We come now to the three motions on local government finance, which will be debated together. All three motions are subject to double-majority voting: voting by the whole House, and voting by those representing constituents in England.
I beg to move,
That the Local Government Finance Report (England) 2019–20 (HC 1916), which was laid before this House on 29 January, be approved.
With this it will be convenient to discuss the following motions:
That the Report on Referendums Relating to Council Tax Increases (Alternative Notional Amounts) (England) 2019-20 (HC 1917), which was laid before this House on 29 January, be approved.
That the Report on Referendums Relating to Council Tax Increases (Principles) (England) 2019–20 (HC 1918), which was laid before this House on 29 January, be approved.
Strong, vibrant, resilient communities are, more than ever, key to unlocking a brighter future for our country. We must therefore celebrate them and help them to succeed, and, in turn, support councils and the many people who serve them every day in delivering essential services and changing lives. I hold those dedicated public servants in the highest regard and have faith in them to rise to the challenges that lie ahead, seeing their people and places flourish with no one left behind. To achieve that, they must have the necessary tools and resources to do their job and I am determined to ensure that they get them. That was why I published the provisional settlement on funding for local authorities in England late last year and invited contributions as part of our formal consultation on that.
We received around 170 responses and I am grateful to those who engaged so constructively with me and my Ministers. My particular thanks throughout the process go to the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak), for all his work and immense efforts.
That important work has helped to shape the final settlement, which recognises the pressures that councils face and acknowledges their impressive efforts to drive efficiencies and strengthen our public finances. That paves the way for more confident, self-sufficient and reinvigorated local government.
I am pleased to confirm on behalf of the Government that, importantly, core spending power is forecast to increase from £45.1 billion in 2018-19 to £46.4 billion in 2019-20. That amounts to a cash increase of 2.8% and a real-terms increase in resources available to local authorities, which is good news for the many communities that will benefit.
We are spending around £1 billion more than at the start of this Parliament. Some £84 million is added into the settlement to ensure that we drive quality and support in the knowledge that, yes, there are pressures. I hope that the hon. Gentleman will recognise the additional £410 million that has been committed to children’s and adult social care in response to the good work that is going on and some of the pressures.
I welcome the £2.7 million extra for the Isle of Wight. More than that, I am delighted that, for the first time ever, the fair funding review mentions English islands and refers to the Isle of Wight by name as somewhere that requires extra study to analyse additional costs. Will my right hon. Friend ensure that that results in concrete extra support for English islands and the Isle of Wight in recognition of the needs of islands?
My hon. Friend is a fine champion of the interests of the Isle of Wight and I commend him for his work. He has made representations to the Local Government Minister and seen a recognition that different communities are affected in different ways as we look at the review of relative needs and resources. Obviously, we will listen carefully to representations we receive from hon. Members of all parties as we move forward with the review.
The Secretary of State talks about the additional cash for local authorities. I spoke to a colleague who was at East Sussex County Council’s budget meeting today, and I can tell the right hon. Gentleman that the situation is a catastrophe. The situation with core funding means that meals on wheels are being cut. Unless additional money comes next year, services for vulnerable children will be savaged. Will the Secretary of State today commit to giving East Sussex County Council fairer funding? Even though this is a Tory-led county, the council is on its knees. It needs the money urgently.
I hope that the hon. Gentleman will recognise that East Sussex is part of the business rates pilots and gets the benefits that attach to those involved in that process through the additional resources that are garnered from it. Councils across the south-east will get an extra £226 million in their core spend in the settlement if the House approves it today, which will mean around £7.1 billion of funding.
Will my right hon. Friend join me in congratulating Ian Hudspeth and Oxfordshire County Council on the excellent way in which they have managed their resources? Does he agree that capital funding is equally important? I hope that he will look kindly on our housing infrastructure funding bid, because that funding would provide vital infrastructure for Didcot in my constituency, which is one of the economic engines of the United Kingdom.
I pay tribute to Oxfordshire and to all councils that have been working hard to provide services for their local communities. I am sure that my right hon. Friend will recognise the increase of about £16.9 million that will come through the settlement for Oxfordshire. I am looking carefully at the housing infrastructure bids in respect of Didcot and elsewhere, and I note his lobbying in that regard.
Harrow Council is not unique in having had most of its revenue support grant axed over the past seven years. What conversations is the Secretary of State having with the Chancellor of the Exchequer so that we can, as we hope, see a significant increase in that revenue support grant in the comprehensive spending review?
I am looking carefully at sustainability and issues relating to local government finance more broadly. I hope that the hon. Gentleman will recognise the change that is happening in the structure of local government finance and the move away from revenue support to the retention of business rates. In London, we have a 75% business rate retention pilot. We want to move away from the merry-go-round of money being collected so that it comes into central Government and then going back by way of a grant. We want to simplify the process.
Does my right hon. Friend agree that the measures he is outlining will help Leicestershire County Council, which is involved in the business rate retention pilot scheme, as well as Harborough District Council and Blaby District Council? Those three local authorities are led by excellent Conservative administrations.
I commend the Conservative authorities in my hon. Friend’s area for their work, and I commend him for his recognition of the benefit that accrues from the business rate retention pilots and of how funding from the growth in business rates can be invested into local services. That is why we want to move to this new system throughout the next financial year.
These proposals will amount to a real-terms increase, but I know that we face a number of challenges. Among the most serious is the responsibility that councils—and, indeed, all of us—have towards the most vulnerable in our society. It is therefore right that out of the more than £1 billion of extra funding committed at last year’s Budget, £650 million will go towards adult and children’s social care in 2019-20. This will help to meet the pressures resulting from an ageing population. Some £240 million of that amount has been allocated to ease pressures on the NHS, and that is on top of the £240 million announced in October to address current winter pressures. The remaining £410 million can be spent on either adult or children’s social care and, where necessary, to take pressure off the NHS. I know that local authorities will value that flexibility greatly.
We are investing a further £84 million over the next five years to expand three of our most successful children’s social care innovation programme projects in up to 20 local authorities to keep more children at home safely. We are supporting local authorities to make the best use of available resources and to increase efficiency, as well as to innovate and improve the way in which they deliver services. Better integration of the health and care systems with other local services is essential, particularly in regard to social care. The long-term NHS plan, with its welcome shift from acute to community healthcare services, together with the upcoming social care Green Paper, will make a big difference.
I welcome the extra funding that is going into social care, notwithstanding reductions over the past several years. Will my right hon. Friend do all that he can to ensure that that money is not just pumped into the acute sector? Integration far too often seems to mean bailing out hospitals that are struggling because of increased demand from an ageing population and people with multiple co-morbidities, so will he ensure that more of that money is directed into preventive care in the community? This would take pressure off the NHS and keep people well and properly supported in their own homes.
My hon. Friend will recognise the work of the better care fund and some of the positive outcomes that it has driven for acute hospitals and social care, such as preventing people from having to go to hospital, as he highlights. Ensuring that the social care system works effectively to deal with some of the pressures is a core component of the NHS long-term plan.
I thank the Secretary of State for giving way. A new study by the Centre for Cities shows that Slough has been the hardest-hit town in the south-east. In fact, it has been the 10th worst hit nationally by this Government’s austerity measures. Slough’s local government spending has been cut by 23% since 2009-10, while the UK average figure is 14%. Does the Secretary of State agree that it is unfair to mete out the deepest cuts in those areas that are most affected by issues such as childhood obesity, childhood poverty and homelessness?
The hon. Gentleman will recognise the need for us to look carefully at relative needs and resources. I encourage him to engage constructively and positively with our review so that we get the right formula to ensure that need is recognised. He makes an important point, but we are putting more funding into the system, and I hope that he will recognise the benefit.
Nottinghamshire County Council, which is run by an exceptional Conservative group, has had its funding cut by 52% since 2013—from £238 million to £118 million for 2019-20. Despite its excellent budget management and real-terms cuts to services, the council’s deficit is projected to be £34.1 million. I say to my right hon. Friend, who is a very good Secretary of State, that the cuts have been going on for too long, and county councils such as Nottinghamshire will now have to cut through the muscle and into the bone. They simply need more money. On that basis, I will be abstaining this evening.
I pay tribute to the work that councils such as Nottinghamshire have done over the past few years in making hard calls and difficult decisions as a consequence of the financial position that the Government have had to deal with. I encourage my right hon. Friend to look at core spending power, which combines all sources of local government income, because she will see that Nottinghamshire will have an additional £16.3 million between 2018-19 and 2019-20, which is an increase of 3.2%.
I am terribly grateful to my right hon. Friend for giving way. West Sussex is thankful for the additional money and for the business rates retention pilots, but the truth is that we have had to make savings of £200 million over the past eight years and face a gross gap of £145 million over the next four years. We have one of the oldest populations in the country, with the consequent social care requirements, and we are in the bottom decile for schools funding. In addition to all that, we have “Think Family”—one of the best troubled families programmes—and it would be a catastrophe if its funding were not renewed next year, because it offers really good preventive early intervention work, the effects of which are great and save money later on.
I am a strong supporter in the troubled families programme, and I have been a strong believer in preventive work for young people, including through family units, for many years. My hon. Friend makes an important point based on his experience about the value of such services and interventions. I assure him that I will continue to focus on that as we look to the months ahead and the spending review.
I need to make some progress due to the time available for this debate.
To do more, it is crucial that we listen and respond to what local authorities are telling us, not just on the NHS and social care, but on all issues. It is in that spirit that we are increasing the rural services delivery grant by £16 million in 2019-20 to maintain it at last year’s level. In addition, after consulting widely, we have decided directly to eliminate negative revenue support grant—where changes in revenue support grant have led to a downward adjustment of some local authorities’ business rates top-up or tariff—in 2019-20. I recognise the strength of feeling about that, and I believe this is the most straight- forward and cost-effective approach for the next year.
We also want to continue rewarding councils for delivering the homes we need. I therefore confirm that the new homes bonus baseline threshold will be maintained, at a cost of £18 million. The message about councils wanting certainty to help them plan also came across loud and clear in the consultation. To that end I can confirm that, in 2019-20, local authorities, with the exception of police and crime commissioners, will retain the same package of council tax referendum limits as in 2018-19. This will protect local taxpayers from excessive increases, in line with our manifesto commitment.
Every council has the freedom to set higher council taxes if it wishes, provided it gains the consent of local people in a referendum. I am also providing an additional 2% council tax flexibility to Northamptonshire County Council to assist with improvements to council governance and services after its serious issues.
With the end of the current multi-year deal in sight, it is clear that we need to take a longer view on how we fund councils as we move to a stronger, sustainable, smarter system of local government. Preparations this year for increased business rates retention, a new approach to distributing funding between local authorities and the upcoming spending review will be pivotal to this, as will the important work under way with local authorities and the wider sector to better understand service costs and pressures. Again, we are listening and responding.
For years, councils have asked for more control of the money they raise, and we are giving it to them through our plans to increase business rates retention to 75% from 2020, in the process providing local authorities with powerful incentives to grow their economies. Local authorities estimate they will retain around £2.4 billion in business rates growth in 2018-19 under the current system, a significant revenue stream, on top of the core settlement funding I am outlining today.
The pilots testing increased business rates retention have, unsurprisingly, proved very popular, and I am delighted there will be 15 new pilots for 2019-20 covering 122 local authorities. We will also be piloting 75% business rate retention in London and continuing our existing pilots in devolution deal areas.
I thank the Secretary of State for including West Sussex in the business rates retention scheme and for the 4.2% increase the county council is getting. Crawley Borough Council has reserves of over £21 million. What more can be done to make sure that councils use such large reserves more efficiently?
I congratulate my hon. Friend on the way in which he has championed his local area. As a former local government leader, he has shown what can be delivered through local authorities, and I commend him for that.
My hon. Friend highlights the increased spend that West Sussex will gain as a consequence of the settlement before the House, but obviously it is for local authorities to work smartly and thoughtfully in relation to their retained reserves. There is a clear need for reserves, which he will understand, but he rightly underlines the need to use those funds sustainably, appropriately and effectively.
The Secretary of State rapidly skipped over the funding review. Will he confirm that the consultation proposed in December to take deprivation out of the foundation element of the funding review? That would transfer money from deprived areas to non-deprived areas. Is that fair?
Obviously we will look at all the representations that continue to be made during the review of relative needs and resources, but our analysis in the review demonstrates that, overall, population is by far the most important cost driver for both the upper-tier and lower-tier foundation formulae. Although in aggregate terms deprivation is not shown to be a major cost driver for the services included in the foundation formulae, I am of the view that relative levels of deprivation remain an important cost driver for some specific service areas such as social care. I welcome views as part of the current consultation, and I am sure the Select Committee will continue to focus on this important work.
Can it be right that prior to the new fairer funding formula central Government grants for inner London were £437 per person per year, whereas the grants for county areas were £153 per person per year? Do we not simply need a fairer funding formula?
While mindful of the intervention from the Chairman of the Select Committee—of course it is right that we take into account deprivation—let me say that a range of other factors are involved. Rurality and sparsity in a county such as Lincolnshire make it hard to deliver public services, as the Secretary of State will know. He has mentioned rurality, so when he looks at the funding formula, while being mindful of that earlier intervention, will he look at that matter once again?
I must make some progress.
I know that local authorities were also pleased to hear that we plan to distribute £180 million of surplus in the business rates retention levy account in 2018-19, which was generated by strong growth in business rates income, to every authority in England, based on need. But as well as more control, councils want and need to see a clearer link between the allocation of resources and local circumstances.
On a point of order, Madam Deputy Speaker. I have tried two or three times to draw the Secretary of State’s attention to serious cuts in Coventry, and the people of Coventry want to know what the benefits are in relation to the £1 billion that he just announced—
Order. The Secretary of State has the right to take as many or as few interventions as he wishes. He is aware that there is pressure on time. I am not sure whether the hon. Gentleman has put in to speak, but he really does have to wait until the Secretary of State wants to give way. I do not like points of order getting in the way of speeches, because I do not think it is fair on others who are waiting to speak.
Thank you, Madam Deputy Speaker. I know that a number of Members wish to speak this afternoon. I hope I have been generous in taking interventions, but I am conscious of allowing sufficient time for right hon. and hon. Members to make their points for their individual communities. I did not mean any disrespect to the hon. Member for Coventry South (Mr Cunningham), as I know he takes these issues extremely seriously. It was on that basis that I sought to be generous but I need to make progress now.
As well as more control, councils want and need to see a clearer link between the allocation of resources and local circumstances. That is why we are working with them to overhaul a funding formula that is currently far too complicated and badly out of date. We need to look at this afresh and do away with anomalies such as double weighting for urban roads compared with rural roads, which the Labour party was far too comfortable imposing. Let us not forget that local people paid the price for Labour: under the last Labour Government the average band D council tax bill went up by a staggering 109% between 1997 and 2010, costing families, on average, an extra £751 a year. Given that track record, one would think that the Opposition might have learned a lesson or two about excessive tax rises, but no. Labour’s manifesto set out plans for a new land tax on family homes, which would punish those with gardens. Labour’s garden tax would send tax bills soaring and house prices plummeting, and would pressure families to build over their back gardens. By contrast, our approach has been informed by a strong consensus on the need for fairness, for local authorities and for local taxpayers. It is now critical that everyone takes a pragmatic approach, recognising the trade-offs that are necessary to ensure we get this right and deliver a new and fair formula on time, as agreed.
This important work—on the funding formula and on increased business rates retention—reboots our system of local government, creating the space for communities to re-imagine what they can do and can be in the 21st century, and helps to renew the bonds with communities. This is of the utmost importance as we strive to ensure every part of our society and country benefits from a modern, outward-looking Britain after Brexit. No one is better placed to deliver on that than local authorities. That is why last week I released £56.5 million, to be used across this year and next, to help councils to prepare for EU exit, and it is why we are backing them to deliver every day through this settlement and the extra funding announced in the Budget. In doing so, we are delivering on what they have asked for: a real-terms increase in spending in 2019-20; support for the vulnerable; a boost for housing, with the removal of the Government cap on how much councils can borrow to build, for quality public services and local economic growth; and help for our high streets. The Labour party may turn its face against this, but it is no less than our councils and communities deserve. I commend the settlement to the House.
We expected better from this Secretary of State and wanted to see better from this Government. I thank our dedicated council staff and our local councillors of all political persuasions and none, because, frankly, over the past nine years they have all been hung out to dry by successive Secretaries of State.
This is an Alice “Through the Looking-Glass” settlement. Ministers present a cut as an increase, but back in the real world, what we saw in the provisional settlement, which was reaffirmed last week in the Secretary of State’s written statement to the House, is that there is no new money, no new ideas and no recognition of the dire situation facing councils. Between Christmas and last week the Secretary of State had the chance to change tack, but he has just confirmed to the House that the settlement is identical to the provisional settlement that failed so miserably before Christmas.
Local government is at the heart of our local communities. It looks after the most vulnerable in society and makes our local green spaces cleaner and safer, but under this Conservative Government we have seen unprecedented levels of cuts to our local councils. The fact is simple: between 2010 and 2020, local government in England will have lost more than 60p in every £1 that the Government provide to our communities for services.
We just had a debate on the police settlement grant. Does my hon. Friend agree that local authorities are at the forefront of prevention work, so it is particularly tragic that my local authority, Westminster, has removed all funding from youth services, after-school services and holiday schemes and, like authorities all over the country, lost at least a third of early-intervention funding?
My hon. Friend is absolutely right. The fact is that councils are the lynchpin of the provision of proper, cohesive, joined-up services with other agencies, whether housing associations, the police, leisure services or youth services. It is crucial that our councils and councillors are given the resources they need so that we do not cost-shunt from one area of the public sector on to the others. It is self-defeating to cut youth services, early intervention and police budgets at the same time, because we end up in the situation my hon. Friend describes.
I thank my hon. Friend for giving way. I was rather surprised that the Secretary of State did not give way to me; he is usually quite generous, so I am disappointed.
More importantly, it is vital to the people of Coventry that we represent them. Their budgets—if I can put it that way—through the city council have been cut by well over 50%. That has affected libraries, children’s services, care in the community—I could give a litany. It has been a general attack on public services, whether we talk about local authorities, the health service or other services. It is vital that we know the breakdown of the £1 billion pounds that the Secretary of State just announced—I noticed that he tried to avoid that. My hon. Friend is right that central Government are shifting expenditure on to the local council tax payer, rather than facing up to their own responsibilities.
My hon. Friend, who is a doughty champion of the people of the city of Coventry, is absolutely right. What we have seen today from this Secretary of State is smoke and mirrors. He can talk about a spending power increase across local government, but that is predicated on every English local authority increasing council tax by the maximum level possible—an eye-watering, inflation-busting increase. We know that not every local authority can raise sufficient money by council tax alone, which is the reason behind the revenue support grant. A 50% cut to the revenue support grant of my hon. Friend’s city of Coventry is a big cut by monetary standards. Coventry’s council tax base does not allow the city council to raise anything like enough money to plug that gap.
The hon. Gentleman talks about the revenue support grant. How can it be right that a person in London gets £437 per year allocated to them from the central Government grant, a person in a metropolitan borough £319, and a person in a county £153? How can that be fair or right?
I will answer that: a third of the services are more expensive to deliver in urban areas. That is the fact. It is in the Government’s own report that was commissioned for the then Department for Communities and Local Government. Some Tories do not get the reality of this, but I imagine that those who represent urban areas probably—silently—do. The fact is that revenue support grant is there because Governments of all political persuasions recognise that not every area is the same. The baseline is not the same. In some urban areas, the council tax base is low.
No, I am answering the hon. Gentleman, if he will do me the courtesy of listening.
Every local area has a different council tax base. I hazard a guess—I do not have the facts in front of me —that a 1% increase in council tax for Tameside Council, which I partly represent, will raise significantly less than a 1% increase in his area’s council tax, but the needs of Tameside are as great, if not greater, than some of the needs of his constituents.
I will give way later if the hon. Gentleman will allow me.
According to the Local Government Association, the change in the revenue support grant has left local services today to face a huge funding gap of £3.2 billion. This is the Tory-led Local Government Association, so I hope that Tweedledum and Tweedledee sitting opposite will listen to this. It includes a £1.5 billion gap in adult social care funding, a £1.1 billion gap in children’s services, a £113 million gap in tackling homelessness and a £531 million gap in public health. By 2025, the gap facing local councils will rise to £7.8 billion, which is something that should shame us all.
My hon. Friend is making a very powerful speech. On the issue of child poverty, we have high debt rates and nine food banks in Hartlepool. How can my local authority cope with a £6 million funding shortfall and 40% departmental cuts right across the patch?
My hon. Friend is absolutely right. This is what Government Members really need to get about some of the authorities that we represent—although, to be fair, a number of Conservative Members represent authorities with very similar deprivation statistics to those represented by my hon. Friends.
The fact is that if we want to tackle health inequalities, narrow the gap between the richest and the poorest, and actually do the things that the Conservative Prime Minister said were her main aim and ambition on the first day that she took office, we have to ensure that local authorities have the resources they need.
When the Conservatives were in government in the early ’90s and they had to consign the community charge to the dustbin of history, they brought in the council tax and everyone breathed a sigh of relief. The trouble with the council tax is that it depends on there being a median band D council tax raising power in every part of the country. Just under 70% of the properties in my area are in band A; we cannot raise the revenue locally, so by taking away our revenue support grant, the Government are really crippling councils like mine in Gateshead.
My hon. Friend is absolutely right. Scandalously, council tax now equates to 7% of the income of a low-income family, compared with just 1% for a higher income family. That is unfair. Some people say that we can merely reform the council tax by adding extra bands to the end. Let me tell my hon. Friend—I imagine his area is very similar to mine—that we can add as many extra bands on the end as we like, but it will not raise a single penny more for my council because we do not have houses that would fall into those bands.
The hon. Gentleman has spoken a great deal about pressures on urban areas, but in my constituency in rural Shropshire there are additional costs involved in providing services across a very large, remote, rural area, and we have a lot more senior citizens than the national average. Is he saying that, under a future Labour Government, there will be more money for urban areas rather than rural ones?
I am afraid that the hon. Gentleman has fallen into the trap that has been set by his own Ministers. We should not be talking about urban versus rural, or cities versus towns and villages. What is important is not how we cut an ever-diminishing cake differently, which is the approach of Ministers; we need to grow the cake. Politics is a question of priorities and Labour has set out very clearly how we would put more money into local public services, meaning more money for the hon. Gentleman’s council as well as more money for mine.
I thank my hon. Friend for making the excellent point that this is not a dichotomy between rural areas, such as that which I represent, and urban areas. We cannot be robbing one area to give to another. The fact that this Government have cut and cut and cut means that costs are increasing in counties such as my county of Derbyshire. Local authorities have overspends on adult care purchased services and on children’s services because they have been cutting social services and early help. That is why councils are struggling all over the country.
My hon. Friend is absolutely right, and she is also right that it should not be about urban versus rural, but that is what the Government have made the situation with their approach to local government finance over the last nine years—this perverse reverse redistribution. The facts speak for themselves, and they should shame each and every one of us in this House.
We have seen a shift away from spending based on need and deprivation. The Secretary of State can shake his head, but nine out of the 10 areas seeing the biggest cuts to spending power per household, in pounds sterling, are all Labour controlled. Between 2010 and 2019, Hackney has seen a spending power cut of £1,406 per household, Newham a cut of £1,302 per household, Tower Hamlets a cut of £1,264 per household, and Knowsley a cut of £1,057.06 per household. It is worth noting that Knowsley is the second most deprived area in the country and has received the fourth biggest cut of any council. Nine of the 10 most deprived councils in the country have seen cuts of almost three times the national average. Blackpool, the most deprived area in England, has seen a spending power cut of £680 per household. Then there is Knowsley, followed by Hull, with a cut of £710; Liverpool, with a cut of £924; and Manchester, the fifth most deprived area, with a cut of £902 per household.
My hon. Friend is making a most powerful argument. Local authorities like Slough are currently housing 79,000 homeless families in temporary accommodation, including more than 120,000 children. Last year, there was the largest annual increase in children in care since 2010, and councils are now starting 500 child protection investigations every day. Does he not agree that that is a diabolical situation resulting from these harsh ideological cuts?
My hon. Friend is absolutely right. I pay tribute to his council for all the hard work that it is doing in very difficult circumstances. Cuts do have consequences, and cuts that are outside the control of the local authority are now presenting themselves as spending problems for town and county halls across England. That is why we are so angry about what this Government are doing.
I will give way in a little while.
I have talked about the shift of resources out of some of the most deprived communities in England. Yet contrast that with the councils that have seen the smallest cuts in cash terms—or in some cases, increases—over the nine years of Tory austerity. Seven out of the 10 areas seeing the smallest cuts to spending power per household are Conservative-controlled councils. That is very clearly what is going on here. Let me give the Secretary of State and his MPs the facts. The Isles of Scilly have seen a £337 per household increase in spending power, Wokingham a £40 per household increase, Horsham a £16 per household increase, Surrey—the council of the Chancellor—a £13.12 increase, Hart a £9 increase, Uttlesford an £8 increase, Stratford-upon-Avon a £7 increase, and Tonbridge and Malling a £4 increase. It is only when we get to places like Maidstone that we start to see spending power cuts over the past nine years —of just £6.78 per household.
Of the councils that are getting increases, not one of them is a Labour council. It is an unfair funding system peddled by a Secretary of State and Government who are recklessly gambling with our communities.
It is even worse than that. This ever diminishing cake has now been subject to the Prime Minister—not the Secretary of State, the Prime Minister—offering bribes to people who are going to—[Interruption.] This is part of the system, and it can affect any area—
My hon. Friend makes a powerful point. Communities that need help and assistance after nine years of Tory austerity should not be offered help and assistance in return for getting the withdrawal agreement through this place; they should get it because it is the right thing to do for those communities. He is right to turn down such offers, as he has done.
If the statistics that I have mentioned were not bad enough, at a time when the Government should be reinvesting in our most deprived communities, helping them and lifting people out of poverty, they propose to cut even further. What we see in this perverse reverse redistribution is another cut to the revenue support grant of £1.3 billion, taking money away from the poorest communities in England. Yes, the Government have announced £1 billion of additional spending in the Budget, and they re-announced it in the provisional settlement and today. But the reality is that the way they propose to distribute that additional money, which does not offset the loss of revenue support grant in absolute terms anyway, is unfair.
For example, the Government are changing the way that the pothole money they announced is to be allocated. Tories who represent urban constituencies should be worried about that, because the Government are moving away from the type, width and usage of a road and merely using a simplified formula based on length of road. That is great for a constituency with lots of country lanes that are used by one tractor a day and 16,000 sheep, but try telling the people who live on potholed dual carriageways in urban areas that they are losing funding by the fiddle and sleight of hand that Ministers are adopting.
Children’s services are the biggest single cost pressure facing our local councils. That was one reason why Northamptonshire County Council—it gives me no pleasure to say that it is a Tory council—was the first council to declare bankruptcy not once but twice in the same year. Not only has that caused misery for families and children, but councils have had to squeeze the place-based services that people think they pay their council tax towards to be able to look after children. That is the right thing for councils to do, but the Secretary of State has to understand that £84 million divided by five divided by 20 councils will not resolve the problems facing children’s services in England. Adult social care has a massive £1.5 billion funding gap next year. Where is the Green Paper? It has been delayed and delayed. That can has been kicked so far down the road that it is probably on the country lane with 16,000 sheep.
In closing—[Hon. Members: “Hear, hear!”] Those on the Government Benches can cheer as much as they like, but they are cheering cuts to the poorest communities. I suspect that many Conservative Members have now forgotten why they came into politics. The Prime Minister was right when she entered Downing Street—it should be about narrowing health inequalities. It should be about caring for those who cannot care for themselves. It should be about dignity in old age and looking after our children. I want, and we on the Opposition side of the House want, to improve the lives of people in every part of the country. We have not forgotten how important it is to deliver for local communities when and where they need it most.
Not a day goes by but people claim that politicians are all alike, that we are all the same and that there is no difference between the lot of us. They need to look at this debate today, and by doing so they will see that there is a difference between the Secretary of State’s party and ours. Our party—the Labour party—would never hit the most vulnerable like this, and we have a record to prove it. Politicians are not all the same. Some of us remember why and how we got into politics in the first place. A Labour Government will stand up for local communities. After all, Labour councils are leading the way in standing up for the local services that people rely on. A Labour Government will share power with local areas. We need to make sure that they have a Government who will rebuild this country for the many, and not the few.
Before I make my general comments, may I gently remind the House of the economic mess of 2010 and the financial difficulties that this country was in at that time? Opposition Members seem to forget that.
First, I congratulate the Government on the overall budget increase to local authorities, which I think helps councils to plan for the future and creates some stability for them. We often underestimate the importance of local authorities and the role that they play in providing leadership in their communities, helping to develop localities and, most importantly of all, providing services to their areas. I also welcome the Government’s various initiatives on social care, the new homes bonus and—this is of particular importance to me—business rates retention. That is a very important incentive to local authorities to be business-friendly, and I am just sorry that Cumbria is not part of one of the pilot schemes.
I want to touch on some wider issues, one of which is the relationship between central Government, local government and MPs. We often underestimate the importance of such relationships and the great change that can be made when people work together. I would like to put on record my thanks to the Secretary of State, the Minister for Housing and the Minister with responsibility for the northern powerhouse, my hon. Friend the Member for Rossendale and Darwen (Jake Berry), for their positive and proactive approach to dealings with me and my local authorities to improve our region.
These are exciting times for my city of Carlisle and for the region. Traditionally, we have in many respects punched below our weight. We are the regional capital and the only city in the area, yet for many years we appear not quite to have reached our potential. I genuinely believe that that is starting to change. We have had investment from Pirelli, the Edinburgh Woollen Mill, 2 Sisters, Pioneer and McVities—to name some very important companies in our area. That demonstrates that the Government are interested in rebalancing the economy and in the northern powerhouse, which is relevant to Carlisle and beyond.
There is further evidence of such support from central Government, and of the relationship between central Government, local government and MPs. We have an enterprise zone, where businesses are now expanding and growing. We have the garden village with 10,000 new houses—a real vision for the future for Carlisle—and financial support from the Government is helping local authorities to make appropriate plans for that village. As the Secretary of State is well aware, we have made a housing infrastructure fund application that, if successful, will unlock the garden village. It will be the biggest significant infrastructure investment in Carlisle in a generation, and it will be a huge boost to the region, not just to the city. Of course, there is also the borderlands initiative, which goes beyond Carlisle to south-west Scotland and the rest of Cumbria and Northumbria. That really exciting opportunity for the area demonstrates that a positive relationship between councils, MPs and central Government can bring real benefits to a locality.
I give credit to the Labour leader of the city council in that he has been willing to be proactive, but an awful lot more can be done. We have all-out elections in Carlisle in May. If we achieve what I hope will happen—a Conservative council—I think that we will see even more happening when there is working between a Conservative council, a Conservative MP and a Conservative Government.
My final observation is about the devolution of powers and the reform of local government structures. As Ministers are well aware, Cumbria is in need of reform. We are over-governed and over-represented, and there is a real opportunity for rationalisation and savings. The way forward is unitary, but not with a single authority. Cumbria is too large a geographical area with a small population, so something else needs to be done, but clearly reform is required.
I support the Government’s direction of travel on local authorities. It is the right approach and I will support it. My real message today is that with proactive central Government, with a responsive local government and with MPs willing to work with local and national Government, an awful lot can be achieved. I therefore look forward to welcoming Ministers to Carlisle in the near future.
I probably agree with most of the points about devolution made by the hon. Member for Carlisle (John Stevenson), but I strongly disagreed with his comments about the situation in 2010. It was clear that we had an international financial crisis, and Gordon Brown deserves a great deal of credit for mitigating its consequences on the international stage. That should be put firmly on record.
That is quite a good record. If the hon. Gentleman looks back, he will find that one of the problems was the lack of regulation of financial institutions, but the Conservatives criticised Labour for regulating too strongly throughout that period.
I will try to be charitable to the Government by saying that I can welcome some elements of the spending review, including an extra £650 million for social care. However, that has to be set against the LGA’s analysis of a £1 billion deficit in both children’s and adult social care, which will rise to £3 billion for each in 2025. I can welcome the fact that the spending power of councils as a whole will not fall in real terms—there is a 2.8% increase in cash terms—but that is spread differently across various authorities, and is cushioned by increases in council tax. Those increases bring in more money in richer areas, of course, and those are the areas that have received the smallest cuts to their grants since 2010. Those two things do not sit well together.
Sheffield has seen a 50% cut in grants since 2010 and major cuts to services. Social care services for both children and adults overspent by £15 million last year and will do so again this year. This is not a local authority out of financial control. It has not yet used its reserves, but next year, for the first time, it is planning to do so. Of course, that can be done for only a limited number of years. Many authorities across the political spectrum are in the same position.
Care is very important, but there are other services to consider. Sheffield and most authorities have done the right thing by concentrating on care, because they have statutory responsibilities to the elderly, children in care and people with disabilities, but National Audit Office figures for cuts to other services since 2010 show that private sector housing has been cut by 60%, that traffic management and road safety has been cut by 60%, that recreation and sport has been cut by 50%, that libraries have been cut by 30%, and that planning and development has been cut by 50%. Those cuts are hitting communities. In the end, it is not councils that are hit by such cuts; it is communities. It has happened in my city, where libraries are having to be staffed by volunteers, grass-cutting is done less often and private sector housing officers are not sufficient to bring selective licensing on the scale that we would like. There are cuts to funding for road safety, with bus routes scrapped, and children’s centres and youth centres closed. That is happening in the constituencies and local authorities of Conservative Members, too. What worries me is that as most people do not have family members in care, they see the other council services: parks, buses, libraries, road maintenance and refuse collection. Those are the services that matter to them, but they are the services that are subject to the biggest cuts of all.
Absolutely right. We hear people start to say, “What is my council doing for me? What am I getting from it? I’m paying a lot more as council tax rises by 6%, but I’m getting a lot less.” We should all worry about the impact on and support for local democracy, and local councils as a whole, if that continues and people think that they are paying money into the system but getting nothing out. There was something very wrong with the announcement of another cut to the public health grant of £80 million in the very week in which the Government promoted their new long-term funding plan for the NHS and said that prevention would be more important in the future. Those two things just do not fit together.
There have been two clear facts since 2010: first, local government has been subject to bigger funding cuts than any other sector of the public realm; and, secondly, within those cuts to local government, the biggest have been in the poorest areas. Those two facts are absolutely clear. Looking ahead, how can we deal with that? First, there has to be a bigger pot of money for local councils in the spending review. The answer is very simple. The Housing, Communities and Local Government Committee has welcomed 75% retention of business rates. It also said that that money should not be used to replace public health and other grants. The money needs to be kept in place and used to help to fund the gap in social care and to reverse some cuts to the other services I have just described. That money needs to be kept in local government, not used to mop up other grants that are going to be cancelled.
On the funding review, there is a question of not just the totality of the money, but how it is distributed. I accept that one area’s fairness will possibly be another area’s unfairness, and we will have different views, but taking deprivation out of the foundation element—taking money away from deprived areas and moving it to others—is very difficult to justify. I say to the Secretary of State that this is a serious exercise. I hope that in the end the Government do not get to a point where they use that mechanism as a way of financially manipulating money into Conservative areas, because that is the suspicion among Labour Members. I accept that this is a difficult and complicated job, but the Government need to be very careful that the process does not become seen as an exercise in financial gerrymandering. That would be very sad for local government, as well as for the people we represent.
There are two challenges for the period ahead. Let us all stand up for local government and ensure that it does better in the next spending review and has a better allocation of resources. Let us then make sure that those resources are fairly delivered. I am sure that we will have a lot more to say about that in the future, but those are the two tests by which I will judge next year’s spending review.
I have the utmost respect for the hon. Member for Sheffield South East (Mr Betts) and it was good to hear his comments. I did not agree with everything he said, but there is no doubt that he has a significant level of knowledge on this subject.
I welcome the real-terms increase in funding for local government in this settlement. I want to talk a little about the settlement in that context and then talk about the segue we have between this year’s local government finance settlement and a number of different events that are going to take place that will frame the funding for local government as we go to the following year.
There is no doubt that for a number of years it has been a challenging time for local government. Local government has done its share. It has worked extremely hard to do its part to help to sort out the absolute mess left behind by the Labour party in 2010. Many councils have worked extremely hard and coped extremely well in very difficult circumstances. Some have made far better decisions than others. I praise my local authority, Warwickshire County Council, for the sound financial management that it has shown while, at the same time, significantly increasing the funding going into adult and children’s social care. Clearly, it has had to make tough decisions, but it has set priorities and made sure that it is still providing many of its core functions.
That is in stark contrast to one of my district councils—Labour-run Nuneaton and Bedworth District Council—which, quite frankly, has done an absolutely appalling job of dealing with the challenges. It has tried to raise revenue by hiking car parking charges and has lost £500,000 in income. It has overspent on a council depot by £2 million and has purchased a climbing wall, which has so far cost the taxpayer nearly £200,000 and has hardly been used. The council has then proceeded to blame the Government for the financial position that it is in.
I welcome the £17.5 million extra that Warwickshire County Council will get for children’s and adult social care and I welcome the significant investment in roads. In Warwickshire, we are starting not just to fill potholes, but to patch roads properly and replace road surfaces, which is important if we are going to get long-term value for money. I am also pleased that the Secretary of State made his case and got the challenge of negative revenue support grant under control. That makes a difference of £300,000 for my Labour district council and it makes North Warwickshire Borough Council, two wards of which are in my constituency, better off to the tune of £100,000.
One area that I am extremely concerned about in my constituency is rough sleeping. Over and above the settlement, I know that a number of pots of funding are being allocated to dealing with the challenge of rough sleepers. I appeal to the Government Front Benchers, as we go through the various stages of funding on that: in Nuneaton, we desperately need to make sure that we have funding, so that we can get people off the streets and get the support around them to keep them off the streets and help them to sustain accommodation.
Various events are coming up, including the fair funding review, the business rates retention pilots and the spending review. Clearly, we do not know the quantum of funding. There is a lot of speculation over that, but we do not know that as yet. However, there is the distribution of funding to consider. Personally, I think that we need to pay deference to deprivation, but based on looking at how we can improve the potential of areas and let them fulfil their true potential, rather than getting into a race about how deprived every area is, and running and talking those areas down. We also need to look at the difference between county funding and funding for metropolitan areas. That needs to be far fairer. We need to make sure that the business rates review seeks to support councils that do the right thing and drives growth and jobs in their areas.
I mention to the Secretary of State that it would be good to see the new settlement taking place over as long a period as possible. The four-year settlement this time has been very helpful. There are also challenges for the upper-tier authorities that have had various social care funding streams over the last few years. It will be interesting to see how that comes into the final decisions that are made through this process.
I also want to mention the new homes bonus. My area has not used that for frontline services, but many have, and we need to be careful and acknowledge that in the new settlement. Finally, there is car parking. In times when many towns need to reduce car parking charges, we need to be very careful not to put too much importance on car parking in doing the settlement.
I welcome today’s settlement. I will support it, and it is a good segue into all the hard work that the Secretary of State and the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend Member for Richmond (Yorks) (Rishi Sunak), will do.
Liverpool has received yet another poor local government settlement, but that is no surprise; it is a continuation of the Government’s austerity policies. Liverpool has high concentrations of deprivation and this settlement simply fails to recognise the city’s needs.
Liverpool is now No. 4 on the national list of areas of deprivation, but that is a great improvement on being No. 1, and the praise for the change must go to Mayor Joe Anderson and the councillors in Liverpool who have worked so hard to protect people against a background of continuing cuts. They have worked with the private sector to boost the economy, because that is how to improve things and increase prosperity.
Let us look at what has been happening to local government spending. The Centre for Cities report shows that since 2009-10 Liverpool households have suffered the second deepest real-terms cuts in the country, having lost £816 per resident. Government support has reduced by 63% since 2010.
Government policy is very clear. It is to make the city and other areas more reliant on raising their own income, and Liverpool is involved in a pilot scheme looking at just this policy, but we must remember that raising council tax in Liverpool by 1% produces £1.4 million, while raising it by 1% in Surrey raises £6 million. If we are to have a local government system unduly dependent on areas being able to raise their own finances, areas suffering poverty and deprivation are bound to suffer more. Under the settlement for 2019-20, if Liverpool had a tax base the same as the national average, with the same range of property values, the city would be receiving £102.3 million more to spend on public services. Is that fair? The answer has to be no.
What are the consequences of this long-term policy of reducing Government spending in real terms while need is actually growing? The council has done its best to protect the people of Liverpool and their services—it is an efficient council, it has shown a willingness to innovate, it has done its best to protect services for the under-5s; remarkably, it has protected Sure Start services—but there is now a new threat in the uncertainty around Government funding for maintained nursery schools. Abercromby Nursery School, in common with other such schools across Liverpool and the country, is fighting for funding so that it can continue its vital work and increasing achievement among underachieving pupils, who, at the start of every year, are often in a majority in areas of deprivation.
Liverpool has innovated in raising funding for schools. When the Government stopped funding, Liverpool went to the private sector and raised finance to build seven new schools. This is a council that wants to innovate and work with others. It has protected the arts as best it can, the arts being so vital to Liverpool’s economy, but none of these things can stop the reality of cuts, and neither the council’s innovation nor its determination to protect people can stop people suffering.
The council cannot stop destitution. Universal credit is causing massive problems in Liverpool. People are becoming destitute and more people are rough sleeping, although the council is making a valiant effort to address that and has had some success. People are suffering from Government cuts to social care. People in hospital cannot go home because adequate packages cannot be made available. Children need support, but vital preventive work cannot be undertaken as it should be.
The fact that cuts have continued year on year makes things harder. The council can try to protect people—and does to the best of its ability—but consecutive cuts year after year cannot protect the most vulnerable.
What should the Government do now? Looking ahead, they must recognise the needs of areas such as Liverpool which are high in deprivation but low in tax base. They must provide a fair council tax settlement for local services, protecting the poor, widening opportunities, and protecting and promoting the city of Liverpool. That is what the council wants to do and the Government should support it by enabling it to happen.
It is a pleasure to follow the hon. Member for Liverpool, Riverside (Dame Louise Ellman), for whom I have the greatest respect.
I welcome the Secretary of State’s announcement that councils’ core spending power will increase by 2.8%, and that following a real-terms increase they will have £46.6 billion to spend on services for local residents. I know that councillors, officers and staff will greatly appreciate what he said about their working together to provide value for money for residents in recent years.
I also welcome the key principles that lie behind the Government’s approach. They include the principle of encouraging growth by providing housing and the business premises that will create jobs, and hence providing funds in response to the needs of local residents. I hope to demonstrate to the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak), who will visit Rugby later this week, that our council is doing a brilliant job. The council represented by my hon. Friend and neighbour the Member for Nuneaton (Mr Jones) has been less effective.
In July last year, the all-party parliamentary group for district councils, which I chair, produced a report on district council finances. District councils provide 86 of the 137 essential local services in two-tier areas, and cover 40% of our population and 60% of the country by area. According to evidence that the APPG received from the representatives of 60 district councils who appeared before us during our Select Committee-type inquiry, there was real concern about the possibility that the majority would stop receiving revenue support grant by this year. We are delighted that the Secretary of State and the Minister have recognised the concerns about “negative grant”. It was feared that councils would give back to the Treasury more than they would receive from the Ministry for Housing, Communities and Local Government. District councils throughout the country are greatly reassured to learn that that will not now happen, and we are grateful to the Secretary of State.
Our report also asked for no further changes in the new homes bonus baseline rate. The new homes bonus has been a great success during our party’s time in government. It has encouraged local authorities to provide new housing, to fund infrastructure, and to compensate communities for the disruption that occurs when development is taking place. I am very pleased that the Secretary of State has acknowledged that and retained the current baseline, although there is a strong case for the removal of that 0.4% level. It is important to recognise that district councils’ housing completions have increased by 45% since the introduction of the new homes bonus.
There are a couple of other asks in our report. One, which has already been discussed today, is recognition of the role of councils in prevention. District councils, through their housing and planning authorities, provide services that are critical to the health of communities, such as leisure and recreation facilities and home adaptations, and they also tackle homelessness. I am delighted that my local authority, Rugby Borough Council, has allocated an increased budget for that work, and is working closely with the charity Hope 4 to deal with an issue that was also mentioned by my hon. Friend the Member for Nuneaton.
The local authority representatives from whom I have heard want more freedoms and incentives when it comes to raising revenue, but I should enter a word of caution in that regard. I have heard of too many local authorities that are turning themselves into property investors and property companies, often outbidding commercial organisations in the private sector, and I am worried about the level of expertise. Although it is entirely right that local authorities want to invest in their communities, I am worried that sometimes they are not sufficiently hard-headed.
The business rates retention reform is perfectly sensible. I ran a small business in Rugby between 1982 and 2008. I had always believed that what I paid in business rates went into my local community, but for much of that time, it did not. When I learned that, my question was, “What incentive is there for a local authority to do the right thing for growth and attract businesses?” We have turned that around and, like my hon. Friend Nuneaton, I am therefore disappointed that Warwickshire was not selected as one of the pilots.
We are considering a strong settlement today—it is a step in the right direction. Of course, there is always much more we can do, and I look forward to the Local Government Minister responding to the various points that have been raised in the debate.
It is always a pleasure to follow the hon. Member for Rugby (Mark Pawsey). It is a particular pleasure to follow my hon. Friends the Members for Sheffield South East (Mr Betts) and for Liverpool, Riverside (Dame Louise Ellman), both of whom came to the House with long and distinguished careers in local government, and indeed having achieved positions of national prominence. We can learn from their experience.
It seems clear from the debate that the Government have a two-pronged approach. The first is cynically to try to divide rural and urban areas. It will not work in my constituency because there are both urban and rural areas in it. The second is the cynical modus operandi that I have mentioned previously of slashing support to public services, then blaming local authorities for failing to deliver them, or when they are forced to put up the council tax.
For example, it is slightly off topic, but we are campaigning to bring a second fire engine back to Chester, yet the fire authority’s funding will fall to zero next year. Local Conservatives have the nerve to support that campaign, even though their party introduced the cuts.
In the previous debate, hon. Members talked about the increase in knife crime. The Mayor of London is often blamed for a rise in knife crime in London, despite the fact that across the country 20,000 police have been cut. The problem intermeshes with the cuts to local government that we are discussing. Children’s services and money to schools have been slashed. It is no wonder that knife crime has increased, but apparently it is all the fault of the Mayor of London and others.
That brings me to the settlement for my council, Cheshire West and Chester. For the last four years, the Labour council, led by Samantha Dixon, has had to deal with a £57 million cut. Since 2010, the cash cut to my local authority has been £330 million. In the next round, which we are discussing, a further £20 million will be cut, despite the fact that that extremely efficient council, which is down to its bare bones, is already running on empty. If the Secretary of State had any courage or sense of responsibility, he would tell us where he thinks those cuts should fall. Should they be to support for vulnerable children, disabled adults, the homeless—homelessness has of course doubled nationally on the Conservatives’ watch—or rural bus services? Ministers will then of course attack our council leaders when we are forced to put up council tax.
My hon. Friend the Member for Denton and Reddish (Andrew Gwynne) pointed out that all the additional spending power is created only from increases in council tax, but the situation is worse than that. The rate support grant is largely being replaced by individual pots for which councils have to bid in a beauty contest: money for potholes; money for rapid rehousing; support for high streets; extra cash for children’s services. Councils have to go cap in hand to Ministers every time they want to fund anything, and Ministers can cherry-pick their favourite councils. We all know where that money will go.
The Government are centralising expenditure and taking away local democracy. They have announced extra money for 20 councils to support children’s social services. I can make a fair guess that the majority of those councils will be of a particular political complexion, and they will not be Labour. There will be another special deal for Surrey or, as we have heard tonight, for Tory Northamptonshire.
Meanwhile, locally, the Minister’s fellow Conservatives in Cheshire West and Chester want to spend more money supporting free parking and on mowing the grass while criticising Labour locally for having to put up the council tax. Those are both worthy aims, but those Conservatives need to do locally what the Conservatives have so far failed to do nationally—namely, to say which services will be cut to pay for the increased expenditure. If I may, I will briefly cross over the border into Cheshire East, because this has implications for the Minister. Madness still reigns there, with police investigations, corruption allegations and a whole series of chief executives and senior officers being sacked. I say to the Minister that if that were a Labour council, the commissioners would have been called in years ago.
Ministers are driving ahead with plans to keep 100% of business rates, which means that the richer councils will get richer and the poorer areas will be made even poorer. The Conservatives will use that business rate revenue to keep their council tax rises low, then claim political credit because the funding formula has been cut back. Cuts are forcing local authorities and other public services to hunker down and defend the money that they have. In Cheshire West and Chester, we are trying to build local partnerships with voluntary groups and charities, but that is not sustainable for long. At some point, Ministers will have to take responsibility for the dreadful effects that their cuts are having in the real world.
It is a pleasure, as always, to follow the hon. Member for City of Chester (Christian Matheson).
I welcome the many positive aspects of the funding settlement, including the assistance given to the elimination of the negative rate support grant and the additional moneys given through the better care fund, which will benefit local authorities such as mine. However, it also highlights the pressing need for us to move swiftly and radically to overhaul local government funding properly. An efficient authority, Bromley will balance its budget this year, but unless we have change, in four years’ time we will have a funding gap of between £20 million and £30 million, depending on the assumptions one makes. The current system is not sustainable in the long term, which is why it is critical that we press ahead with the fairer funding review and with a radical approach to the devolution of business rates, as well as with the other initiatives that the Government are looking at in this area. That must include a White Paper on adult social care, to follow the Green Paper that has been promised. It is critical that we have that early, in time for the 2021 finance review.
Does my hon. Friend agree that it is time we had an adjustment to our local authority’s baseline, to reflect the fact that it has made enormous efficiencies in order to absorb a 50% real-terms cut over the past four years, and to reward it for being one of the most efficient local authorities in the country?
I very much agree with my hon. Friend.
I will now deal with the specifics. Bromley has historically been a low-cost authority, and credit must go to the Conservative-led Bromley Council, which has made savings of around £97 million per annum since 2011-12. However, because it has been efficient historically, there is really no fat left for it to cut, and because of the way the system works at the moment, there is no reward for efficiency. There is no reward in the formula for being a historically low-cost and efficient authority. If anything, perversely, we tend to get penalised for this, and that needs to be put right in the spending review.
We also need to recognise that there are more nuances, even in an outer-London Borough such as Bromley, than people might expect. Deprivation is now moving across London, and the old distinction between inner and outer London does not work any more. Bromley has the fourth lowest level of settlement funding in the whole of London, despite having the sixth highest population. It is the largest borough in terms of geography, and it has the highest proportion of older people, with all the cost pressures that that places on adult social care. It also has the largest road network, but it’s funding settlement is the second lowest per head of population.
That does not make sense to the members and officers of Bromley Council, who are working hard to deliver services for our residents. They have a limited ability to make further savings while maintaining statutory services, and the scope for discretionary spend is more and more squeezed. There are pressures not only on adult social care but on the temporary accommodation budgets, not least because the operation of benefit caps in London is pushing people in private rented accommodation out from inner London to the outer-London boroughs such as Bromley. That means that we, in turn, are having to accommodate people out in Kent. This is leading to real difficulties for many London boroughs.
There are also real pressures on children’s services and social care. Bromley has behaved magnificently in turning around its social services, which were rated poor two years ago, but are now rated good and outstanding in terms of leadership, with a Minister describing the speed of turnaround as unprecedented. The council achieved that despite funding pressures, but those pressures still exist. More children are diagnosed or recognised as having complex needs that must be dealt with, for example. Again, the current settlement mechanism is too blunt and opaque an instrument to deal with the situation adequately.
We must also consider the full implications of the Homelessness Reduction Act 2017. I warmly welcomed the Act, but the truth is that, in practice, not all the costs are being picked up for local authorities such as Bromley, so we need to consider a revised formula. The same goes for the deprivation of liberty social care arrangements, because their costs must also be picked up. Such things can be achieved through a sensible revision of the formula.
Turning to the need for business rates reform, Bromley has gone into the London business rates pool and wants to work collaboratively with its neighbours. However, Bromley wants to become self-sufficient and does not want to be dependent on Government grants in the long term. Its ambitious approach to supporting development in the borough, particularly in the town centre in my constituency, underlines that desire, but it needs a proper slice of devolution as a reward in a way that is not currently available given how the pool operates.
Finally, if we are to give local government genuine flexibility, we must look again at the amount of ring fencing within some of the remaining grants. I would hope that we could move a situation whereby such a grant as there is simply comes as a block and then the local authority has the flexibility and leeway to move money around based on its priorities. A simple example from Bromley is that the council is unable to move money from the schools block into the higher-need blocks or into special educational needs transport. A suburban borough such as Bromley has larger distances compared with inner-London boroughs and so requires a greater level of flexibility than the formula currently permits.
While welcoming the settlement, which I shall support tonight, I hope that the Minister will take away my specific points and the broader cry for root-and-branch reform of local government funding.
It is a pleasure to follow the hon. Member for Bromley and Chislehurst (Robert Neill), who made a thoughtful, reflective contribution to today’s debate.
The publication of the latest Centre for Cities report last week confirmed what my constituents in Liverpool already knew: the city has been hit hard by almost a decade of austerity, with massive cuts in central Government funding hitting not only the council but police and fire services. Benefit changes have also hit the poorest communities the hardest. My hon. Friend the Member for Liverpool, Riverside (Dame Louise Ellman) has already spoken about what the report says about Liverpool, but I will repeat one of the statistics she quoted because it is so powerful. Since 2010, Liverpool has lost £441 million in Government funding, which equates to a per-resident reduction of £816 a year. That is the largest per capita cut across the whole country. As she said, our directly elected Mayor Joe Anderson and the Labour city council have shown enormous leadership in taking the city though that period despite the cuts, and have been doing their utmost to protect services for some of the most vulnerable communities in our city.
To illustrate all that, the city council spent £222 million in 2010 supporting adults who need help in the community because of age, infirmity or disability. That has now reduced to £152 million despite demand rising by 15%. Such has been the pressure on Liverpool’s adult social care budget that the council has had to spend almost its entire reserves simply to support social care spending. We also have some of the highest levels of looked-after children in the country. As we know, those numbers have been going up across the country in recent years. As a consequence, the city council overspent last year on vital services for vulnerable children and young adults by £7 million.
Against that backdrop, and despite the pressures on its funding, the city council recently adopted a radical new approach to delivering social care. It has been able to find an additional £7.7 million investment to employ 160 new staff to cut the case load of children’s social workers by half, and I pay tribute to the city council for doing that even in these difficult circumstances. The council says that its new model will reduce the number of children for whom each social worker is responsible, allowing them more time to work with children, young people and families. I pay tribute to the council for that important work.
We had an excellent debate on maintained nursery schools last Thursday, in which I spoke about the two outstanding nursery schools in my constituency—East Prescot Road and Ellergreen. I know this is a matter for the Department for Education and, ultimately, the Treasury, but I echo what my hon. Friend the Member for Liverpool, Riverside said about the crucial role played by maintained nursery schools.
I also echo the call from our city council for a royal commission to ensure a fair funding formula for local services. We have heard different points of view in this debate, each of us representing our own constituency. A royal commission could provide an opportunity for this to be looked at in a full, comprehensive and independent manner.
The Government’s own figures on core spending power show that, had Liverpool been subjected to the average level of cuts over the past nine years, our budget would be £71 million better off. We have seen Liverpool’s spending power per household cut by over £700 during a period in which Surrey has seen its spending power per household increase by £65.
My hon. Friend the Member for Denton and Reddish (Andrew Gwynne), the shadow Secretary of State, rightly said that the council tax base is crucial in determining what a local authority can actually spend. Liverpool City Council raises an average of £886 per chargeable dwelling. As such, we are in the bottom fifth of local authorities in the country. If we had the average tax base, we would have getting on towards £100 million more in council tax revenue. That is the basic injustice that hits the areas of the country with the greatest levels of poverty and inequality, which is why this settlement is unacceptable.
I welcome most of the local government settlement for 2019-20 and its recognition of the work done by councils to provide hundreds of services to local residents. Given the rapidly expanding council funding gap, which the LGA reports will rise to £8 billion by the middle of the next decade, I urge the Government to use the 2019 spending review to begin clarifying their plans for sustainable funding for local government after March 2020.
Part of the way to achieve that sustainable funding would be to move to unitary councils across England, a change estimated to generate savings of nearly £3 billion, as revealed in a County Councils Network report. Based on an assessment of data across 27 two-tier local authorities in England, replacing them with unitary authorities could save between £2.4 billion and £2.9 billion nationally. Colleagues will know that process is already under way in Northamptonshire.
After 12 years as a district councillor and 10 years as a county councillor, including time as a county council leader, I know the great work that both tiers can do, but my experience has convinced me that unitary is the way forward to promote localism and democratic accountability, as well as efficiency. I take this opportunity to praise many colleagues at both Northampton Borough Council and Northamptonshire County Council.
Northamptonshire County Council has, to my dismay, become a shorthand for things going wrong, rivalling Venezuela in that regard. The current leadership who have taken on that profound challenge, such as county council leader Matt Golby, deserve our thanks for their efforts to turn things around ahead of the move to unitary. The Secretary of State’s announcement today on Northamptonshire County Council will, I am sure, be welcomed by council colleagues.
Coming back to the local government finance settlement, I welcome the additional £240 million allocated for adult social care, and £410 million for both adult and children’s social care, announced in the Budget. Although that is helpful in the short term, adult social care faces a funding gap of £1 billion in 2019-2020. I appreciate the Secretary of State for Health and Social Care giving us April to look forward to by announcing that month—instead of a season, which is progress—for the launch of the much anticipated social care Green Paper, but I need to say to him and the Ministry of Housing, Communities and Local Government team, through you, Mr Speaker, that after all these delays it had better be good. It had better be radical, open to fresh and non-statist ideas, and cognisant of not only just how big a challenge but what an opportunity getting adult care right could be. Nothing is more central to effective local government funding, and thereby to MHCLG, than getting this right.
Let me start with a couple of facts: there has been a 49.1% reduction in Government core funding to local authorities and a 28.6% real terms reduction in spending power, which means Government funding plus local council tax, since 2010; and there has been a 32% real-terms reduction in spending on non-social care areas. Those are not my figures, but those of the National Audit Office.
My hon. Friend the Member for Liverpool, West Derby (Stephen Twigg) mentioned the Centre for Cities report, which shows that those cuts have not been fairly distributed; they have been targeted at northern cities and northern councils. Some of the more affluent areas, such as Wokingham in Surrey, have had no reduction in core spending at all. This Government have used local government funding like a pork barrel, putting it into areas that support the Conservative party and penalising areas that do not. Since 2010, Durham County Council has lost £224 million in its budget, and it is predicted that in the next four years it will have to slash another £39 million. That is being done by a Conservative Government, but I do not want to let the Liberal Democrats off, because they also signed up to these cuts when they were in coalition.
On the ability to raise finance, Durham has a similar problem to that outlined by my hon. Friend the Member for Liverpool, West Derby, as 55% of its properties are in band A. The more core funding from national Government is cut, the more Durham County Council’s ability to raise funding is limited. In addition, Durham can raise only a limited amount through the retention of business rates compared with what can be raised in Westminster and other places. So the future does not look bright for Durham County Council, a well-run authority, under this Government’s proposals. If we look at core spending power per dwelling, which is what the Government are looking at, we see that the national average is £1,908 whereas the figure for Durham is £1,727 and Surrey’s figure is £2,004. Areas of deprivation in Surrey would not even register on any type of social index compared with what we have in Durham, a former industrial area, which just shows us the way in which this Government have used the system to reward their own areas.
My hon. Friend the Member for Sheffield South East (Mr Betts) raised the issue of public health funding. If the Government go forward with the notion of the fair funding formula—that should be getting done under the Trade Descriptions Act—Durham County Council is forecast to lose some £19 million, or 35% of its public health budget. That is happening in some of the most deprived communities anywhere in the country. It is a rural county, but it has deprivation on a par with some inner cities and parts of the former coalfields. How can it be right that under that formula Surrey would gain, and deprived areas such as County Durham would lose? The Government are taking political decisions about where the funding goes. There is this notion among those on the Government Benches that somehow every single council is the same, but I am sorry, they are not. The demands on my local council and councils such as Liverpool in respect of adult social care and looked-after children are a lot more severe than the demands in some of the areas that are getting extra funding.
In her statement on Europe on 10 December, the Prime Minister said:
“It means working across all areas to make this a country that truly works for everyone, and a country where nowhere and nobody is left behind.”—[Official Report, 10 December 2018; Vol. 651, c. 25.]
I am sorry, but the policies of this Government over the past eight years have run counter to the Prime Minister’s promise. That just shows how hollow her words are.
Earlier this afternoon, in your absence, Mr Speaker, we had a striking contrast in both the style and content of the Secretary of State’s presentation on local government financing and the Opposition spokesman’s response. On the one hand, we had someone calm and measured who, with his experience as Security Minister and as Secretary of State for Northern Ireland, has dealt with real crises, perhaps not least his own cancer. On the other hand, we had the hon. Member for Denton and Reddish (Andrew Gwynne), who was more purple than reddish with indignation as he made his remarks about how his party would never do anything to hurt the people. He said that we must grow the cake. We in Gloucester remember how Labour grew the cake, and he would do well to listen.
No, let me make this point first.
I remember how Labour grew the cake in Gloucester: by shrinking the economy; by spending furiously on public services while 6,000 of my constituents lost their jobs in business, apprenticeships dried up, and engineering and manufacturing were on the verge of closure, as my Labour predecessor blithely ignored the fact that we had the second worst-performing secondary school in the country; by churning out youth unemployment; and by closing the King’s own post office. We know all about Labour growing the cake, going bankrupt, increasing unemployment—like all Labour Governments—and then complaining about austerity when Britain calls for the Conservatives to sort things out.
Let this House not forget that it was the last Labour-run—
The hon. Gentleman should listen to this. It was the last Labour-run city council in Gloucester that sold the car park for a pound and bought it back for a million. Let us also not forget that the current Leader of the Opposition claimed that 672 Gloucester City Homes tenants had been thrown out, although the actual figure was eight.
We do not need to take any lectures from the Opposition on growing the cake, but does that mean that every Conservative Government get it right? No, of course not. I wish to highlight briefly some of the issues for us in Gloucester. Library research confirms that Gloucester is in fact the worst-affected council, with a year-on-year spending decrease between this year and next of 4.4%. The council’s core spending power fell by more than 8% over the past four-year period.
In today’s world, we know that all second-tier councils must do as much as they can to generate efficiencies, whether by generating savings from increased productivity, merging their back offices, sharing space with other authorities or scrapping the mayor’s car—you name it. That is what every good council should be doing and it is what Gloucester City Council has done. The truth is, though, that as an urban district authority, it is difficult for us to grow and generate new homes bonus, because we have only 5 square miles of land. We are penalised by the deadweight calculation, which is the starting point of the number of homes, and we do not benefit as much as we could from business rate retention, although we are part of the pilot project in Gloucestershire.
The council is a good one. It is well rated by peer group reviews and respected in the city. It is leading on creative physical regeneration, with an award-winning bus station that is much admired in Cardiff and elsewhere, and making real progress on human regeneration by making sure that rough sleepers are helped into housing through the social impact bond and gearing up for a new homelessness hub, both of which are funded by the Government. None the less, the additional costs of dealing with homelessness issues are greater than the extra revenue we were given.
The Minister, who did see Gloucester and Cheltenham councils, at my request and that of my hon. Friend the Member for Cheltenham (Alex Chalk), has made some pragmatic decisions, but they do not, I am afraid, resolve the financial problems that my city council faces. These include issues such as pension contributions and the business of council fees and charges income. Despite being able to raise our precept, we will not, I am afraid, be able to match the costs if our city expects the delivery of the services that it so values at the moment.
I would love to ask the Minister this: will he have not a full blown review of local government funding, as the hon. Member for Liverpool, West Derby (Stephen Twigg) called for, but arrange for a senior official to look specifically at our city council and offer advice on whether the system is working for us and fair, and what more we can and should do to raise the revenue to deliver the services that are so valued across our city of Gloucester?
Like other Members, I want to remind Ministers what the places that they have cut so savagely actually look like. By next year, Newham will have lost 48% of its grant—£138 million a year. That is a £1,301 cut for every household, which is the second highest cut in the country in what is arguably the second poorest borough in the country.
Conservative Members like to pretend that this is all about population—the number of residents in an area who need council services. How can that be true given that Newham grew by almost a third in the 10 years leading up to 2015? We are already the fourth largest London borough by population, and we are expected to have the second largest population growth in London over the next 22 years as well. We also have the youngest population in the country, with 40% of residents under 25 according to the last census. That obviously massively increases need for children’s and youth services, as well as for local authority school services, public health, welfare assistance and more.
The Government seem to think that the only age group that needs council support is pensioners—through social care. It is absolutely true that social care is in crisis, and that affects my constituents in the same way it affects those of every other Member, but young people need much more support as well, and nothing illustrates that better than the fact that nine of my young constituents were murdered between January 2017 and March last year.
A further change that has increased demand for council services is the huge growth in the proportion of my constituents who have to rent privately. Private rentals have doubled—they made up 23% of the total in 2006 and 46% 10 years later—and private rents are simply extortionate. The lower quartile rent on a two-bed over a chicken shop in Newham is now £1,250 a month. Lower quartile earnings are £1,168 a month, so a month’s full-time pay will not even cover the rent, let alone luxuries such as food, heating, clothes and so on. It cannot be any wonder then that the council recently found that, when housing costs are included, 67% of Newham’s children live in poverty.
Although we do have serious problems locally due to the consequences of right to buy, it is not social housing that has reduced so massively, but owner-occupation. In 2006, owner-occupation represented 47% of local housing but, over 10 years, it has more than halved to just 23%. Homelessness and temporary accommodation are extreme problems in Newham—the situation is the worst in the country. The number of Newham residents in temporary accommodation almost doubled between 2012 and 2017. There are more children in temporary accommodation in the 36 sq km of Newham than there are in the 63,000 sq km of Yorkshire, the south-west, the north-east and the east midlands combined.
This urgent and horrifying crisis is simply awful for the families who have to live with it day by day, but it has also meant fewer people living in Newham for long periods, thereby building up relationships and a sense of community, and far more people feeling constantly insecure. That insecurity in itself has generated yet more need for council services, and I believe that it has contributed to everything from criminal gang activity to mental health crises, and from childhood obesity to elderly loneliness—and even to things like fly-tipping. All these issues have a cost to the council and make it harder for council workers to do their most important jobs for the public.
Can the Government seriously tell me that my constituents have not been harmed by their cuts, and that those cuts have not contributed to the rise in young people being murdered or in fear on my streets? Can they seriously tell me that continuing these cuts over the next year will not deepen that harm? No, they cannot—not honestly. Frankly, the best way that this Government can help my constituents is by getting out of the way.
I speak in two capacities: as a Member of Parliament representing a coastal constituency with wards that are among the most deprived in the country; and as chairman of the county all-party parliamentary group, whose role is to ensure that county areas receive sufficient funding to provide good-quality services that meet their residents’ needs.
The Government’s proposals for 2019-20 address the short-term challenges faced by councils in the area that I represent, and I am supportive of them, but there is also a need to think strategically and look to the long term. Although the Government have recognised the challenges that immediately lie ahead, there is much work to be done as we look to the future. Yes, the settlement provides councils such as Suffolk County Council and Waveney District Council with breathing space and vital short-term resources. The Government have recognised the immediate challenges that such areas face and have made resources available. The £180 million from the levy account that is being returned to local government is much needed and welcome.
This is the final year of a four-year settlement upon which the Government embarked in 2015. It has provided councils with some financial certainty, but it has also required them to drive through efficiency savings that, in many respects, have been a really tough challenge. There is now very little, if any, fat left on the bone. Although this settlement contains vital short-term support, it does not address the medium-term financial pressures that councils face, and nor does it provide long-term certainty. The uncertainty beyond 2020 is creating significant financial risks for councils in county areas. A failure to provide a significant uplift in funding for them from 2020 onwards will challenge the long-term financial viability of the services that they provide.
It is vital that local government is provided with a long-term sustainable solution. This should encourage autonomy, incentivise growth and provide sufficient money for adult social care and children’s services, both of which are under real pressure. The fair funding formula is critical to securing this solution. The present system of funding is outdated, unfair and opaque. Moreover, county areas receive the lowest amount of funding per head from Government grants and retained business rates—£153 per person compared with £225 for unitaries, £319 for metropolitan boroughs and £437 for inner London wards. This is notwithstanding the fact that it is more expensive to provide services in rural areas, that there is an increasingly disproportionate elderly population in counties and that, as the county APPG’s recent report on social mobility highlighted, there is a real problem of social mobility in coastal areas and county areas, where young people are missing out on opportunities that are available so readily elsewhere in the country.
In the short term, the settlement just about keeps the house wind and watertight, but in the longer term, we require underpinning, a radical overhaul and additional investment. I believe that the Secretary of State and the Minister for Local Government understand the challenges that such areas face. I recognise the various demands from Members that they will have to balance, but I do believe that county areas have been taken for granted and ignored for too long, so I urge the Minister to put that unfairness right through the fair funding review and the comprehensive spending review.
The past few years have seen the deliberate and systematic destruction of local government. It is local services delivered by local councils that most people see from day to day. From bin collections to park maintenance, from library services to food safety, from highway repairs to care services, these services matter—they are a core part of our local democracy and what people experience from government. With the excuse of austerity, this Tory Government have deliberately stripped out the ability of communities to shape their local areas. Most services are now being contracted out to private companies, and the oversight of good local services is deliberately fragmented and complex.
The biggest cuts to local government are still to come and still to be felt. Councils have emptied their reserves, cut services to the bone and shed the maximum number of council staff. The consequence of all this is poor local services—a tatty public realm, non-existent youth services and unmaintained parks. Worse than that, it is homeless people on the streets, low-quality care for the elderly and limited provision for vulnerable children, especially those with mental health problems. The Government offer nothing new for children’s social care, which has seen a £1 billion shortfall.
In my constituency, 82% of Bath and North East Somerset Council’s budget is spent on adult and children’s social care. This leaves the remaining 18% to fund everything else, from waste collection to road maintenance, library services, the arts, public realm improvements and community outreach services. These services are an absolute shadow of their former selves, becoming more and more squeezed under the pressure of a growing responsibility for social care. Bath and North East Somerset Council cut 15% of its total staff last year and still has another £12 million of cuts to make to meet central Government targets. We have heard today about inequalities. I acknowledge that Bath is one of the better local councils, so I absolutely understand what councils have to face in areas that are even less well off than Bath.
What is the Liberal Democrat answer to this? It is properly funded local government. We have been talking about the revenue support grant and how it provides some fair funding across the board. The Conservative Government currently plan to completely abolish the revenue support grant, which has distributed resources fairly from richer to poorer areas, and replace it with a system where councils can substantially increase council tax and retain the business rates that they collect. These proposals are highly divisive and will starkly increase inequalities across the country. Liberal Democrats are totally committed to the fair distribution of money across all areas of the UK for the provision of good local services. Wherever people live, there should not be a postcode lottery for local services. We will replace business rates with land value taxation, which will help to protect our high streets for the long term.
Liberal Democrats propose additional higher council tax bands so that everybody, including people in high-value properties, makes a fair contribution to the public purse. I understand the argument that just adding council tax bands will not make the substantial difference, so I confirm that the revenue support grant, as one of the fairer ways of providing fair council funding, is the absolute bottom line. There must also be, after 30 years, a revaluation of property values to correctly establish the correct council tax band for every property. While we still have council tax in the mix, it has to be fair.
Finally, I will touch on devolution and democracy. It is not only local government finance that is being cut to the bone by this Government—they are also taking every opportunity that arises to weaken local democratic accountability. Every structural change in local government proposed in the past few years has been to cut out the democratic levels and to have fewer elected councillors making local decisions.
The Tory agenda is clear: weaken local government, cut its budgets to the bone, remove the checks and balances of local democracy, and pave the way for large private sector providers answering to Whitehall. Liberal Democrats have a completely different vision for local government: properly funded and properly democratic, taking decisions about local services, delivering them locally and being locally accountable. This funding settlement is woefully inadequate and I will vote against it.
The funding challenges facing East Sussex County Council are well documented. It has had to make £129 million of savings since 2010 and has cut services to the core as a result. Most of the difficulty is due to the demographic challenges that the county council faces. It has the highest number of 85-year-olds in the country, and a quarter of the population are over 65, which puts huge pressure on adult social services. We heard earlier that most councils are spending money on their children’s services. In the budget for next year, East Sussex proposes to spend £171 million on adult social care and just £77 million on school services, because it is having to push the funding to where the greatest need is.
Over the weekend, I met the chief executive of East Sussex County Council and the leader of West Sussex County Council. They both have high praise for the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak). He has met them, listened to them and understands their problems, but they still face difficulties. They have the historical issue of being rural authorities with 50% less funding per head of population than urban areas, and we cannot continue like that. Many Members have mentioned the fair funding formula. It cannot come soon enough for areas such as East Sussex. I know that the Minister has had discussions with the council. When this four-year funding settlement is over, the council needs certainty, so that it can plan services.
Despite the revenue support grant dropping, East Sussex County Council has received extra funding from the Government. It has been lucky enough to be included in the business rates pilot, which has generated £1.6 million for it. It has secured £4 million of extra funding for adult social care, £2 million extra for services this winter, £4 million extra for potholes and £1.1 million for special educational needs. While not part of the revenue support grant, all those pots of money are making a real difference to communities in my constituency. I welcome that, but we need it to be ongoing, not in yearly one-off settlements. I urge the Minister to look at population projections in the fair funding review, because we do not want to be pitting old against young and asking who needs the funding most. It has to be done on a fairer basis.
While East Sussex County Council does need more funding, I am disappointed when councils just top-slice and cut services when funding is a struggle. I have the privilege of having the county town in my constituency of Lewes, and it is like a Monopoly board of local government infrastructure. None of it is joined up or shared. We have the beautiful town hall in Lewes town, which the town council shares and is well used by the community. Two minutes down the road, we have Southover House, which is for the district council and which no one else uses. A further five-minute walk down the road is the county hall building, which is the sole preserve of the county council. We have Sussex police headquarters another five-minute walk from that, which is overstretched and does not have enough space for the police, but the police and crime commissioner has her own headquarters another five minutes down the road from that. We then have the beautiful Lewes House building, which is completely underused but owned by the district council. It cannot be right that councils are not making the best use of the resources they have when they are struggling.
I echo the sentiments of my hon. Friend the Member for Northampton South (Andrew Lewer) in urging councils to become unitary authorities. I would force them into that, because this is not the best use of resources. That would not only save £2.9 million across the country but enable better services. Our county council recently introduced fees for using the tips for tyres and rubble, which has dramatically increased fly-tipping, and the district council then has to pick up the tab for that. These are not joined-up services. This is not just about saving money; it is about a better service for local residents.
I will support the Government tonight, but I urge the Minister to devise an innovation fund. If the Government cannot force councils to become unitary authorities, they must incentivise them to do so, because they are not making the best use of their resources.
I want to start by associating myself with the remarks of the shadow Secretary of State, my hon. Friend the Member for Denton and Reddish (Andrew Gwynne), in what I thought was a brilliant exposition of the injustice at the heart of this statement this afternoon. Be in no doubt: this statement today is a basic question of injustice and unfair deserts. It shows this Government’s wilful determination not to do anything about tackling the injustices that now scar this country, including communities such as mine in Birmingham. If they did want to tackle them, at the heart of this statement would be a bold determination to make sure that we were investing most in those communities that need it most. Instead, as the shadow Secretary of State has set out with such brilliance, we have exactly the opposite.
Many of us on this side of the House came into politics for a simple reason: because we wanted to tackle the basic, fundamental injustice that the postcode in which people are born defines their possibilities in life. That is why I gave up a career in business to serve what is this country’s most income-deprived constituency, where four generations of my family have lived and worked.
Nine years into this Government’s austerity, those injustices are now looming larger than ever. This Government have given us a slower recovery than after the great depression. What that means in Birmingham is that it is harder to earn a good life than ever before. The employment rate in our city is now lower than it was before the great depression. In some parts of the west midlands today, people are now earning 9% less than they did in 2008. The ladder in life is harder to get on to because apprenticeship numbers in the west midlands have fallen by a third. That is 10,000 fewer apprentices in our region over the last year.
How can it be just for a child born in Ladywood to live eight years less than a child born in Sutton Coldfield? How can it be right that a kid born in Alum Rock has a third less chance of going to university than a kid born in Solihull? How can it be right that someone born in Bordesley Green has a one in five chance of being overcrowded, even if their parents or siblings are disabled? How can it be just that someone born in Birmingham this year has a four in 10 chance of being born in poverty? These injustices are wrong.
These inequalities demand an answer, not the proposals from the Secretary of State this afternoon. This Government were able to rustle up £1 billion for their friends in the Democratic Unionist party in the space of days. In Birmingham, we have taken the biggest cuts in local government history—£690 million to date, £85 million still to come and £46 million to come out of our budget this year. That is a total of nearly three quarters of a billion pounds. The bad news is that it could be worse because we face £161 million of pressures over the next two to three years. That is why I say to the Secretary of State today, on behalf of all the Labour MPs in Birmingham: this battering of our city has to stop and it has to stop now.
Yesterday morning, I met the friends of Kane Walker, the young man who died on the pavements of Birmingham a week or two ago. They could not stop for long because they were rushing to hospital to see a friend, homeless too, who had been bitten in the face by rats and they feared sepsis—the sepsis that they think killed Kane Walker just a week or two ago. But Kane Walker was not alone: one homeless person a week now dies in the west midlands, sometimes in medieval conditions. This, in the fifth richest economy on earth, is a moral scandal, and this statement this afternoon has done nothing to reverse it.
This Secretary of State takes the issues of Birmingham so seriously that, when its entire number of Labour Members of Parliament wrote to him demanding an urgent meeting last November, he cleared his diary immediately to offer us some time five months later—in March. I know how little this Government care for Britain’s second city, and I know it will take a Labour Government to bring justice back to our city.
It is a pleasure to speak in this debate, and I warmly welcome the Secretary of State’s remarks. This is of course the fourth year of a longer term framework for local government funding, and the key element is the need for a fairer funding formula. We also need to deal with some of the underlying pressures for local authorities, particularly the time bomb that is adult social care. An extra £10 billion of funding for adult social care to 2020, including £650 million committed by the 2018 Budget, will go a long way to help in the short term. In the longer term, we need the fairer funding formula underpinned by the business rates retention pilots. I am delighted to see that North Yorkshire County Council has been entrusted with one of those pilots.
The fairer funding review and the spending review that comes with it are vital. If fairer funding is simply a redistribution of money—moving money from one local authority to another—it will be difficult for some authorities. We must learn the lessons of the fairer funding review in education, and fairer funding must come with extra money in the pot generally, to make it possible for some local authorities to manage as we redress the balance and make things fairer.
The present situation is unfair. Nine out of the 10 best funded authorities per capita per year are in London; they have about £1,000 spending power per person a year. In North Yorkshire we have £770 per person a year, despite the fact that a much larger proportion of that £770 is made up of council tax. We are contributing more but getting less in services. As my hon. Friend the Member for Waveney (Peter Aldous) pointed out, central Government grants to local authorities to inner-London councils are £437 per person per year, for metropolitan boroughs they are £319, for unitaries they are £225 and for counties £153. The hon. Member for Denton and Reddish (Andrew Gwynne) cannot talk about unfairness and avoid those figures. We must move to a fairer funding settlement.
I pay tribute to my neighbour, the Under-Secretary of State for Housing, Communities and Local Government, the hon. Member for Richmond (Yorks) (Rishi Sunak), who has looked at this issue and tried to simplify the system. Simplicity is the ultimate sophistication, as da Vinci said many years ago. My hon. Friend is right to try to simplify this and make it fairer. We must take on board many of the comments that have been made to make sure that the funding formula is fairer in the future.
Adult social care is putting more pressure on my constituency than any other issue and we need to take a more strategic approach to its funding. The Select Committees on Housing, Communities and Local Government and on Health and Social Care had a long joint inquiry on this and came up with a simple recommendation—to emulate the German system of social insurance, which involves a social care premium. It is a simple, scalable and sustainable solution. It is a small amount that everybody pays—everybody pays something so nobody has to pay everything. That is the key to it. It was introduced in Germany in 1995 to replace a system of local government funding, and it has been incredibly successful. It was a unanimous recommendation of those cross-party Select Committees.
The key element of the system is not the small amount people pay in, but how they get the money out. If someone is defined as in need of social care—a young adult or someone in later life—they can take it in the form of local authority provision, third-party provision or as a cash settlement every month which can be paid to a neighbour or loved one, be it daughter, son, nephew or whatever. It also helps to strengthen the social fabric by making sure that people are looked after by those who love them most and understand their needs the most. It is something that we should adopt, and I hope it will be in the Green Paper that is expected shortly.
It is a pleasure to follow the hon. Member for Thirsk and Malton (Kevin Hollinrake), a fellow North Yorkshire colleague. He made some powerful and thoughtful points, in particular on the disparity of funding between the north and the south. I enjoyed his contribution very much.
This is the second time today that I have had to stand up in this Chamber to fight against the unfair and disproportionate funding that is leaving my constituents behind. The funding formula is leaving them at the bottom of the table. Areas that are more deprived, as we have heard from so many Members across the Chamber, are not getting the funding and support they need. There is clearly unfairness in the funding system. It is vital that we make that point today. The Government have to look at it again.
Redcar and Cleveland Council has lost £90 million since 2010. That is 35% of our funding. How on earth can a council be expected to continue to provide the level of service it wants to provide for its residents, particularly in areas like mine with high deprivation and high child poverty, when it has lost 35% of its funding? Residents are seeing and feeling the impact. As many colleagues have said today, we have seen a huge increase in the crisis of social care for adults and for those with disabilities. There are huge challenges around mental health support, particularly for young people, and there has been a rise in the number of children being taken into care. The situation is just not sustainable. Something has to give. The Government must look again.
In Redcar and Cleveland, we have lost 1,100 jobs in the past nine years. We have faced not just the tragedy of those individual job losses, but the knock-on effect of spending power being taken out of the community. On top of other job losses, that is just not acceptable. In 2010, I worked for a local government think-tank. The big pressure around the cuts was the argument that said, “Councils have reserves. They can dip into their reserves and the cuts will hardly affect them.” Redcar and Cleveland has already had to spend £14 million of its reserves on trying to balance the books. There is nothing left. The cuts are going to the bone.
On top of that, Redcar and Cleveland lost business rates in the region of £10 million when we lost our steelworks. This is simply not acceptable. I have spoken to Ministers about the unfair system where Redcar and Cleveland was asked to pay £2.6 million for business rates relating to an industrial property that was revaluated that never even crossed its desk. It is not acceptable that Redcar and Cleveland has had to pay for business rates it never actually saw.
One in four children in Redcar and Cleveland are living in poverty. One in 10 four and five-year-olds are classified as obese, and that doubles by the age of 10 to 11. Currently 300 children—one in 10—are looked after. That has risen 35% since April 2017—a 35% rise in just two years.
I thank Sue Jeffrey and the Labour team in Redcar and Cleveland for their excellent work. They have done a superb job of dealing with the implications of the devastating cuts, protecting people on the frontline and supporting the most vulnerable people in our communities. They have kept our five leisure centres and all our libraries open. They have bust a gut to look after the poor and the needy. They are doing a superb job with both arms tied behind their backs.
Councils are at breaking point and this settlement gives the people of Redcar and Cleveland nothing. When people are already having to pay more council tax—an unfair tax—they are paying twice for services that are being cut to the bone. That cannot continue.
It is a pleasure to follow the hon. Member for Redcar (Anna Turley).
I rise to put on record my thanks to the Minister and the Department for the rise in core spending power in my constituency, and to highlight the urgent need to finish the funding review, as I think every single colleague has said. The sector needs clarity and resolution by October so that it can plan for the long term. We see that acutely in my constituency. Redditch is just down the road from Birmingham. Opposition Members have spoken about the unfairness of funding in urban areas. Households in Birmingham receive 27% more than households in my constituency, yet the deprivation needs are comparable on any indicator. The areas that some Opposition Members are speaking about are starting from a much higher base. That has to be taken into account in any calculations about fairness.
Yesterday, I met Councillor Simon Geraghty, the leader of Worcestershire County Council. He specifically wanted me to thank the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak), for listening to him on the specific issues facing his council. It has had challenging and tough times, yet due to sensible and prudent management it is due to pass a budget. It will make savings and efficiencies, while being able to keep all the libraries open. I also recognise the hard work that it has put in, working with the district councils and Councillor Matt Dormer, to put together a unique bid that has gone into the business rates retention pilot in our area. That will deliver up to £4.9 million of additional funding, which can be spent on addressing some of the acute social care needs in Worcestershire, which is another area with an ageing population.
Local services are so important to my residents. I am sure I am not the only Member who, when I go door-knocking, finds that I get blamed for everything to do with local services as well as, of course, the national issues that consume us, such as Brexit. Often, local residents do not make any distinction. They just think that we are responsible for all of it, and indeed we are. That is why I am delighted that the hard work and the lobbying that we put in across Worcestershire has resulted in a reasonably good settlement for Worcestershire, which I welcome.
I will finish my remarks by touching on the town centre, which is of paramount importance to my constituents. Redditch is a new town. We are proud of our heritage. We want to cherish the beautiful areas that we have in our town centre, and yet, after eight years of Labour being in control of our district council, nothing has been done about that. The stark fact—shameful, I think—is that in eight years in control of Redditch Borough Council, Labour did not build a single home for social rent. We are already starting to do that, having taking control last year. I support that and want that work to go further.
My local council leader, Councillor Matt Dormer, is pulling together funding pots from the local enterprise partnership, the county council and various different places, including local government. Investment will be going into our town centre for the first time. We look forward to having those conversations and building a bright future for our town centres, which have been so long neglected under the Labour party in local government. We want to make a thriving and vibrant local economy, where people can feel free to start a business, invest and bring more revenue into our town, and where people can work and play and be proud, as they already are, to raise their families. I thank the Minister very much and I will vote for the settlement this evening.
In Derbyshire, we have seen a 60% reduction in our revenue support grant since 2010. Instead, we end up with short-term pots of funding. We have a Conservative county council that says it cannot spend its pothole money because it was given too late in the year. It has a better care fund that is £8 million underspent, in spite of huge cuts being made to our health services, including our voluntary services, in Derbyshire. Yesterday, the county council refused to refer that to the Secretary of State or to cover those cuts, which will make such a difference to our communities.
In the less than two years that I have been in this place, I have seen cuts to our libraries in Derbyshire—almost half the libraries have been transferred to community management, with no grant, and the rest of them have reduced hours—and our Sunday bus services have been cut, so now at the weekend, the Peak District is overrun with cars. In our schools, one of the biggest issues that I see in my casework is children with special needs being deprived of the support they need. Parents have been battling against schools and schools have been battling against the local authority year on year. We have seen educational psychologists cut yet again, even though they are crucial to diagnosing autism and special needs. When parents have been able to get the support they need to take the county council to a tribunal, the county council has lost 39 out of 40 recent cases. However, parents are still struggling on to support their children, who are not getting the help that they need.
It is only going to get worse for families. In spite of rising numbers of children on child protection orders—up by over a quarter in two years—the number of children in care in Derbyshire has risen by 9% in nine months. However, the county council has just put forward its response to the consultation: it is going to cut two thirds of its early help staff—293 of the 400-odd staff will be cut. Its responsibility for supporting families will be transferred to schools, which are already struggling. Those with no at-risk children—largely in better-off areas —will be fine, but those in areas where children desperately need support will not be.
Our children’s centres have been cut and most of them closed while youth services are being abolished. In adult social care, contracts for care at home are constantly being whittled away and private providers are at their wit’s end. Areas of my constituency simply will not bid for care packages because they cannot balance the books. As a result, more elderly people are stuck in hospital desperate to come home. Careworkers are being transferred from two to three shifts, but they cannot continue on that basis.
Care homes are having their funding frozen and community alarm services are being cut for four fifths of those who use them. Learning disability services, respite breaks, and now a consultation on day centres—the cuts are endless, and they hit the most vulnerable, who are the people the Government claim to protect. In just 18 months, 2,700 people have been referred to court for collection of council tax, and 7% of households have been lumbered with court costs and bailiff fees. The Government are hitting the poorest, and we are all paying more.
It is a pleasure to follow the hon. Member for High Peak (Ruth George). She described the challenges in Derbyshire much as I would describe those in East Sussex.
I want to thank all my district and county councillors, and indeed all my parish and town councillors, for their work. I spent eight years as a district councillor—I stood down the day I entered this place—and I think it essential that local government be well represented on both sides of the House. I also thank the ministerial team for listening to the lobbying and the concerns raised by me and my colleagues from East Sussex, which is to receive an extra 2.5%. We are also in the business rates retention pilot, which will mean a great deal to us.
We have a big challenge in East Sussex, although, in a way, it is a wonderful challenge. Some 28% of my constituents are over 65; the national average is 17%. A lot of people move to East Sussex to retire—for its great quality of life—but the difficulty is that they tend to downsize and live in smaller houses, meaning that they require social care but do not pay as much council tax as people in counties such as Surrey.
If we are to reform social care, we must ask ourselves whether we want a state system, meaning that there is no postcode lottery as everything is funded equally through the NHS, or whether we go for more radical reform. In East Sussex, we cannot carry on as we are, going to Ministers each year and asking for more. They usually give more, for which I am grateful, but it feels hand to mouth to many of our councillors, who want longer-term certainty.
Social care has gone from a third of East Sussex County Council’s budget to 75%. We are not fixing holes in the road, because we are fixing people—or doing our best to. That should be our priority, but we need more if we are to be a success. We know that nationally, social care funding will need an additional £12 billion by 2030. If we continue as we are without reform, there will be a £6 billion hole. I hope that everyone in this place agrees that we will need more money and more reform.
In the last 20 years, we have had 12 Government papers, from both Labour and Conservative Governments, and five independent commissions, but we still have not had the reform we need. Surely it is in the gift of this place, where there is no real Government majority, for MPs to work together cross-party to deliver. We must have no more calling reform a death tax, as the Conservative party did, and no more calling it a dementia tax, as the Opposition did. We must work together now to find a solution. I am willing to do that, and I hope that others are as well.
I want to look at countries that have introduced reform. In Japan, where there was no state funding for social care until 2000—when it was recognised that there was a problem—over-40s pay an additional amount in their pay packets, but of course they started with a blank page. It is to Germany that we should look, however, as my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) rightly said. Its plan, introduced in 1994—he says 1995—was delivered with political consensus and has been a great success. People in work pay half, employers pay the other half, and the retired pay the full amount, which brings in the element of inter- generational fairness. The contribution rate is 2.5% of wages, payable to a ceiling, with those without children paying more. To take out £283 per month, or a maximum of £1,784, changes lives. The system has been reformed, too, as impairments have developed. It used to be based more on physical need; now it is based more on dementia and the mental side.
Long-term care is a social risk that requires social protection. Surely we can all come together and make that happen.
I draw attention to my entry in the Register of Members’ Financial Interests.
I am delighted by the success of Stoke-on-Trent’s pooled bid for 75% business rates retention. Increased rates retention fits the city’s ambition to be a prominent and notable success story of the Government’s localism agenda, and will enable that ambition to be realised. Stoke-on-Trent is on the up, and the city council has set out a compelling strategic vision to keep it that way, working closely with local partners across Staffordshire. Challenges remain, but after decades of decline under Labour there is huge local support for the growing prosperity of our proud city and an appetite for locally driven change, with local business and employment opportunities being given the boost that they need.
People wanted to see improved living standards, and since the Government took office in 2015, local Conservatives, in coalition with independents, have indeed delivered positive change. We have upped the ambition for the city, making close-run, enthusiastically supported bids for the title of city of culture and for a Channel 4 hub. We have a heritage zone in Longton, money from the transforming cities fund to improve local transport, and the Ceramic Valley enterprise zone.
Fully realising the city’s ambition requires local people of all ages to gain directly, and be seen to gain directly, from the implementation of pro-business, pro-development policies. Getting more out of what we put in is a fundamental requirement for improved ambition and productivity in the Potteries and in Staffordshire more generally. We are determined to share the proceeds of local growth locally, generating the levels of support that we need to continue our ambitions for redevelopment and greater prosperity for our city. The hard work done by the council in recent years has seen Stoke-on-Trent recognised in independent assessments as one of the best places in the United Kingdom in which to start a new enterprise.
Local authorities have a vital role in making high streets and towns places where people want to be. Rates retention is an important reform because it ensures that authorities have a direct financial incentive to improve the sense of place and sense of destination, encourages more people to live in town centres such as Longton and Fenton, and encourages more small businesses to move into spaces that are currently vacant. Initiatives such as the future high streets fund are essential additions. We must incentivise property owners to convert their empty buildings so that they can serve new and creative uses. I certainly hope that our bid for that funding will be successful.
Brownfield land is a significant issue in Stoke-on-Trent, a legacy of our past industrial decline. I was pleased to meet my hon. Friend the Minister for Housing and representatives of Homes England recently to discuss some of the challenges involved. Decontaminating land to make it fit for house building can prove highly expensive. Much of it consists of smaller urban sites, and larger house builders are unwilling to take them on. The challenges are often left with smaller developers, who frequently struggle to swallow the high risk.
A focus on local business growth is particularly important in cities like Stoke-on-Trent, because the residential council tax base is low. The reality of our housing offer locally means that council tax alone will never allow us to keep pace with the growing and necessary demands on the public purse from, for instance, social care. What we are doing locally is seeking alternative ways of generating revenue to help to fund services. That will make us more self-sufficient, unlike Labour’s approach, about which we heard earlier. It would only saddle our constituents with more borrowing and more taxes, which we cannot afford.
We have not heard a great deal today. We expected, perhaps, a rabbit to be pulled out of a hat. Word had it that the Prime Minister had a few quid to give out, but we have not seen much of that today. It could have been used in a morally just way: it could have been sent to the areas that have suffered the biggest cuts although they also suffer the most significant deprivation. Those areas have been targeted by the Government, as has been set out today in the many excellent speeches made by Labour Members in particular.
My hon. Friend the Member for Sheffield South East (Mr Betts) said that people now questioned why they were paying council tax at all, given that the neighbourhood services that they received were being reduced. My hon. Friends the Members for Liverpool, Riverside (Dame Louise Ellman), for City of Chester (Christian Matheson) and for Liverpool, West Derby (Stephen Twigg) made the same points about the human cost of removing vital public services. My right hon. Friend the Member for North Durham (Mr Jones), my hon. Friend the Member for West Ham (Lyn Brown) and my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne) outlined the very real community impact of austerity and the Government’s targeting of our communities. Through to my hon. Friends the Members for Redcar (Anna Turley) and for High Peak (Ruth George), we heard story after story of the human and community cost of austerity.
What shift did we get from the Government? Absolutely none. Why? This has not happened by accident, and the Government will not suddenly wake up and realise that they have made a horrible mistake. The policy has been deliberate and targeted from day one. The Institute for Fiscal Studies said:
“In England, cuts have been much larger for poorer, more grant-dependent councils than their richer neighbours.”
“This pattern arose directly from the way central Government allocated grants.”
That was deliberate and targeted and it has not stopped today. Despite our calls and our outlining the real human cost, the policy continues.
The Government have been very good at shifting money from those who need it most to areas that will secure the support of their Back Benchers. How many times today have we heard Conservative Back Benchers praising their Front Benchers and thanking them for giving in to their lobbying? So much back patting has gone on as Government Members congratulate each other on taking food off the tables of the poorest in society to shift funding to the richest.
We have heard time and again from Conservative Members how much more expensive services are in rural areas. There is no doubt that some services are more expensive to deliver in rural areas by unit cost. However, let us look at the evidence. In 2014, the Government commissioned a report that examined every single service that local authorities deliver throughout England. It showed that it is true that some, but only 15%, of services are more expensive in rural areas. In urban areas, 31% of services are more expensive, and whether areas are urban or rural has no bearing on the delivery of 50% of services. The evidence therefore shows that services are more expensive to deliver in urban areas. That is because the deprivation is ingrained and generational. It is tied to the local economies, and councils are there to try to keep it all together.
When our communities have asked for hope and direction, what have they been given? Not even warm words or an acknowledgement of the human cost. Now more than a million older people do not get the social care they would have got in 2010. Children who are at risk of violence and abuse are not given the protection they need, because the Government have walked away and said that it is nothing to do with them. It is everything to do with them. When other Departments were fighting their corner, where was the Ministry? When austerity first struck, local government was hit hardest. We have lost 800,000 members of staff from local government. We have the lowest number of staff since comparable records began, yet the central Government workforce is the largest since comparable records began. Local government has taken more of a hit than any other Department. Within local government, Labour-controlled areas have taken the hit, and that is politically motivated.
The Government had the chance to put this right today. They have failed to be fair and just, and failed the people we come into this place to serve. Shame on the lot of you.
It is a pleasure to close the debate. I start by joining my predecessor, my hon. Friend the Member for Nuneaton (Mr Jones), in paying tribute to all the committed people who work in local government and deliver for their communities every single day. We are all grateful to them for their hard work and dedication. I thank all hon. Members for their passionate speeches today, particularly those who brought their personal experience of local government to the Chamber—our debates are the richer for that. Although I may not agree with the content of Labour Members’ speeches, I respect the passion with which they represent their local communities.
As a northern MP, I feel that the north is lucky to have, in my hon. Friend the Member for Carlisle (John Stevenson), a champion for the northern powerhouse. He is committed to pushing the Government on rebalancing the economy and working constructively with them. That sentiment was echoed by my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton), who spoke well about the importance of economic regeneration in his constituency and what the Government are doing to support his residents as they look to a brighter future.
My hon. Friends the Members for Northampton South (Andrew Lewer) and for Lewes (Maria Caulfield) made excellent speeches about the need for all Members and all local authorities to think about how we can serve our constituents better and at cheaper cost every single day. We should always strive for ways to achieve that, given that the taxes that fund our public services are paid through their hard work and efforts. My hon. Friends the Members for Rugby (Mark Pawsey) and for Waveney (Peter Aldous) do a great job in this Chamber of representing their district council and county council respectively, and I thank them for all their engagement with me and the Department over the few months in which I have had this job. I can tell my hon. Friend the Member for Rugby that the Secretary of State is well aware of the excessive activity of a few councils with respect to borrowing for commercialisation, and this is something that the Department is actively looking at as we speak to the Treasury.
Many Conservative Members, including my hon. Friends the Members for Bromley and Chislehurst (Robert Neill), for Gloucester (Richard Graham), for Lewes, for Thirsk and Malton (Kevin Hollinrake), for Waveney, for Redditch (Rachel Maclean) and for Bexhill and Battle (Huw Merriman), made powerful and compelling cases for a root-and-branch review of how we distribute money in local government today. We heard about the specific issues that councils face on the ground that our current funding formula simply does not capture. I pay tribute to their work in bringing this to my attention and that of officials. They mentioned issues such as the rapidly changing demographics that are driving up demand for adult social care. These are the kinds of things that a new formula fit for the 21st century should absolutely cover, and I look forward to working with all of them as we develop a funding formula that is right for every part of this country.
My hon. Friends the Members for Northampton South, for Thirsk and Malton and for Bexhill and Battle spoke of the absolute importance of getting adult social care right. I know that my colleagues in the Department of Health and Social Care are committed to doing exactly that, and I agree that the solutions should be radical, not statist. I hope that they will include consideration of the excellent work of the Select Committee.
Three themes have run through the speeches that I have heard in the debate, and they are the three things that everyone agrees that our local councils do: first, they support the most vulnerable in our society; secondly, they drive economic growth in their areas; and, thirdly, they build strong communities. I am proud to say that this Government are backing them to do all three. It is local authorities whose hands are the first to reach out to those who fall on hard times, and I am delighted that this settlement provides them with a real-terms increase in financial resources to support that vital work.
Councils told us that the most acute pressure that they faced was in adult and children’s social care, so this Government responded with £650 million in incremental funding in the Budget. Councils told us that they wanted to do more to support people with disabilities, so this Government responded with an extra £55 million to make vital home adaptations. Rural councils highlighted their particular challenges, so this Government responded by maintaining the rural services grant at record levels. But Conservative Members measure success not by how much money we spend, but by how many lives we are changing, so we are supporting local authorities to innovate and improve to ensure that we are careful with taxpayers’ hard-earned money and that people are getting the best possible services.
In children’s care, where there is a huge variation in performance, we are investing £84 million to spread best practice from Leeds, Hertfordshire and North Yorkshire across the country so that children everywhere will benefit from best-in-class practice. In technology, we recently launched an innovation fund to support councils in embracing the digital revolution. Working with the Local Government Association, we are developing a tool to help councils to benchmark, analyse and drive performance. Across local government, whenever there are opportunities to improve lives, save money and transform services, this Government will be relentless in pursuing them.
The Government understand that the only sustainable way to pay for our public services is to create the economic growth that will fund them. Let us not forget the vital role that councils play in creating prosperity for their communities. Rather than being reliant on central Government handouts, local authorities should be empowered and rewarded for their entrepreneurship. I am pleased to say that our business rates retention scheme does exactly that, and local authorities are expected to retain almost £2.5 billion of business rates growth this year. Across the nation, from Yorkshire to Southampton, our 15 new business rates retention pilots demonstrate this Government’s commitment to backing councils’ ambitions for their local economies. We all know that the enemy of that growth is the higher taxes that the Labour party would inflict on our residents.
Local authorities are key to strengthening our communities. Every single day, they ensure that people are proud of the places in which they live. Those communities must start with the houses that people call home, so this Government are backing local authorities to fulfil those people’s aspirations. The new homes bonus part of the settlement has awarded councils almost £8 billion since it started for 1.5 million additional homes that they have brought forward, each one providing incentive and rewards for those councils that are trying to ensure that every one of their residents can fulfil the dream of homeownership.
However, local authorities told us that they want more. They want greater flexibility to build more of their own homes, so this Government listened and lifted the housing revenue account borrowing cap. Strong communities also need vibrant high streets, so this Government are trusting local councils with a £675 million fund to transform and revitalise our town centres. Finally, when it comes to our communities, the only holes that I want to be pouring money down are the ones on our local roads, so this Government were pleased to ensure that councils have £420 million to fill potholes for our motorists. From homes to roads to high streets, this Government are backing local authorities to create communities where everyone can thrive.
We have heard a lot about deprivation today, and there was an accusation that this Government are somehow trying to massage the numbers. When we put together the new funding formula, we listened to the Housing, Communities and Local Government Committee report that was published at the end of 2017, which made a compelling case for reducing the number of indicators to fund local government without sacrificing accuracy. That is exactly what our funding formula does. Deprivation accounts for less than 4% of the variation in spend for universal services—[Interruption.]
We heard a lot about Liverpool and a lot about Surrey. Members of this House should know that households in Liverpool have £400 more to spend on local services than households in Surrey. Only a third of spending in Liverpool is financed by council tax versus almost 85% in Surrey. This funding formula is accurate and based on the facts.
In conclusion, I will continue to listen to local councils to learn from their expertise and to champion their cause across Whitehall. I tell them that their voice is heard loud and clear and that they will be supported by this Government. I commend the settlement to the House.
The House proceeded to Division.
That the Local Government Finance Report (England) 2019–20 (HC 1916), which was laid before this House on 29 January, be approved.
More than three hours having elapsed since the commencement of proceedings on the motion, the Deputy Speaker put the Questions necessary for the disposal of the business to be concluded at that time (Order, 31 January).
That the Report on Referendums Relating to Council Tax Increases (Alternative Notional Amounts) (England) 2019-20 (HC 1917), which was laid before this House on 29 January, be approved.—(James Brokenshire.)
That the Report on Referendums Relating to Council Tax Increases (Principles) (England) 2019–20 (HC 1918), which was laid before this House on 29 January, be approved.—(James Brokenshire.)