We now come to the two motions on local government finance, which will be debated together. The Order Paper notes that these instruments have not yet been considered by the Select Committee on Statutory Instruments, but I can happily inform the House that they have now been considered. Gloriana. I call the Secretary of State to move the first of the two motions.
I beg to move,
That the Local Government Finance Report (England) 2022–23 (HC 1080), which was laid before this House on 7 February, be approved.
The House should also note that the Local Government Finance Report has since been updated with a small correction on page 14. Like you, Mr Deputy Speaker, I am grateful to the Select Committee on Statutory Instruments for its careful consideration of these reports.
Before I turn to the details of the reports, may I say a brief word of thanks to my right hon. Friend the Member for Tamworth (Christopher Pincher), who until very recently served as Minister for Housing and Planning? We will be starved of his eloquence at the Dispatch Box, because he has been translated to the Whips Office, but I know that that eloquence will not be wasted on my right hon. and hon. Friends, who will benefit from his wisdom and gentle guidance as they consider which Lobby to enter in the light of all the delicate matters that we discuss.
I should add that it was on the watch of my right hon. Friend that the number of first-time buyers in the country reached a record level, and that the stewardship he displayed, and also the imagination and attention to detail, were those of a model Minister. He will be missed. I should also add that although his shoes are both difficult to fill and always highly polished, we are nevertheless very fortunate to have in the Minister for Housing, my right hon. Friend the Member for Pudsey (Stuart Andrew), an excellent new addition to our departmental team. We welcome him to his place, and we know that he is a doughty defender of the interests of the north of England, of local government overall, and of those who aspire to live in and to own a decent home. I am therefore grateful for the fact that he has joined the team.
The local government finance settlement makes available, to local government in England, core spending power of £54.1 billion for 2022-23. This is an increase of £3.7 billion on 2021-22, a real-terms increase of 4.5%.
It would be remiss of me not to acknowledge that the considerable eloquence of the hon. Member for Wigan (Lisa Nandy) will be deployed inter alia in drawing attention to the years from 2010 to 2017-18 when there were necessary economies in local government spending. I suspect, although I cannot be certain, that she will for partisan reasons, entirely fairly, seek to contrast the restraint in public spending during those years with the increases that we are now making to suggest that the increases do not make up for the previous restrictions on public spending, but it is impossible to consider those restrictions without appreciating the context of the economic circumstances that the coalition Government inherited in 2010—I do not wish to make any partisan points—and that required us to deal with the inevitable consequences of the financial crash.
I am not going to delve into history; I would just like to talk about the pandemic of the last couple of years. In my constituency, Newham Council is about £10 million shy because of covid spending, which will have ongoing consequences. Much of it has come from revenue accounts for temporary accommodation. Newham has the largest housing list in the country and the second highest rate of child poverty, yet we are still having to cope with covid costs of £10 million and counting without any respite from the Treasury.
The hon. Lady makes a series of important points. Newham Council faces serious pressures for a variety of reasons, as do so many in local government. This provides me with an opportunity to draw attention to, and to praise, the efforts not only of elected councillors but of those who work in local government in Newham and elsewhere who, in dealing with the strains of covid over the past two years, have shown immense determination, energy and forbearance.
Whichever party had been in power, these covid costs would have been inevitable because of the nature of the pandemic. I would argue that the big choices made by the Prime Minister on the vaccination programme and the approach we took immediately before Christmas in the wake of the omicron wave have been vindicated by events. I would also argue that the Chancellor of the Exchequer’s adoption of the furlough programme ensured that our economy weathered the storm more effectively than other economies did. Because of those big decisions made by the Chancellor and the Prime Minister, we are now in a position where the spending review can increase expenditure by 4.5% in real terms.
I am grateful to the right hon. Gentleman for mentioning how very difficult it has been to be a councillor or officer in local government over the past two years. They have had a terrible job, but it is not made easier when they were told that their costs would be covered only to find themselves £10 million shy and counting. I hope he will take that away and think about how he can give respite.
Absolutely. The position of those who are served by Newham Council has been very clearly outlined by the hon. Lady. Within the context of the settlement we are debating today, we will look at all the additional support we can give to those who are dealing with the consequences of covid.
My hon. Friend makes an important point, but it is vital not to pit urban against rural or Dorset against London. In the debate on the police grant report, he and my hon. Friend the Member for South Dorset (Richard Drax) drew attention to particular crime challenges that Dorset faces, with major cities such as Bournemouth in the broader Dorset area, issues of county lines and rurality, and pressure on public services overall. They were absolutely right to do so. We have sought to ensure that in the settlement we provide Dorset’s police and fire and rescue service with appropriate resource, but of course we keep things constantly under review.
For the benefit of the House, I will briefly run through the details of the funding settlement. Overall, the settlement funding assessment—in essence, what used to be the revenue support grant allocation—comes to some £14,882,000,000, a truly significant amount and a significant increase. In the local government finance settlement, we are also increasing our compensation to local authorities for under-indexing the business rates multiplier. We are making sure that local authorities have the opportunity to raise the council tax precept by 2% on the social care precept and that they benefit from an improved better care fund from the new homes bonus. The rural services delivery grant, which helps to address some of the issues that my hon. Friend the Member for West Dorset (Chris Loder) so ably raised, is being held at £85 million.
Perhaps the two most substantial changes are the increase in the social care grant, to take account of the particular pressures on local authorities as a result of the challenges that adult social care services face, and the additional £822 million that has been made available in a specific services grant. That money is unringfenced, and it is in keeping with the direction of our “Levelling Up” White Paper and of the Government overall in recognising that, wherever possible, those in local government are best equipped to meet local needs. That principle of devolution and local discretion will be in our mind as we consider how to reform local government finance further in future.
The right hon. Gentleman is being generous in giving way. He will know that Salford City Council has faced budget cuts of £232 million since 2010 and has stated that the approach to funding that he outlines does not adequately reflect the demand that it faces. Does he agree that true levelling up requires funding to meet actual demand, and that it requires differentials for poverty, inequality and council tax payers’ ability to pay to be effectively factored into Government grant methodology?
The hon. Lady makes an important point. As we review future reforms to local government finance, I look forward to working with her and other colleagues to make sure that her point about deprivation, which affects a considerable number of her constituents, is reflected in our overall approach. It is important to say that the most relatively deprived areas of England—those in the upper decile of the index of multiple deprivation —will receive 14% more per dwelling in available resource through this year’s settlement than the least deprived areas. The settlement serves the cause of social justice with a redistribution towards poorer areas, but of course we keep these things under review.
Why does the Secretary of State think that the Conservative chair of the Local Government Association, James Jamieson, has criticised the settlement for not including sufficient funding to tackle the considerable additional pressures on local services, particularly with respect to vulnerable adults and children?
I talked to James Jamieson this morning, as I do most weeks. One reason why he leads the LGA is that he is a brilliant Conservative council leader. If James were here, I think he would say he was not criticising but encouraging us, as any friend would, to do even better. It is striking that the welcome that the local government sector gave this year’s funding settlement was broader, deeper and more cordial than it has been for some years. Politics being politics, any sector will always, entirely understandably, want its champion to be someone who can ask for more.
I note that the Secretary of State does not want to talk about what has happened in the past, but my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey) raised a point about need. It was no accident that the Government took the needs formula out of the local government settlement, meaning that areas such as mine and hers, which have high demand for social services—County Durham has over 900 looked-after children in care—have been the net losers. I am sorry, but it is not about pitting cities or areas against one another; it is just a matter of fact that certain areas have higher demands because of their demographics. That has to be taken into consideration, but the Secretary of State’s Government took the needs formula out during the coalition era.
The right hon. Gentleman makes a number of points and ensuring that I addressed them all would mean that I would be here well after the moment of interruption. We could discuss the difficult economic situation that the coalition Government inherited in 2010. We could discuss the way that we unringfenced funding to ensure that local authorities could respond to that. We could discuss the particular way in which some local authorities, irrespective of political colour, were able to use their resources more effectively. We could discuss the way in which interventions beyond direct local government funding under the coalition Government sought to address deprivation. It is striking, for example, that between 2010 and 2014 the Education Secretary—whoever he was—managed to introduce a pupil premium that saw millions flowing to the very poorest students, an initiative that had not been introduced under the previous Labour Government and that helped to close the gap between advantaged and disadvantaged children.
The right hon. Member for North Durham (Mr Jones) is an brilliant campaigner for citizens in Stanley and North Durham. He makes his case effectively and he is right to remind us that when we look at local government finance it is important to bear in mind need and deprivation. That is what we are doing as we look overall at how we can review local government funding later on.
The Secretary of State just does not get it. Those were not options; they were political choices taken by the coalition Government. The point that my hon. Friend the Member for Salford and Eccles and I are making is that on issues such as looked-after children and adult social care—he should remember that in County Durham life expectancy has gone down in the past 10 years—it is not optional for councils to intervene. They have a statutory obligation to do so and if that is not taken into account in the formula, councils in areas such as County Durham and Salford and Eccles will always be at a disadvantage because the right hon. Gentleman’s Government, of which he is a part, took that out of the funding formula.
Again, the hon. Gentleman—my apologies, the right hon. Gentleman, and quite right too —makes three important points. On looked-after children, the whole position that we have had to take over the past 10 years on children in social care has been driven by a variety of factors that mean that we deal with the challenges of looked-after children and children at risk of abuse and neglect in a more intense fashion. That is why Josh MacAlister’s review of children in social care is so important and I hope that when it is published the right hon. Gentleman will welcome it.
On adult social care, the right hon. Gentleman is absolutely right that there is a greater degree of pressure, not just because we have an ageing population, although I note his important point about life expectancy in County Durham, but because we have more people moving into adulthood who, thanks to advances in medical care, also require social care. That is why in this settlement local authorities can make use of more than £1 billion of additional resource specifically for social care. On top of that funding, as was outlined in the presentation of the White Paper earlier today by my hon. Friend the Minister for Health, £162 million in adult social care reform funding is also being allocated to help local authorities.
I could recognise the valuable approach the coalition Government took under the then Secretary of State in removing ringfences, but we can contrast that with the number of pots that are being created that local authorities have to bid into, which seems like ringfencing by another name. The Secretary of State mentioned Councillor Jamieson, the chair of the LGA, who said at the Select Committee that we cannot sort out local government finance until we sort out social care funding. The LGA is looking for a big solution and it is disappointed that the levy highlighted as solving the problem actually gives no mainstream money to local councils to deliver important social care services.
The Chair of the Levelling Up, Housing and Communities Committee makes two very important points. First, there is the tension, which always exists, between ensuring that we devolve as much funding as possible and simplify the funding landscape. There is also the need from time to time to respond to specific challenges. The one relates to the other, because local government, as he made rightly clear in his second point, wants additional funding for adult social care made available to it, and worries, for well-rehearsed reasons, that much of the additional funding will be devoted to the NHS’s immediate needs rather than long-term reform. I believe that the White Paper introduced earlier today on the integration of adult social care between the NHS and local government to an even greater degree will help address those issues. However, I recognise that they are serious ones and that the House will want to examine both the White Paper and any legislation that we introduce in due course.
I am conscious that many Members across the House will want to use the debate both to praise those in local government and to make specific cases for future funding reform. However, the settlement that we have secured marks a real recognition of the importance of local government and the Government’s determination to ensure that we strengthen its hand in dealing with the social ills that our country faces. That is why I commend the increase in the local government finance settlement to the House.
I enjoyed the Secretary of State’s debate with himself on what I was about to say; let me try to enlighten him. I must say, having treated us to a lecture about the causes of the global financial crash and the reasons for the deep and harsh cuts inflicted on our communities in the past 12 years of Conservative Government, he struck a different tone from that struck yesterday with northern leaders at the convention of the north. When he was challenged by the Liverpool Echo about whether the Government accepted that they—and he personally—played a role in the problems that he has been dispatched to solve, he said:
“You can never know with…hindsight whether”
those decisions “were judged just right”. I will leave it to Members to decide whether the Secretary of State is saying one thing to the House and another to the north of England. To misquote Eminem, “Will the real Secretary of State please stand up?”
The trouble is that the core spending power that the Secretary of State has trumpeted in press releases comes from our pockets. Bills have gone up and shopping costs more, so, as he should well know, people across the country are trying to keep their heads above water. Surely he can see the problem with the settlement that he has brought to the House today. For a decade, people have had money stripped out of their places and taken out of their pockets by the Government. The council tax rebate does not compensate us for that; nor does his settlement for councils. He has given us a partial refund on our money and asked us to be grateful.
Unsurprisingly, the Secretary of State was not asking people to be grateful for that last week when he was touring the country trying to sell his White Paper to a sceptical public. He did not say to people in Grimsby, Blackpool and Liverpool that this is the offer on the table from the Government: they can pay more to stand still or pay the same and get less. For all the gloss on this announcement, he is continuing to cut the central fund to councils in real terms, so, if places want to get the spending power that he promised, taxes will have to go up. That is a direct consequence of the decisions made by Ministers and the Tory Government.
Does my hon. Friend agree that it is actually worse than that? For local authority funding, in the last 10 years—we continue to have it today—we have had a movement away from central Government funding and on to local council taxpayers, and areas such as County Durham, where 56% of properties are in band A, are severely limited in their ability to raise that revenue, whereas areas such as Surrey can raise a lot more. The net effect is a movement of resources away from areas such as County Durham to places such as Surrey.
My right hon. Friend is exactly right. Worse than that, it is at a time when people can least afford to bear it. Walk into any community in any part of the country and we find people talking about the impact of runaway inflation under the Government and their inability to pay their gas and electricity bills and meet the costs of the weekly shop. How can the Secretary of State look them in the eye and tell them that he is forcing council tax rises on them of 3% in just a few months’ time, and that is on top of the increases in national insurance that his Government are so determined to bring in?
In 2019, the Secretary of State promised that people will keep more of what they earn and more will be invested in public services. That was an election promise, and it turns out that neither of those things is true. In the past seven years, the proportion of funding for local councils from central Government has nearly halved. The Government are doing less, so people are having to do more, and they have made people pay £10 billion more in council tax this decade.
Just yesterday, the Secretary of State was in Liverpool telling our northern leaders that they should
“judge us on our actions in the future.”
How about we judge him on his actions right now? How on earth did he get here—a Conservative politician, who once promised that hard-working people would keep more of what they earn under a Conservative Government, throwing new taxes on struggling families like confetti and treating the British public like a cash machine? This is the consequence of a high-tax, low-growth Government, and in every community people are paying the highest possible price for this Tory Government.
How can the Government have got their priorities so wrong? This week, BP announced £10 billion in profits, but while we said that oil and gas companies should pay more in tax so people could keep more of their own money—remember that phrase?—the Secretary of State backs the oil giants, and all this Government have done is offer families a dodgy loan to ease the pain now and to be paid back later. They have stripped £15 billion from our councils over the last decade, and in the last couple of weeks, with one stroke of a pen, they wrote off £13 billion of our money to fraudsters and dodgy contractors.
Where is the investment we were promised? Even after getting levelling-up funding, in 144 areas, people are £50 million worse off. North-east Lincolnshire, Dudley and Hyndburn have all lost under his deal. Blackpool, which the Secretary of State visited last week—and it is a town, by the way, not a city, if he wants to let the Prime Minister know—is down 1.92% in real-terms in funding to its council. Does he not understand what councils are dealing with? We are still in a pandemic, and these are the people who stepped up to run test and trace services when the Government failed. These are the heroic people—the council workers, the public health workers, the NHS workers—who rolled out the vaccine in record time.
Two days ago, the Government cut the public health grant in real terms, telling councils to pick up the slack. These are the same councils that have a half a billion pound funding shortfall for children with special educational needs. Remember the Sure Starts that the right hon. Gentleman closed—over 1,000 of them across the country—when he was the Education Secretary? Remember the time he lost a High Court battle for slashing funding for nursery children? On his watch, he set in train a process that saw spending on vulnerable children fall by half over this decade.
Actions have consequences. The Secretary of State said yesterday that he understood why we would be cynical about a Government Minister coming and promising us the earth. Well, we are not cynical; we are furious. We are still paying for what he did as Education Secretary, so when he rocks up and tells us that we can have less to do more, and talks about renaissance Florence and the rise and fall of the Roman empire, we have had enough. Our local leaders, meanwhile, are living in the real world—grappling with climate change and rising transport costs—and having to compensate for what the Government have taken from us and our communities, with all the added costs that come from inflation at a 30-year high.
The Secretary of State must know that by far the biggest factor driving up costs is the crippling cost of social care. We have just had an exchange about that in the House, because it affects every single community in this country. However, this is also at the heart of levelling up, because it is our towns that are ageing as good jobs have left and young people have had to get out to get on. These are the places where pressure on social care is most acute, but they are also the places where property prices are lower and the rise in council tax that he is promoting and forcing on people across this country produces the least. When his Department steps down, as it is doing today, these are the places least able to step up.
That is how we get a settlement in which parts of this country have fallen further and further behind while others have pulled further and further ahead. This is what he was tasked with fixing. That is before we even consider that, for six years now, the Government have been wasting our time, announcing and re-announcing intentions to review the system, yet all we have again for the fourth year in a row is a one-year settlement.
“Levelling up requires a focused long-term plan of action”.
Those are not my words, Mr Speaker, but those of the Secretary of State in his White Paper that he published last week.
We are getting sick and tired of the spin and the hype. Levelling up surely has to mean levelling with us and being honest about what this Government are doing. We are getting big promises and nothing to show for it. People are not fools, though; they can see through the shine, through the press releases, and see that life is getting harder and harder under this Conservative Government. Today should have been the day when the Secretary of State set that right, but instead he came with more of the hype, more of the slogans and more of the spin. It will not do.
It is a pleasure to contribute to this debate and a pleasure to be here with my constituency neighbour, my hon. Friend the Member for South Dorset (Richard Drax). We are here today to represent Dorset and to make sure that the Government take on board the priority of Dorset, particularly for me as the Member for West Dorset.
I was busy looking through the revenue support grant spreadsheet the other day when it had just been announced to see whether Dorset was in it. I did not see it. I thought that that was an error, but, regrettably, Dorset does not feature in the revenue support grant. My neighbouring colleagues and I have been looking for a meeting with the Secretary of State for a little while now. I am very grateful that there has been a bit of a flurry of action and that, hopefully, we will have that meeting very soon, but I just want to say how disappointed we are that, after the draft finance settlement was put forward, and despite my colleagues and I hoping to meet Ministers and, indeed, the Secretary of State, we have not been able to do so in order to make the case on behalf of the residents, not just of West Dorset but of the wider Dorset Council area.
The last time that I had a look, Dorset had the second highest council tax in the country at band E level—£2,233 for a band E property before any discounts, with a revenue support grant of zero. Wandsworth’s band E council tax is £845 per annum, yet it has a revenue support grant of £24.3 million. In Dorset, 30% of the population is over 65 years old, with all of the associated social care costs, difficulties and challenges that go with it, compared with Wandsworth, where only 10% of the population is over 65. London receives 10 times the amount per passenger journey than we do in Dorset to support local transport and bus services. Indeed, only more recently, we hear of billions more going to support Transport for London, yet we are struggling in Dorset to run a bus service.
In Dorset, we have a railway line with the worst frequency in the country. I was looking through this wonderful levelling up document, which is very good and I commend it to the House, but, although it contains many excellent initiatives for the country, regrettably there is not much in there for Dorset. I say to the Secretary of State that we would be very grateful if he considered the letter that the Leader of the Council sent to him just a week or two ago to help us with this issue, particularly in terms of the local plan. That would be much appreciated. Also, in terms of future levelling-up plans, any influence he might bring to bear ahead of a future six-year contract to be signed with the DFT and one of the local railway companies to operate that railway line with the worst frequency in the country would be much welcomed.
I shall conclude, because I know that my hon. Friend the Member for South Dorset wants to speak and I do not want to steal any of his thunder. The point that I shall repeat for the House is that whilst the perception from many in the House is that Dorset is a well-off community—a chocolate-box area with plenty of lovely thatched houses—we have more than our fair share of difficulties. Conservative-led Dorset Council has done an excellent job managing those difficulties over the last couple of years and I think it is fair to say that we are very grateful to the Department for many of the things that have happened in recent times.
I particularly welcome the fact that, as I understand it, the Dorset local enterprise partnership is under review. We would be very grateful if that could be expedited imminently; it will run out of money with which to operate quite soon. As the Minister knows, I am a clear advocate of change because I do not think it has delivered much, and I think the effectiveness of the LEP is an indicator of how much or little there may be in the levelling-up plan to benefit rural Dorset.
I will be supporting my right hon. Friend the Secretary of State’s motion today. I understand that he has had many difficult things to navigate, but I want to put clearly on the record that it is not acceptable for us, going forward as Dorset MPs, and particularly for me, as the Member for rural West Dorset, that we continually end up in this place, where we have some of the highest council tax rates in the country, with zero revenue support grant, when others, who have some of the lowest council tax rates in the country, have considerable millions of pounds of support.
The Secretary of State is right: the settlement this year is better than in some previous years. The core spending power is up by 7.4%, though I think his definition of inflation is somewhat different from mine. The scrutiny unit of the House of Commons told me that the Bank of England’s inflation rate is 5.4%, so that does not give quite such a big increase in the real-terms rise in core spending as the Secretary of State indicated. But it has to be set against the background that since 2010, local government has had the biggest cuts of any part of the public sector.
The Secretary of State was explaining how the coalition Government had to respond to a financial crisis; but there were choices in the way that response was made. One of the choices was to single out local government for those spending cuts. Perhaps the suspicion was that it was easier to pass the responsibility on to others to decide which bits of the public sector were to be cut—libraries, parks or bus services, or whatever else local authorities had to resort to in order to reduce their expenditure.
It is also, I think, uncontested that the poorest parts of our country had the biggest cuts. That is a reality with the Government grant. The Secretary of State made the point—he produced the figures—that the poorest areas have done slightly better this year. I accept that: I think the figures show it, but it is slightly better on top of substantially worse situations for the previous 10 years, and they are having to recover from that. I will return to the issue of levelling up later.
For my own city of Sheffield, the grant cut has meant that £3 billion-worth of grant in real terms has been lost since 2010. That is an awful lot of money when thinking about what could have been done with that in terms of levelling up. Yes, the situation has been better since 2015. Government figures show that spending power has gone up by 2.1% in real terms. Actually, per head, though, it has fallen by 2.2%. So even since 2015, real spending power per head has fallen across the country.
Some significant themes have continued this year that we ought to reflect on for the longer term. The Secretary of State has been talking about the longer term; I think it is right that we should view these settlements in a longer-term context for the future. First, council tax in my own city of Sheffield was 41% of council spending in 2010; it is now 59%. That is a really significant switch of where the money comes from. Spending on social care is now two thirds, as opposed to about half. Again, that is a switch in what the money is spent on. My real concern is that although councils have properly responded—not just in Sheffield, but all over the country —to the pressures in social care and given it a priority, for very obvious reasons, it means that all the other day-to-day essential services that councils provide have been cut even more. Many libraries across the country are shut; the services in parks have been reduced; cuts have been made to bus services right across the country—we have heard Conservative Members complaining about those; money has been cut from road safety schemes; and cuts have been made in terms of the availability of public health inspectors to go into food shops. One issue I know the Secretary of State is really concerned about is planning departments, where a significant cut has been made to resources. There is a real democratic issue here: most people do not receive services from social care, but the public do, as a whole, look at their street cleaning, parks, libraries, buses and other important services, and they are paying more council tax—I have just described the extra money that comes from council tax—and getting less for it. There is a real challenge to our whole democratic system if we allow that to continue. I think the Secretary of State probably recognises that and we need to address it.
In the face of that, councils have done remarkably well. They have probably produced more efficiency savings than the rest of Government put together; if the rest of Government worked as well as councils have done, we would all be in a much better place. Most councils, like Sheffield’s, have used reserves very prudently; they are only able to get through the social services crisis we are in because of the reserves we have. Great credit must go to council officers and councils across the country, particularly to those in my city of Sheffield. Councils have also done a remarkable job during covid, be it on food parcels for the elderly and people who are shielding, on working with the health service jointly to deliver effective services, or through directors of public health doing test and trace far more efficiently and effectively than that the national system, at far less cost. We can be proud of what local government has done in those circumstances.
There were one or two disappointments about the settlements, but to put it slightly more positively I will call them “challenges for the future”. First, this is a single-year settlement. Local councils want multi-year settlements; we can all agree on the reasons why, and that is important. Secondly, on fair funding, it cannot be right that we have a settlement here based on 2014 data, with some of it going back to 2000. I accept the challenge; one person’s fair funding is another person’s unfair funding. That is going to be an interesting challenge for the Secretary of State, but I would say that levelling up has to be part of a fair funding review. It cannot be about individual bits of money; levelling up has to be about mainstream core funding and getting the distribution of that right to reflect the need for levelling up.
We have to get a new source of funding for social care. We have to get money from a levy or whatever source to come in. I welcome the attempt to integrate health and social care. I do not think it should be brought into one giant service; getting local councils and the health service to work together is right. They have done brilliantly well in Sheffield during the pandemic, with the clinical commissioning group, the director of public health and the director of social care working together. One of my worries is that in the reforms to the health system we do away with that place-based approach that a CCG gives. I welcome the letter that the Secretary of State has just sent and the offer to meet officials. It is really important that that place-based delivery of services—councils and the health service working together at a local level—is maintained. I hope that that is absolutely seen through.
The other two issues are still waiting to be done: business rates reform; and protection for the high street as part of that, with some sort of digital sales tax. When are we going to get it? Everyone seems to think that we ought to have one, but we have not actually got one. I mentioned the level of council tax now—the amount out of the totality of council spending. Council tax is regressive. If we look at the amount people pay compared with the value of their houses as they go up, we see that it is completely disproportionate. So we need a council tax review reform as well as a business rates reform if we are going to deal with this for the future.
Finally, I come to one regret. I look at the public health grant, where there is a 2.8% increase—if inflation is 5.4%, that means a reduction in real terms. The public health service has done a brilliant job, and I give credit to Greg Fell and his team for what they have done in Sheffield, but covid has shown us the health inequalities in our communities that need addressing. Is that cut not therefore a complete mistake at a time when we need more prevention and more attempts to reduce those inequalities?
In Sheffield, if I get on a bus in the west end of the city and go to the east end, life expectancy changes by 10 years. That simply cannot be right. Our public health director and his staff in that service, working with the health service, are key to addressing those problems. It is disappointing that their reward for all the work they did during the pandemic is to see a real-terms cut in their spending.
It is a pleasure to take part in this debate and to follow both the hon. Member for Sheffield South East (Mr Betts) and my hon. Friend the Member for West Dorset (Chris Loder), who is sitting beside me.
I give credit to our leader, Councillor Spencer Flower, and our chief executive, Matt Prosser. I also agree with the hon. Member for Wigan (Lisa Nandy) that we should thank all staff and officers, who have done a fantastic job over the pandemic in particular. I welcome the good news that they are all heading back to their offices now—the sooner the better, frankly.
I have huge respect for my right hon. Friend the Secretary of State, and I know he understands, being a true Conservative, that the best way to raise money is to lower taxes. The sooner we have some really bright blue Tory policies to do that, we will get more money for the Treasury, which can hopefully be better spent for local authorities and all the public services we need to spend money on. Otherwise, we will have to keep raising taxes—as Labour, of course, would do—and the pips will squeak for all of us, but particularly for the less well off, who are struggling, as we all well know.
Dorset, as my hon. Friend the Member for West Dorset has said, sets one of the highest council taxes in the country, and the unfair proportion of it lands on the Dorset council tax payers—a point that has already been made—with precept rises in various areas of council tax. I am grateful to him; we lobbied hard for the one-year settlement and we got more than we expected; we budgeted for between £4 million and £8 million, and we got £10.4 million.
I am going to crack on, because I think there are many colleagues who want to speak; I know the right hon. Gentleman will have something to say later when he is called. We got £10.4 million, for which I am extremely grateful, although some has been ring-fenced and £3.1 million is for one year only.
Statistics are incredibly dull and can be misused, but I will just utter some to my right hon. Friend the Secretary of State for the 2021-22 Budget, to exemplify our particular issue. Our income is 85% from Dorset taxpayers, versus 67% on average for other unitary councils. The business retention rate is 14% for Dorset and 24% on average for other unitary councils. The revenue support grant, as my hon. Friend the Member for West Dorset said, is zero—nul points.
That counters the notion that we have moved to a unitary council, as my right hon. Friend the Secretary of State knows, we have led the way in the country—I know the Government want to go further with other authorities—and we cannot be seen to fail. I emphasise that and ask him to take it into account. So much has been done and so much money has been saved and cut that statutory services are under huge pressure. I know he is aware of that, but let me say it anyway.
The key issue, as we have heard, is that too much is one-off funding, when we need time to plan and far more funding for further ahead: three, four or five-year funding would be fantastic, so that we can plan and have certainty. The unfair distribution of the revenue support grant means that we get none—nil. The business retention rate, as I have said, is lower in Dorset than elsewhere, and the rural authority has additional costs that are not accounted for. That is where the funding formula needs to change.
We also have an accumulated debt of £70 million on the high-needs block for children with special educational needs. The Department for Education’s support is needed to eliminate that debt. For example, one child I know is costing the council £1.5 million to get the care that they need—and rightly so, but that care has to be provided from outside the county and that is costing Dorset Council vast sums of money.
Next year’s budget proposals include a 3% increase in council tax and an almost 1% increase for the social care precept. That means that for adult social care there is a 10% increase of £13 million to £141 million. For children’s services, there is a 4% increase of £2.7 million to £74.5 million—mainly for children in care and for disabled and SEN children. On climate and ecological emergency response, £10 million in capital investment has been put aside over the next five years. Finally, £750,000 will go to support new homes under the registered provider scheme.
Those are all extreme pressures facing a rural constituency such as mine, that of my hon. Friend the Member for West Dorset, and those of other Dorset MPs. Again, my right hon. Friend the Secretary of State for Levelling Up, Housing and Communities is aware of that, and I am grateful because, since my hon. Friend the Member for West Dorset spoke, I understand a meeting has kindly been organised by the Secretary of State’s staff. I look forward to discussing these issues, and more, with him in person, along with the council leader and chief executive.
Before I get into the substance of what I want to say about this settlement, I want to make a couple of remarks to the Secretary of State. There was a debate yesterday in Westminster Hall on local government funding in Merseyside—the Liverpool city region, as we now call it—which was covered by the Under-Secretary of State for Levelling Up, Housing and Communities, the hon. Member for Harborough (Neil O’Brien). In his response, he chose not to answer any of the questions asked by me or my hon. Friends from the city region. The Secretary of State is unfailingly polite and always pays attention to what people say, so I say to him ever so discreetly—of course, no one else can hear what I have to say—that he needs to have a word with the Under-Secretary of State, who should understand that one of the basic requirements of replying to a debate is to respond to what people said during it.
Unfortunately, the local government finance settlement, as others have said, is still 20% lower now than it was in 2012-13. I will return to the implications of that for Knowsley, but I will first make some general comments, some of which have already been made, about the overall implications for local government. As my hon. Friend the Member for Wigan (Lisa Nandy) pointed out, it represents a one-year settlement and, in a typically fluent, well-informed speech, she made it clear why that is unacceptable. I simply add that it is impossible for local government to plan ahead unless local authorities know more than a year ahead—preferably three years—what they will receive in grants. I am sure the Minister and the Secretary of State are well aware that that is an impediment for local authorities, and I hope that they will address it in future settlements.
My hon. Friend also mentioned that the Government promised—if the Government deliver on this, I am sure that it will be welcomed—that the next settlement will better reflect local levels of need. That would be important if it did address the disparities in deprivation between local authorities in different parts of the country, rather than to continue with the shift towards sparsity and population-based measures, which are manifestly unfair on those areas with the greatest need. I therefore ask the Minister—perhaps he will take the time to answer this at some point—to confirm that need will be properly accounted for in any new grant distribution system.
There is also justifiable concern that if Knowsley does not increase council tax by 2.99%, it would forgo permanent funding that the Government might assume will be available when determining future funding allocations. Will the Minister reassure me that the Government will not penalise those local authorities that, for whatever reason, decide that 2.99% is unaffordable to their residents?
I also worry that the settlement will be insufficient to cover inflationary pressures—for example, democratic pressures, legislative cost pressures, and pressures as a result of the health and social care levy on national insurance and energy price rises of up to 50%. As my hon. Friend the Member for Sheffield South East (Mr Betts) pointed out, the general level is already above 5% and could, by the end of the year, be as much as 6%. That will mean that the settlement will be less generous than it appears to be at the moment. Will the Minister again give us some assurance that any additional inflationary pressures that influence the way that the grant will work for local authorities will be considered sympathetically?
The settlement includes funding for new burdens, such as adult social care, children’s social care and home-to-school transport. Unfortunately, however, it is wholly inadequate and will not cover, for example, the £12 million that Knowsley faces as a result of these additional demands.
I turn to the specific implications of the settlement for Knowsley. As the Minister will know, since 2010 Knowsley has had its grant support reduced by £116 million. That figure was referred to in a debate yesterday. The cumulative effect of that on a small borough such as Knowsley—the third most deprived authority in England, by the way—is enormous. It means not only that services that are badly needed by people cannot be extended or grown to meet need—I have referred to some of the pressures that brings—but that people’s life chances are impaired, sometimes irreversibly, by the lack of support that they get. That is nothing to do with any intention on the part of Knowsley; it is simply a matter of the money not being there to do everything that it needs to do. Will the Minister undertake to start the process of reversing that unfair and unacceptable trend whereby areas with high need, such as Knowsley, end up having some of the highest cuts in grant support anywhere in the country?
The picture I have painted so far is one of unrelieved gloom, particularly for Knowsley, so let me make a couple of positive points. First, as my hon. Friend pointed out, the 8.5% increase in core spending power that Knowsley will get is welcome, although, frankly, it does not do anything like address the problem of the £116 million that we have lost over the past decade.
Secondly, despite the crushing loss of grant that we have experienced, Knowsley Council, amazingly, managed to bring about some transformational changes, including the regeneration of Kirby town centre. As a result of the fact that there were years and years of successive private sector owners who failed to regenerate the town centre, the council, very bravely, bought it and is now in the process of wholesale regeneration, which is obvious for all to see. There is also the Shakespeare North project, which I do not know whether the Minister is aware of—probably not.
I am pleased to hear that, so maybe he is not completely a Shakespearean tragedy. The Shakespeare North project, into which, to be fair, the Government have put a substantial amount of investment, is a huge success. I pay tribute to the Government for putting money into the Arts Council, to Knowsley Council for putting in a substantial amount, and to the Liverpool City Region Combined Authority and metro Mayor Steve Rotheram for also contributing. I should also mention the private donors, including Lady Anne Dodd—the widow of Ken Dodd—who put £400,000 into the project for a comedy space.
Knowsley Council has been the driving force behind Shakespeare North, on which it should be congratulated, and much else besides that I do not have time to go into. However, there are important projects still awaiting Government support that we had hoped would come from the levelling-up fund, such as the regeneration of Huyton town centre. Knowsley Council put forward a really good project for regenerating Huyton town centre, and I totally reject the assertion that such projects were selected on merit alone because, frankly, this project would have been far better than some that were funded. As I said yesterday, there is real concern that the levelling-up fund has so far been politically skewed in a way that means Knowsley, yet again, loses out.
Does my right hon. Friend agree that the Government’s fixation on competition for such funding is inefficient and is clearly being used by the Government as a pork barrel? It puts a lot of pressure on councils such as Knowsley Council, which have already faced cuts, to put in the officer time to make such bids. Would it not be better to scrap the whole nonsense of bidding for this type of funding?
My right hon. Friend makes a typically forceful point, and I agree with him.
Frankly, it is pretty grim to say to one local authority, “You have to be set against another authority for any project, and it won’t necessarily be based on the need of the community; rather, it will be based on a political choice that might not reflect that need.” In Knowsley’s case, the decision does not reflect the need.
As I said earlier, Knowsley is the third most deprived borough in England and it received nothing from the levelling-up fund—it was not 0.1%; it was nothing. That cannot possibly reflect a fair distribution of those resources. I made that point to the Minister during yesterday’s Westminster Hall debate, and he did not respond. I hope he will now take this opportunity to do so. I suggest to him—again, he overlooked this yesterday—that he grants a meeting to me and Knowsley Council to discuss what can be done to get the funding we need through the levelling-up fund for the regeneration of Huyton town centre.
There are some small but encouraging signs that the Government might be beginning to recognise the gross unfairness that the last decade has meant for areas such as Knowsley. I give them a small amount of credit for that, but those of us who are more fair-minded recognise the importance of need. The Government are now talking about accepting need as an important part of funding mechanisms, but we do not yet have any evidence to support that assertion.
Finally—I notice you are looking at your watch, Mr Deputy Speaker, so I had better be quick—there was a time when I chaired the local authority finance committee and understood the distribution mechanism then, which was based on multiple regression analysis. I do not know whether the Minister is familiar with that, but I have to confess that I am not so well informed on the current mechanism. I am reminded of Palmerston being asked, many years after the event, to explain the Schleswig-Holstein affair, which was a border dispute between Denmark and Germany. He replied that only three people ever understood it: first, Prince Albert, who by that time was dead; secondly, Bismarck, who by that time had gone mad; and thirdly, Palmerston himself, and unfortunately he had forgotten.
When it comes to talking about local government distribution mechanisms and formulae, I feel I am very much in the Palmerston category, but I shall undertake to do better in future. I am sure that my hon. Friends the Members for Weaver Vale (Mike Amesbury) and for Wigan are now much more expert on the subject than I am. We welcome the fact that some small harbingers of change have been promised and will watch very carefully for them actually to come about.
I fear that, in local government terms, I am perhaps in the same vintage as the right hon. Member for Knowsley (Sir George Howarth) and have perhaps also experienced the Palmerston effect over my years in local government finance. Since I was elected to Havering Council in 1974—as a very young man, I might add—the nature of the finance settlement has changed and things have come and gone. We had the rate support grant and then the block grant, then we had standard spending assessments and then the revenue support grant, and there were any number of combinations thereof. The one thing that has been constant is that nobody has ever been satisfied with the settlement and, almost by its nature, nobody ever will be.
I remember, in the days when I was a young councillor, the late Lord Healey, when he was the Labour Chancellor of the Exchequer, telling the local government sector that “the party is over”. The difficulty of getting the balance right in the funding of the local government element expenditure from the centre has bedevilled Governments of all parties. In a sense, it is a problem that will always be there while we have the highly centralised local government finance system that we have in the United Kingdom. That contrasts with the much greater levels of financial and, indeed, fiscal devolution to be found in local authorities and the local government sector in the rest of Europe and in the United States. That is a long-term issue; I know my right hon. Friend the Secretary of State is up for long-term issues and imagination, so hope he will take that away for the future.
If it is really to be delivered, it seems to me that levelling up can be sensibly achieved only if we look at fiscal and financial devolution as well. I commend to my right hon. Friend and his Minister the excellent work done by the London Finance Commission—I must admit to having served on one of its iterations—which was set up by the then Mayor of London, who is now the Prime Minister, so it has good provenance for the Minister to look at it in those terms.
The Secretary of State will remember that he and I dealt with local government when he was a rising young shadow Minister in the 2005-2010 Parliament, and I know he takes a real interest in the subject. When subsequently I was a Minister, it was generally delegated to the junior Minister to make the local government financial settlement statement, perhaps because there was less generous news to be given than is the case today. Nevertheless, I am delighted that the Secretary of State has been able to bring us some positive news in person. We can, of course, all make the case, genuinely and on a cross-party basis, that we would like to see more for our individual local authorities and for the sector, but it is noteworthy that London boroughs—including my local authority, Bromley—have seen a real-terms increase of 4%, which is a significant difference from the situation that has pertained in the past. For a number of reasons, I will say that it is not enough, but I recognise it as a step in the right direction.
I take on board the point that has been made by other Members that that increase is welcome, but in the long term we need, as well as a much deeper reform of the system, to move away from single-year settlements, because they make it extremely hard, even for the best organised of local authorities, such as Bromley, to plan on any long-term basis. No business would operate on the basis of single-year financial planning and we need to move back to multi-year settlements as soon as possible. I know that my right hon. Friend the Secretary of State will be well seized of that point.
The hon. Member for Sheffield South East (Mr Betts), the Chairman of the Select Committee, made a number of important points and speaks with great wisdom on these matters. I join him in commending the work done by officers and members in local government, with which I have always been proud to be associated. The chief executive of Bromley Council, Ade Adetosoye, was recognised by the Prime Minister in the Chamber on his appointment as a Commander of the Order of the British Empire for his transformational work, but many hundreds of thousands of others in local government are doing their bit, and we ought to salute them and the elected members who do a lot of hard work at the grassroots.
On where we should go forward from here, may I posit some observations from the point of the view of the London Borough of Bromley, a well-run, low-cost—I will return to that—and efficient authority. It is the only London borough to be entirely debt-free, but also it levies, I think, the second-lowest council tax in Greater London. That is not helped by the precept from the Mayor; it would be even lower without that. It is also an authority that has matched the reductions in expenditure from central Government and gone further with its own cost savings through an innovative approach to the way it delivers its services, to outsourcing and to investing wisely to generate income from its significant reserves, all of which have seen it through difficult times. It is a model of how a local government ought to be run, but none the less it faces very significant cost pressures.
One of those pressures is that we have the highest percentage of over-65s in Greater London. The population of Greater London has grown by more than 1 million, but in many of the outer boroughs the demographic change includes a mixture of young families moving in from the centre in one part of the borough and a static, ageing population at the other end, which creates pressures on both the schools and adult social care elements of funding at the same time. In Bromley’s case we have an additional factor, which is our proximity to inner London. A raft of other changes—the benefits cap and so on—has undoubtedly put pressure on a borough where the journey from Bromley South station to Victoria station takes 20 minutes, so there are considerably increased pressures on our homelessness budget as well. The difficulty of any formula-based system—back to my point about devolution—is that it is never easy to pick up all the nuances that any local authority will have. That applies even within London, never mind across the country.
The position I hope that the Minister might be able to move to is this: social services and the NHS are intimately connected. We had a further statement earlier today about integration. Although there has been a significant increase in funding for the national health element and the services it delivers, the local authority social services element of the same population—we need both elements to support the growing elderly population—has not had an increase in funding to the same degree. We can therefore get the bizarre and perverse situation where the ability of NHS funded services to help people is compromised, because there is not the same level of care when patients leave hospital and go back into the community. I hope that we can consider a better approach to joining up and better aligning the funding from those two elements.
Bromley, by the way, has done pioneering joint working between the two. I hope that the Secretary of State might like to come down to Bromley at some point—he has many fans there—and see on the ground what is being done. In particular, I commend the point made by the Chairman of the Select Committee, the hon. Member for Sheffield South East, about the importance of not losing in these reforms the place-based element that we see from clinical commissioning groups. Our CCG and our Bromley place director, Dr Angela Bhan, are absolutely magnificent at pushing that local element, and we do not want to lose that in the reforms.
Although we recognise that the capping of care costs and the fair cost of care reforms represent additional funding, there are considerable additional commissioning costs that first would have to be taken onboard. There will also be significant reductions in income further down the track from the reforms. Therefore, we need to look at smoothing out fairness of funding overall. Bromley’s overall estimate is that the changes will bring an additional funding burden of more than £10 million per annum, which is not currently covered. We need to find means of addressing that funding gap, and since that comes from a central policy, they ought not to fall upon the taxpayer.
The other issue that we need to look at is the public health grant, which has remained flat in real terms over three years. As we move to a post-covid situation, there will be long-running consequences, not least the impact of long covid on some of our population and many other things that will need to be picked up. We need to look again at how we deal with that.
Another element that is not directly within the local government finance settlement but that I hope the Secretary of State, as a former Education Secretary will take on board, although it is not in the general fund, is the shortfall in funding through the dedicated schools grant, particularly to meet special educational needs. That will create a deficit situation for Bromley and many other London boroughs and local education authorities in future years, as part of demographic changes. There have been some changes: the tightening of the ring fence on the dedicated schools grant, and introducing a statutory override last year. That was helpful, but it is not a long-term solution.
I hope that we can press ahead, as a Government, with the SEND review, and therefore find adequate funding to go with it. There is a particular perverseness that while some of the increased cost pressures on children’s social care can be funded, SEN transport is not funded from the dedicated schools grant. Since they are all part and parcel of the same package of the child’s educational needs, it seems strange that, although we can cover the cost of the education itself, we are not able to cover such costs out of the same pot.
I hope that we can look at the way the system operates. We need a system that rewards efficiency. We do not have any financial mechanism at the moment that rewards efficient, low-cost authorities such as Bromley. When I was a Minister in the Department, I was told politely by one of my officials, “Surely, efficiency is its own reward, Minister.” That is nice, but it does not really help when trying to balance the budgets and not pass on unfair costs to council tax payers.
We need a system where behaviour that leads to long-term efficiency and saving, as Bromley has demonstrated, is incentivised and rewarded within the local government grant system, until we move on to something more sophisticated in future. I was never able to crack it, and the then Secretary of State, the noble Lord Pickles, was never quite able to, although we made efforts, with the Localism Act 2011 and the Local Government Finance Act 2012. Perhaps the Secretary of State will be able to go further than we were able to, to reward good behaviour by elected members in a way that is demonstrable to their voters and communities. That, surely, would be a worthwhile thing to achieve.
We need to look at area cost adjustments. Bromley has one of the lowest area cost adjustments for the London area. The way that London property markets and other costs have shifted over recent years is such that there is really no distinction to be drawn between the costs of delivering services in Bromley, and, say, Richmond and Kingston in south-west London, which are much better compensated by the area cost adjustment. We need a review of how that works. I also hope that we can look at giving local authorities more freedom to raise and spend their own resources across the piece.
I mentioned the homelessness budget. Our difficulty, which I must say links to planning, is that there is pressure on housing, for the reasons I have set out. Bromley is willing to build new housing in the right place—the right place is important. Even with planning reforms, however, the private sector either is now too expensive for low-income households—in areas such as ours, it is usually taken up by young professionals who work in the City or the west end and are not yet able to get a mortgage—or falls into the lower grades of accommodation, if I may put it that way, with houses in multiple occupation that are not suitable for families and that we would not wish to see families in. We need to join up all the policy areas of housing, planning and local government funding to ensure that we do not create a perfect storm and leave families falling through the gaps in the system. That is part of the reason that Bromley has significant pressures on its homelessness budget, which as an outer London borough it had not had previously.
Finally, we expect Bromley’s population to grow above the national average, but funding is not currently being relocated on the basis of population growth. Surely, with our much better technology to store data, we could be more fleet of foot in updating these things. We have a projected increase of 18.9% in over-65s, compared with 12.1% in the rest of London. That will be a problem across the country, but surely we must make cleverer use of our data to update the figures on which we base the payments made centrally.
I could say much more, but for the sake of time I will not. I commend to the Secretary of State and the Minister the London Borough of Bromley’s 13 January submission to the consultation on the provisional settlement, in which Mr Peter Turner, our excellent director of finance, sets out many of the issues in detail. I would be happy to meet the Secretary of State and the Minister to discuss in more detail how a good and successful local authority can come up with ideas to help the system to work even better.
I pay tribute to all those who work in local government, particularly for the immense efforts that they have made over the past two years to meet the needs of their local communities, and to the elected members in all parties who serve their communities for not much recompense. It is a noble calling and something I enjoy doing; we should pay tribute to them. I must also throw in a mention of those who serve on parish and town councils, most of whom do so without any recompense whatever and have stepped up to the plate.
Over the past few years, as we have effectively seen caps on public spending in the principal authorities, the ability to raise a precept without going through the process of a local referendum has meant that many parish and town councils have really stepped into the breach. For their sake as much as for principal authorities, we should regret that we are still on one-year budgets. To have a single-year settlement for a fourth year disrespects all local government authorities—the parish and town councils that are not in direct receipt of grant support, as well as the principal authorities that are—and makes it very hard for them or the organisations that depend on them to plan. That is not an argument about the amount of money; it is about levelling with authorities and ensuring that they can plan ahead and serve their communities efficiently and with ambition.
There is an awful lot that we could talk about, but I do not want to take too long or tick every box, so I will make just a few observations. Like other hon. Members, I regret very much the failure to keep public health spending in line with inflation, or anything like it, as we learn more and more about the importance of preventive healthcare, both physical and mental. I pay tribute to Colin Cox and all those in Cumbria’s public health team who have worked utterly tirelessly through the pandemic, keeping us safe and giving us the advice, confidence and reassurance that we all desperately need. They have been responsible for excellent systems throughout this very difficult time.
It is worth bearing in mind just what this means—not funding public health well. While tiers 2, 3 and 4 of the mental health support framework for young people are provided through contracted services, through the NHS and through child and adolescent mental health services, tier 1 is the responsibility of public health services run at county level. The poor funding for public health in our county means that the amount we spend on young people’s preventive mental health care in Cumbria equates to 75p per child per year.
Let us ignore for a moment the moral wrong of that small amount of funding. What does it mean in terms of the consequences in later life? I carried out a survey last year and found that 28% of young people referred to CAMHS were waiting over six months to be seen. Unless we invest in tier 1 preventive mental health care, we will increasingly see people cropping up further down the line with conditions that are much more tragic and much more difficult and expensive to treat. I ask the Secretary of State to think again about investment in public health throughout the country, not just in mental health and not just in Cumbria.
We have seen no real-terms increase in the rural element of the grant, and the lower-tier services grant has not been increased. District councils, which are much more likely to be in rural areas, are not receiving the support that they need. I do not want to see a push-and-pull and a fight between rural and urban communities—such activities are often misplaced—but it is worth pointing out that those who operate services in rural communities do so relatively inefficiently, because they are dealing with the same sort of issues but with much smaller numbers. There may be only 30 children at a school in the south lakes, for example, not because it is of poor quality and unable to recruit pupils but because only about 14 kids live in the catchment area, and 30 pupils mean that it is over-performing. In my constituency there are two high schools—secondary schools—with fewer than 200 pupils, and probably about a dozen primary schools with fewer than 60. I can think of two with fewer than 30. They have small school rolls not because they are not good schools, but because they represent vast areas of land in the Lake district and the dales. The lack of an understanding of rural needs means that the needs of those schools become greater and greater.
When it comes to funding formulas, one issue in particular concerns me. It depends on which metric we look at and whom we believe, but I do believe that Cumbria may have the worst pothole problem in the country, for one reason in particular. Ours is, I think, the second biggest county in England, and I think that therefore we have the second biggest number of roads. We have one of the smallest populations in any county—we certainly have the smallest concentrations of population anywhere in the country—and yet we have colossal numbers of visitors, 38 times more each year than the number of people who live in the county. The tourists who are so welcome in the lakes and the dales and elsewhere in Cumbria are helping to contribute to the wear and tear of our roads, but they are not contributing to the upkeep. I should like the Secretary of State to think carefully about how he can compensate rural communities like mine—particularly tourist-heavy communities—bearing it in mind that although, after London, the Lake district is the most visited place in Britain, it does not receive any compensation to help it to fund the services that are used by those visitors, which is a terrible shame.
We should bear it in mind that over a third of the increased funds available to local authorities this year is money that councils have to raise, with a £1.4 billion increase in council tax. Council tax is an unfair form of taxation: it is disproportionately paid by those on lower incomes, and it puts a greater burden on household outgoings. Combined with the national insurance rise that is coming in a few weeks’ time, this puts an additional burden on people with low and middle incomes which they cannot afford.
The increase in council tax is, broadly speaking, for social care, and no sensible council will miss the opportunity to find that money to protect its social care provision. The national insurance rise is being sold as a measure that will help social care provision, but it is not really going to do that. It will not lead to what we really need, which is an upgrade in the terms and conditions and pay for people working in social care. Without that, we will neither recruit nor retain the people we need. In Cumbria, we have seen a 32% reduction in social care beds in just six and a half years. It is deeply troubling for people to have a rise in taxation outgoings both to the local authority and nationally but to see nothing for it, and nothing that will help retain those people whom we clearly need working in social care.
One reason why we have great difficulty in meeting social care needs in Cumbria is our inability to provide places for the workforce to live, which is a major responsibility of unitary and lower-tier authorities. As the Secretary of State knows—I think he has agreed to meet me to discuss this issue—rural Britain in particular faces a massive housing crisis, which is costing us in so many different ways, and while we have had this crisis for many years, through the pandemic it has become a catastrophe.
Two things have happened. First, roughly speaking, 80% of house sales in Cumbria during the pandemic have been to the second-home market, weakening communities and leaving them with an ever smaller permanent population. That means that we lose the services. If we lose a number of kids at a school, we may lose the school as well as the bus service, the post office and what it is to have a life in a community. The other thing that has happened, since the end of the eviction ban last year, is a massive increase in people evicted from relatively affordable private rents to turn those houses into Airbnbs instead.
Hon. Members can imagine the existing number of holiday let properties in a place such as the Lake district, and in my district alone in a 12-month period last year they increased by 32%. Where did those properties come from? Ordinary families in my community have been evicted—kicked out. They may have been there for years. I think of one family who raised their kids there for 16 years and were kicked out with little notice. They had to leave the community and move their children because the Government did not scrap section 21 evictions having promised to do so. That leaves us with no staff available for care homes or all the other provision that we need. It is a moral outrage, and it practically undermines our economy.
As we look to support local government, I would love the Secretary of State to look at the ways in which he can affect that by, for instance, changing planning law so that a family home cannot be turned into a second home or a holiday let without asking the planning authorities for permission. That would keep a lid on the problem and maintain and protect the communities represented by me and others in other beautiful parts of the country. That would not cost anything—perhaps a bit more resource for planning departments for enforcement —so there is a way of adding value to our communities without necessarily spending any more money.
I have one final ask via the Secretary of State to the Chancellor of the Exchequer: why do we not consider following the Welsh Government’s lead in providing local authorities with permission to double council tax on second homes? That would be a disincentive for second homes and protect communities from too many of them. It would also create a revenue stream, which those communities could invest in supporting new affordable homes and protecting local schools that would otherwise have too few kids to be viable. I would love him to look at and think about those things. As we suffer through many other challenges such as the cost of living crisis and recovery from the pandemic, I want him to focus in particular on the housing catastrophe that affects the economy and community in so many rural areas such as mine.
This has been a really interesting debate. I want to pick up a few points made by hon. Members. In particular, my hon. Friend the Member for Sheffield South East (Mr Betts) gently—and rightly—chastised the Government for not offering a multi-year agreement for local government and asked what has happened to business rates reform. He and my right hon. Friend the Member for Knowsley (Sir George Howarth) rightly made afresh the point about the need for a fair funding review to focus genuinely on need and poverty if the Government’s levelling-up agenda is to have any substance.
If I may, I will also praise the hon. Member for Bromley and Chislehurst (Sir Robert Neill) and his point about fiscal and financial devolution for local government. Sadly, we remain one of the most centralised nations, certainly in Europe, in the way we approach local services. Like him, I would strongly support the Secretary of State’s taking up the challenge of negotiating with the Chancellor of the Exchequer for more fiscal devolution for local government. Nowhere is the argument for such fiscal and financial devolution more pertinent than in the scandalous treatment of Transport for London, with the Secretary of State for Transport demanding that the Mayor of London put up council tax to pay for concessionary fares for the elderly and the young—of which more anon, if I may. I also thought the hon. Member was right about special educational needs and the need to provide more dedicated funding, particularly to London authorities as virtually every London borough is facing huge additional pressures in that area.
Local councils are fundamental to the quality of the places where we live. They are not always universally loved, but they are essential for keeping our communities safe and our streets clean. They help create the environment in which we all want to live—for example, through the planning decisions they take—and they drive opportunities for young and old to access high-quality education, the arts, sports and leisure. Yet, tragically, they have been neglected for a decade under the Conservative party.
Too many in our communities up and down the country feel that they are not able to influence the future of the area in which they live, and that they have too little control over how their area looks, how it changes and the services they can access. If we are to help constituents shape the areas they live in and drive improvements in the services they depend on, then one—not the only one, but a crucial one—of the essential routes to doing that is to empower local councils. That means tackling the legacy of the active neglect of local councils which, I am afraid to say, has characterised the Treasury and much of the Department in recent years.
A number of bodies over recent years have published studies that paint an all-too-similar and familiar picture of declining support from central Government to local councils. Those funding cuts have made it easier for developers to do what they want where they want, and the 600-plus changes to planning law that Ministers have brought in have certainly helped in that regard. The funding cuts have made it harder to strengthen community-run services, and they have put pressure on councils to sell community assets and slowed down investment in crucial local services.
The National Audit Office has charted how the spending power of local councils, funded by central Government, has fallen in real terms by more than 50% in the last 10 years. Those cuts in funding have coincided with growing pressures on council-run services through bigger populations; the increasing numbers of the elderly, vulnerable adults and young people needing vital care and support; and, in London in particular, the rising number of homeless families. All of that has helped to squeeze the discretionary funding that councils have to spend on enforcement action against antisocial behaviour and rogue developments, as well as on street cleaning, services such as libraries, and supporting local charities, all of which have together impacted slowly but steadily on the quality of life in our towns and district centres.
Across London, since 2010, councils have seen a 25% reduction in funding, even though there are 1 million more Londoners. Harrow remains one of the lowest-funded councils both in London and nationally. We are fortunately well led by Councillor Graham Henson, we have strong officers and, certainly over the last four years, we have had very strong finance leads in Natasha Proctor and Councillor Adam Swersky. However, over the last 10 years, the main source of funding from central Government to Harrow—the revenue support grant—has reduced by 97% to just £1.6 million, a reduction of over £50 million for Harrow. There are other grants, but they are ringfenced to a large extent. To maintain balanced budgets, the council has had to find £150 million of savings as well as ways to raise new income, and has had to decide between making cuts to services or raising council tax. It has been able to make savings and efficiencies of some £98 million over that time, but it has had to reduce services and consistently to increase council tax in line with the Government’s expectations.
Despite all those steps, every year it remains a huge challenge to balance the council’s budget. Harrow has a good track record of financial management. It has strong collection rates and has not reported a revenue budget overspend for many years. It has not had to use its small reserves to prop up its budget. It is a remarkable tribute to officers and councillors in Harrow that they have such a good record of financial management, but of course in the past two years in particular they have done all that while managing the disproportionate impact of covid on the borough. Of course, the pandemic has affected every part of the UK. In Harrow there has been a significantly higher than average rate of infection compared with the rest of London, yet Harrow has received one of the lowest allocations of emergency funding of all London boroughs. In 2019-20, Harrow’s core spending power per head was estimated to be £170 lower than the London average and £75 lower than the England average. The fair funding review that has been promised needs to tackle that disparity.
Despite the considerable financial challenges the council has faced, it has succeeded in securing the future of vital community assets. The future of Harrow Arts Centre is now secure, investment in the Sir Roger Bannister athletics stadium has been achieved and the Harrow Museum has a new funding future. That is all positive and the council is trying to increase support to the victims of domestic violence and to young carers, as well as to improve street cleaning and to increase enforcement activity and investment in local parks. However, it is not able to increase support or invest at the level that it and local residents would want because of the financial challenges that I have set out.
Councils are far from universally popular, as I have said. They can seem too remote and their services can be frustrating to access, but in my experience in Harrow there are proud and committed staff in every part of the council who are determined to do what they can to make Harrow an even better place to live. Harrow councillors, those from my party and those in the opposition ranks, who challenge them, are remarkably dedicated given that most are paid very little and have to manage their responsibilities alongside other jobs. I want Harrow to be an even better place to live, and first of all that requires the Government to invest more in the ambitions of local people by supporting Harrow Council more than they have to date.
I also want to mention London and how the Mayor of London is being pressured into raising council tax to protect vital travel concessions for young people and the over-60s and to provide further funding for policing. Indeed, I understand that the Secretary of State for Transport personally told the Mayor that council tax had to go up. The pandemic has had the same devastating impact on the finances of TfL as it did on privatised rail companies, yet those failing privatised rail companies were bailed out straight away and without any strings attached.
Despite the Mayor’s doing the right thing to protect Londoners during the pandemic, the Transport Secretary is still refusing to fund TfL properly, offering only another sticking plaster deal. As I understand it, the Transport Secretary is refusing to meet the Mayor to discuss those issues.
Does the hon. Gentleman agree that the Secretary of State for Transport and this Conservative Government have—I understand for the second time—given the Mayor a multibillion-pound settlement to help with the operation of TfL, which has been to the detriment of constituencies such as mine in West Dorset, where we are not able to get the transport, in favour of Transport for London?
With all due respect to the hon. Gentleman, I do not think it will help the people of West Dorset or the rest of the UK in general if we leave London with a poor transport service. Just as I would like to see his community getting better support from the Secretary of State, I hope he might have the grace to recognise that Harrow and London in general also need to be properly supported as we come out of the pandemic.
My right hon. Friend makes an important point. I do not know whether the hon. Member for West Dorset (Chris Loder) has been challenging the Government in that regard—I think I heard a bit of gentle criticism, but perhaps he needs to make some more pointed remarks to the Secretary of State in private.
We are in the midst of a cost of living crisis, and Government Ministers are demanding further council tax rises to fund local councils, the police and transport for the elderly and the young in Harrow. That is yet another financial blow to hard-hit families. If, as my hon. Friend the Member for Wigan (Lisa Nandy) on the Front Bench rightly said at the outset, the Conservative party had not allowed so much money to be wasted on fraud, corruption and personal protective equipment that could not be used, there would be money to invest in more policing in local councils such as Dorset and, crucially, Harrow, and to invest in better services for local people in my borough and beyond.
We have just heard it in a debate on the police grant, and we have heard it in this debate with the Secretary of State: the Government are treating 2019 like year zero. Anything that happened before then was nothing to do with them. He is increasingly trying to push the narrative that decisions around funding, local government, policing, fire or anything have somehow happened by accident. They have not: they have happened because of deliberate political decisions that, in some cases, the Secretary of State—who I think has been in the Government since 2010—has taken.
My hon. Friend the Member for Sheffield South East (Mr Betts) said that the most savage cuts have been made to local government, with a 56.3% cut in the past decade. The Cameron-Osborne approach was to cut the central Government funding to councils from central taxation and push it on to local council tax payers, thereby deflecting the blame when local councillors and council officials had to take some very tough decisions. We have had the galling situation over the past 10 years in County Durham of Conservative councillors standing up and blaming the Labour council for raising the council tax, when they know the real reason is that the formula being used has shifted the way local government is funded in this country from central to local taxation.
In County Durham’s case, that means that the county council’s budget has been cut by £232 million a year—40% of the council’s budget. The hon. Member for Bromley and Chislehurst (Sir Robert Neill) referred to Lord Pickles, and in the early days, we were told, “Don’t worry about this; it can all be sorted out if councils get more efficient”—that if they had fewer pot plants in council offices, as I think was said at one stage, or stopped serving tea and coffee at meetings, or sacked all their chief officers, somehow that would fill the gap. Well, that is absolute nonsense.
Another issue that affects counties like County Durham is that we now have an inbuilt mechanism that deliberately moves money from the poor areas with the highest need, to more affluent areas. That is no accident, but the result of a political choice. I take as an example County Durham, where 58% of our properties are in council tax band A, so if we raised the council tax by 1% we would raise £3.8 million. There are a couple of higher-band properties in my constituency—there is at least one castle, which may well be in the higher tax bracket—but there are very few higher band properties across County Durham. That should be compared that with Wokingham in Surrey, where only 2.8% of properties are in band A, so if it raises council tax by 1% it generates £8.9 million. Add to that the fact that we are not just moving that money to areas of lower need, but are ensuring that the poorest people in County Durham, or Knowsley or any other deprived community, pay the most, because we all know that council tax is a very aggressive form of taxation.
That is continuing. We again have a one-year settlement, and councils are now having to work out what they will do in coming years. The Policing Minister told us earlier that when it came to the fairer funding review on police funding, the train had left the station. He gave no indication of when it would arrive. Unless we tackle this issue, councils such as County Durham will always be at a disadvantage
As my hon. Friend the Member for Sheffield South East said, there is a lot of press and PR. The Government work on the basis of slogans, gimmicks and spin, and the latest one is levelling up. I might be one of the few people who have actually read the entire levelling-up White Paper, including the annex.
Yes, I am, and the hon. Member for Redcar (Jacob Young) called me an anorak, so possibly I am both.
The White Paper’s analysis is not bad in that it raises the issue that we should be tackling, but it offers no solution to enable us to do that. I really enjoyed the undergraduate thesis on the Venetian city state and how Babylon was built, but again it did not reach any conclusions. Nevertheless, we have a Government who talk in terms of levelling up. My hon. Friend the Member for Sheffield South East is right: you cannot have levelling up if you exclude the way in which local government is financed.
The other sad thing is that the Government’s approach has mainly been around capital projects. I think it is because the Prime Minister has a fixation—he has a fixation on quite a few things—on projects where you can see that something is being built. No doubt a Minister or local Conservative Member of Parliament can unveil a plaque and say, “This is what we have achieved.” As my right hon. Friend the Member for Knowsley (Sir George Howarth) said, if it was a fair process, fine.
I used to have a saying, when I was in local government, that any idiot can spend capital, which they can. The more difficult thing is to get the revenue streams into the future. Like my right hon. Friend, distantly I used to understand local government finance, but no doubt my knowledge is a bit out of date. What I do recognise is that we can spend as much capital on projects as we like, but what is needed is the revenue funding to go alongside it for the day-to-day needs of our local communities.
My right hon. Friend the Member for Knowsley covered the bidding process very well, but the point is that, if it were a fair process, then fine, but it is not. Quite clearly, it is a pork barrel approach to the doling out of money to certain Conservative seats. Let me give an example in County Durham. Which constituency has either got new towns funding or levelling-up funding? The answer is Bishop Auckland.
I do not disagree with the Secretary of State. County Durham is a wonderful county. It has some great towns and, more importantly, great people. But why did Bishop Auckland get that money as opposed to any of the other towns in County Durham? Well, it has a Conservative Member of Parliament. I doubt that it will be getting much funding in the future, following the recent antics of the hon. Member for Bishop Auckland (Dehenna Davison), with her criticism and plotting against the Prime Minister. She will be on the naughty step for a while, and will not get any future funding. The important thing is that this must be clear. I also question the bidding process. The problem with the process, as my right hon. Friend has said, is that it takes a lot of time and effort to take this through. Officer time is taken up, and councils are limited in the amount of officer time that they have. Then they have to go into some beauty parade, which is clearly rigged by the Government. The real issue in terms of levelling up is this—
Order. I did not want to jump in as a kneejerk reaction, but I have been considering what the right hon. Gentleman has just said. He has made a very serious criticism of a Member of this House. I just want to check whether he has given notice to the hon. Lady that he intended to criticise her on the Floor of the House?
The right hon. Gentleman most certainly made reference to another Member. My interpretation was that he was criticising her, but the point is that he made specific reference to her. I just want to check that he gave her notice of his intention to do so.
I am sorry, but I do not know where in Standing Orders it says that you have to give notice. If a Member is criticising someone or raising a point, I agree with you, Madam Deputy Speaker, but when a Member is referring to a Member, which is what I did there—
The right hon. Gentleman can try to argue with the Chair for as long as he wishes. I am concerned about keeping good order in this Chamber, and my interpretation of what the right hon. Gentleman said was that it was a serious criticism of the hon. Lady. Perhaps the most subtle thing for him to do is to undertake to tell her that he criticised her on the Floor of the House and apologise for not having given her notice of his intention to do so.
I have to say, Madam Deputy Speaker, I am not known for my subtlety. I am not sorry. I do not quite understand the point. The point I made was in reference to what has been in the newspapers. I was not criticising the hon. Lady. Frankly, if she is working against the Prime Minister, I would congratulate more than anything, not criticise her. I do not think that it was a criticism—
I will, and I will take this up further, Madam Deputy Speaker.
May I now come back to the main points? We are talking about some really serious things, and I am sorry that we have been diverted. As my hon. Friend the Member for Sheffield South East said, if levelling up means anything, it means building up those communities. It is not necessarily about bricks and mortar, but about trying to pull the fabric together.
County Durham has high levels of deprivation, with people more likely to need social care and intervention by the health service at a lower age—in their 50s—than in most places. There are huge demands on adult social care. One thing that makes me very angry is the fact that in the last 10 years, life expectancy in County Durham has actually been falling. The idea that there is a part of this wealthy country where our citizens’ life expectancy is falling is deeply disturbing and wrong.
This brings me to the issue of public health. I give full credit to Amanda Healy, the director of public health in County Durham, and her officers, who have worked tirelessly, and I agree with my hon. Friend the Member for Sheffield South East that if we had given test and trace to them, they would have made a damn sight better job of it than the billions that were wasted nationally. We now have a situation where we have a cut in the public health grant. The last time the Government were consulting on the public health grant, County Durham was going to lose 40% of its funding. The problem is that if we really want to tackle the inequalities, we have to do it in terms of public health. It is no good trying to shy away from that.
We now have a situation whereby, as part of the levelling-up agenda, everything seems to be tied to changing the local government arrangements. County Durham has been offered a county deal. I do not understand why the Government are looking at changing the local government structures of an area—[Interruption.] I am sorry, Madam Deputy Speaker. You are interrupting what I am saying. I can’t hear myself think.
I am glad it is, Madam Deputy Speaker.
Turning to the devolution deal, one of the bare minimums that we have looked for is a replacement for the money that we would have received from the European Regional Development Fund. The Government gave a clear pledge that, once we left Europe, that money would be matched, but it is quite clear from looking at the Treasury Red Book that it will not be. That money is important in County Durham because it allows us to fund programmes such as DurhamWorks, which works with young people who want to get into work. It has been a tremendous success, but its funding ends in 2023 and there is no more after that, so it is important that at a bare minimum we get the equivalent of that funding. However, if we have to bid for it, the bidding process will take up the time and effort of our officers, and there is also the question of the transparency of the process.
I will turn now to the White Paper, which I have read. I actually like the Secretary of State; he is a thinker. It was certainly a loss when he was demoted from the post of Justice Secretary, because he had some great ideas around how to reform the justice sector. I plead with him to take some of the ideas in the White Paper, ensure that we have the funding review that has been put alongside it, and stop this nonsense of tying resources to a requirement for devolution or to messing and tinkering around with the governing structures locally. He must then ensure that that system tackles these issues and puts back what is needed in the formula, which is a needs-based assessment.
As I have said, County Durham has more than 900 children in care. That is not cheap and it has led, as my hon. Friend the Member for Sheffield South East said, to adult social care and looked-after children gobbling up nearly 70% of the budget. That is not sustainable over the long term for doing the other things that my right hon. Friend the Member for Knowsley mentioned, when he talked about ensuring that everything else that people expect—parks, services and basic communities—is there.
There is an opportunity here, and one thing we can say about the Secretary of State is that he is a thinker and he wants to drive change. I think he was out of the Chamber when I said that the main themes in the White Paper are correct. It is about not getting bogged down in the detail of governance, deals and devolution that does not actually mean devolution; it is just about trying to get the funding in place.
I have been a leader in local government and also a Minister, and I think that if the Secretary of State looks at some of the innovation taking place in local government, he will see that the quality of some of the officers in local government is fantastic—there are some great people there doing some great things. What we have to do is free up their time, give them credit when they are doing things and support those politicians who are actually there. Let us get away from the idea that mayors are the answer to everything or that these people do not have the responsibility. This issue affected our Government as much as it has affected his. The Treasury just does not trust these people, but frankly it should, because in local government we have some great innovators. We have people who will tackle the real issue, which, as I say, is not just about bricks and mortar; it is about making the real change that happens at a local level.
I wish the Secretary of State well in his ambitions. I hope he has a good fight with the Treasury, to ensure that he gets the resources so that if we are going to make real change at the local level, we will actually make a real difference. We have political differences in this place, but we do actually want what most people want, which is the best for their local community.
There have been some excellent contributions, from Members across the House, highlighting the brilliant work that many of our councils—yes, I include parish and town councils—right across the country have been doing in these challenging periods. That has been noted by hon. Members today. We heard interesting contributions from the hon. Member for West Dorset (Chris Loder), who has been mixing it up a little on the issues of region versus region, and rural versus urban. I suggest to him that he should probably get the broadband sorted out in Ilfracombe, so that when the Chancellor is there in the future he can send a positive tweet to the likes of the Prime Minister.
I must move on—I have acknowledged the hon. Gentleman.
My hon. Friend the Member for Sheffield South East (Mr Betts), who chairs the Select Committee, referred to the political choice of austerity over a 10-year period and the stark consequences for Sheffield City Council—I think £3 billion was cut from the council. My right hon. Friend the Member for Knowsley (Sir George Howarth) referred to the need for three-year settlements. I believe we are now in the fourth year of one-year settlements. How can we plan resources effectively—how can we plan for the future and invest in early years—when we have continued one-year settlements?
The hon. Member for Bromley and Chislehurst (Sir Robert Neill) rightly referred to the need for genuine fiscal and financial devolution, and I concur. The hon. Member for Westmorland and Lonsdale (Tim Farron) spoke about the public health grant, which is being reduced in real terms, and the pressures on mental health. My hon. Friend the Member for Harrow West (Gareth Thomas) referred to devolution, concurring with the hon. Member for Bromley and Chislehurst. My right hon. Friend the Member for North Durham (Mr Jones) referred to the cut of more than 50%, as measured by the National Audit Office, that has been imposed over the past 10 years in communities up and down the country.
If the levelling-up White Paper did not already out the Department as being devoid of any real ambition or strategy to better the lives of people across our regions, this settlement is the confirmation. It might not be 300 pages, and I might not have learned much about the last 10,000 years of urban settlements, but it once again reminds us that this Government do not truly back our communities, do not back our councils and certainly do not back our country. No wonder that Tory councillor and Local Government Association Chairman James Jamieson, whom the Secretary of State phones on a regular basis—
Every morning, I think. No wonder he stated that he was disappointed that council tax went up by a massive 31% between 2010 and 2021 while the area base grant has been cut, on average, by 37%. Tory Ministers have just piled the pain on to hard-pressed families, who pay more while receiving fewer services that are vital to making life work in our communities.
The Secretary of State has been waxing lyrical about the core spending power. Does he think that our residents, communities and constituents have missed the fact that inflation is at its highest for 30 years? Taking that into account outs this settlement for what it is: a 2.2% reduction compared with last year. It is a settlement that assumes local authorities will all raise council tax by the maximum amount without needing a referendum, meaning that councils will have to choose whether to raise much-needed funding while being well aware of the real financial pressures on households. The social care precept on top of the social care levy create a double whammy of taxation for residents, while providing insufficient resources for adult social care, according to the Tory leader of Surrey County Council. Indeed, the hon. Member for Bromley and Chislehurst raised exactly that point.
The draft of the settlement also came with another announcement, because the Government have once again kicked local government finance reform—the fairer funding review—into the long grass. It is desperately needed. Council tax as the main source of local authority income, as hon. Members across the House have said, is inherently unfair and regressive. We need that funding review very soon indeed.
The reform of business rates is another thing that we apparently will not see this year. We desperately need a new system that reflects the modern nature of business, that has some relation with money that goes through the till, that rebalances our high street versus online, and that boosts local economies rather than stifling them. However, we are of course not getting that. Could there be a clearer sign that the Government do not have a real plan?
The Secretary of State mentioned the announcement earlier this month of the £150 council tax rebate. We would very much like to see the detail of that, because we have had little so far. Indeed, our councils’ financial officers and leaders have had little information. How are councils to be involved in handing out that money? Will it be by cash, cheque or electronic payment? In some areas, such as Manchester, 49% of residents do not pay by direct debit, so there are some real practical difficulties there. Have the Secretary of State or the Minister estimated how much the administration will cost?
These woefully inadequate short-term fixes will not stop the cost of living crisis. The Government choosing to put taxes up on working people—the Government cannot escape the fact that they are now at a 70-year high—while cutting benefits and utterly failing to tackle rising food and energy bills simply pushes more people into poverty. Of course, the money is spare change compared with the £15 billion that our communities have had taken away over the last 12 years. Finances have gone that could have kept vital services open. Instead, the public now do not have 921 libraries, over 1,000 children’s centres and 368 swimming pools, to name but a few. The public health grant has been cut, but we are not quite out of the covid/omicron crisis at the moment. Real-terms increases are desperately needed.
We do not have a Secretary of State for Levelling Up; he is quite rapidly becoming the Minister for closing down, boarding up and laying off. The Government have kept our regional towns and cities down and held them back. No wonder this week’s newspapers representing communities across the north used their front pages to plead with the Secretary of State not to leave them behind, after 12 years. They pointed out the fact—this is a damning indictment of the inequality under this Government—that a baby girl born in Salford will, on average, die 10 years earlier than one born in the Secretary of State’s Surrey constituency. I know that he will not be at all proud of that fact, but he really needs to do something about it.
In conclusion, the sad truth is that the Government have left people and communities behind for over 12 years. We now know that they simply do not have a plan to change; they just have a scorecard with 12 mission statements of failure over the last 12 years. We know that, as a nation, we can do better than this. Any genuine levelling up of our communities will chiefly be delivered by local authorities. They need three-year settlements. The funding needs to be adequate, with long-term resources, devolved freedoms and budgets that reflect the work that local authorities put into their communities—communities that are genuinely powered up to deliver the fair and green future that our constituents and our nation require.
I begin by paying tribute to the work of councils across the country. Over the last two years, they have been our foot soldiers in the fight against covid. They have innovated, worked hard and done incredible things to keep our vital services going, and they cannot be thanked often enough. I also thank officials in central Government and the Minister for Levelling Up Communities, my hon. Friend the Member for Saffron Walden (Kemi Badenoch), for their work in producing this balanced settlement today. She is away following the death of her father but she has done a lot of work to bring us to this point.
I also thank Members from across the House for their thoughtful and considered contributions to the debate. I would like to take some of them in turn and, as I do so, I will highlight what the settlement will mean for their area’s spending power. My hon. Friend the Member for West Dorset (Chris Loder)—the spending power of his area will go up by 6.8%—made the important point that even though areas may look pretty, or “chocolate box” to use his words, we must recognise that there are areas of serious deprivation in some of them. That is one of the reasons why we are maintaining the rules over such grant. It is at the highest level—£85 million—that it has been. I know that his council leader has met with the former Minister for Housing, my right hon. Friend the Member for Tamworth (Christopher Pincher), and the letter that they sent has been replied to. I look forward to further conversations with my hon. Friend.
I really appreciate my hon. Friend responding to these points. I should be clear for the record that I, my colleagues and the leader of the council have been asking to meet Ministers for a very long time. I appreciate my hon. Friend’s comeback, but it is important to note that we would appreciate it if the meeting were expedited. I do not think that it has taken place.
I assure my hon. Friend that we will expedite that.
Let me turn to the thoughtful comments made by the Chair of the Levelling Up, Housing and Communities Committee, the hon. Member for Sheffield South East (Mr Betts)—the spending power of Sheffield will go up by 7.6% under this settlement. He noted, to use his phrase, that the settlement was better than in some years, which may be faint praise, but we will take it. He raised the very important long-term issue about the relevance of upward pressure on social care caused by an ageing society, and one in which we do a better job of caring for the sick and disabled. As a party, we have taken difficult decisions to adequately fund that and the NHS, and difficult decisions on tax. We are also taking steps, as we set out in the House earlier, to promote the integration of health and social care, because we all know that is one of the crucial things we can do to make that sustainable in the longer term.
I mentioned the letter from the Secretary of State offering a meeting with officials. Perhaps it could be a meeting with Ministers, and perhaps I could be allowed to bring someone from the CCG and someone from the city council, who are doing great work together, to explain what they really want to see to marry up this place-based approach to health with local government.
Absolutely, and the hon. Gentleman anticipates the point I was about to make.
Of course, deepening devolution is one way of driving the integration agenda to save money and produce better services. The hon. Gentleman referred to the important health and life expectancy gaps, and the White Paper sets out the steps that the Department of Health and Social Care will take through its health inequalities strategy and its new tobacco strategy.
My hon. Friend the Member for South Dorset (Richard Drax) noted the importance of keeping taxes down, and I strongly agree. That is why the settlement keeps the increase to 2%, with 1% for social care—far lower than the double-digit increases we saw in many years under the Labour party.
I will reply at length to the right hon. Member for Knowsley (Sir George Howarth). This morning I relayed all the points raised in the important debate on funding in Merseyside to my right hon. Friend the Secretary of State, and we talked it through. I completely agree about the need for a multi-year settlement. We had to have one-year settlements because of the turbulence around covid, but we aim to have a multi-year settlement. Yes, it will take account of the need for levelling up and of inflation.
I am pleased the right hon. Gentleman mentioned Shakespeare North, as I was previously involved in its central Government funding. It is a brilliant project, and he rightly paid tribute to some of the individuals who are helping to make it happen.
The right hon. Gentleman also made some important points about the levelling-up fund. Seventy-five per cent. of the money has so far gone to top-priority areas, and only 6% has gone to bottom-priority areas. It is highly skewed towards the poorest areas and, in the first round, £20 million went to Liverpool, next door to Knowsley, and £37 million went to the Liverpool city region as a whole. It is not correct that there is a political process. There is competition, and there are arguments for having non-competitive funding, which is why there will also be an allocation through the UK shared prosperity fund. There are arguments for competition to get good bids, but we must not traduce civil servants who score the bids and allocate the money.
My hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill) will see spending power in his constituency go up by 6.2%.
Again, the right hon. Gentleman anticipates my next point. I am happy to facilitate a meeting between officials in Knowsley and officials in central Government to talk about the bid, but this is done on an objective basis. [Interruption.] It does not seem that the right hon. Member for Knowsley wants to make an intervention, as he is chuntering from a sedentary position. Liverpool, as I said, has received funding, so it is not politics; it is about getting the best bids and the right money to the right places. The spending settlement means an extra 8.5% for Knowsley.
My hon. Friend the Member for Bromley and Chislehurst made a verbal slip when he talked about when he was a young man. Of course, he meant to talk about when he was an even younger man, so I correct the record. He and the hon. Member for Westmorland and Lonsdale (Tim Farron), who is sadly no longer here, made important points about the public health grant, and those points are why we are protecting it in real terms across the SR period and why we have an extra £300 million to tackle obesity, an extra £170 million to improve Start4Life and children’s mental health services and an extra £560 million to improve drug and alcohol treatment.
The hon. Member for Westmorland and Lonsdale also made an important point about second homes, and we recently closed the tax loophole to try to address that issue.
The hon. Member for Harrow West (Gareth Thomas), in whose constituency spending power will go up by 6.8%, made the case for more devolution to more places. I agree: we are both widening devolution through the county deals process and deepening it where we already have it. I should point out that the only place in England that had devolution under the previous Labour Government was London, which is just part of the country; there was no devolution for the rest of England and we have put that right.
I hope that the right hon. Member for North Durham will reflect on the point he made and his serious criticisms of my hon. Friend the Member for Bishop Auckland (Dehenna Davison). Let me simply say that my hon. Friend is a superb, dynamic young Member of this House who has a lot of ideas and is making things happen for her constituency. Likewise, the same is true of the new council in Durham, where Labour is out of power for the first time in 100 years. Why is that? I do not seek to make partisan points in this speech, so let me simply say that perhaps one reason why voters in County Durham have turned away from Labour is that they are looking for people with a positive agenda who will get a devolution deal, and not people who just criticise from the sidelines.
Let me move on and address some of the other points made by the right hon. Member for North Durham that were slightly more becoming of him. He talked about having read all of the levelling-up White Paper; he will realise, then, that it marks an approach distinctly different from that under the previous Labour Government, when we saw the increasing concentration of research and development spending in Oxford, Cambridge and London. In the “Levelling Up” White Paper we increase spending outside the greater south-east by 30% over this spending review settlement period; we bring devolution to the rest of England, not just to London; and we get central Government back into the business of driving major urban regeneration in 20 places. Central Government were taken out of that business by the Labour Government’s decision to get rid of English Partnerships—a decision that, in retrospect, I think Labour will regret.
I am conscious that I am taking up time, Madam Deputy Speaker. In the year ahead, councils in England will be boosted by up to £3.7 billion in extra funding. That is a real-terms increase of 4.5% and includes an extra £822 million for services through a one-off services grant. The settlement puts councils on a firm footing for the year ahead—one on which they can build and grow. It maintains the things that are already working, such as the rural services delivery grant; it raises funding in areas where more support is needed, such as through the extra £72 million for the revenue support grant; and it makes sure that no council anywhere in England will receive less money by updating the funding floor.
The settlement reflects the reality of 2022 and the acute pressures faced by the social care sector, with an extra £1 billion made available to alleviate pressure in the year ahead and £162 million to pave the way for the landmark social care reforms we are putting on the statute book. With a core referendum principle of 2%, plus an extra 1% adult social care precept, the settlement protects taxpayers with the lowest expected average council tax rises since 2016-17.
Several Opposition Members made points about the wider context, which includes the £1,000 extra that people working full time will get from our massive increase to the national living wage—a Conservative achievement. It also includes the £1,000 extra that 2 million households will get because of our changes to the universal credit taper rate so that people can keep hold of the money they earn.
We are being asked to believe that there has been a road to Jericho moment and this is now a low-tax Labour party that also wants to spend more money on everything and cut the deficit. It simply does not add up. There have been moments in this debate when Labour Members have said, in short terms, that the funding for public services is paid for by taxation; we are on the edge of an intellectual breakthrough, Madam Deputy Speaker! If only they had learned that lesson before they left behind the biggest deficit in this country’s entire peacetime history—a deficit that we had to spend many years clearing up, with our coalition partners. On that non-partisan note, let me bring the debate to a close. I commend the settlement to the House.
No, no more.
Question put and agreed to.
That the Local Government Finance Report (England) 2022–23 (HC 1080), which was laid before this House on 7 February, be approved.
That the Referendums relating to Council Tax Increases (Principles) (England) Report 2022–23 (HC 1081), which was laid before this House on 7 February, be approved.—(Steve Double.)