It is right that more of our money that is spent locally is raised locally. In 2010, councils were 80% dependent on Government grants. By 2020, they will largely be funded by council tax and other local revenues.
Local councils have faced devastating cuts. The Institute for Fiscal Studies estimates that, between 2010 and 2020, councils will have had their direct funding cut by 79%. In Tower Hamlets, we have lost £138 million through budget cuts since 2010. With one of the Conservative party’s own councils going bust, will the Minister now finally commit to funding local authorities properly, so that they can provide vital services to their communities?
As I have pointed out, it is right that we rebalance council spending from central Government grants to locally raised taxes, to help to keep councils accountable. We have seen councils up and down the country finding innovative ways of working, such as sharing back-office services and doing things such as installing wi-fi and improving waste collection. We have also seen Labour councils wasting money. For example, Momentum-supported Birmingham City Council bin strikes have cost the taxpayer £40,000 a day, and Reading—
Order. Resume your seat, Minister. That is the end of it. You answer for Government policy. You do not waste the time of the House by launching into rants about the policies of other parties. I have made my point, and if the Chancellor is confused about it, he really is under-informed and I say to him: stick to your abacus, man.
My own council of Brighton and Hove has had to make £52 million-worth of cuts in three years, despite superb Labour leadership in the city. With one of the Minister’s own Tory councils going bust, will the Chancellor finally commit to properly funding local government in tomorrow’s local government finance settlement?
We have provided local councils with council tax flexibilities to enable them to fund spending in their areas. It is absolutely right that councils should not waste money and should find savings. The fact is that we went through an incredibly profligate period under Labour in which the Government were running record deficits, and we have succeeded in reducing the deficit by three quarters. I must also point out to the hon. Gentleman that councils have reserves of £23 billion. In fact, those reserves have increased by £8 billion since 2010.
In Cumbria, the Labour council leaders failed to reach a devolution settlement with the Government that would have brought in additional resource. Does the Minister agree, however, that this is not just about resource and that it is also about council structures, leadership and creating efficient organisations?
My hon. Friend is absolutely right. Lots of councils have done things better and more efficiently, and have led the way across government. We have given more powers to local Mayors, and we are giving Mayors across the country £4.8 billion of new investment over the next 30 years.
My hon. Friend is absolutely right. We have seen the leadership of numerous Conservative councils across the country in finding new and efficient ways of doing things. That is what we need to do as a Government. We need to find better ways of doing things and more efficiency, rather than wasting money and crashing the economy, as happened under the previous Labour Government.
We have put additional funding into social care, and we have also allowed councils to raise the precept, but it is a very important principle that local councils are accountable to local voters for the money they spend. The situation we inherited in 2010, when 80% of the money came from the Government, meant we could have profligate local councils and local taxpayers would not have to foot the bill.
This week, having faced the same central Government cuts as everyone else, Conservative-controlled Kettering Borough Council, of which I am a member, can be expected to freeze its council tax for the eighth year in a row. Does it therefore appear that some councils are better at managing their affairs than others?
The issue of public sector pay is inextricably linked to the level of funding provided to both local authorities and other public bodies. Will the Chief Secretary commit to lifting the public sector pay cap across the board and to properly funding these pay increases?
First, if you will forgive me, Mr Speaker, as we came into the Chamber we heard the news of the death of Simeon Andrews, who co-ordinated a large number of all-party groups and trade union groups, and, if we can, I would like us to send our sympathies to his family on behalf of the House.
The ministerial responses we have heard demonstrate absolutely no understanding whatsoever of the crisis created by the cuts of the past eight years and their impact on local government. Local councils are now facing a funding gap of nearly £6 billion by 2020, and it is the most vulnerable in our society who are suffering. The number of children taken into care is at its highest level since 1985, and one in three councillors are warning that the cuts have left them with insufficient resources to support these children. The leader of the Chancellor’s own Surrey council said:
“The Government cannot stand idly by when Rome burns.”
Will the Chief Secretary commit today to use the opportunity of next month’s spring statement to address the funding crisis in our local councils?
First, the spring statement is not a fiscal event, and it is vital that we maintain the discipline that we have achieved over the past eight years and keep control of public spending, because that is what has led to the strong economy we are now seeing, with record levels of employment and an increasing number of new businesses starting up. The reality is that if Labour were to get into power, that legacy would be squandered.
Local government will see a 2.1% increase in cash terms between 2015 and 2019, and, as I have pointed out, they have also seen an increase in local council reserves of £8 billion—money available to spend on, and invest in, local services.
With the crisis in children’s services, to be frank this is not the time for political knockabout responses. I am not sure whether the Chief Secretary has witnessed a child being taken into care; I have, and it can scar that child for life. But do not listen to me; listen to the all-party inquiry into children’s social care, which warned that nine out of 10 councils are struggling to meet their legal duties to children. The president of the Association of Directors of Children’s Services has said:
“We cannot go on as we are”,
and it is reported that over half the councils in England are planning further cuts to children’s services.
Recent estimates of Government spending and income show that the Chancellor will have sufficient resources to protect our children from further cuts. So I appeal—once again—to the Chancellor to use the flexibility he has to use the spring statement to address the £2 billion funding gap in our children’s services, to protect our children.
It is a bit rich of the right hon. Gentleman to suggest that we should not bring politics into this when that is precisely what he is doing. We are making sure that local councils have the flexibility to raise council tax to fund these vital public services. Labour has to acknowledge that this is not just about the money we spend but the way we spend it. The reality is that if the entire focus is on the level of spending rather than what we are doing, we end up with the situation that occurred in 2010—vast increases in spending and services actually getting worse.