commendable efficiency; they have shown that over the last year with covid. However, the bulk of the cash goes straight into the coffers of Somerset County Council, and that is where the trouble starts. This lumbering dinosaur of a local authority has an appalling record of mismanagement and financial jiggery-pokery dating back decades. Far too often, we hear it pleading poverty and begging for extra grants from Government, and it has been doing that recently. The whole idea of the unitary is to save the council from bankruptcy, we were told, and I am sure that that will not bypass the Secretary of State. For every bleeding heart story, there are shocking examples of bad decisions, blind leadership and sloppy practice. Somerset County Council, I am sorry to say, is a lost cause. Turning it into a unitary, which is what the council is after, will make it an even bigger failure, and I hope the Secretary of State ponders on that.
Let me give you an example, Mr Speaker. In common with many councils, the road network under Somerset County Council is an expensive failure and has been a complete disaster. The council signed a contract with Skanska, a worldwide enterprise with a pretty good reputation, three years ago. Skanska would fill the potholes, lay the tarmac and smooth out the wrinkles of the incompetence in county hall, all for £30 million a year. Common sense says that you get precisely what you pay for—not in Somerset. Believe it or not, the council has not checked the Skanska invoices. At the moment, the council has overpaid by more than £300,000 and probably a great deal more; the guess down here is that it runs into millions. When the regional auditors spotted the error, Somerset County Council deliberately hid the report, but it will emerge, I am glad to say, on Thursday.
Secrecy goes hand in hand with incompetence. Somerset County Council received around £43 million to ease the burden of the pandemic. We have all been trying to discover where that grant has gone on, including our council tax money. The council offered assurances but no proof. Tens of millions went into a reserve fund, which can be used for anything. We have all asked—not just me—for a precise breakdown, but we have yet to get it. How can we trust anybody who does not tell us the whole truth?
That is why I will not support the Opposition motion for any reason whatsoever. Labour wants to freeze local government taxes and ease the burden of fighting covid by offering a bottomless pit of money for councillors. It is not going to work; we know that. My district councils have spent the money wisely. Three of them are not of my persuasion, and I am impressed. They have done the work they are meant to do without compromising their ethics or concentrating on becoming a unitary. None of them has complained. They have used the money wisely, and they have done a lot of good. Somerset County Council was given shedloads more but will not reveal where the money went, so why on earth should we pile money into the manhole of Somerset County Council when we do not even know which way it is floating? On behalf of the people of Somerset—and you know how feisty they can be, Mr Speaker—may I say that we do not trust it?
I am glad that the hon. Gentleman is on the fence.
As a former councillor, I am glad that we are able to hold this debate today. Before entering this place, I was a councillor for 17 years and saw at first hand the impact that austerity has had on our city and its families. I also saw the challenges we faced in trying to prioritise budgets in the face of wave after wave of cuts. Since 2010, many local authorities across the country have had to grapple with devastating cuts. My council in Sheffield has lost almost 50% of its budget, with cuts amounting to £475 million. Throughout this period, the Labour council has made difficult decisions and been forced to adapt many services, but it always sought to protect the most vulnerable in our city.
The Government’s proposals to allow councils to raise tax by up to 5% is absurd. It would not come close to addressing the funding crisis that many are experiencing. Next year’s costs for adult social care alone in Sheffield will be £31 million. A 3% increase would contribute only £6.6 million to that cost. The further 2% would contribute only £4.4 million. That does not come close enough to addressing the covid funding gap of £61 million that Sheffield City Council faces next year after the £92 million cost of responding to the pandemic.
This policy flies in the face of the Government’s levelling-up agenda by benefiting wealthier areas. While a 5% increase in Sheffield would raise £9 million, Surrey County Council would raise £38 million with the same increase. Councils across the country will, of course, be reluctant to raise council tax by 5%, but the Government have given them no choice. They have done what they do best: they have shifted any responsibility away from themselves. No council faced with significant funding gaps would refuse even the slightest boost to funding during these challenging times. It is shameful to hold councils to ransom in this way.
My constituency of Sheffield, Brightside and Hillsborough ranks as the 12th most deprived constituency in England. Over a third of children are eligible for free school meals. Very many of my constituents face tremendous hardships to make ends meet. Claims for universal credit have risen by 95% since March, with almost 14,000 families now receiving the payments—around half of these are in work. While the Government consider removing the uplift, they are also moving forward with this plan, which would add further strains to household budgets.
Families in Brightside and Hillsborough have particularly felt the cost of covid-19. Funding this increase will be more difficult for many families in our community than in more prosperous areas. I am deeply concerned that pushing forward with this plan would only further the hardships that many of them face. Hundreds of thousands of families across the country are feeling similar pressures. The Prime Minister said he would do “whatever it takes”. It appears that this meant abandoning councils and pushing the burden of support for their strained finances on to local taxpayers.
The Government are adept at performing U-turns, so I hope that they will do another and scrap this policy. The Chancellor must prioritise introducing a comprehensive funding settlement for local government to redress the budget imbalance that a decade of cuts and the covid-19 pandemic have caused.
Today, we have heard arguments that the Government are forcing councils to increase council tax and that they have not adequately funded the costs associated with the covid-19 pandemic. The reality, however, is quite different, and the comprehensive spending measures taken have been set out clearly by the Secretary of State. Conservative councils on average also set the lowest band E council tax rates and, since 2010, we have ensured that council tax has fallen in real terms. That compares with the last Labour Government, when it doubled.
We know that councils face many challenges, but we also know that many decisions are taken locally and that taxpayers do not always get the value for money that they deserve. In my first real venture into politics, I spent many years as a councillor in the city of Nottingham, so I was very disappointed to hear of the scandal involving council-run Robin Hood Energy, a company that set out to help people struggling with their bills, but instead, failed to turn a profit and ended up losing millions and being closed down, leaving 230 workers redundant. Unlike the real Robin Hood, this one ended up taking people’s money and then losing it. While Alan Rickman’s sheriff famously suggested calling off Christmas, it is now the modern incarnation in the form of the Labour council that will see budget cuts of £15.6 million, the loss of 272 full-time jobs and numerous cuts in services.
At its peak, Robin Hood Energy supplied energy to 125,000 customers around the country, many of those through council-run partners. Its turnover went from £4.6 million in 2015-16 to nearly £100 million in 2018-19, but, in all but one year, that growth translated not into profit but into bigger losses. By March 2019, it was in the red by more than £34 million. Auditors Grant Thornton calculated that the council had invested a total of £43 million into the company and risked £16.5 million in guarantees. It said that the council had failed to act on warnings to manage their budgets and criticised the use of councillors on the boards of its companies without sector-specific knowledge, which it said led to huge debts. They now plan to sell off £100 million in assets to make up the shortfall and balance the books. In short, their coffers have had their hearts cut out with a spoon.
Compare this with Conservative-led Nottinghamshire County Council, which has managed its budget admirably. In my constituency, Labour-controlled Bassetlaw District Council has been given a great deal of Government support, with £54.2 million of funding in 2020-21, including an additional £2 million in covid-19 funding. In 2017, some councils in Nottinghamshire spent tens of thousands of pounds paying over and above the Government’s recommended rate for mileage. Notably, Bassetlaw paid the highest rate in the entire country—69p per mile—and, at the time, Her Majesty’s Revenue and Customs recommended only 45p per mile.
Other Nottinghamshire councils are no different with wasteful spending—for example, independent Ashfield District Council, which has created five extra cabinet positions and a political officer at a cost of £90,000, while increasing council tax. In Mansfield, the Labour-run executive Mayor’s office costs around £250,000 a year, and that is also entirely unnecessary.
This Government and Conservative-led councils have shown the way in terms of sound financial management and sustainable public finances. It is time the Opposition took note.
As a former councillor—I was a councillor for a decade—I am extremely grateful to be able to take part in today’s important debate on increases in council tax.
In the depths of this chilling, coldest of winters, it is hard to believe that spring is on the way: the numbers of infections and deaths are rising; the hospitals are full; and the country is in lockdown. The vaccine obviously brings hope and I applaud those delivering the millions of doses, but we all know that there is still a mountain to climb. The harsh truth is that the economic price will be paid for years, if not decades. This is the worst recession for 300 years and the worst of any developed nation.
According to the Office for National Statistics, public sector debt is at an all-time high of £2.13 trillion. At the same time, tax revenues are down 0.7% year on year, and the Bank of England says that the unemployment rate will peak at 7.7% in April to June of this year. We rightly ask: what is the best possible policy to prevent economic carnage such as we saw in the 1930s and the 1980s, to create growth, to build better services, to protect jobs, and to make our economy stronger? We rightly ask: who should shoulder the biggest burden? Should it be those who are most able to afford it, or those who are least able to do so—the people who put on the personal protective equipment or the people who profiteer from selling it at exorbitant prices?
Ministers want a continuation of austerity and they want the poorest and the most vulnerable to pay for the crisis. Their proposed increase of up to 5% in council tax is further proof of that. It is not just morally wrong to increase council tax in the depths of a pandemic, but economically illiterate. As the Institute for Fiscal Studies states:
“Now is not the time to raise taxes; the economy is still weak and the recovery only just starting.”
We have had the pay freeze for key workers. We have cuts to universal credit on the way. We have seen increases in unemployment and growing reliance on emergency food parcels. In Slough alone, food banks distributed 6,533 food parcels to people in the past year. Now the Government want to increase council tax. In Slough, that would mean an increase in band D of £88. That represents the difference between turning on the heating or sitting in the cold; or between eating three meals a day or going hungry. There will be less money to spend in the local economy, hitting local shops and services. We need strong, resilient public services. When faced with a crisis, we do not need Serco; we need Slough Borough Council, the NHS, the armed services and all the amazing public services that make up the public sector.
It is nearly a year since the Secretary of State addressed more than 300 local government leaders, and the official press release, dated 16 March 2020, is still on the Government website. It says:
“The government stands ready to do whatever is necessary to support councils in their response to coronavirus, the Local Government Secretary confirmed to council leaders today (16 March 2020).”
I repeat, “whatever is necessary”. Have any other words turned to ashes so swiftly? By 4 May, the Secretary of State was telling councils not to labour under the false impression that they would be guaranteed funding from central Government. Well, who created that false impression in the first place? What dishonesty! It is no wonder that councils feel absolutely betrayed. My right hon. and learned Friend the Leader of the Opposition and my hon. friend the shadow Secretary of State for Communities and Local Government have recently written to the Government calling on them to think again, to protect families and to boost the economy. They are right, and that is why I shall support the Labour Opposition motion tonight.
Order. There is a lot of pressure on time, as I am sure colleagues know, so we will now be taking the time limit down to three minutes. I understand that those participating virtually have already been informed of that, but I wanted to inform the Chamber.
I was not informed that the time limit had been cut, but I will try to keep to three minutes.
As a former councillor and cabinet member of Cornwall Council, I know at first hand the important role that local authorities play in the lives of our constituents. There can be no doubt of the important role played by Cornwall Council, and councils up and down the country, in supporting local communities as we have faced this pandemic. In particular, I place on record my thanks to town and parish councils for the incredible work they have put in to support their local communities.
The Government have shown their recognition of the role that councils play with the support we have provided to local councils throughout this pandemic, amounting to billions of pounds. Cornwall Council alone has received more than £555 million to support the people of Cornwall. I am therefore pleased that this motion today gives us the opportunity to highlight the important work that councils do.
I am not surprised, however, that the Labour party’s motion misses a number of important points. First, it misses the Labour party’s own record on council tax. I remember when the Labour party was in government, when council tax doubled. Even now, Labour-run councils cost the taxpayer £84 a year more and Liberal Democrat-run councils a staggering £132 a year more than the average Conservative-run council. If we want to know what a Labour Government would do with council tax, we only have to look to Wales.
Secondly, the motion misses the point by saying that the Government should provide funding, but without saying where it should come from. It is all taxpayers’ money; whether raised centrally or locally, someone has to pay.
Are the Opposition suggesting that tax rises should be put in place to fund local authorities across the country? That would mean taxpayers in Cornwall paying so that Sadiq Khan can subsidise travel for Londoners. I do not believe that would be right. Or are they saying that we should take money away from other essential public services to fund the council tax from other Government budgets? If so, they need to say where the money would come from.
I am sure that the Liberal Democrats and independent councillors who run Cornwall Council would love to hide away their spending from local taxpayers, but the whole point of council tax is that councils are answerable to local taxpayers for the decisions that they make. In Cornwall, we have many examples of the Lib Dem-independent administration wasting money, such as funding an office in Brussels, even though we have now left the European Union—wanting to continue it at a cost of tens of thousands of pounds a year—or a £2 million failed IT system that hardly anyone has used.
I believe it is right that local council tax is raised by local councillors who have to answer to their electorate for the decisions that they make.
Let me just start with a point that I think many of us will share: in these debates about numbers, statistics and finances, we must remember the lives that are at stake.
Most of us will never forget the stories of love and loss that we have heard this year, stories such as those I heard from the family of Sarah Scully. Their mum, Sarah, went into hospital and said goodbye to her family at the hospital door. Sarah was pregnant. She had to be given a caesarean section, but was so ill she had to be put into an induced coma. Tragically, she died before she was ever able to hold her newborn baby in her arms. Or stories such as Monica’s. She had been married to her husband since she was a teenager. They both got covid, but went into different hospitals. She got the news from her husband that she had feared by text message: “Told just 24 to 48 hours to live.” Or stories such as Bishop Windsor’s, who buried so many people in his congregation that he did not know how that congregation would ever recover from their agony of loss. Now, after all that agony and pain, and after all the anxiety of the job losses, in Britain’s second city we are being handed a bill—a bill to make good on the underfunding of this Government.
Last May, we wrote a cross-party letter to the Minister to warn that the costs of covid in our city would total some £282 million. That included the £92 million extra for social care, to cover the costs of PPE that never arrived or to ensure that there was a safe social care system after the protective ring around care homes failed, and £95 million in lost income, as well as business rates going down and council tax support going up. It is true that the Secretary of State provided some grants to make good on that, but as of last year, we were still £100 million short because our council, led by Councillor Ian Ward, decided to step up and help protect the people of our city where there were shortcomings from the Government. Now, what was the result of that? A 4.99% increase in council tax—£72 a year for a band D home.
How on earth can it be right that council tax payers in places such as Surrey are being cushioned, when council tax payers in Birmingham and the west midlands are being punished? We took the Secretary of State at his word when he told us that he would ensure that there were the resources we needed to do the job. He has reneged on that. It is people—people who are going through hell on earth—who are now being asked to pick up a bill for Government underfunding. That is simply not right, and I, along with my colleagues, urge the Government to think again.
I listened to the previous speaker, the right hon. Member for Birmingham, Hodge Hill (Liam Byrne). The sad things he is telling us go right across the country, and that is why the Government have put a staggering £36 billion into local authorities and local businesses. Some £4.6 billion of that has been given in unprecedented, unring-fenced grants to those local authorities, and many of them, particularly the Labour ones, should be looking over their shoulder at how they have been spending the money. Their largesse is often outrageous.
It is interesting to compare three south London councils: Southwark, Lambeth and Wandsworth. All three are very similar, in that they are London local authorities, all with similar needs and a similar population. All have similar inner-city problems. They are neighbours. The first two are Labour-controlled, and have been through a considerable period of time as Labour-controlled councils. They have a reputation for high council taxes, without the quality of services to match. Wandsworth is a Conservative-controlled council. It has a reputation for high-quality services and low council tax. The central Government grant to Lambeth is approximately 15% higher than that to Wandsworth. The grant to Southwark is approximately 20% higher. The grant per head of the population is approximately 20% higher for both the Labour authorities.
If one looks at the council tax of those authorities, after the removal of the Mayor’s precept, Wandsworth’s council tax for this financial year at band D is approximately 40% that of the two Labour authorities, and it provides better services. Those councils should look to their expenditure. That is where they should be looking, but I guess they will not.
We all recognise that covid has put all local authorities under considerable pressure, but that is no excuse to agree the motion we are considering, which would cover the inability of many Labour authorities to better manage their services. They should use this opportunity for the sake of the public to keep their council tax rises right down, if not to zero.
When the Secretary of State said that the Government stood ready to do whatever is necessary to support councils in their response to the pandemic, council leaders at the sharp end of responding to the pandemic were entitled to take him at his word, and they were right to do so. It is an absolute betrayal that the Secretary of State has since gone back on his word and that councils face a total shortfall across all local authorities of £2.6 billion. We can compare that with the billions the Government have wasted during this crisis on contracts handed out to people with strong links to the Conservative party and people who have been donors to the Conservative party. Those contracts have failed to live up to what they were supposed to be delivering, all while local authorities face such a huge shortfall. It is unconscionable.
In Birmingham, we face a shortfall of £207 million, and the Government have not even pledged half of that amount. Over the next two years, our council is expecting an additional spend of £55 million on adult social care, £11.4 million on children’s social care, £9.5 million on education and £2.3 million on PPE. Which of those, I ask the Secretary of State, is superfluous to requirements? Which of those is an add-on or a waste of money? None of them—they are part of the statutory responsibilities of our local government. In Birmingham, we are expecting a total loss of £44 million in business rates and £20 million in our council tax receipts. Given the state of the economy, does anyone seriously think that business rates and council tax receipts will recover quickly, if at all? The changes that are occurring to the high street, as I speak, mean that the hight street is changing beyond all recognition and some of its revenue will never return to local government.
The expectation of a 5% increase in council tax implicit in the Government’s own numbers is morally wrong, given the promises that the Government made at the start of the pandemic, but it is also wrong that the Government continue to pass the buck on funding for local government. For a decade they have succeeded in devolving the blame for their cuts, but they know that the biggest factor that is driving up expenditure of local government is adult social care. We have an ageing population, and that brings with it increasing costs, much of which are currently picked up by council tax payers. This method of funding is simply not sustainable.
The pandemic has brought into clear focus the parlous, frighteningly fragile state of our adult social care. It is a dereliction of duty that the Government have for 10 long years failed to come up with a sustainable solution to the adult social care crisis, preferring to let councils and families muddle through. That cannot continue. I urge the Government to change course and come up with fairer, more sustainable funding for local government.
Before being elected to Parliament, I had the honour of being a local councillor in Dudley, including serving as shadow finance cabinet member. Having seen Labour’s record on council tax when running Dudley Council and when in power nationally, I am amazed that Labour Members have the sheer brass neck to talk about council tax. In the six years when we had both a Labour Government and a Labour-run council, Dudley’s council tax rose by more than 45%—by twice the rate it has gone up over the past six years. Since being a Member of Parliament, I have heard Labour Members in this House and Labour councils around the country demanding that the referendum cap be scrapped, yet now they attack an increase raising that cap by 1% more than last year—an increase that is earmarked to fund social care. How I wish that this change was the result of some damascene conversion, but sadly the reality is more cynical.
As a Conservative, I want all taxes to be as low as possible for hard-working families in our communities, but at the same time I know that the vital services that local councils provide have to be paid for. I declare an interest, as I have a brother who works in social care. To meet the urgent care of more people being likely to need greater and more expensive social care, for longer in their lives, the cost will have to be shared between central Government, local government and those who benefit most directly. Government is about making difficult choices, but instead of addressing those choices, the Opposition’s response is, “Can’t someone else pay for it?” That is not principled leadership; it is cynical opportunism. The public expect us to work together to find solutions to the greatest issues facing our country, and there can be no greater challenge than reforming social care.
A 1% increase in the cap allowed for the earmarked rise in council tax for social care works out at less than £40 per year for a household in Dudley—less than £1.20 per month. It is a necessary short-term measure while long-term reform is properly considered. We must find a sustainable solution to social care that is fair to those who need care, fair to those who provide it, and fair to the taxpayers both locally and nationally who will have to pay a share. The people we represent deserve better than the ham-fisted attempts today to score political points at the expense of short-changing our social care system.
Before entering Parliament, I spent my entire working life in local government. Local government as an institution is one of the great pillars of our democracy. It is in every sense the frontline, providing the bread-and-butter services our communities and our people rely on day in, day out. I cannot be more earnest in delivering this message from the frontline: morale has never been more crushed or in such short supply within local government than it has for this last decade. Half a billion pounds has been slashed from my own council in Liverpool in the past 10 years and more than £10 billion from local government overall, with a postcode lottery where the Tory shires are cushioned from the devastation inflicted on councils across the north of England.
The disturbing irony of it all is that the Conservatives claim to be no big believer in the central state, yet trash the very institutions that have the expertise and know-how to put local people in charge of their communities’ own destiny. They talk a good game on devolution, but we know in the north that the reality is quite the opposite. Meagre powers with little resource do not deliver real change, nor do they come anywhere close to levelling up. The Conservative party talks an even mightier game on tax and spend, but there is nothing to justify such assertions if the modus operandi is to shift the tax burden from progressive taxation to the most regressive of taxes, council tax. The most sinister swindle of them all is when local people receive their council tax bill. The top does not read “Ministry of Housing, Communities and Local Government” but “Liverpool City Council”, “Salford City Council” or “Leeds City Council”. I dare say that if the opposite were true and blame was directed where it truly belongs, to Whitehall, the Government would think twice about backing councils into a corner like this.
Social care is a case in point. If this Government in all their delusions honestly believe the way to put adult social care on a truly sustainable financial footing is to pillage the pockets of local taxpayers with huge council tax hikes that let the wealthiest off the hook and allow the poorest to shoulder the greatest burden, they are in for a shock. Squeezing the tax base in areas of high deprivation to subsidise an inadequate adult social care business will never ever provide the solutions our people need as our population grows older and therefore more dependent on such services.
This Government have abjectly failed to live up to their own mantra of “whatever it takes” when it comes to local government. Our councils are delivering despite the most difficult circumstances. Instead of forcing more of them into the humiliation of section 114 notices, let us restore essential government grants, cancel the council tax hike and keep the money in the pocket of working-class people.
As a former councillor in Wolverhampton, I want to thank City of Wolverhampton Council for its work during the pandemic to get Government support to our most vulnerable residents. Delivering help at a local level is often more efficient and more effective, and I welcome the recent announcement of the holiday food and activities programme, which will be so beneficial to children in my constituency.
The Government have also provided a huge level of funding to local government to manage the pandemic. During the first lockdown, I drove a food parcel van each week out of the Aldersley food hub. Although it may have had a council logo whacked on every box, it was directly and entirely funded by this Conservative Government. I am very proud of that. A total of £148 million of covid funding has been channelled through Wolverhampton city council to support our businesses and our most vulnerable people in addition to un-ring-fenced funding—millions of pounds of additional support for food and essential supplies, for rapid testing for infection control, for the winter grants scheme and to help rough sleepers, among other things. Next year funding for my council from Government will rise by 4.6%.
I am sure that the political football of council tax will be continually kicked around, but what I want to speak about is value for money for their council tax for all our residents around the UK. I want to recognise the important work carried out by councils across the country, but I also want to use this speech to urge more people to hold their councils to account and to get involved in the decisions that shape council spending. I was disappointed at how few people took part in local budget consultations when I was a councillor. I know that attending such meetings might seem less attractive than an evening in the pub, but these decisions are important and affect local planning decisions and local services. I find that many people do not have a good understanding of where decisions are made. As an MP, I am called out on plans to pedestrianise the city centre, high salaries in the civic centre, the disastrous Civic Hall renovation and £130,000 being spent on award ceremonies. All these local decisions are made at council level.
As my constituency has a Labour council and is an example of a seat that will benefit from the Government’s levelling-up agenda, I will continue to push for more money to come to Wolverhampton, and I would like to hear our communities speak up at local level, ensuring that they get value for money and that this investment is wisely spent.
May I start by praising both Blackpool and Wyre Councils, controlled by two different political parties, for their superb efforts on behalf of local constituents?
There was a fascinating letter in The Times last week from a lady in Hertfordshire, accusing the Conservatives of complaining about Labour’s playing politics with Opposition day debates. She wrote:
“The opposition had asked for a serious debate, which is exactly what parliament is for.”
I agree that serious debate is what we are here for, but she must never have watched any of these Opposition day debates; or if she has, she must surely be seriously disappointed at the poor quality of contributions from Labour Members.
There is a real irony in Labour lecturing us about council tax. I know that Labour does not like losing elections—who does?—but it takes some nerve to expect a Conservative Government to bail out Labour councils for the calamitous choices they have made and that they fear putting before the voters in their local areas. This debate is like a dog riding a bicycle: the Labour party is not doing it very well at all, but it is astonishing that it should even try to do so in the first place.
If anyone wants to know about Labour’s plans for local government spending, they need only look around them. Council tax doubled under the last Labour Government. Sadiq Khan in London wants a 10% increase because he cannot put a decent transport strategy in place. In Wales it has gone up by one third, showing just how awful Labour is at managing its own devolved services in the Principality.
Let us look at what the Government are actually proposing: an increase of up to 2% for general purposes and of up to 3% for social care, to address increasing demand for both children’s and elderly services. Labour has no answer to how to meet that increased demand. The Government protect resident interests with a referendum block on rises above 5%. Labour wants to abolish that—it hates the idea of local people telling it what to do. To avoid any local accountability, it advocates a nationally set, progressive property tax, with an end to the single person’s discount. Where is the local flexibility in that?
Labour’s attitude overlooks all the extra covid funding that the Government have given to local councils, including up to £150 million in my constituency, spent prudently and wisely on behalf of local people. I do not like the term “left behind”, but one thing is for sure: it is Labour that is leaving behind communities in constituencies such as mine. It is a party bereft of ideas and of interest in anything outside its London-centric metropolitan elite who know nothing of reality in towns like mine.
The adage of council tax is devastatingly simple and is just a few words: “Conservative councils cost you less.”
I draw the House’s attention to my declaration in the Register of Members’ Financial Interests. Prior to taking my place in the House, I spent the past 16 years as a councillor in all three tiers of local government. Most recently I was the finance lead of an upper-tier authority, and previously I was the finance lead for a lower-tier authority, and we did not increase council tax over many years.
It is probably worth repeating what councils do. They are very much on the frontline of what our residents see, including waste collection, council tax collection, housing, leisure, social services, education and highways. May I take this opportunity to thank all those excellent council officers up and down the country who have made sure that, despite the pandemic, residents have been at the forefront of receiving support?
On localism and devolution, of which I am a massive fan, politicians at the local level have a responsibility to make tough decisions, and residents have the opportunity at every election to confirm whether they think a politician made the right decision. This Government have given local authorities the option of increasing their council tax by up to 5%, and it is down to local councillors to make that decision.
I look forward to a long-term solution being found for the issue of social care, and I know that this Government are continuing to work on that very difficult decision. It is worth repeating, however, that those councils that have grasped the opportunity to become self-sufficient rather than reliant on handouts have also fared best during this pandemic.
Basic economics dictate the need to either increase income or reduce expenditure. The focus should always remain on value for money. We as politicians are only custodians of other people’s—that is, taxpayers’—money. However, as a Conservative, I very much believe in having a safety net, and I am glad that this Conservative Government have given us the £500 million council tax hardship fund to ensure that those who are not able to pay their council tax have the support they need.
The other thing I wanted to bring up is that each council has a duty to collect council tax, and it was interesting to see from my research that the 10 worst offenders up and down the country in terms of council tax collection happen to be Labour. I urge all councillors and council staff to focus on making sure that the policy position they implement means that we do not need to cut or reduce services when it is not necessary to do so. I will leave it at that. Thank you very much, Madam Deputy Speaker.
We have the worst recession of any major economy. The virus is still not under control. Many thousands of my constituents in Liverpool and Knowsley have lost their jobs, have lost income and are facing wage freezes, while those on universal credit are about to lose the £1,000 uplift that has been keeping the wolf from the door. The self-employed are excluded from any help at all, and many are now wondering how they are going to feed their children. Indeed, many people are already relying in increasing numbers on food banks.
Now is not the time for the Government to force councils to hit these people with a 5% council tax hike to balance budgets. That will hit the poorest hardest. Liverpool has had to make cuts of over £420 million in the last nine years, as it has lost 63% of its Government grant. Knowsley has lost over 50% of its grant and has had to make over £100 million in cuts. These are two of the councils worst hit by Lib Dem and Tory cuts since 2010. If Liverpool had faced a cut at the average level over those years, it would still have an extra £123 million to enable it to avoid increasing council tax.
Over three quarters of housing stock in Liverpool is in council tax bands A and B, so it raises less money—only £1.5 million for every 1% increase. The poorest areas are hit hardest. When the Government mandate council tax increases as the main way of increasing the income of councils—they have increasingly done that—it hits poorer people harder and the poorest areas hardest. Those being expected to meet this extra financial burden, such as council tax payers in Liverpool and Knowsley, are the least able to do so.
A quarter of all UK households went into the covid crisis with less than £100 in the bank. Some 3.6 million people nationally are trapped in insecure work, and their finances are not resilient. In Liverpool, council tax support is provided to about a third of all council tax payers, costing £30 million a year, yet one in four of those receiving that help are actually in work. Telling the council that it must hit those people hard again is not a fair way of doing things. Many councils will have to consider making major cuts to services next year—the exact same services everybody will be depending on to help the recovery. The jobs that are lost will be those of the very people who have worked so hard and put their lives at risk to deliver key public services during the ravages of covid.
The Government must provide a solution to local government finance that takes into account the already entrenched disadvantage in constituencies such as mine, and they must seek to address it, rather than just assuming that those with the least can pay the most and attacking Labour councils for spending more. Those councils cannot easily raise more money from council tax, because they have low band properties, and people just cannot afford to pay. That will not work. It is a recipe for further poverty. The Government have to change their view.
In my constituency, I have two local authorities—Dover District Council and Kent County Council. I have been working closely on the ground with both councils during the pandemic. The response by the council officers has been absolutely outstanding, particularly the senior team in Dover, led by Nadeem Aziz, Roger Walton, Tim Ingleton and Brinley Hill, together with our dedicated Conservative leaders, Councillor Trevor Bartlett of Dover and Councillor Roger Gough of Kent.
Reliance on local government has never been stronger. That is why it has been so right to ensure that it has the financial and resource support to deliver on the ground. Undoubtedly, there are financial challenges at this time both nationally and locally, but there is no doubt whatsoever that the scale of funding and support to the councils in my area makes a real difference. For Dover and for Kent, the scale of financial support from Government has been immense—getting on for £100 million in covid additional funding alone. The Conservatives’ support and funding will keep down council tax bills. My area has a strong tourism and hospitality sector. We have received £48 million in business grants and business rates relief. We are set better for the future, with a £3.2 million award for future high streets funding.
In addition to managing the pandemic, the councils in my area have two big expenditure items to fund and deliver, which cost more for every council tax payer because of the Opposition’s failure to support sensible, Conservative policies. These items are social care and illegal migration. Kent County Council has calculated that it has a funding hole in its reserves of over £24 million directly related to the cumulative costs of illegal entry into our country, whether through the small boats route or lorries coming into Dover. This is in addition to local policing and other costs.
If the Opposition want to reduce the tax impact for people in my constituency from illegal migration, I expect them to fully support the Conservative Government’s changes to bring in fair migration, tackle illegal migration and enable returns. If they do not, then they simply show that not only do Labour councils cost you more, but the Labour Opposition want to cost you more, too. Only a Conservative Government are committed to both doing the right thing and costing you less.
Council tax is flawed and regressive. It disproportionately impacts on the poorest the hardest, and not just on the poorest people in society, but on the poorest areas of England. Not every area has the same council tax base. The two boroughs that I represent are a case in point. Tameside is predominantly made up of band A and B homes. There is nothing the council can do about that: those are the facts on the ground. Stockport is more mixed, with many more properties in higher council tax bands. That means Stockport can raise more money than Tameside can—it is basic maths—but neither can raise enough from council tax alone to meet basic service standards set by Government. They are both grant-dependent councils. They both need Government top-ups to function.
Some councils are fortunate. They can raise enough from council tax and business rates to meet local needs. They do not need a central Government grant. But all past Governments of all political colours have recognised this in-built unfairness and have redistributed grants to councils with low tax bases and high needs to even things out—until recently. This is the sheer unfairness of what this Government are doing. They have cut grant funding by half across England, but that is an average. In some areas, it is over 60%: 60p in every £1 gone. That is a lot of lost income for Tameside and Stockport. There is smoke and mirrors from Government. Ministers then tell councils they have more flexibility—“You can plug your gap by increasing council tax”—except that it does not work because it brings in nothing like the same amount as the funding cut by Ministers and there is still a gap. So the poorest areas with the highest needs in social care and children’s services still have to cut services.
Then came covid-19. I was the Secretary of State’s shadow this time last year and I was grateful to him for briefing me about local government stepping up to the covid challenge—and, boy, didn’t they do just that? I pay tribute to those councillors, officers and staff for all they did and are continuing to do. But I do not think that I am breaking any confidences, because it has been said in public, too: Ministers guaranteed to me that they would reimburse in full those already cash-strapped councils to do what it takes. That has not happened.
Here we are in the grip of covid still and councils are being told, “If you want to plug your gap, you need to increase your council tax.” Except it does not plug the gap. It does not come close. Residents lose out twice: they pay more, they get less. And the blame is devolved to councillors, not Ministers. That is why I support this motion tonight.
This Opposition debate is a purely political stunt and Opposition Members should look a little closer to home, where their party is in government in Wales. Welsh Labour has presided over more than two decades of council tax rises, with further rises planned this year. What is more, on average, council tax has risen 30% faster in Labour-run Wales than in England. Those types of increases have caused council tax to treble in Wales, from around £495 in 1998 to £1,667 in the financial year ending 2021.
Residents in my constituency within Bridgend County Borough Council, under a Labour-controlled council and a Labour-controlled devolved Administration, have seen increase after increase. Last year it was 4.5% and they are likely to see yet another increase of 3.9% this year. That equates to an average Bridgend home paying about £320 a year more than they did just five years ago. The approach to council tax is one where the people of Bridgend are treated as cash cows while services are being cut. It is hitting working families hard during what has been a very difficult year for them.
The UK Government have supported councils during the covid-19 pandemic, with a package worth more than £30 billion helping councils in England to keep their council tax lower than that in Wales. The Welsh Labour Government should match the ambition of the UK Government, support their councils to keep bills low, give families more space, and not be afraid to allow residents to veto high rises, as has been allowed in England since 2011 thanks to the Localism Act 2011.
The people of Bridgend deserve better than the inevitable year after year of Labour rises in their council tax, so I will not be walking through the Lobby to support this motion tonight. Moreover, I urge right hon. and hon. Members on the Labour Benches to press their colleagues in Wales to end this ever-increasing council tax rise, which is burdening my constituents in Bridgend.
I would like to personally pay tribute to the hard-working staff of Hartlepool Borough Council.
Over the last decade, austerity has led to public sector cuts to local authorities, which have caused major job losses and cuts to vital services. Hartlepool has seen this on a grand scale. Because of our high levels of deprivation, growing costs and dwindling funding from Whitehall, our council tax is proportionately some of the highest anywhere in the country. As one of the most deprived local authorities in the country, departments such as children’s and adults’ services were stretched in capacity prior to the pandemic, despite the best efforts of council staff. Poverty levels, especially child poverty levels, have risen dramatically over the last decade. Local government costs for children’s services have increased in line with those demands, even before the cost of the pandemic has to be taken into account. My constituents are already paying through the nose for a bear minimum of services, which the council can just about afford. Three successive Tory Governments have caused this situation, even without consideration of the effects of the pandemic on local government finances. The Chancellor promised no new tax hikes this year, so instead he is trying to introduce them by stealth through local councils. People will see right through that. Even the local Conservatives in Hartlepool recognise that the plan would be a disaster for the people of Hartlepool and that no member of the public will respect any politician who tries to force the cost of this pandemic on to them. Locally, this council tax rise is likely to be hidden in the adult services precept to avoid embarrassment for the Tory and Brexit leadership. Hartlepool Borough Council is just about managing to deal with the current cost of the pandemic; however, that will not be so if this drags on much longer.
I am too aware that increases in council tax will hit those in the most precarious financial situations: young families; low-income families; young workers; low-income workers, and self-employed people whose businesses have been failed by the Government. The pandemic has highlighted the role and importance in our society of key workers, who are essential to its functioning; public sector and local council workers were high on the list of those key workers we clapped for week in, week out.
The Government can seemingly always find millions to throw at consultancy fees, yet with spiralling costs, millions in debt, thousands grieving the loss of loved ones and policy failure after policy failure on covid-19, local government needs proper funding. This year of all years, it is ill-timed, ill-judged and simply wrong to neglect it.
The national effort against coronavirus has relied heavily on the hard work of council employees, and I thank all the dedicated staff delivering local services in High Peak. There is no doubt that councils have been under incredible pressure throughout the pandemic, and I am pleased that the Government have done as much as possible to back them up, ensuring that vital services can continue to help the most vulnerable. Over £10 billion has already been provided.
I am grateful to the Opposition for the opportunity to debate council tax, although I am slightly surprised that they chose this topic, given the shambolic record of so many Labour councils across the country. It is important to point out that, despite the cleverly worded motion in front of the House today, no council is being forced by the Government to increase council tax. I can only assume that the Opposition are against giving voters local control of how their council raises revenue and balances local budgets. Nevertheless, this is a good opportunity to debate how we can fundamentally reshape the tax system after covid to the benefit of the whole country.
I encourage Members to read the report “Levelling up the tax system” recently published by the levelling-up taskforce and the think-tank Onward. So much of the debate around levelling up is focused on Government spending, and understandably so—places such as High Peak are crying out for more investment in our infrastructure—but that is only half of the levelling-up equation. We also have to think seriously about how we raise money for services and the impact that that has on different parts of the country. Nowhere is that more obvious than with the council tax.
Average council tax per head in London is the lowest in England, at £481 per person. That is a fifth lower than in more deprived regions, such as the east of England and the south-west, and as a share of post-tax income, Londoners pay half of what households in Yorkshire and the north-east typically pay. That difference is getting even starker. London has seen its share of total council tax revenue decline steadily despite average house prices more than doubling in the capital, yet councils in London typically get a much higher central Government grant, despite the fact that they are able to benefit from much greater revenue-raising opportunities such as parking and that services are typically cheaper to deliver given the population density. While it is true that London generates £1 in every £5 of tax receipts, we must remember that London generates less tax than any other region as a share of GDP.
London is a great city, and I am certainly not here to pull it down; I just want to see places such as High Peak levelled up. I strongly urge the Government to think carefully about how we can make the tax system, including council tax, fairer. There is a real opportunity to be bold and deliver lasting reform. A good place to start would be requiring a regional impact assessment of different tax measures as standard practice as part of the Budget process.
While the end of the pandemic is finally in sight, there is still a long way to go. Getting the vaccine rolled out and helping the most vulnerable during lockdown requires action from every level of government, including our councils. Instead of tying their hands, like this motion sets out to do, let us figure out new ways of making the tax system fairer for everyone.
The Secretary of State’s speech was really one of the most disingenuous that I have heard for a long time. He knows full well that Labour councils do not want to raise council tax; they have been forced to raise council tax because, for the 10 years before the pandemic hit, Tory-led Governments cut funding disproportionately hard for deprived areas and Labour councils. For almost a decade, the toughest decisions and the most painful Government cuts have been handed down—effectively outsourced—to local authorities, which have to pass them on to communities such as mine in Manchester, Withington.
I was a councillor having to try to make some of those awful decisions. The cuts forced on us by the Government since 2011 would have been impossible to mitigate by cost savings alone. Councils had to increase their income. In Manchester, the council sold part of its share in the airport to guarantee an annual dividend in order to help make up the income shortfalls. That was innovative and successful, with the council doing the right thing to protect services for its residents. But this Government lockdown has had an impact. The flights stopped and the airport dividend was hit—£71 million-worth of impact. Manchester, like many others, has been doubly hit: by the spending pressures necessary to combat covid; and by the revenue that has been lost as a direct consequence of Government restrictions.
In the midst of the greatest crisis that we have had in generations, a massive share of the burden continues to fall on councils. The financial impact of the pandemic in Manchester, like the impact in town and cities across the country, has been catastrophic: £152 million this year. With only £108 million of Government funding available, we have a shortfall of £44 million. Even with the maximum permitted council tax rise—a rise that no one wants to introduce—Manchester faces £50 million-worth of cuts. Last March, the Government promised to give councils what they need to deal with the pandemic. They must come through on that promise, take into account loss of revenue and fund councils properly so that this council tax is not forced on local people.
In addition, councils need from central Government the ability to carry out financial planning for the long term. The biggest chunk of local authority spending is on social care for adults and young people. We all know that the cost of social care will rise as the population continues to age, yet the Government’s long-promised plan to tackle the social care crisis has failed to materialise. Councils need an improved settlement for social care, and they need it to be built into funding settlements, not just as annual grants, because, although the Better Care grant is important, councils need to know that the funding will be there for years to come. On such a fundamental issue, they need to be able to plan for the long term.
Our councils do a great job in difficult circumstances. I join my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane) in congratulating Manchester City Council on its response to the flood alerts in south Manchester last week. It needs proper funding to do that great job. It is past time that the Government stopped treating local authorities as a vehicle for outsourcing cuts and blame, and funded them to be the crucial parts of our civic life that they really are.
Many councils have done a great job adapting to the ever-changing situation and supporting local residents. It is right, therefore, that the Government have given local authorities an unrivalled and unprecedented £10 billion package of support. In Stockton, this has meant an extra £110 million in funding—much of it unring-fenced, allowing councils to spend on local priorities. Money has also been given to councils to meet the cost of lost revenues, to support enforcement and infection control, to support and help the vulnerable, to cover business rates relief and to provide a huge package of support to local businesses—yes, huge challenges and costs for local councils, met with a huge package of support from the Government, so much so that my local council is still deliberating over how to spend some of it.
At this time, one would hope that many councils would look at how to shield residents from any unnecessary increases in council tax, but Stockton Council is a Labour-led council, which means that it will continue to tax like there is no tomorrow and spend like no one is watching. It is a fact: people are better off with the Conservatives. The average resident living under a Conservative council pays significantly less in council tax, while enjoying great local services. Under the last Labour Government, council tax bills across the country doubled. In Wales, where Labour is still in power, they have trebled.
In Stockton over the last five years, council tax has gone up by more than 20%, and that hurts those on fixed and limited incomes most. Not only are residents asked to pay more; the council is getting its priorities wrong, slashing spending on youth services while we have seen increased spending on press and communications, more on events and more on fireworks. When the private sector looked to reopen Stockton’s Globe theatre, it was warmly welcomed. It is a great opportunity to breathe life into our town centre. The original plan, under the private sector, was for it to open in 2012 at a cost of £4 million, but unfortunately the council got control of the project and it has now cost more than £26 million and counting, and it still has not opened.
It is said that if we look after the pennies, the pounds will look after themselves; my local Labour council looks after neither. Public money is there to benefit local people, including the most vulnerable, and therefore every penny counts. We have seen my council spend £1,900 on a rusty metal door, £62,000 on a pair of bollards, around £10,000 a year on VIP soirées where councillors can eat and drink for free. An allowance scheme has seen the chair and vice-chair of committees receive as much as £1,500 per meeting between them even if they do not bother to turn up, and we have seen council officers fly out at taxpayers’ expense to watch street theatre performed in Montpellier, Copenhagen and Amsterdam.
Councils have a moral responsibility to those on limited and fixed incomes to justify every penny they spend. It is right that locally elected councillors can make decisions about local taxation and spending, but with such rights come responsibilities.
To govern is to choose, and the Government have chosen to make local authorities choose between cutting services at this time of all times and imposing a 5% council tax rise.
I have always opposed the council tax since the Conservatives introduced it in a rush in the early ’90s in the poll tax debacle. It was always a wrong form of taxation; it takes more from those who have the least, and it takes less from those who have the most. It is a regressive form of tax, and for the Government to force local authorities—red, yellow and blue—to increase that burden on the families who struggle the most during a pandemic is utterly inexcusable.
It is a choice that the Government have made to increase council tax by 5% and to hit the worst those families who struggle the most, but there are other choices that this Government have made at the same time. The stamp duty holiday has given a boost of tens of thousands of pounds to people who want to buy second homes. Therefore, people who are struggling by on the minimum wage, paying a much higher proportion of their salary in council tax now than those who are wealthier, get a hit, yet those who can afford not just one home but two or more get a benefit worth tens of thousands of pounds from this Government, who have chosen to give it to them.
I suggest to the Minister that there is something better he could do with council tax. In communities such as mine in the lakes and dales, where as many as 85% of the properties are second homes—boltholes for folks who are well-off enough mainly to live somewhere else—the impact is colossal. Every single one of those homes is sending no child to the local school and providing no demand for the post office or the bus service, and so those services and facilities end up closing, as they have done in many communities in my part of the world. Yet there are things the Government could do to ameliorate that. Instead of imposing a huge council tax burden on those who are struggling to pay now, why not increase council tax on those who are well-off enough to have more than one home and recycle that money back into local communities?
Furthermore, why do the Government not deal with their own consultation that closed nearly three years ago on whether to close the loophole that allows second-home owners to pretend that they are a business? They claim business rate relief, and get business rates taken off altogether—so pay no council tax and no business rates. If this Government cared about levelling up, they would not be levelling down Lake district communities by benefiting those wealthy enough to have more than one home while hitting those who are on low incomes to start with.
The Government have chosen to impose this council tax rise, and council tax always hits the less well-off more than those who are better off. This is the opportunity that the Government have to change their mind, to benefit not just the lakes and dales but the whole of the country as it struggles through this terrible crisis.
Newham is one of the worst hit boroughs in the country. We have the second highest level of child poverty and the highest level of homelessness. We have had the highest furlough numbers, and our covid infection rates have regularly been among the highest in the country, especially during recent weeks. There are no signs that our difficulties are going away any time soon. In fact, I am afraid that many in Newham might not be able to get a vaccine for many months, despite significant vulnerability due to health conditions and ethnicity. The fact that we have a young population means that restrictions may well be placed on our local economy for longer, destroying the hopes that many had just a few weeks ago.
My constituents need to know that the decent public services and support on which they rely are going to continue. For that, at bare minimum, the Government will need to compensate our council fully for lost revenue and the added costs of covid. Sadly, the signs are not good. Currently, Newham Council estimates that it will lose £16 million of income this year due to the virus and will only be compensated for £8 million of that—barely half. Frankly, that has a real cost to people’s lives.
In Newham, a large number of small businesses, self-employed people and employees have been excluded from Government support. When support is not there—when it is not universal—discretionary council funds are all the more important, but with our very high levels of infection, almost all of Newham’s funding for self-isolation payments has been allocated. To beat the virus and support our overwhelmed NHS, we need more funding for discretionary payments, and we need it now.
We need a financial settlement that provides for necessary spending without raising taxes on our residents at this worst possible time. An increase in council tax can be ill afforded by my constituents, but the Government are providing no other option. The Chancellor said, “whatever it takes.” Well, let me tell him what it takes: it takes Government to properly fund councils, at the very least for covid costs. It takes the Government financially looking after everyone in need, including the excluded. We must not make the poorest pay for this crisis.
As a Welsh MP and former councillor, I would have greater respect for the Labour party if it practised in Wales what it is preaching here this afternoon, but I can assure the House that it is not. Not only has Wales seen some of the highest increases in council tax in the UK since 2010, but the latest proposed local government funding settlement by the Welsh Labour Government in Cardiff has discriminated against a significant number of councils by giving low increases in funding support.
That has been particularly the case in north and mid-Wales, where the average increase in Welsh Government funding support is below the national average, whereas in predominantly Labour-run south Wales, it is above the average, thereby reinforcing the unfairness of the north-south divide. For example, in my constituency of Clwyd South in north Wales, Wrexham County Borough Council has a provisional Welsh Government grant increase of only 2.3%, which is the second lowest in Wales and compares with an average increase in funding support of 4.1% in south Wales. It means that, with the heavy burdens of covid, flooding, snow, increased social care and many other factors, Wrexham County Borough Council will be forced to increase council tax by 6.95%, despite being a well-run council.
It is within the Welsh Government’s power to review this funding settlement, given that it is subject to consultation until 9 February, and I hope that they will do so. But Opposition Members should admit that the Welsh Labour Government are acting in a manner contrary to the terms of the motion before the House. Furthermore, the Welsh Government have the financial means to do this, as they have still not spent about £1 billion of the £5.3 billion that they have received from the UK Government in additional funding due to the coronavirus pandemic.
The approach of the Welsh Government is in stark contrast to that of the UK Government, who have stepped in and confirmed more than £10 billion of direct additional support for councils during the pandemic, plus billions more to ease financial pressures, with councils also receiving a significant boost to their budgets in April in the most generous funding settlement for a decade. In conclusion, I hope that the Labour Government in Cardiff will look to the example set by the UK Government and provide the financial support that is badly needed in these exceptionally difficult times for councils with low average funding settlements in Wales.
I wish to speak in favour of the motion.
These have been testing times for local authorities in West Yorkshire. Just today, the “Cities Outlook 2021” report has revealed that the economic impact of covid has meant that levelling up will now be four times harder than pre-covid. As Gordon Brown said today, the virus has a political dynamic: it cruelly exposes our weaknesses, with higher deaths among the lowest paid and an unfair economic impact on women and black, Asian and minority ethnic communities. This hit to our community wellbeing is, of course, on top of all the other too-familiar tales of council budget cuts and job losses.
The Government’s encouragement, saying that they would do whatever it takes, has now turned into a £2.6 billion funding gap. The LGA tells us that cuts have totalled £15 billion for councils in England. That is devastating, given the fact that between 2011 and 2018 the number of looked-after children grew by 11%. The number of people over 65 in need is up by 14% and the number of those unintentionally homeless is up by 35%. These are real people, their lives brutally changed beyond recognition through no fault of their own.
West Yorkshire councils have stepped up and made sure that food and medicine gets to those who are shielding; kept essential services, such as refuse collection and housing maintenance going; provided laptops to disadvantaged students; and worked flat out to get financial support to as many businesses as possible. They decided not to wait for the Government to fund free school meals and took in-house the feeding of hungry children across West Yorkshire. More importantly, they have used local knowledge to transform the failed and chaotic test and trace project into one that actually delivers results.
All that has been done against a background of income cuts. For example, for Leeds City Council, underlying funding from business rates is down 5%. Council tax payments are down, with people ineligible to pay as they are out of work, forcing the council to fill a £25 million black hole from reserves to avoid bankruptcy. Of course, the Government will say that that is why it is important to give councils the chance to raise council tax to pay for extra costs, but hard-working, low-paid families should not be picking up the bill for austerity and the pandemic. There are higher food costs, higher energy bills and the extra costs of home-schooling, which is why we absolutely must retain the £20 uplift to universal credit and why we cannot add yet another extra financial burden on to family expenses, especially when millions have already been excluded from meaningful support.
In this landscape, do the Government really want to increase household bills by £93? Not only is that a poor reward for those who have sacrificed so much, but it is economically illiterate. Shops and businesses need people to go out and buy goods and services, not tighten their belts. I know the Minister will list the financial packages available, but I urge him to do the right thing.
I suppose I should thank the Opposition for giving us this chance to talk about the Conservative record on tax and all the support—including an extra £10 billion for councils—that we have put in place during the pandemic. The level of support across the board has been unprecedented in peacetime.
I have a local example of Conservatives’ record on tax versus that of the Labour party. In Conservative Surrey, it was decided that council tax would go up by between 2% and 3% this year, whereas across the border in Labour-run London, the Mayor is looking at a 10% increase. In Labour-run Croydon, which also borders Surrey, the council has mismanaged its finances so badly that is has had, in effect, to declare bankruptcy.
I pay tribute to all my local councillors and council officers in Surrey, who have worked during this time not only to provide a brilliant service to residents but to take a careful look at our public finances and make sure that they are providing value for money for residents. The House will have heard today example after example of Conservatives being better with public taxpayer money. Frankly, no one believes that their taxes would have been lower under a Labour Government. Every single MP on the Opposition Benches stood on a manifesto that committed to hiking taxes in this country by £80 billion, taking them to the highest level ever in peacetime history. The Institute for Fiscal Studies said that Labour’s spending plans were not only “colossal” but “simply not credible”.
I want to spend the rest of my time talking about the council tax hardship fund. I am incredibly disappointed that the shadow Secretary of State and every single Labour MP have failed to mention it. This is a fund for which we put aside £500 million last year and £670 million this year, and it is there to help struggling families. Although I fear the Labour party is more interested in playing party politics, it is our duty as MPs to signpost families to the support that is there, instead of playing on their fears.
I notice that on the Labour leader’s Twitter feed today, there is a council tax calculator, which I tried out to see whether it would signpost people towards this support. It did not: it did ask for a variety of contact details that the Labour party could use for further electoral purposes, but it did not offer any real guidance. I urge every Labour MP who is going to be asked by Labour headquarters to pump out these scaremongering graphics later today to actually do their job, and signpost people to the support that this Conservative Government have put in place.
Today’s debate is about fairness, and the 5% hike in council tax is not fair: it is not fair on my constituents, and it is not fair on my city. As many of my right hon. and hon. Friends have already said, we are in the midst of an economic crisis. The Government bear some responsibility for the fact that our country faces the worst recession as a result of the pandemic and their failure to properly control the health crisis. This is the worst possible time to be raising taxes, yet this Government are forcing local councils to do just that, even though they know that it will hit families who are already struggling to make ends meet. Of course, those impacts will not fall evenly: they will fall hardest on the places with the highest levels of deprivation and the least ability to make up the shortfall in central Government funding.
Over the past decade, Nottingham City Council has seen its central Government grant cut by hundreds of millions of pounds. It has tried to protect services, the very services that my constituents rely on, but this year, the situation that it and other councils face is more serious than ever. Instead of doing as they promised and standing by councils that did “whatever is necessary” in response to coronavirus, the Government have left them with unreimbursed costs—£28.4 million, in the case of Nottingham City Council. It is not good enough; the Government need to do as they promised, and make up that shortfall.
Almost 40% of Nottingham City Council’s entire budget is spent on adult social care, and that percentage is rising as we face supporting more older and vulnerable residents. Central Government have repeatedly promised to meet the challenge of funding social care, but year after year, they fail to do so. Local councils have no choice but to apply the social care precept, even though in deprived cities such as mine, where demand for services is greatest, it generates far less than in areas with lower levels of demand, where councils can raise more through council tax. The Government’s approach is fundamentally unfair. It seeks to hide the truth of their decision, passing the blame on to local authorities even though they know that council tax is regressive. It is levelling down, instead of levelling up.
I know I am not the only Member of this House to be slightly bemused by Labour’s apparent sudden concern over tax rises, given its own record. We have already heard about how Labour’s tax plans would hit the pockets of working families with its so-called progressive property tax, which would cost the average household an additional £374 a year, as well as its plans to abolish single person discounts and referendums on high tax rises. But this is not just about future policies; we can also see it from Labour’s own record, especially in London, where my neighbouring borough of Croydon has been led into bankruptcy and my Carshalton and Wallington residents have been punished by a 20.3% rise in the Mayor of London’s share of the council tax since 2016, despite his manifesto promise to keep his share of council tax as low as possible. Now the Mayor wants to raise his share of council tax in London by a further 10%, punishing Londoners for his poor financial management at City Hall.
It is not just Labour that would hit working families with tax rises. We have already heard that Conservative councils charge, on average, £84 a year less in council tax, but the Lib Dems charge more than £132 a year more than Conservative councils. Such an example can be found in my own council, the London Borough of Sutton, where the Lib Dems have joined with