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.
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.
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?
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?
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 the Mayor’s council tax rise for local residents, having raised council tax in the borough by nearly 14% since 2017-18, according to London Councils. The London Borough of Sutton is one of only 23 councils across all the 393 local authorities that is classified as having very high rates of council tax, according to the website Property Data.
The reason often spouted by Labour and Lib Dem councils for their increases is that they do not get enough support, but these tax rises were happening long before the pandemic, and it is clear that this Government have given an unprecedented level of support to local authorities during the pandemic. Over £95 million has been given to Sutton in 2020-21, and so supportive has this finance been that the borough’s finance director said at a council meeting last week that the council was in as good a financial position as it was before the pandemic, thanks to a good level of support from central Government. I suspect that the Lib Dems will never forgive him for saying something so positive.
Residents do not have to settle for councils that waste money and impose higher taxes. We have heard that Conservative-run councils and Conservative Mayors offer better services while charging less council tax. Recovering from the covid pandemic is going to be hard, so more than ever we need Conservative councils and Mayors who are up for the challenge and who are innovative and careful with taxpayers’ money, rather than the high tax and wasteful spending mantra of the Opposition.
Throughout this crisis, local councils have been on the frontline of fighting covid-19 and I would like to pay tribute to every member of local authority staff across the country for the work they have done over the last year, particularly the staff of Salford City Council. Whether it is through providing support to vulnerable people who need it or ensuring that the bins are emptied, councils are playing a vital role in keeping people safe and well during the pandemic. Despite seeing its budget cut by £211 million over the past decade, Salford City Council has stepped up during the crisis to provide grant support to businesses, put in place extensive infection control measures in care homes to protect residents, and developed contact tracing that is much more effective than the Government’s scheme.
Local councils have more than lived up to their end of the deal; central Government have not. There is still no social care funding settlement, despite the additional costs to social care providers this year. Local authorities do not have the certainty of the resources they need to properly support older and disabled people through the crisis. The Secretary of State said at the start of the first lockdown that the Government stood ready to do whatever was necessary to support councils in their response to coronavirus, but now the Government are asking councils to pass the costs of support for communities during the pandemic directly back to local residents. In the same month that furlough will end for over 16,000 residents in Salford, unless it is extended, the Government want councils to pass a £100 increase on to struggling families.
Council tax is a regressive way to raise funding. The areas that are most able to raise money through this measure are also those that are less deprived. In Surrey, a 5% council tax increase raises £38 million, whereas in Salford that raises only £6 million. Therefore, the measure will raise six times more in Surrey than it will in Salford. The Government should not be allowing vital public services to be subject to this kind of postcode lottery. This is a national crisis and we need national solutions to the problems we are facing.
Greater Manchester has been under more stringent restrictions than other areas since last July, with six months of tight and then tighter restrictions that hit people’s livelihoods and weakened businesses, causing many to fail, and caused mental health stresses affecting the wellbeing of families. Rather than trying to avoid responsibility and shift the burden on to the residents in areas that have been hardest hit by covid, the Government must live up to the commitment they made last spring and do whatever is necessary to support councils during the pandemic. This is no time to impose a 5% council tax rise on families. I join the call on the Government to scrap this inflation-busting tax increase and support councils with the funding they need.
Unfortunately, in Birmingham, we see examples every day of why Labour councillors in the city will choose to put up council tax yet again this year. It seems like we see examples of waste and incompetence every single day. Let us take the Perry Barr bus depot as an example. Because of the Commonwealth games, it should be moved to make way for the athletes’ village—which, by the way, will no longer be the athletes’ village—with the cost to move it 300 metres down the road initially being put at £2 million. It will now cost £16 million. That is incompetence. The leader of the council assured the city council that hosting the Commonwealth games would not impact on its revenue budget. Now, years down the line, we see that it will impact on the revenue budget to the tune of £2 million every single year for the next 40 years, affecting the council’s ability to plough the money into services, which people want to see in their local communities.
We see an example in the form of business grants. The Government have provided millions of pounds-worth of assistance to companies struggling during the pandemic, but is being sat on because of incompetence in getting it out to local businesses on the frontline, which has led to the delays that we have seen in that assistance.
We see an example in the Bristol Road South bus lane, which nobody wanted. The council has tried for years to install it, but it did not have the guts to do a proper consultation and has now imposed it on local people, wasting thousands of pounds. A couple of years ago, the bin dispute put Birmingham City Council on the front of all local and national papers. That cost millions of pounds to fix, and, unfortunately, we are still paying for it.
We see the home to school transport service, which looks after some of our most vulnerable citizens. We see severely disabled children being dropped off at the wrong school and parents being kept in the dark over what time their children will be picked up. That is incompetence. What is the solution to all that we see? It is yet another tinkering around the system, another restructure, another review, and another report to be put on a shelf.
Last week, we saw proposals to spend half a million pounds on new directors in the city council. This restructure will cost £3.6 million—this after the council spent no less than £2 million on non-disclosure agreements, or gagging clauses, for city council officers who have left. It is funny, Madam Deputy Speaker, how it is never Labour councillors running the council who get restructured out of the council; it is always the council officers who have to bear the brunt. So, unfortunately, all the noise from the Opposition Benches today rings hollow. When people’s council tax bills land on their doormat later this year, they will know that they have gone up because of incompetence, bad financial management and waste.
My constituency is covered by two local authorities: Labour-run Greenwich and Conservative-run Bexley, which I served on as an Opposition councillor. I saw at first hand how the heart and soul of local government was being ripped out by successive Chancellors: green land sold off for unaffordable housing; libraries shut; and support for elderly and disabled residents stripped to the bone. This is happening up and down our country. It is a deliberate, calculated and deeply philosophical rolling back of the state. This attitude is why, in the middle of a pandemic, when councils have been on the frontline in the fight against coronavirus, we have a shameful policy of enforcing a council tax rise on hard-pressed residents while services face further cuts.
Many of my constituents will face a rise of nearly £100 a year, while seeing a Tory-run Bexley sell off land so that it can make hundreds of staff redundant. They will be paying more while their children’s centres are closed, their libraries are closed and their fees and charges skyrocket. They are paying more in Greenwich, too. Over the past 10 years, they have seen the Government reduce funding by £1,500 for every household. Let me repeat that: £1,500 for every household. Next year, Greenwich must cut £20 million and potentially the same amount for 2022 and 2023. That is a long, long way away from the very public promises that the Government were making a year ago at the start of the pandemic. Last Wednesday, I asked the Prime Minister why, when the Secretary of State had promised councils “whatever it takes”, that promise has been broken and why my constituents have to pay for his broken promises? He could not answer me then, so perhaps the Minister will do so when he closes the debate.
It should not be lost on the House that much of the council tax rise relates to social care. We are here today because the Government refuse to take responsibility and properly and sustainably fund care for some of the most vulnerable residents in our communities. There is nobody in the House who does not know the solution to this problem. We need to end the postcode lottery that means that a resident of mine living in Bexley will receive a different level of care to a resident of mine living in Greenwich.
The Government must listen to the voices of hard-pressed families around the country at a time when we desperately need to grow our economy, and when many people are facing pay freezes. An enforced council tax rise will be a disaster.
Today’s debate is a great opportunity to shine a spotlight on how well Conservative councils are doing in comparison with those controlled by the Labour party. I begin by thanking every member of the team at Darlington Borough Council, including councillors, officers, administrative support and street cleaners. Every one of them has worked hard for the community that I am privileged to represent.
In May 2019, a mere 20 months ago, 28 years of hard Labour in Darlington was brought to an end and the Conservative team, led by Heather Scott, are now delivering for the people in my constituency. Over those 28 years, the Labour-led council raised council taxes year after year while reducing services, choosing to close or put in jeopardy key facilities, and, as has been recently highlighted, failing to recover rents, fees and charges.
The Conservative-led team at Darlington have saved our fantastic 19th century library; commenced restoration of our amazing market hall; restored our market to the market square; reduced car-parking charges, which had previously been the highest in the Tees valley; tackled the scourge of fly-tipping with increased prosecutions; successfully won a bid of £23.3 million from the towns fund; made real progress on resolving our local plan; and saved Springfield park from the road that Labour wanted to bulldoze through it. On top of all that, over the last year, they have overseen the quick and efficient distribution of more than £30 million of support grants to our businesses. This Government have provided billions of extra support to local government to meet the challenges of covid. Darlington, like many local authorities, has received fantastic support, and it gives me a great sense of pride to acknowledge the millions of pounds in extra support for Darlington.
This debate is another attempt by Labour to create headlines and weave a fiction that it is only Labour that cares. The work I have seen by Conservative-led Darlington Borough Council has clearly demonstrated to me that the team there care deeply about the community they serve. They care about the quality of the service that they provide. They care about the money that they have a duty to collect, and they care about the cost to my hard-working constituents.
While Labour plays divisive party politics, this Government are getting on with supporting local authorities, providing £51.2 billion for councils across England—an increase of £2.2 billion on last year—and I thank the Government for making the millions available to Darlington Borough Council. When push comes to shove, this Government have shown themselves to be compassionate in the face of our communities, supportive of our colleagues in local government and robust in challenging the waste and inefficiency of Labour in local government.
Like a lot of people here, I found my route to Westminster via the town hall. I was quite surprised to listen to the oration by the hon. Member for Worsley and Eccles South (Barbara Keeley), because I was a councillor in her constituency for eight years. I sat through eight Salford City Council budgets, listened to the same speech year after year from the leader and then the elected Mayor as they decried the Government, and then I took out a copy of the previous year’s Salford Conservative Policy Forum alternative budget, which I penned myself, and ticked off each of the supposedly cruel and unconscionable measures that they rejected previously, having enacted them a year too late to do any good.
Financial mismanagement is the hallmark of Labour authorities. Pointless and often ruinous vanity projects are dressed up with Blair-era names like Invest to Save, and millions of pounds of taxpayers’ hard-earned money is shovelled in to prop them up as it transpires that local authorities probably should not be running, for example, a rugby stadium in Salford or an energy supplier in Nottingham.
In my experience, Labour authorities, far from being forced to increase council tax, have been some of the most enthusiastic proponents of increases, and Greater Manchester is a prime example. In Heywood and Middleton, my constituents will be faced with a council tax rise of almost 5%. The council is hiking rates by 3.99%. Andy Burnham will be adding the maximum £10 allowed for the police precept, and another £14 on top for his general precept. That will put a minimum burden of £58 per household on my constituency. Andy is right that it is the minimum, because he actually wanted more. Members will be aware that Andy got himself into a spot of bother recently as Greater Manchester police were taken into special measures because 80,000 crimes were not recorded. Despite being the police and crime commissioner for Greater Manchester and being warned by councillors, officers and MPs, Andy was apparently oblivious to this, but he has magnanimously promised to fix it—although it will cost you.
For Labour Members to come here and complain about council tax rises when their colleagues at local level have tripled the average council tax over the past 20 years so that the average council tax in a Labour authority is £84 higher than the equivalent in a Conservative authority is a heady mix of hubris, chutzpah and old-fashioned brass neck. Once again they come here with a false narrative, intending to stoke up an army of social media trolls, encouraging them to share misleading and sometimes entirely wrong posts and graphics, and to abuse and threaten, while they feign their dismay at these tactics in this Chamber. Instead of riling people up and deliberately frightening the most vulnerable, a serious Opposition would have come here with an alternative and wanting to debate with the Government about the best way to do things—but sadly, not today.
I have spoken many times about covid and the impact on Hull West and Hessle, which, as highlighted by Amy Norman from the Social Market Foundation, will be hit harder because of the lasting hardships of the past decade. In a nutshell, the long-term impact of austerity will slow our recovery. To be blunt, the last thing that residents in Hull West and Hessle need is an £88 increase in their council tax bill and a £20 cut in universal credit. Hull City Council has faced a decade of cuts under each Conservative Government, and these cuts have hurt services. It was in a more stable situation until the covid pandemic, when its costs escalated again. Hull does not have the ability to raise all the additional funding that it needs from local residents, but it is simply unfair and too heavy a burden for local people to bear.
We must never let this Conservative Government place all the blame for the state of the economy on the pandemic. A decade of irresponsible choices from the Conservatives has left our economy on shaky ground even before covid hit. A quarter of households in the UK went into this pandemic with less than £100 in the bank, 3.6 million people are trapped in insecure work, and the UK is one of the most unequal countries in Europe. The Government must stick to their promise to do whatever is necessary to support councils’ funding. Instead of a Conservative Government penny-pinching from struggling families while at the same time wasting taxpayers’ money on failed PPE and questionable Government contracts with those with links to the party, we need a concrete plan for post-pandemic recovery, with a focus on green energy jobs and building on the ideas and talents that we have right here. Earlier today, I heard the news that Debenhams is closing its stores. That will hit Hull’s retail sector hard. I hope that when the Minister responds, he can give an answer on what he is going to do about our high streets.
In the longer term, there are two big projects that Government could get behind to help to generate jobs and speed our recovery from covid. Investing in the Hull lagoon project would create about 14,000 jobs. Our growth in the city is challenged by flood risk, and restricted by transport connectivity and a shortage of key development land. This home-grown solution has been driven by local businesspeople and has my full support. It will be bold and transformative, and I urge the Government to take it seriously. The Government could also approve the bid of Zero Carbon Humber, which would not only help to protect the environment, but create 50,000 jobs.
Together, such projects could fulfil Hull and East Riding’s potential to be the green capital of the UK. Here, in Hull West and Hessle, there is talent, ambition and drive, but that could be snuffed out if the Government continue to pursue economic policies that harm the poorest hard-working families. I urge them to think past just the needs of what they are going to do next week and instead think about how they can use the power of Government to follow Labour’s plan to invest long-term in green energy jobs.
I put on the record my thanks for Connected Communities, a best-practice innovation in my local authority which promotes getting around to meet many of those affected by covid and—a double whammy—by the impact of Brexit on my community. They go around to do assessments, assisting many older and disabled people, and people who have fallen on hard times because of coronavirus and losing their jobs.
I also put on the record my concern about the tone of the introductory speech by the Minister, who seemed to be attacking the sector. In actual fact, we need to be praising the sector and building it up; instead, he used it as an opportunity to attack councils. I think this is a time for us all to pull together.
In my brief remarks, I want to highlight two broken promises of the Government. The first is failing to address the social care crisis—for many years, since 2010 when the Tories were first elected, they have promised to sort out social care, promising to put disabled people and older folk first. However, we still do not have a proper funding solution for social care. My message is: get on with it.
The second broken promise is the promise to do “whatever is necessary” for local government. I am extremely concerned about the waste of £1,000 a day on consultants on the failed test, trace and isolate system; that was spent instead of funding local government’s shoe leather, to go around helping people to understand and to educate them about the importance of self-isolation. That is the role of local government but, instead, it was bypassed for an expensive test, trace and isolate system, with consultants—£1,000 a day, what a waste—to tell the Government what to do. At a much more value-for-money price, local government could have done a much better job.
Finally, on the question of council tax, we all know it is a regressive tax, which tends to hurt working families much more disproportionately than others. It falls heavily on renters, who will probably never be able to get on to the housing ladder in my constituency. Year after year, they have to pay more and more council tax, while landlords who own the properties do not pay a penny. We know that forcing councils to raise council tax in this way this spring will be terrible for those affected by coronavirus. The Government promised to do whatever was necessary and, instead, time after time we see local government being attacked. After the worst recession of any major economy and with the virus still not under control, now is not the time to put households under more pressure. I say to the Government and the Minister: rethink this policy.
Today’s debate on council tax rises is an excellent opportunity to set the record straight and to make it clear to the British people that Labour’s position on this topic, as on so many others, opens it up to allegations of hypocrisy.
It is undeniable that most Labour-controlled councils spend money recklessly and with little concern for the consequences. Appreciate how Labour-controlled Wakefield Council has, for decades, overseen the city’s deterioration. In 2008, the council pushed through plans for a £3 million market hall, against the wishes of local residents and the city’s market traders. The scheme has caused the city real hurt and lost an average of £190,000 per year. Although vast, however, that does not even cover the former chief executive’s £200,000 a year pay.
The council chooses to pay its bigwigs eye-watering sums, and yet it fails to deliver vital services. When it snowed last week, our roads were left unsafe for frontline workers to commute or the vulnerable to receive their vaccines. The council gritters were nowhere to be seen.
This sad story of inefficient and unresponsive local government is repeated in virtually every Labour-run administration. Nottingham city councillors gave themselves an above-inflation pay rise, while ruining council finances through schemes such as Robin Hood Energy. The Mayor of London severely mismanages taxpayers’ money, spending an extra £9 million on staffing costs—all to help boost his image—without helping those most in need. Labour’s record in local government is scandalous. The basic problem is that Labour continues to mismanage resources, and its irresponsible solution is to demand even more money, not to improve systems and create efficiencies. Where mismanagement of finances and waste are found, corrections must be made.
The Conservative Government have taken unprecedented action to ensure that councils can provide vital services during the pandemic. Councils have received £7.2 billion in extra funding, including £4.6 billion in un-ring-fenced grants to cover additional costs.
It is clear that Labour cannot be trusted to spend public money wisely. Labour relies on the taxpayer to always pay the cost of its failure. It is the Conservatives who have overseen a reduction in council tax in England in real terms. Labour managers saw this debate as an opportunity to claim the moral high ground, but Britain need only look at Labour’s track record to recognise that this debate is yet another example of its chronic mismanagement.
The Government promised to do whatever was necessary to support councils during the pandemic. Why, then, are they planning to force a rise in council tax, not only breaking their promise, but forcing hard-working people to pay for their broken promises?
Families are already under huge financial pressures as a result of the fallout from covid. Our councils are coming off the back of austerity and have taken the brunt of Tory cuts over the last decade. Central Government cuts have led to council spending power and core funding becoming dependent on income from council tax. Constituencies such as mine have seen around a 33% rise in council tax since the Tories came into power. For some, a 5% council tax rise will add around £100 to their annual bill.
As a councillor for 10 years, I know that one of the biggest pressures on local government spending is adult social care, with councils and the vulnerable people they care for paying the price of the Government’s failure to bring forward their long-promised plan to tackle the social care crisis. We should have seen social care packages and a social care funding settlement, but instead the Prime Minister’s failure to bring forward a plan is putting huge pressure on council budgets and is failing some of the most vulnerable in our society. That is truly sickening when we look at the money that has been wasted during the pandemic on failed test and trace and on procurement from private firms through blatant cronyism.
Such irresponsible choices are nothing new from Conservative Governments. Even before covid, our economy was on shaky ground, with a quarter of UK households going into the crisis with less than £100 in the bank, and 3.6 million people trapped in insecure work. Throughout this crisis, the Chancellor has created problem after problem time and time again. Instead of following the science, he set up a false choice between the economy and public health. That has cost jobs and livelihoods and has left us with the worst recession of any major economy.
Raising council tax now, alongside a cut to universal credit and a pay freeze for key workers, will leave families in the north-east and across the country with less money in their pockets. That is a slap in the face to those who have sacrificed so much during this crisis, and it will hit the poorest hardest. The Government must now live up to their promises. They must scrap this forced council tax rise and stand by their pledge to do whatever is necessary by fully funding our local authorities and protecting our vital services.
The Opposition Front-Bench spokesman, the hon. Member for Croydon North (Steve Reed), started the debate by saying that the Government were forcing council tax rises and that Government failure has led to the economic challenge we face. I will start by saying simply that neither of those statements is true. Councils make their own decisions on council tax, of course, and the Conservatives introduced a cap on rises in 2011, which his party opposed in the LGA. Unless he is accusing the Government of plotting in the wet markets of Wuhan, clearly blaming them for covid, he is well wide of the mark.
As we have heard already, it is pretty rich for Labour to raise council tax as an issue when we know that Labour councils charge £84 a year more, when the Mayor of London wants a 10% tax rise and when a candidate in the West Midlands wants to whack £34 million on the bill for residents. There is no doubt that covid has come at significant cost to local authorities, and that is why more than £10 billion has gone into the coffers, plus the most generous local government settlement in a decade. That is before we mention schemes such as Everyone In, which supported people to get off the streets in the first lockdown, and the winter support grant, which is helping the most vulnerable people through the challenges of covid this winter.
Nowhere is the contrast more stark than in Nottinghamshire. We have heard a lot about it in the debate. In the Conservative-run county, the Conservative group has put residents in a strong financial position. Pre-covid, a lot of hard work went into rebuilding the council after years of Labour administration, and we have therefore been in a strong position to manage the pandemic and offer out services such as the support hub and additional help for residents while still being able to set a balanced budget for next year that protects services. Meanwhile, as we have heard, Nottingham City Council, Labour fiefdom that it is, blew £38 million on Robin Hood Energy, made 230 redundancies—apparently by Skype—and then its members awarded themselves above-inflation pay rises, despite destroying the council’s finances. The council is struggling to put together a budget for next year and is calling the administrators in, and it will be residents in Nottingham city who will be asked to pay for it when the cash was splashed on ideological pet projects. Now it is all gone, and residents will pay the price for Labour’s incompetence. Meanwhile, Mansfield District Council persists with an expensive executive mayoral system that adds costs, and Ashfield District Council has created five new cabinet roles at £90,000 a year to give themselves jobs while raising council tax for residents. It is not good enough.
The Secretary of State is quite right to thank hard-working frontline officers for their work during this incredibly stressful and emotional time, often not helped by the politicians, frankly. I am pleased to be able to tell my residents in Mansfield that at least the Conservative-led county council is in a strong financial position and will be able to put forward a balanced budget for the year ahead and to continue to deliver good local services despite the ongoing challenges we face.
Even before the covid-19 pandemic, millions were struggling to pay their council tax and other essential bills. Research in 2019 showed that 1.6 million people have fallen behind on council tax payments, and the pandemic has only worsened the situation. The financial pressures have put a spotlight on how local government has been forced to rely more and more on increases in council tax over recent years, despite it being a regressive tax that squeezes those least able to afford it. The staggering level of cuts in central Government funding to local authorities since 2010, as Conservative Governments have tried to put the blame for their choices on councils, combined with the failure to deal with the crisis in adult social care as our population ages, has left councils with no choice but to increase council tax and the social precept every year if they want to continue to provide essential child, adult and elderly social care services.
Ten years ago, about 40% of local government revenue came from council tax. Today, it is more than 60%. Let us be clear what that means. Conservative Governments have overseen a shift to a far more aggressive way of paying for local government, squeezing struggling families more and more and putting the pressure on communities that can bear it least, while failing to address the real financial challenges that local authorities face. Those challenges are huge. Following the latest local government financial settlement, revenue spending will be about 20% to 25% below what it was in 2010. Over the last 10 years, Newcastle City Council has had to make savings of £305 million, more than £2,000 per household, to balance its budget. Coronavirus has cost councils across the country more than £11 billion in 2020 alone.
We are all eager to get back to the way things were before last March, but as Unison’s No Going Back to Normal campaign has highlighted, there can be no going back to the pre-covid status quo. That normal, with deep cuts to local services that support children, the elderly, the disabled, people with mental health conditions and many more, has made the human impact of the pandemic so much worse.
This is not just about local government arguing for what was promised. It is about a system that is quite obviously broken and unsustainable, and has been for some time, which is putting far too much pressure on those who can least afford to pay, and a Government who prefer to pass the buck to local authorities in the hope that voters blame them, instead of tackling the real issues and ensuring sustainable, life-changing local services can be provided. Short-term sticking plasters are not going to solve the vital issues created by years of neglect, and we need to see urgent action and serious engagement on those real solutions now.
Council tax has always been a political battlefield, and it is right that it is debated, especially as we will all have our role to play at some point in the economic recovery, and it will define every single one of us—not just as individuals, but as a nation—as to how well we do this and how quickly.
What I like about these debates is that they provide the opportunity to address the spurious political straplines that those on the Opposition Benches peddle, but what I do not like about these debates is the negative impact these very spurious straplines have on those who have seen their economic world order change overnight due to the pandemic. We should never seek to politicise and undermine those who are economically vulnerable. Never more so than today, we must protect and shield: it is not the time for political divisiveness. People want the facts and they need the truth. These are people’s lives, after all. This pandemic has wreaked havoc on our economy and people need certainty, and they need reassurance. Managing money can feel like walking a tightrope at the best of times, let alone when a pandemic rips through the heart of someone’s own personal economy.
The spurious strapline I refer to is this one:
“Labour…demanding that the Government reverse its plans to force councils to raise council tax”—
shameless misrepresentation, sheer political opportunism. Thankfully, these are the real and reassuring headlines: a £670 million hardship fund to enable local authorities to continue reducing council tax bills for those least able to pay—fact; under the Conservatives, council tax in England is lower in real terms—fact; and, yes, there may be a rise in council tax, but this is at the discretion of the local authority, which also has the flexibility to defer this increase for a year—fact. It is also somewhat surprising that we are having this debate, as many Labour-run councils across the country are in fact planning to increase council tax. The Labour mayoral candidate for the West Midlands has already said that he wants to raise council tax by £34 million to pay for young people to get free transport—fact.
Those most vulnerable do not need or deserve the shameless political opportunism that these Opposition debates represent. Everyone knows that this pandemic has affected our lives in many ways, and everyone knows that they will have their part to play in actually repairing the economy. What people want is the truth, not spurious headlines that serve no purpose but to destabilise and undermine those most vulnerable at the time of their greatest need.
This Government, like their predecessor and their predecessor, are pursuing a policy that promotes an ever-widening gap between the haves and have-nots. The opening remarks of the Secretary of State suggest he is clueless about how hard this is hurting hard-pressed households across the country. Most shameful of all is the Government’s disingenuous claim to level up our country and our society. This is laid bare in their approach to local government finance, where they have brazenly encouraged this widening of wealth between our local authorities—between shire and city, and north and south. Instead, they have presided over an acceleration of inequality across this country, while families have to stump up more money for less locally.
Fortunately, the public are starting to see this for the charade it is. After years of inflation-busting council tax increases in effect forced on authorities by this Conservative Government, the public see next to nothing in return: holes in the roads, holes in their arguments. Across England, we have seen the average band D council tax increase dramatically, way ahead of inflation. In 2015-16, this was £1,500, and it is expected now to rise to almost £2,000 in this next financial year. This represents an eye-watering 29% increase in cash terms on its level in 2015-16.
Residents in Warwick and Leamington are facing a further increase of £94 on average this coming financial year, despite next to no increase in wages and inflation at between 0.5% to 0.7%. Warwickshire County Council has lost half a billion in funding since 2013. Among all the services it has cut or closed, let me just mention the virtual closure of youth services, which has clearly contributed to knife crime rocketing. We now have the prospect of yet another rise in the police levy from the police and crime commissioner. It is another 6%—12 times the inflation rate—on local taxes, while cutting 87 staff from the investigations and domestic abuse teams. That is 87 dedicated and experienced police staff being made redundant.
This is all against a backdrop of the Government handing out cash to their mates, with £21 billion for a failed test and trace scheme that sees call operators staying at home and making a couple of calls a day. The Government are starving local public health of money, although local public health would do it better for less. They are shovelling money to other mates setting up middlemen businesses to import personal protective equipment that never arrives—merely hundreds of millions of pounds in their case.
Let me give the Government one desperate plea from local government: charge a fair fee for planning. It is ridiculous that a site employing 2,000 people here for the new megalab in Leamington is, in effect, being subsidised by Warwick District Council. I also make a plea to provide some long-term certainty. How many times have we heard the Government say they will do whatever it takes, only to take whatever they like from what they promised local government? On 16 March, the Secretary of State told 300 council leaders they would do whatever necessary to support them. We are seeing an ever-widening gap in our society, and another inflation-busting council tax is just one too many for them.
This is a Government who are supporting councils with £10 billion of support, including more than £2 million to Gedling Borough Council here in Nottinghamshire, plus more to help ease financial burdens. This Government’s support for local councils has been unprecedented and generous and helped share the burden they face.
Our councils are so often on the frontline when it comes to delivering services. That is especially so in this pandemic, where they have done so much. I thank the staff at Nottinghamshire County Council and Gedling Borough Council for all the work they have done over the past year. From social care to keeping waste collections going, to making food packages at the Richard Herrod Centre in Carlton, council staff have kept the show on the road in difficult circumstances.
More generally, councils need to be well-run, and from where I am speaking, there is a tale of two councils. Conservative-led Nottinghamshire has been described by an LGA peer review as
“an effective council delivering good quality citizen-focused services to its residents.”
The report stated:
“There is financial stability in the organisation and the Council has a proven track record of delivering savings while maintaining front-line services over a long period of time—this is impressive.”
The council has halved the budget gap that it inherited from the previous Labour administration and kept discretionary services such as libraries open. It is set to make a balanced budget next year.
That is all in contrast with Labour-run Nottingham City Council, which we have already heard much about today, and for good reason. It is a council that is selling off assets to try to balance the budget, a council that organised a Christmas market that closed after one day and, infamously, a council that set up the now-failed Robin Hood Energy.
Robin Hood Energy had customers from far and wide—I believe the former Labour leader, the right hon. Member for Islington North (Jeremy Corbyn), was the most high-profile. While he and fellow Islingtonians might have benefited from cheaper energy prices, the collapse of the company will be felt by the working-class taxpayers of the Meadows, Sneinton and St Ann’s in the city, as Nottingham City Council seeks to make up for the tens of millions of pounds it has lost. For the residents of Nottinghamshire, the choice could not be more stark. I trust that in May the good folk of Nottinghamshire will choose wisely.
When the pandemic first hit, the Government brought back an old phrase. “We are all in it together”, they said, but that is not how it has turned out. A report published today by Oxfam shows that the 10 richest individuals in the world have seen their wealth rise by more than £400 billion since March. Friends and donors of the Conservatives have been handed fortunes in deeply questionable covid contracts. Private companies have seen it as an opportunity to open up the NHS to further privatisation. But the vast majority of the public? More than 750,000 jobs lost and 6 million families now on universal credit. In poorer, working-class communities, people are at twice the risk of dying from covid compared with those in the richest. BAME communities are at between 10% and 50% higher risk of dying. Just like when the greed of bankers caused the financial crisis and the working class paid with a decade of austerity, here again, the working class are being hit the hardest by a crisis not of their making.
That is the background to the Government’s plans, forcing councils to raise council tax to help plug the gap of the £15 billion cut from central Government funds in the last decade. It is a move that can mean a rise of nearly £100 on average for band D households, breaking the Government’s promise to
“do whatever is necessary to support councils”.
It does not stop there. In addition to the Government’s plans to cut universal credit by £1,000 a year, they plan to rip up workers’ rights, endangering everything from holiday pay entitlement to the 48-hour working week. They have already cut corners on free school meals and forced a cruel public sector pay freeze on key workers, even as their labour is what is getting us through this crisis.
Before the pandemic hit, Britain was rigged: rigged in the interests of the rich and the powerful by a Tory party funded by the rich and the powerful. That rigged society has meant that this pandemic has hit much harder than it needed to: workers who cannot afford to self-isolate, families who are crammed into overcrowded housing, services privatised and run for profit, not public health, and now the highest death toll in Europe, the worst death rate in the world and the deepest recession of any major economy. There should be no going back to that. So, far from increasing council tax for ordinary people or freezing pay for key workers, we should instead crack down on the £90 billion dodged in tax every year, making the super-rich and big businesses pay their fair share, and giving key workers the pay rise they deserve, councils the funding they need and our public services the resources to serve us all.
I was once a member of Penwith District Council, a council renowned for keeping council tax low and the quality of service delivery high. That came to an end with Labour’s local government reorganisation programme, forcing Cornwall Council on the good people of the Duchy. Since then, we have seen several years of council tax rises and several examples of wasteful spending, some of which was set out by my friend and colleague, my hon. Friend the Member for St Austell and Newquay (Steve Double). In fact, when the Conservative-run administration froze council tax for several years, Labour scoffed at us, suggesting that a rise equalled just four tins of baked beans. Many hundreds of tins of baked beans later, council tax presents a grave drain on working families and what we know as the just-about-managing. My sympathy is with those families, not the party political stunt of an Opposition day motion that we are now used to. I will always favour low taxes and good value for money. The example for Cornwall and of Cornwall is that this is only the case under a Conservative-run council.
As was mentioned by the hon. Member for Westmorland and Lonsdale (Tim Farron), the Government ran a consultation on council tax and second homes. The consultation was triggered by a debate I secured to seek to address the shortage of housing in tourist areas such as Cornwall and the Isles of Scilly. Could the Government please look at this issue? This debate relates to an increase in council tax to fund public services. I believe in tax simplification and a fair tax system for all. One way to address the issue would be to apply council tax to all properties built for residential purposes. That would ensure our police, and our town and parish councils receive the money they should receive and need. Sharing the costs of local public services fairly is something the Conservatives believe in and this is an opportunity to address that further. Would the Minister therefore please look at what is needed to ensure that properties built for residential purposes pay their fair share of council tax in areas such as mine around the country where tourism is a key part of the local economy?
Most council tax payers think that their council tax pays for all council services, but that is not the case; it is made up of council tax, central Government grant and business rates. The central Government grant has been cut by 56% in the last 10 years, in a deliberate policy of this Government to move funding away from central Government grant and on to local council tax payers. In County Durham, for example, the council’s budget has been cut by 40%, which is £232 million in central grant. That has hit northern councils harder, because they relied heavily on the central Government grant for a proportion of their income.
It is a double whammy, because the Government are now pushing this on to council tax. In County Durham, 50% of properties are in band A. Surrey, for example, has larger numbers of council tax payers in band H. A 1% increase in Durham raises very little compared with what it raises in Surrey, so northern councils are being penalised through this.
We have heard all the nonsense this afternoon about local government needing to be more efficient. Councils are making efficiencies, but it is not possible to cut 40% of a council’s budget without services being affected. Some 60% of Durham County Council’s budget is spent on social care and looked-after children. The idea portrayed that every council is the same is nonsense, in terms of the demand for social care and care for looked-after children.
The Conservative Government and Government Members then blame councils for putting up parking charges and everything else. The councils have to, because frankly, that is the only way they are going to get their income. They criticise councils for speculative property developments. I would criticise them as well, because the majority of them are by Conservative councils in the south-east of England, and that cannot be right.
The Government’s campaign slogan is about levelling up the north. Well, I am sorry, but this Government and their predecessor have done exactly the opposite for the last 10 years. Pushing the increase in local government funding on to local council tax payers is not about levelling up. It will mean that people pay more in the north than they do in the south. If that is this Government’s idea of levelling up, it is not what is being portrayed by many Government Members. This is a regressive tax that will hit hard-working families in areas such as mine in North Durham.
I have been a councillor in my constituency for the last nine years. Much like my hon. Friend the Member for Heywood and Middleton (Chris Clarkson), I have sat through repeated budgets from a Labour-controlled council, and they have never needed any encouragement at all to increase council tax. Year after year in Bury, we have council tax increases. What is the reason for that? Clearly, it has not been pandemics or any other reason—it is down to sheer incompetence.
I have listened in amazement to some of the contributions from Labour Members. The plain fact of the matter is that the north of England has been blighted by a decades- long record of incompetence from Labour councillors, and that incompetence has been palmed off on to the poor taxpayer with continued tax rises. To hear some of the stories today is somewhat nauseating when my constituents have suffered as a result of continued incompetence from Labour authorities. One of the things that we never hear from Labour politicians is, what money do councils need? What do they want to deliver? What do they want local residents to see? In my area, it is very difficult to see what my Labour authority has changed or what innovative projects have been put in place, because none have. We have suffered through incompetence, and it is no good Opposition Members simply using tired old slogans and politics by soundbite, with no record in local government upon which to base any of these claims.
Over the last financial year, this Government have supported Bury Council with £107 million of extra spending, with further business support on top of that. That is an unprecedented level of support for my local authority. But we must hold local authorities to account. Democracy is both a national and local concept. Labour politicians would seek to hide the incompetence of Labour councils and mayoralties in the north of England by speaking in generalities about matters that are not affecting people’s lives.
I am proud of this Government; they have found the money to support councils through this pandemic period, and continue to find the money to support councils to deliver the services that are needed. Just once, I hope that the Labour party comes forward with proposals that would have an actual impact on constituents such as mine in Bury North, rather than just talking in generalities and soundbites, and setting up a social media storm that I am sure will hit all Conservative MPs the moment that this debate finishes.
Following on from the hon. Member for Bury North (James Daly), I will talk about practicalities.
The Government are forcing councils to increase council tax while simultaneously forcing them to make cuts. They are passing on the responsibility of funding the cost of covid to our local councils, and breaking the promise made to them at the start of the pandemic that they could spend “whatever it takes.” In the next few weeks, councillors in Hounslow and across the country are having to make incredibly hard decisions, on top of the many years of cuts that they have already had to make. In Hounslow, those cuts have meant virtually closing all youth services, and cutting social care when the need for care is growing. These are decisions that no councillor was elected to make, but which are forced on my council, in my constituency, thanks to a roughly 80% reduction over 10 years to the central Government grant, which once made up half of Hounslow’s income.
Even before covid, Hounslow councillors were going have to find £6 million of savings for this coming year, and £12 million for the next. They were—and still are— having to consider further cutting social care provision, as well as so-called back-office roles, which actually have an impact on the frontline, because these are the people who ensure that services change as conditions change; they are usually central to ensuring that the council is efficient, which is something that all taxpayers expect. On top of this, Hounslow has had to fund £20 million of additional spend on covid costs, as well as loss of business rates and other income.
Up to one in three families in Hounslow includes someone working at Heathrow, so job losses have had a massive impact and family incomes have been devastated. The Government’s covid grants have hardly touched the sides of the costs of responding to the community needs caused by covid. Those costs include the community hub to identify and support those who are isolated and vulnerable in order to ensure that they have food, medicines and other support. Hounslow has provided financial support to those who have lost income and, because there has been a devastating loss of income, the council has developed a “cornerstones of recovery” plan, which supports people into alternative work, helps with establishing small businesses and provides community support. But there are also many indirect costs.
Covid will leave a legacy in terms of poverty, employment, homelessness, the education gap and increased demand in social care, which will last for many years to come. The Government should work in partnership with councils and fully support the costs that they have incurred. Instead of hitting families with a triple hammer blow of council tax hikes, pay freezes, and cuts to universal credit and council services, Labour would act to secure our economy, protect our NHS and rebuild our country.
I pay tribute to everyone who has taken part in today’s debate. There have been excellent contributions from Labour Members, who understand the devasting impact of broken promises from this Government on the communities they serve.
It is worth repeating that in March the Local Government Secretary told local leaders that the Government would do “whatever it takes” to support councils during this pandemic. Come May, he broke that promise and said that councils would not be fully reimbursed. We have heard of the huge package that the Government have put into local councils. What the Government fail to mention is the cross-party letters that the Secretary of State has received from leaders telling him that that is not enough and that he should honour his promise. Government Members talk about business support, but not the businesses they fail to support; they talk about the discretionary support for those who have to self-isolate, but not about the thousands they did not support.
As we have heard today, the Government want to present their council tax hike as a choice, but it is not. We do not have to be economists to realise that this is the wrong time to force councils to raise council tax and ask hard-pressed families to pay for Government failures. The Secretary of State knows full well that his broken promise to do whatever is necessary to support councils will force local leaders to raise council tax to protect vital services. Councils of all political stripes across the country will raise council tax to keep services running and get their communities through this pandemic. They are being punished for this Government’s broken promises—punished for doing right by their communities and punished for Government failures.
Local authorities are still reeling from the £15 billion of cuts over the last decade. We have heard a lot of Tory Members blame Labour councils for raising council tax. As we have heard from many Labour Members, council budgets have been cut by over 50% in the last decade. Councils will have no choice, but the Government had a choice—they had a choice, and they took the decision to cut council budgets. That left councils less financially resilient going into this pandemic, precisely because it left them more reliant on business rates and council tax. As we know, those revenues vanished during lockdown. The Secretary of State ought to have known that before he made a promise to compensate councils—a promise he has continually failed to keep.
It need not have been this way. This is a Conservative Government who have wasted tens of billions of pounds of public money on a test and trace system that does not work—a Conservative Government who handed out crony contracts to their friends for PPE that did not work. It will be families picking up the tab for those broken promises and stuck with a regressive tax rise through the back door at the worst possible time.
As my hon. Friend the Member for Croydon North (Steve Reed) told us, the Government’s council tax hike will increase regional inequality and do precisely the opposite of uniting and levelling up our country. The Conservative Government are dividing communities when they should be bringing communities together. This rise will hit families in all areas, but it will hit the north-west and the north-east particularly hard. A 5% increase in Surrey raises £38 million, while a 5% increase in Blackburn raises only £2.8 million. I pay tribute to my hon. Friends the Members for Sheffield, Brightside and Hillsborough (Gill Furniss), for Denton and Reddish (Andrew Gwynne), for Manchester, Withington (Jeff Smith) and for Hartlepool (Mike Hill) for raising that point—something that was missed by the hon. Member for Bury North (James Daly). In marked contrast, we heard contributions from lots of new Conservative Members from those regions, including the hon. Member, who sought to defend the hike. I am sure their constituents will demand to know why they are prepared to defend and vote for these rises.
Happily, though, there is still time for those Members to do what is right and oppose these hikes, just as there is still time for the Government to think again, scrap the planned rise and stand by their pledge to stand behind councils. A tax rise now will see families up and down the country worrying about paying the bills and keeping food on the table. Businesses will worry about how they will keep their doors open with fewer customers. Councils will worry about protecting their services. I urge the Government to change course now so we can secure our economy, protect our NHS and begin to rebuild our country.
I appreciate that this has been a contentious debate, but may I start by expressing my huge appreciation for the incredible work that councils across the country have been doing to help lead the response to the pandemic? They have been at the frontline of the response in areas such as social care, testing and ensuring public safety, and they have continued to do an outstanding job in delivering the day-to-day services that we all rely on so much, including waste collection, highways maintenance, park management and so much more. May I also join my hon. Friend the Member for St Austell and Newquay (Steve Double) in praising parish and town councils, which have worked so hard over the course of this year to deliver their services?
Unfortunately, what we have heard today is an Opposition who completely misunderstand some of the basic rules of local government finance. The premise of their argument seems to be that the Government are somehow forcing councils to increase council tax by failing to provide adequate support in response to the pandemic. However, if we step back and look at the basic facts, we will see that nothing could be further from the truth.
If Members look at councils’ self-reported figures to our Department, which project that cost pressures for covid total £6.9 billion, and compare that with the £8 billion that we have already provided to councils since March, they will see that we have provided them with £1 billion more than they are spending in response to this pandemic. On top of that, we have provided a business rates holiday worth about £10 billion to retail, hospitality and leisure industries. We have also given councils over £17 billion to provide grants to thousands of businesses across the country, and we have seen some incredible work from councils in getting those grants directly to affected businesses. We have also introduced a sales, fees and charges scheme, supported leisure centres and supported councils with local tax losses. Councils will continue to receive funding through the contain outbreak management fund, to tackle the spread of the virus. That is worth over £225 million a month. We are backing local government all the way with the necessary funding now and into the future.
Does my hon. Friend agree that it is welcome that today Hyndburn Borough Council received an extra £492,000 to help with the community response? Does he also agree that it is important that our residents get the bang for their buck and that the basics get done, such as streets being cleaned, bins emptied and empty buildings on our high streets restored to their former glory?
My hon. Friend is absolutely right that councils should be delivering efficient services with the settlement that they have received from this Government.
If we look at the provisional settlement that the Secretary of State published on 17 December, we see a 4.5% cash-terms increase in core spending power—a real-terms increase for the next financial year. We have also committed at least £3 billion of additional help to councils for next year. That includes the extension of the sales, fees and charges guarantee scheme, which we know has been a lifeline to so many councils during this pandemic. Our commitment to support councils is stronger than ever, and we will ensure that they have the resources they need to deliver first-class public services.
May I thank Members from both sides of the House for their contributions to this debate? I appreciate that it has been hotly contested and contentions, but some important points have been raised. I was surprised, however, to see numerous Opposition Members stand up and say how much they disagreed with the Government’s proposal, given that so many of their councils have not even bothered to respond to our consultation. The hon. Member for West Ham (Ms Brown) said how much she and her council disagreed with it, but Labour-run Newham Council has not responded to our consultation on council tax. The hon. Member for Slough (Mr Dhesi) told us how strongly he and his council feel about this issue, but it has not responded to our consultation, either. Perhaps that is because it welcomes fully the 3.9% increase in core spending power that it will receive next year. The hon. Member for Westmorland and Lonsdale (Tim Farron) told us how much he and his local Lib Dem council did not support it, but it has also not bothered to respond to the consultation. It is typical of a Lib Dem administration that it stands up, shouts from the sidelines and fails to do the necessary work.
It might be because the Government completely ignore them. Durham County Council has lost 40% of its budget—£232 million—in the past 10 years. Under the proposed council tax rises, its limited council tax base will limit what it can raise compared with southern councils. How can that be right, in terms of moving money from the north to the south?
I do not see how it is right for the right hon. Gentleman’s local council to spend millions of pounds on doing up an office building and installing a roof terrace during the middle of the covid pandemic. I shall come to his point about council tax redistribution in a moment.
The hon. Member for Garston and Halewood (Maria Eagle) talked about Liverpool City Council being forced to raise council tax. That is not the case; councils have a choice. Liverpool has been campaigning to have a higher council tax—
The Opposition motion calls on the Government to drop
“plans to force local councils to increase council tax”—
another complete misunderstanding of the system of local government finance. Decisions on council tax levels are, of course, for local councils themselves. We are allowing councils the flexibility to raise council tax up to the ceiling that we have set, with a 2% council tax referendum limit—a ceiling that many Labour councils have been asking us to raise—and an additional 3% for adult social care responsibilities.
We are also giving councils the flexibility to defer rises in the adult social care precept for next year, if that is what councils locally decide and if local circumstances require that. Vitally, we are also providing councils with £670 million of new funding to enable them to continue to reduce council tax bills next year for those least able to pay—a point that was made so well by my hon. Friend the Member for East Surrey (Claire Coutinho).
We on the Government side of the House trust councils to make the right decisions on council tax; the Labour party cannot even persuade its own councils, which have been writing to us to ask for greater flexibility so that they can raise council tax even more. The Labour party cannot even persuade the Labour group on the LGA, which would see the cap on council tax rises scrapped altogether, as my hon. Friend the Member for Dudley South (Mike Wood) pointed out.
Several Members made points about the Government’s record on council tax. My hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) put it very well: under the Labour Government, council tax doubled, it has trebled in Wales and the Labour Mayor of London wants to raise it by 10%, whereas under the Conservatives it has fallen in real terms since 2010. We have introduced council tax referendums, which put an end to the crude universal capping system of the past; we put in place voluntary council tax freeze schemes for five years, which helped to deliver the lowest average increases across England since council tax was introduced; we have introduced local council tax support schemes, requiring councils to set up schemes to help those least able to pay; and we have given councils flexibility over discounts and exemptions and helped them to better manage local housing markets through the introduction of the empty homes premium.
A number of Members raised the issue of social care and were absolutely right to do so. We are funding councils for social care into the future, as my hon. Friend the Member for Dudley South pointed out. The provisional local government finance settlement for next year will provide councils with more than £1 billion of additional funding for social care next year, including £300 million of new grant funding. That is in addition to the £790 million that can be raised through the adult social care precept, if councils decide to. That is, of course, on top of the £1 billion social care grant announced last year, which is being maintained in line with our manifesto commitment.
I was surprised to hear the hon. Members for Nottingham South (Lilian Greenwood), for Worsley and Eccles South (Barbara Keeley) and for Denton and Reddish (Andrew Gwynne)—the former shadow Secretary of State, for whom I have huge respect—all talk about the social care precept raising money in the wrong places. They obviously have not studied the detail of the settlement, which says clearly that we have put aside £240 million to equalise the differences in adult social care precepts. I am afraid they just have not read the detail of the settlement. My hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) pointed out the pressures on household budgets, which are exactly why we have introduced the £670 million scheme.
The Opposition misunderstand and misunderstood the local government finance system. They cannot grasp the fact that it allocated over £1 billion more to local government than councils are spending in response to the pandemic. We take no lectures from a party that doubled council tax when in office and have trebled it in Wales. We are ensuring that councils have the resources they need to come out of this pandemic stronger, and that is why we are supporting councils with a £2.2 billion rise in core spending power and £1.5 billion of extra support to help with covid costs.
We are giving councils the flexibility to defer any increases next year if they believe it is right for their community. We are protecting residents from the sort of outrageous tax hikes that were so commonplace under the last Labour Government. Councils have done an incredible job of responding throughout the pandemic, and we are standing behind them.
I should point out that in current circumstances, when hardly anyone is here, there is no question of my being able to decide this Division on the voices, as there are so few representative voices present. Therefore, I call a Division.
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.
The list of Member currently certified as eligible for a proxy vote, and of the Members nominated as their proxy, is published at the end of today’s debates.