The Parliamentary Under-Secretary of State for Communities and Local Government (Kris Hopkins)
With permission, Mr Speaker, I should like to make a statement on funding for local authorities in England next year.
This Government inherited the largest deficit in post-war history. Thanks to this Government’s long-term economic plan, that deficit is falling, the economy is growing and employment is at a record high. This Government are putting our public finances back on track. Local government, like every part of the public sector, has made a significant contribution to this. However, the job is not done. As my right hon. friend the Chancellor of the Exchequer has indicated to the House, in coming years very substantial savings must be made in public spending. The Government continue to need to take difficult decisions to put the public finances on to a sustainable path.
In the context of this unprecedented challenge to public finance, we have yet again delivered a settlement that is fair to all parts of the country, whether north or south, urban or rural. English local government is expected to spend over £114 billion this year—around a quarter of all public spending. This settlement therefore recognises that local authorities continue to make a vital contribution to helping pay off the deficit. Once again, the settlement leaves councils with considerable total spending power. As planned, we have kept the overall reduction to 1.8%—lower than last year, and one of the lowest levels of reduction under this Government. If we include the funds the Government have provided to support local transformation, the overall reduction is even lower, at 1.6%.
Councils facing the highest demand for services continue to receive substantially more funding, and we are continuing to ensure that no council will face a loss of more than 6.4% in its spending power in 2015-16, the lowest level in this Parliament. I am also pleased to announce that all nine authorities eligible for efficiency support grant in 2014-15—Great Yarmouth, Burnley, Chesterfield, East Lindsey, Barrow-in-Furness, Bolsover, Hyndburn, Pendle and Hastings—will have these amounts incorporated into the settlement for 2015-16.
We also continue to recognise the challenges faced by rural communities. This Government have a clear commitment to rural areas, and consecutive settlements have helped to address the gap between urban and rural spending power. The gap is closing, and that has already benefited rural authorities to the tune of £208 million. We expect the gap to continue to close. In the meantime, the settlement confirms another year of additional resources for the most rural authorities, to recognise the challenges they may face in delivering services. In 2015-16, this grant has increased to £15.5 million.
But this is no longer just about the amount the Government provide to local authorities through grant. We have deliberately shifted the emphasis from keeping authorities dependent on grant to providing councils with the tools they need to grow and shape their local economies. We have given councils a real stake in stimulating local growth. For 2014-15, authorities’ own estimates show that 91% are expecting a growth in their business rates income—growth of £414 million in total. That includes authorities such as Barnsley, which is predicting growth in its business rates income of around £900,000, and which will gain additionally from almost £400,000 of growth that it is predicting within its enterprise zone.
Through the new homes bonus, councils benefit directly from increasing the number of homes in their area and bringing long-term empty homes back into use. On Tuesday, the Minister for planning and housing, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), announced to the House that £1.2 billion of new homes bonus funding has been provisionally allocated to local authorities in England for 2015-16. This brings the total to almost £3.4 billion since the scheme began.
Many councils agree that these measures are having a positive impact on their ability to deliver better outcomes in their areas. National growth is the sum of local growth. For Britain to prosper, every part of the country needs to fulfil its potential. Local places know best how to support growth in their local economies. We know that many authorities recognise this. That is why we have devoted such effort to empowering our great cities and communities to drive local growth through a redistribution of power away from Westminster and Whitehall to councils, communities and individuals across the nation.
To this end, we have established 39 local enterprise partnerships—partnerships between local authorities and business—who decide what the priorities should be for investment in roads, buildings and facilities in their local areas. Through our growth deals, we devolved £12 billion of local growth funding to these partnerships, for them to spend on local priorities over the next five years.
We are committed to further devolution to increase local democracy, bring better services and deliver more homes and jobs. We hope that Greater Manchester and Sheffield will be the first of many to take advantage of greater devolution of powers, and the Government are open to having discussions with other areas.
As well as growing their economies, the best authorities are transforming the way they do business. The Government are supporting them as they do so, achieving real savings and, importantly, improving outcomes for the people who use local services. Last month, I announced the latest round of successful bids to the transformation challenge award. We will provide around £90 million in support for 73 projects that will improve services and ultimately save the public sector over £900 million. In total, the latest successful transformation challenge award bids involve 287 partners, including 122 local authorities and 165 other organisations across the public, private and voluntary sectors.
Increasingly, local authorities are recognising that transformation and further integration has the potential to deliver improved outcomes. Nowhere is this more evident than in relation to health and social care. We are supporting the integration of health and social care services through the better care fund: 97% of local plans have been approved and the £3.8 billion initial contribution from Government has been boosted by local areas to more than £5 billion. This will help achieve significant change in services that will benefit some of the most vulnerable in our society.
Like all parts of government, councils need to prioritise spending so that it gets to those who need it most. Councils are rising to the challenge. Every council issued a balanced budget for 2014-15. The majority of residents remain satisfied with the way their council runs things. That bears testimony to the great skill that authorities have shown in prioritising and promoting efficiencies.
Local authorities up and down the country are demonstrating real innovation. I have seen for myself the work under way in Kirklees to support young people who need help in starting their young lives. Our transformation fund investment of £400,000 will bolster the Kirklees Cares project, where children in care are receiving peer support to prepare them for life after leaving care.
In Durham, a partnership of the police and fire services is using a £500,000 award to bring community volunteers and neighbourhood watch services together; and I was recently in Sunderland, which is one of five areas that had its better care fund plan approved early because it was making such good progress. I met staff from both the health and social care sectors working together in the same room, with the same patients, in a brilliant new community facility that is keeping elderly people out of hospital. Sunderland projects that it can start to cut local accident and emergency admissions by up to 15% in the years ahead as a consequence of this approach. That will save a huge amount of money and provide people with dignity and respect in retirement.
Last winter, to help local authorities deal with the immediate costs of the severe weather, the Government activated the Bellwin scheme of emergency financial assistance to local authorities. In recognition of the unique scale of the flooding, the terms of the scheme were made more generous. The changes included a reduction in thresholds above which the Government would compensate, and reimbursement at a rate of 100%. This reduction was the first time in the scheme’s 30-year history that thresholds had been reduced in that way. Last month, my right hon. Friend the Secretary of State for Communities and Local Government announced a consultation on improvements to the scheme, including permanent lower thresholds and 100% grant rate. Although the consultation does not end until the start of the new year, we have today published illustrative Bellwin thresholds for 2015-16. This will give local authorities a greater degree of financial certainty in planning for emergencies in the case of severe weather.
With colleagues in the Treasury and the Department for Work and Pensions, we have been analysing responses to the Government consultation on how local welfare assistance should be funded in 2015-16. We have been looking at these alongside the Department for Work and Pensions review. Local authorities will continue to be able to offer local welfare assistance from within existing budgets, alongside a range of other services for 2015-16 if they judge it a priority in their area. It would be helpful to many areas to see how much of their existing funding relates to this, so today I can confirm that we have separately identified an amount relating to local welfare provision in each upper-tier authority’s general grant, totalling £129.6 million nationally.
The Government have always been clear that councils should choose how best to support local welfare needs, because what is right for Croydon will not be right for Cumbria. This allocation will therefore not be ring-fenced and we will not be placing any new duties, expectations or monitoring requirements on its use. The Government will carefully consider all responses to the consultation on this settlement, including those that relate to the provision for local welfare over and above existing budgets, and we will take these into consideration when announcing the final settlement in February. Over the last year, councils have increased their reserves by £2.2 billion, and they now stand at a total of £21.4 billion. Authorities should of course maintain a healthy cushion when balancing the books. However, local taxpayers would be right in asking whether such substantial reserves are necessary.
All councils should be freezing their council tax in 2015-16 and helping people with their cost of living. We are providing additional funding equivalent to a 1% council tax increase, to help councils to freeze. This is the fifth successive year of freeze-funding provided by the Government. This brings the total package to £5 billion, which will save up to £1,075 for an average household over the course of this Parliament. All councils should be taking advantage of this extra Government funding and freezing council tax for hard-working families. Councils choosing to increase should have the courage to put their case to local people. Any council proposing an increase of 2% or more will need to allow local people the opportunity to approve or veto the increase in a referendum. This threshold will apply to all local authorities, including the Greater London authority, fire authorities and police and crime commissioners.
Parishes are an important part of local government, delivering valuable and valued local services. However, that is not a reason for them to impose inflation-busting increases on their taxpayers. The average band D council tax in England has risen by 2% since 2011-12. The equivalent figure for the parish element is 14.7% over the same period. That is why I would welcome views on whether the highest-spending parishes should be subject to the same referendum principle as the rest of local government. There is also a question about whether town and parish councils whose failings have been highlighted in a public interest report should be included.
Today marks the start of a period of statutory consultation with local government on the settlement, and I welcome its responses. The consultation closes on 15 January 2015. We are publishing full supporting material online and I have placed copies of the consultation paper and other main documents in the Vote Office. This is a fair settlement that continues to recognise the responsibility of local government to find sensible savings and make better use of its resources. It supports business growth, adding to this country’s wealth, and helps to deliver our long-term economic plan. It also enables councils to offer another year of frozen council taxes. I commend this settlement to the House.
Hilary Benn (Leeds Central) (Lab)
I am grateful to the Minister for giving me advance sight of his statement, and at least Ministers have chosen to come to the House today rather than having to be summoned, as happened last year.
In its recent report “Financial sustainability of local authorities 2014”, the National Audit Office found that the Government
“will reduce its funding to local authorities by 37% in real terms between 2010-11 and 2015-16”.
Will the Minister confirm that this is the case, and that the Government are going ahead with a 10% reduction in the main component of Government funding to local authorities in 2015-16, as also reported by the NAO? Councils have experienced the biggest spending reductions in the public sector, and they have done an extraordinary job in trying to deal with that, but they rightly resent the Secretary of State claiming, as he did, that the cuts are “modest” and that Local Government Association fears for the future are “utterly ludicrous”. Does the Minister still agree with those statements, given that in an open letter last month, a large number of council leaders, including 40 Conservatives, said bluntly:
“Services such as libraries, leisure centres and road maintenance continue to buckle under the strain of cuts and the ever-rising cost of caring for our growing elderly population”?
The Audit Commission has confirmed that
“Councils serving the most deprived areas have seen the largest reductions in funding relative to spending”.
That is still happening.
Why is it that the most disadvantaged communities are yet again being hit the hardest? Why is it that by 2017, the city of Liverpool, the most deprived local authority in the country, will have lost over half its Government grant compared with 2010? Why is it that Wokingham is on course to have a higher spending power per household than Leeds and Newcastle, despite those cities’ greater need? Why is it that, having claimed that those with the broadest shoulders should bear the biggest burden, Minsters have done the very opposite to local government? Given the complacency of the Department for Communities and Local Government, is it any wonder that the National Audit Office found that the Department had
“a limited understanding of the financial sustainability of local authorities”?
What is the Minister going to do about that? Councils are showing
“clear signs of financial stress”.
What contingency plans do Ministers have to deal with the potential failure of local councils? The truth is that the Government either do not want to know what is going on or do not care. Tough times do indeed require tough decisions, including on spending, but there is no justification whatever for taking the most from those who have the least.
I have a number of specific questions to put to the Minister. How many councils will face the maximum reduction in spending power of 6.4% in 2015-16? Will he accept the NAO’s advice and in the final settlement publish figures detailing the change in individual local authority income in real terms since 2010-11, so that the cumulative impact of funding reductions is made clear? How have the Government accounted for the better care fund when calculating 2015-16 funding reductions? Can he confirm that the new homes bonus actually takes money away from the most disadvantaged communities and gives it to areas where the new homes would probably have been built in any case? Does he not think that that funding could be more efficiently allocated to areas based on need?
Will the Minister confirm that the Secretary of State lost his battle with the Chancellor to save the local welfare assistance fund? It is clear that this year’s separate grant will now go and will not be replaced with any new money. That means that councils with the greatest need will face the greatest difficulty, because they are already facing the biggest cuts in funding. How much of the funding held back for the business rates safety net in 2013-14 is required for safety net payments, and what will be the total amount held back in 2015-16? The Minister talks about business growth incentives, so why will he not allow combined authorities to keep 100% of business rate income growth? Why has there been no economic devolution to counties? How will the business rates review affect the proposed revaluation in 2017?
On the impact on front-line services, 324 libraries have closed since 2011. What assessment has the Minister made of how many more will go as a result of this statement? How many more children’s centres will close, on top of the 578 that have gone since the Secretary of State took office? What effect will this statement have on women’s refuges, school crossing patrols and day centres for the elderly? We have just had an urgent question on the crisis in accident and emergency departments. Has it not occurred to Ministers that one reason why this is happening is the cuts that councils have had to make in social care? That is why the number of people over the age of 90 going to A and E in a blue-light ambulance has increased by nearly 50% in recent years.
In difficult times what councils need is fairer funding, help with longer-term funding settlements so they can plan ahead to protect services, and more devolution of power so they can work with other public services locally to get the most out of every pound of public funding. Nowhere is that needed more than in health and social care. If the loss of services we have seen already is only part of what the Chancellor and the Secretary of State have in mind for local government in the years ahead, let me tell the Minister that Labour Members will not be joining him in a headlong rush back to the 1930s. What hard-working councillors and communities wanted today was recognition of the increasingly stark choices they face and some practical help. Instead all they have got is Ministers who have no idea what is really going on.
Kris Hopkins
I am really disappointed with the right hon. Gentleman’s tone. There was no sense of guilt or shame about the situation we were left in when we came to power. Let me mention two speeches that were made last week. In one, my right hon. Friend the Chancellor talked about the requirement and need for us to live within our means and to grow our economy in order to be able to support public services. The other speech was about how the deficit was the big test for Labour, and we can see from the right hon. Gentleman’s response today that the Opposition have no chance of meeting that test. They have failed at the first attempt, wanting to borrow and spend more money.
The Government are confident that councils can respond to the challenging economic circumstances that we inherited, and they are responding. The NAO says that many councils are dealing with that; they have been able to fix and deliver a budget, and to respond to economic emergencies as they have come about. The reality is that all councils need to respond and transform their delivery, and despite the right hon. Gentleman’s words, the authorities are doing thaton the ground. The Labour authorities in Manchester, Sheffield and Sunderland have faced difficult choices but are transforming their services. They are more open-minded than the Labour team on the Front Bench, ensuring that they care about delivering good services where it is important to people and that they will deal with the circumstances they are left. In answer to his question, we are delivering a reduction of 1.8% this year—if we add the transformation challenge fund moneys in, the figure drops to 1.6%. Given the economic circumstances that this Government picked up four years ago, that represents considerable movement in the right direction.
The right hon. Gentleman talked about the most deprived authorities. The 10% most deprived authorities will continue to receive 40% more than the least deprived areas, and that is important. It is a standard that we have set and we will continue to do it. However, this is not just about grant; it has to be about promoting businesses. It is about increasing growth within a particular area. That is why this Government have set about, through city challenge, growth deals and the retention of business rates, giving councils the opportunities to grow the moneys in their community. There is no greater amount than that from house building, so the new homes bonus, worth £1.2 billion, is really important.
However, there are difficult challenges to address. The better care fund is there to address one of the fundamental challenges to public services which for generations councils and health authorities have failed to address—£5 billion to be used to work with local authorities, clinical commissioning groups and acute hospitals to deliver care for the most vulnerable people. Labour Members, the Labour Government and the House historically have failed to address that. We are facing up to this problem, and getting those social workers, doctors, health workers in the same place so that they can deliver services. That is the right thing to do.
We appreciate that welfare provision is important to people, so we are identifying the spending this year in next year’s money so that users of services and people who may want to call upon that money can understand how much money has been spent historically in this area. It will be up to the local council to set those priorities and make sure that that money is available.
The right hon. Gentleman talked about counties not being included in some of the devolution, but this Government are completely open-minded on devolution and look forward to all areas coming forward with ideas about how we can devolve powers. [Interruption.]
Finally, there was an ask about women’s refuges. The Prime Minister himself thinks that this is extremely important and intervened on the issue of women’s refuges and domestic violence and saw that an extra £10 million was put in. [Interruption.] Despite the fact that this country faced an economic disaster in 2010, we are delivering a fair budget for local authorities, making sure that they can set the priorities they believe are important to them. [Interruption.]
Madam Deputy Speaker (Dame Dawn Primarolo)
Order. As we progress through this statement, it would be really helpful if the Secretary of State stopped shouting and gesticulating across the Chamber, and if Mr Sawford you stopped as well, so that we can hear the questions and the answers. Mr Docherty, I do not need you saying, “Shame”, as you chatter through just about everything. Perhaps we can make progress now.
Mark Pawsey (Rugby) (Con)
Households across the country will be pleased that the Government are making funds available for an unprecedented fifth year to enable a freeze in council tax. The Minister will be aware that Conservative-controlled Rugby borough council has gone further in the current year, by giving council tax payers a rebate of 3%. However, given the increasing satisfaction with the services provided by local government as shown in surveys, does the Minister agree that councils have risen to the challenge and shown themselves to be very effective at doing more with less?
Kris Hopkins
I congratulate Rugby borough council on its excellent work. I have been there myself and seen the quality of the services it is delivering. It is also setting out wider plans to deliver more houses and to promote business growth. It has also frozen its council tax, which means that residents will benefit from the fact that they have not had to pay that £1,075 over the past five years.
Mr Clive Betts (Sheffield South East) (Lab)
The Minister said in his statement that no council will face a loss of more than 6.4% in its spending power next year, the lowest level in this Parliament. Why does he think that that is a matter for self-congratulation? Will he confirm that the percentage cut that local councils will face in the next year will be bigger than the cut faced by all central Government Departments throughout the whole of this Parliament?
Kris Hopkins
It is the lowest level of this Parliament. We can achieve that because we are in a far better economic situation than we were when we came to power. More money may have been taken from this particular area of public service, but the fact is it represents a quarter of all public service, which is significant. I do not relish the idea of taking money off councils, especially as people are working extremely hard to deliver quality services. I say to the hon. Gentleman that he served in a Government who crashed the economy and we are picking up the pieces. We want to support local councils, and I would be proud to work with them to deliver quality services.
Mr David Nuttall (Bury North) (Con)
Bury council constantly claims that it has not had a fair deal. Will the Minister please confirm for the record that neither he nor his officials have picked on Bury council for special treatment and that Bury council is funded on exactly the same basis as every other council regardless of whether it is in the north or the south and of which party controls the council?
Kris Hopkins
I thank my hon. Friend for his question. The economy in the north is thriving and local authorities are leading the way. What I said in the statement was that we offer a fair deal to all areas—whether north or south, rural or urban. If the local authority is not content with what it has been offered, it should come and speak to me. I will be speaking to local authorities in the new year, and I am more than willing to talk to Bury about its council settlement.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Even a borough such as mine in Hackney, which is extremely well run by Mayor Jules Pipe, will face enormous cuts in the future. The poorest of my constituents who are already finding life very hard will be squeezed until the pips squeak when social services and other budgets have to face the brunt of these cuts. How can the Minister come to this House and say that this is a good settlement for the people of Britain?
Kris Hopkins
Even the most deprived areas have an opportunity to grow the moneys they receive by promoting business. Newham, which is struggling in many ways, has still managed to grow its business rate base by some £7 million. It is up to local councils to set as a priority supporting the most vulnerable people. We have talked about social services, and it is important that councils make some choices in that area. The opportunity to grow the amount of money they receive is there, and we have put those mechanisms in place.
Sir Edward Leigh (Gainsborough) (Con)
Will the Minister continue to address the grotesque divide in central Government funding of poorer rural authorities and urban authorities? For instance, my own district of West Lindsey, which is only 45 minutes from Hull, receives a staggering £282 per head less every year than Hull. That is simply unfair. People are paying £120 more in council tax, and I have in south-west Gainsborough the poorest ward in the whole country. Something needs to be done, and we need to have a fair settlement for rural authorities with a sparsity factor.
Kris Hopkins
I recognise the problem. Despite the economic circumstances, we have sought to close that gap between rural and urban areas. The fact that we have increased the rural grant this year to £15.5 million goes some way to achieving that. I say again that the East Riding of Yorkshire, not far from my hon. Friend’s constituency, has managed to grow its business rate moneys by some £5 million. Both deprived and rural areas have the opportunity to grow the moneys that come to their local council.
Mr David Winnick (Walsall North) (Lab)
May I remind the Minister that as far as Walsall is concerned there has been an overall reduction of nearly 40% since 2010-11? Further reductions will have an even more devastating effect on front-line services in my borough. It is war—there is no other way to describe it. It is outright war on the most deprived areas, and it is absolutely shameful that this Government continue with such policies.
Kris Hopkins
In the few years I have been in this House, I have always held the hon. Gentleman in high respect. But it is shameful to say that I or my colleagues would go out of our way to pursue the most vulnerable. We want to preserve and protect those most vulnerable people, which is why we have given local councils the opportunity to make choices about how they spend their money.
Annette Brooke (Mid Dorset and North Poole) (LD)
On local welfare assistance schemes, will the Minister clarify whether any extra money is being given to councils to provide those services? In the event of no ring-fencing and no monitoring, will he confirm how a family in crisis through no fault of their own will cope on a Friday afternoon if their council says, “No, we are not providing anything”?
Kris Hopkins
There is no additional money in this. I said in the statement that if, during the consultation process, a local authority or interested party wants to write to us about additional moneys over and above those noted in the Budget, we will consider its contribution in our final consideration of the settlement. In devolving powers to local authorities and enabling them to make choices, local authorities need to be transparent and open about the choices they make. My right hon. Friend says that there are people who need support. We have identified the money so that people will know what money has gone into a local council historically and been used in that area. I challenge local people to make sure that those authorities make the right choice to protect those individuals in need.
Nic Dakin (Scunthorpe) (Lab)
What this statement manages to combine is further savage cuts in spending to local authorities with further devolution of blame to local authorities. Will the Minister commit to publishing the financial cumulative impact of the cuts over the life of this Government on each local authority?
Kris Hopkins
The cuts have had to be made as a consequence of the Labour Government’s failure to manage the economy. They are what happened as a result of the mess that was left. We have had to make difficult choices. Local authorities are far more sensible and respectful in trying to address that matter than Opposition Members. I am more likely to have a trustworthy conversation about trying to deliver those services with someone from a local authority than with any Opposition Member.
Robert Neill (Bromley and Chislehurst) (Con)
I congratulate the Minister and his colleagues on the statement and urge them not to take any lessons from a party that produced record deficits and doubled the council tax. Does he accept that if we are to have genuine local accountability, it is critical that it must be in a climate in which we continue to move away from old-fashioned dependency on central Government grant and to break down the ring-fencing that has inhibited innovation, as we have seen demonstrated by the better care fund, which deals with one of the key pressures on upper-tier authorities?
Kris Hopkins
I respect the wise words of my hon. Friend. He is right: the council tax has dropped 11% as a consequence of the actions that we have taken. It doubled under the previous Government. There is a need to move away from grant and to grow local economies. The best councils are now stepping up to the mark and growing those economies. On the better care fund, it is a difficult issue, but we are facing up to it. Where previous Governments have failed to do this, we will deliver savings and ensure that those vulnerable people are getting a decent service and the dignity that they need.
Kate Green (Stretford and Urmston) (Lab)
What assessment has the Minister made of the likely impact on some of the most vulnerable people—disabled people, low-income families with children and women fleeing domestic violence—of his plans not to put more money into local welfare assistance and not to protect that funding?
Kris Hopkins
As I have already said, the 10% of areas that are most deprived will receive 40% more than the least deprived. Issues of domestic violence are important to this Government and we have put additional moneys—some £10 million— into that. We will constantly monitor resources related to the issues the hon. Lady raises.
Philip Davies (Shipley) (Con)
On the Government Benches, we understand why spending reductions need to be made, even if the Labour party does not. Does the Minister agree that local councils should treat all parts of their local areas fairly? He will know, for example, that Bradford council has drastically cut children’s centre provision in his constituency and mine, while protecting its Labour heartlands at the centre of Bradford, even though they have children’s centres virtually around the corner from each other. What can he do to ensure that all parts of local authorities get a fair crack of the whip and that political games are not played by local councils to punish more Conservative parts of their area?
Kris Hopkins
I thank my hon. Friend for his comments and obviously I know the areas he is talking about. All the Labour children’s centres are being protected and all the Conservative ones are being closed. The fact that he has raised this in Parliament—[Interruption.] Centres in Labour wards are being protected and centres in Conservative wards are being closed. The public have heard that and will make a judgment on it.
Mr Jim Cunningham (Coventry South) (Lab)
I was rather surprised that the Secretary of State did not make today’s statement, given that a quarter of the Government’s budget is spent by local government. He did the same thing the other day on the fire brigade.
This announcement will not help anybody in Coventry to participate. We need to find another £65 million for the libraries, for instance, and the welfare budget will affect a lot of people from among the worst-off. Equally, we have bed blocking because we cannot get social workers, which affects University hospital Coventry. The settlement is an utter disgrace and it is no good the Minister blaming the previous Labour Government when he and I know that it was the bankers he is apologising for.
Kris Hopkins
I wondered how long it would take for the bankers to come up in this conversation. The Minister responsible for local government makes the local government finance settlement announcement, and I am pleased to do so today. If the hon. Gentleman wants to grow his local economy, rather than coming here, not wanting to talk about his failures as part of the Labour Administration, he needs to go back to Coventry and think about ways in which to grow the business base and encourage more housing. That will create better outcomes for the people he alleges to represent.
Andrew George (St Ives) (LD)
Cornwall, the poorest region in the country, is already doing more with less. Before the Conservative opposition in Cornwall runs another shameless campaign for a council tax freeze as the council faces a cut of a third of its budget over the next three years, causing carnage in the local authority, will the Minister reflect on his statement today that he is closing the gap between underfunded rural authorities, such as Cornwall, and urban authorities? At the rate he is going, he might close the gap by the next ice age. Will he please go back to the drawing board?
Kris Hopkins
An extra £4 million is definitely an increase—it was £11.5 million and is now £15.5 million. The Government are going a long way towards closing the gap. If the hon. Gentleman believes that more money is required, there is a mechanism by which that can be achieved, as the council can increase the council tax. He should trust the people of Cornwall and put it to the vote.
Jack Dromey (Birmingham, Erdington) (Lab)
Yesterday, on top of 1,400 police officers already gone, West Midlands police service suffered a cut of £23 million, being treated less fairly than Surrey. Today, on top of nearly £500 million of cuts, Birmingham will see a further cut of £348 million over the next two years, being treated less fairly than Surrey. Is the National Audit Office right when it says that those with the greatest need, such as Birmingham, are suffering the biggest percentage cuts? Is it not absolutely wrong that everything that this Government do is characterised by rank unfairness?
Kris Hopkins
Birmingham is not being pursued in any greater way than anybody else, but it has its own challenges. There is a report out about the effectiveness of its leadership, and it needs to respond appropriately to it. I wonder what savings can be made in that authority, bearing in mind the poor leadership over recent years.
Jason McCartney (Colne Valley) (Con)
Labour-run Kirklees council has recently managed to find £200,000 to lend to the struggling Castle and Minster credit union. There is no guarantee that it will get that money back. Does the Minister agreed that that is the kind of can-do attitude we need more of from our Labour-run councils?
Kris Hopkins
Being from west Yorkshire, I have seen some interesting responses from different leaders of Kirklees council over the years. I have also been able to see some excellent work there. Credit unions are an important part of the local economy and if the council is offering that service and can get the money returned, it is the right thing to do, but it is public money and the council must be accountable for it. I am sure that the public will be watching where that money has gone.
Heidi Alexander (Lewisham East) (Lab)
In his statement, the Minister said that local authorities continue to make a vital contribution to helping pay off the deficit. The truth is that they are making a disproportionate contribution. Lewisham tells me that at some point in the year 2017-18, if it covers the costs of social care and waste collection, it will have £20 million left to spend on all other services. If the Minister was the leader of Lewisham council, what would he stop providing: leisure centres, libraries or parks?
Kris Hopkins
It is important that local government makes a contribution, as £114 billion is a huge amount of money. Today's announcement involves £49 billion on its own. If I were leader of Lewisham council, I would build its business base. Even the most deprived areas can do it. Newham has managed to grow its economy by some £7 million, and if Newham can do it, I am sure Lewisham can as well.
Nigel Mills (Amber Valley) (Con)
I welcome the extra year's funding for council tax freezes. Will the Minister join me in urging Amber Valley borough council, in its one year under Labour rule, to extend the five-year council tax freeze that operated when the Conservatives were in control?
Kris Hopkins
The public of Amber Valley will be watching what the Labour council does. We have given a significant amount of money, £5 billion, to enable councils to freeze their council tax for the past five years. I am sure that the public will make their decision in early May as a consequence of the choices that councils make.
Helen Goodman (Bishop Auckland) (Lab)
When the Government abolished the social fund and transferred responsibility to local authorities, they said it was an administrative change. Now the Minister has come to the House and said that there is no additional money and that this is discretionary spend on the part of local authorities. Is that not truly the return of local poor boards and to the 1930s?
Kris Hopkins
I have said already that it is important that local communities can understand what has been spent and can see in their councils’ budget lines what choices local authorities have made. I trust local authorities to make those choices to protect those individuals. That is the whole point of localism, and being accountable for those choices at the ballot box is the right approach. We have clearly indicated how much money there is, and the most vulnerable individuals can be protected if councils make the right choices.
Mr Christopher Chope (Christchurch) (Con)
Will my hon. Friend agree to meet the leaders of Christchurch and East Dorset councils to discuss the work they have done to improve the quality of services for taxpayers by having shared services? Would he also be willing to discuss why he rejected their bid for funding under the transformation challenge award when it seemed to satisfy all the criteria for part A of the scheme?
Kris Hopkins
I would be absolutely delighted to meet my hon. Friend’s councils. They have done some exemplary work in sharing services and we want to ensure that we share that excellent work with other authorities through the transformation network so that they can do it, too. There were some exceptional bids for the award scheme and we have had to make difficult choices. His councils were unlucky this time, but perhaps in future bidding rounds they might be successful.
Stephen Timms (East Ham) (Lab)
The Minister is right repeatedly to commend Newham council. The social fund, which my hon. Friend the Member for Bishop Auckland (Helen Goodman) mentioned, was the ultimate safety net against destitution. On the basis of the Minister’s statement, can he give any assurance that the replacement local welfare assistance will continue to be available where it is needed?
Kris Hopkins
I was very complimentary earlier about Newham and the fact that it has managed to grow its base. When making choices about how to ensure that those vulnerable people are looked after, which both the right hon. Gentleman and I also want to ensure, the council will no doubt consider the fact that it has increased its reserves by some £46 million in the past year, a significant amount of money that could be used to look after those vulnerable individuals.
Dr Matthew Offord (Hendon) (Con)
It has been reported that the Local Government Association said that public services would buckle under the cuts, but does the Minister agree that that does not appear to be happening on the ground? In my local authority, the London borough of Barnet, over £70 million has been taken out of the annual budget since 2010, 77% of those savings through efficiency in the back office. At the same time public satisfaction with services has increased from 53% to 75%. Does the Minister now feel vindicated?
Kris Hopkins
Members of the House can feel vindicated that they made the right choices. Labour said that it would be an economic disaster if we took the money away from regional development agencies, but we now lead the G8 in growth. A million jobs were going to go, according to Labour, but 1.7 million jobs have been delivered. Local authorities are also stepping up to the plate. They are making the choices to deliver good-quality services with a reduced amount of money and they can be very proud of what they have done.
Mike Gapes (Ilford South) (Lab/Co-op)
Labour-led Redbridge council has re-introduced weekly refuse collections, brought in free bulk waste collections and, to help local businesses, introduced 30 minutes’ free parking. All those proposals were in the manifesto on which the council was elected. Despite the legacy of the previous Con-Dem council and the problems emanating from the Con-Dem Government, we are supposed to pay £70 million in the next three years. What figure will be taken out in addition, and does that mean that the improved local services will be put at risk?
Kris Hopkins
I was beginning to wonder which party was in if the council had introduced weekly bin collections and free parking. Perhaps we can look at what reserves the council has. Councils across the country have increased their reserves by some £2.2 billion, taking the grand total to £21.4 billion, a huge amount of money. Some of those councils can make some choices that would make the whole system work better.
Andrew Gwynne (Denton and Reddish) (Lab)
Has the Minister had time to digest the findings of the survey of local government finance directors conducted by the Chartered Institute of Public Finance and Accountancy, which shows that their confidence in their ability to continue funding services has plummeted? Will he consider the findings, including a desire for councils to be funded in a long-term and sustainable way, rather than by “stop-gap” measures such as the new homes bonus and the council tax freeze grant?
Kris Hopkins
No, I have not read the CIPFA report, but I have listened to the public, who have said that they continue to have confidence in the quality of services offered by local authorities.
Jeremy Corbyn (Islington North) (Lab)
Is the Minister aware of the damage he is doing to local government all over the country with massive cuts year on year, while demand increases among the poorest people in our community? By the end of the next financial year my borough council will have had its income cut by 50%. That is a massive cut for an inner-city borough with a very large number of poor children, and a very large number of needs in the social care and many other areas. Will the Minister think for a moment of what the cumulative effect of all this destruction of local government is doing to local communities, to jobs and, in the long run, to the achievement of many people in schools and other places?
Kris Hopkins
I repeat that overall the budget will be reduced by 1.6%. Bearing in mind that the Government whom the hon. Gentleman supported prior to 2010 left a deficit of £163 billion, getting to the point where we have to reduce our budget by only 1.6% is testament to the work done to ensure that we get things back on track, rather than reckless spending, which the hon. Gentleman may suggest.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
Harrow local authority faces some £25 million in funding cuts next year, including the possible closure of the popular North Harrow and Rayners Lane libraries and virtually all our children’s centres. Given that Harrow faces a further £50 million worth of cuts in future years, can the Minister say when Harrow might expect a fairer funding settlement?
Kris Hopkins
All local authorities across the country are facing difficult decisions. What efficiencies has the hon. Gentleman’s local authority put in place? What business growth has it stimulated to enable it to address the challenges that he talks about? If he believes that the council needs to raise more money, there is a mechanism for it to do so. He should suggest the amount and test that opinion among the public.