Local Government Finance Settlement
(8 years ago)
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The Parliamentary Under-Secretary of State, Department for Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)
My Lords, with the leave of the House I will now repeat a Statement given earlier today by my right honourable friend the Secretary of State for Communities and Local Government. The Statement is as follows.
“With permission, Mr Speaker, I will make a Statement on funding for local authorities next year. Local government accounts for almost a quarter of public spending, and it is making a significant contribution to reducing Labour’s record-breaking budget deficit. Councils have dealt with this admirably; public satisfaction with local services has been maintained. There is much that other parts of the public sector can learn from councillors across the country when it comes to delivering value for money, but no one is disguising that more can be done to improve efficiency and further transform services.
In last year’s spending review we delivered a flat cash settlement for local government, which gives councils more than £200 billion to spend on services over the course of this Parliament. In February we published a historic four-year offer for councils, and core spending power figures have been made available in the Libraries of both Houses. The added certainty provided by the four-year offer will increase stability for councils as we transition to a world where they retain 100% of locally raised taxes to fund local services. By 2020, we will see local councillors deciding how to fund local services using local money—true localism in action.
Meanwhile, stronger incentives to support local firms and local jobs may increase business rate revenue for local government as business expands. In the new year we will introduce a Bill to provide the framework for the new system, with trials beginning later in the year. The March Budget announced that London and the devolution deal areas of Greater Manchester and Liverpool City Region will pilot 100% business rates retention. I can confirm today that these authorities have reached agreements to begin rate retention pilots in 2017-18. I am pleased to say they will be joined in this by authorities in the devolution deal areas of the west of England, Cornwall and the West Midlands.
The new homes bonus is an important part of our commitment to reward communities and authorities that embrace ambitious housebuilding plans. It also provides valuable income for councils seeking to grow their local economies, and they can spend it as they see fit. Since its introduction in 2011, over £6 billion has been paid to reward housing supply and over 1.2 million homes have been delivered. But, for all its success, the system can be improved.
A year ago, we consulted on a number of possible reforms to the scheme. Having studied the results closely, I can today confirm that, from next year, we will introduce a national baseline for housing growth of 0.4%. Below this, the new homes bonus will not be paid. This will help to ensure that the money is used to reward additional housing rather than normal growth. From 2018-19 we will consider withholding NHB payments from local authorities that are not planning effectively by making positive decisions on planning applications and delivering housing growth. To encourage more effective local planning we will also consider withholding payments for homes that are built following an appeal. A consultation on this will take place in due course.
We will also implement our preferred option in the consultation—to reduce the number of years for which payments are made from six years to five years in 2017-18, and to four years from 2018-19. This will release important funding for adult social care, recognising the demographic changes of an ageing population, as well as a growing population.
I am sure that all Members on both sides of this House agree on the need for action to meet the growing cost of caring for some of our most vulnerable citizens. Every year, councils spend more than £14 billion on adult social care. It is by far the biggest cost pressure facing local government. The spending review put in place up to £3.5 billion of additional funding for adult social care by 2019-20, allowing local government to increase its spending on this service in real terms by the end of this Parliament. However, more needs to be done.
Over recent months, we have listened to, heard and understood calls from across the board saying funding is needed sooner in order to meet short-term pressures. Today I can confirm that savings from reforms to the new homes bonus will be retained in full by local government to contribute towards adult social care costs. I can tell the House that we will use these funds to provide a new dedicated £240 million adult social care support grant in 2017-18, to be distributed fairly according to relative need. I can also confirm the indicative allocations of the improved better care fund we published last year. The Department of Health will shortly be confirming allocations of the public health grant to councils for next year.
Last year we agreed to the request by many leaders in local government to introduce a social care council tax precept of 2% a year, guaranteed to be spent on adult social care. The precept puts money-raising powers into the hands of local leaders, who best understand the needs of their community and are best placed to respond. In recognition of the immediate challenges faced in the care market, we will now allow councils to raise this funding sooner if they wish. Councils will be granted the flexibility to raise the precept by up to 3% next year and the year after. This will provide a further £208 million to spend on adult social care in 2017-18, and £444 million in 2018-19. These measures, together with the changes we have made to the new homes bonus, will make almost £900 million of additional funding available for adult social care over the next two years.
However, we do not believe that more money is the only answer. There is variation in performance across the country that cannot be explained by different levels of spending. Some areas have virtually no delayed transfers of care from hospital. But there is a 20-fold difference between the best and worst performing 10% of areas. It is vital that we finish the job of integrating our health and social care systems. We know that this can improve outcomes and make funding go further, helping people to manage their own health and well-being and to live independently for as long as possible.
There are already some strong examples of where this works. For example, in Oxfordshire joined-up working has seen delayed discharges plummet by over 40% in six months. Meanwhile, Northumberland has saved £5 million through joining up with its local health trust, reducing demand for residential care by 12%. The better care fund is already supporting this, with £5.3 billion of funding pooled between councils and clinical commissioning groups last year. But we also want to make sure that all local authorities learn from the best performers and the best providers, and we will soon publish an integration and better care fund policy framework to support this. In the long term we will need to develop reforms that will provide a sustainable market that works for everyone who needs social care.
We also need to recognise that demographic pressures are affecting different areas in different ways, as is the changing cost of providing services. So we are undertaking a fair funding review to thoroughly consider how to introduce a more up-to-date, more transparent and fairer needs assessment formula. The review is looking at all the services provided by local government and will determine the starting point for local authorities under 100% business rate retention. This is an opportunity to be bold and an opportunity for bottom-up change. We are working with representatives from local government on the review and I will report on our progress to the House in the new year.
Council tax is a local decision, and local councils will need to justify social care precept rises to their taxpayers. They will need to show how the additional income is spent to support people who need care in their area and how it improves adult social care services. However, it is worth noting that the extra flexibility to raise funding for adult social care next year will add just £1 a month to the average council tax bill. The overall increase to the precept in the next three years will remain at 6%, so bills will be no higher in 2019-20.
In our manifesto we made a commitment to keep council tax down, and this is exactly what has happened. Since 2010-11, council tax has fallen in real terms by 9%. By 2019-20, hard-working families will be paying less council tax, in real terms, than they were when we came to power.
However, last year we saw a worrying 6.1% rise in precepts by town and parish councils. That is why, earlier this year, we consulted on extending council tax referendum principles to larger town and parish councils. These councils play an important role in our civic life, and I understand the practical considerations of scale. So we have decided that we will defer our proposals this year, while keeping the level of precepts set by town and parish councils under close review. I expect all town and parish councils to clearly demonstrate restraint when setting increases that are not a direct result of taking on additional responsibilities. I am also actively considering with the sector ways to make excessive increases more transparent to local taxpayers.
This local government finance settlement honours our commitment to four-year funding certainty for councils that are committed to reform. It paves the way towards financial self-sufficiency for local government and the full devolution of business rates. It recognises the costs of delivering adult social care and makes more funding available sooner, and it puts local councillors in the driving seat and keeps bills down for hard-working taxpayers. I commend it to the House”.
Lord Kennedy of Southwark (Lab)
My Lords, I thank the noble Lord, Lord Bourne of Aberystwyth, for repeating the Statement made in the other place earlier today.
This is a settlement that will leave the people of England paying higher taxes and getting worse public services for their money. It will not pay for a single extra carer this winter. With a current crisis in social care and care budgets stretched to breaking point, we have heard nothing from the noble Lord that will give any comfort to those who need good-quality care or to their anxious loved ones.
The Association of Directors of Adult Social Services was already raising the alarm this summer, but the response from the Government was to refuse to accept that adult social care was underfunded. Even now, have we really seen anything that leads one to believe that the Government are serious about dealing with the crisis in adult social care? We have seen £4.6 billion axed from social care budgets since 2010; 1.2 million people not getting the care they need, according to Age UK; and the service at tipping point, according to the Care Quality Commission. In addition, as the noble Lord, Lord Porter, the Conservative chairman of the Local Government Association, has made clear:
“Services supporting our elderly and vulnerable are at breaking point now”.
So what do we have? We have blame put on councils, a fair funding review and an increase in council tax. Can the noble Lord confirm how much new money is available to tackle this winter’s social care crisis? Will he also confirm that the further increase in council tax next year will not plug the funding gap for next year either? Does he regret that before the 2010 general election senior figures in his party chose to kill off cross-party talks on how to fund social care going forward? Then there was the Dilnot commission, whose recommendations have been shelved until at least 2020.
Why should we have any confidence that the noble Lord and his party are serious this time about sorting out social care funding? Can he tell us more about the fair funding review? What is the timetable for it? This is, after all, an immediate crisis and we have elderly and vulnerable people who need action now—they cannot wait for the review.
Will the review also address the worsening postcode lottery for social care and other services? In the most deprived areas of the country, social care spending fell by £65 per person as councils were hit particularly hard by government funding cuts, but it rose by £28 per person in the least deprived areas. And will not the social care precept only further entrench inequality? Blackpool, one of the most deprived unitary authorities in the country, faces a 31% reduction in spending between 2011 and 2019, while Wokingham, one of the least deprived areas, faces a fall of just 4% over the same period. When will the Government address that injustice?
I pay tribute to local authorities, councillors and local authority staff up and down the country who are doing their best to plug the funding gap to cope with huge rising demand for care and increasing costs. In 2014 alone, councils diverted £900 million from other services to maintain adult social care services.
Since the Prime Minister came to office, there has been much talk of help for those who are just about managing their finances, However, that seems to have gone out of the window today. The fact is that we need deeds as well as words. The Prime Minister has decided to put up council tax in every part of England again. She told us:
“If you’re from an ordinary working class family, life is much harder than many people in Downing Street realise”.
I think we can all agree with that statement. She also said:
“You have your own home, but you worry about … the cost of living”,
the state of your area and the services you rely on, and you worry whether you can pay the tax bill at the end of each month. Today, the Prime Minister, the Secretary of State and the noble Lord have decided to make things just a bit harder for those hard-working families. On top of council tax rises this year, there will be a 3% rise in 2017-18 and another increase in 2018-19—a 17% rise in council tax compared with 2015, all decided in Downing Street.
The Conservative Party, which once claimed to be in favour of low taxes, is putting up taxes every year until the next election. If you are a band B council tax payer in Blackpool, this will take twice as much as a proportion of your income as it will if you are a band B council tax payer in Wokingham. For some, it will mean the support they had hoped would be there for an elderly relative will not be, while for others visible public services such as street cleaning will be cut ever closer to the bone. There will be even fewer youth centres and more libraries will close.
Can the noble Lord say more about the proposals to, as he says, encourage more effective local planning by making positive decisions on planning applications and housing growth? I have to say to him that it is not councils being slow in approving housing planning applications that is the problem—that is just political dogma from the Conservative Party. We need to deal with the problem of land-banking by developers that just sit on land with planning applications but do not build the houses. What we need is real, urgent action so that the homes that we need are built quickly to deal with the housing crisis. What we have seen here today is too little, too late, with needs unmet, hopes dashed and social care in crisis, and complete and abject failure on the part of the Government to get a grip on the situation. It is not good enough.
In conclusion, I apologise that I did not at the start make my usual declaration of interests as a local councillor in Lewisham and a vice-president of the LGA.
Baroness Pinnock (LD)
My Lords, I declare my interests as a local councillor in the Metropolitan Borough of Kirklees and as a vice-president of the Local Government Association.
I am rather relieved today that I am not on the Government’s Christmas present list. The Government’s Christmas presents are ones you pay for with your money, not theirs. A clearer, more transparent picture of today’s Statement is this: the Government, in the four-year deal to local authorities, are slashing the grant they give to local government by 56% over the planned period. This, of course, has a disproportionate impact on those councils that, because of need, rely more heavily on government grants to provide the services that the Government demand of them. The effect so far has been that council spending has, for the majority of councils, fallen like a stone. Some spend 44% less on all services, excluding schools, than they did six years ago. An average metropolitan council serving 400,000 people spent £377 million in 2010 and £257 million this year, according to an analysis of figures by the ONS. The consequence is that hard-pressed councils have even had to cut services to vulnerable adults and children. A crisis has ensued. Care homes are closing down and the impact on the NHS is there for all to see. The Government’s response in this time of good will is to give local authorities their own money and label it a social care grant. The funding has been taken from the new homes bonus and redistributed. No doubt there will be winners and losers, and it will be no surprise to me if the winners are those who need it least.
The Government have given local authorities not one but two presents this year. The second present is to allow councils to collect and raise the Government’s social care tax—so those who are just about managing will be even more hard pressed. Worse still, this largesse from the Government does not do any more than apply a sticking plaster to the gaping wound that is social care, while the patient is bleeding to death. Local figures tell the story better than the national ones. In Kirklees Council there is already a funding gap of £12 million in adult social care because of rising demand. The social care tax of 3% will provide £3.3 million of extra funding, but there will still be significant cuts to be made in social care services.
The new homes bonus reallocation provides no new funding; it is just reallocating and relabelling the same money. What is given is also taken away. Existing new homes bonus funding is being used to prop up libraries, parks and road repairs. These services will now be even worse off, so outlook is bleak for many councils, and there is not much seasonal good will there.
Does the Minister believe that the scale of the crisis in social care requires more than two years of a 3% tax rise to meet existing needs? If not, how does he anticipate plugging the remaining gap? Will he discuss with his colleagues the potential to bring forward increases to the better care fund which are planned for 2020, so that the integration of health and social care can be accelerated? Can he explain how those families that are just about managing will manage the 6% rise in council tax imposed by the Government? Does he expect all local authorities to survive intact under the burden of these pressures?
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord, Lord Kennedy, and the noble Baroness, Lady Pinnock, for their contributions. I will try to answer the questions that they have asked. First, as I have indicated, councils and councillors perform an incredible job with great success—their approval ratings make other levels of government envious of the extraordinary work that they do. I must take issue with the basic thesis that the Government have not answered the call for additional needed money for adult social care. This is additional needed money for adult social care, as I was at pains to announce today, recognising the problem with £900 million additional funding over two years. It is more than the 3% precept: it is £240 million in the next year specifically earmarked for social care spending and that will be allocated according to the fair funding formula for those in the greatest need. That is something that we should welcome.
In addition, I was at pains to point out that the fair funding review that is going forward will help in this direction. I indicated that my right honourable friend the Secretary of State will be making a report back to the House next year, and that will no doubt be reflected in your Lordships’ House too. Meanwhile, now that we have announced additional money, the health and social care integration that is going on and that will be completed by 2020 has in excess of £6 billion to help with health and social care integration, which is key to dealing with this problem. As I indicated, this is not just about money. Clearly, money is central, but it is not the only factor. I repeat that there are authorities across the political divide performing much better than others. We are available to provide information to authorities on the best-performing authorities, so that that information is more widely available.
We recognise the issue that needs to be addressed, and I think we are addressing it. We have consulted on the changes in the new homes bonus, which were referred to. This is not something that has happened out of the blue—it was consulted upon. It is sharpening the incentives; it is not stopping the new homes bonus but introducing a floor at 0.4%. It is scaling down the legacy changes, but authorities will continue to benefit from this. Meanwhile, the savings have been specifically channelled into helping to address the problem in the area correctly identified by the noble Lord, Lord Kennedy, and the noble Baroness, Lady Pinnock, as needing attention. I would have thought that that was to be welcomed. I think this provides cheer to the sector, in recognising that we are addressing the urgency of the situation with additional money in the way that I have expressed.
Lord Beecham (Lab)
My Lords, the Government are qualifying themselves for nomination for the Nobel prize for complacency in how they are addressing the problems facing local authorities. Since 2010, when Salome, in the perhaps unlikely form of Eric Pickles, offered up local government as a prize to central government, which led to the largest share of cuts in any area of government expenditure going to local government, councils have struggled manfully to maintain services. I refer to my interest as a member of Newcastle City Council and a vice-president of the LGA. In Newcastle, we are heading, by 2020, for a £291 million a year cut from what was being provided in 2010. That is a remarkably high figure. It amounts to about £1,000 per head of the population per year. How are councils supposed to maintain services?
The Government’s complacency is reflected in the remarkable assertion that added certainty will provide “increased stability”—the stability of the graveyard for councils—and that,
“By 2020, we will see local councillors deciding how to fund local services using local money”.
But of course, there are inadequate amounts of public money. This will apparently be, “true localism in action”. It is more likely to be inaction in local government, because councils will not have the capacity to deliver the services that their people need.
The Government go on in this Statement, unilluminating as it is, to talk about how the,
“extra flexibility to raise funding … will add just £1 a month to the average council tax bill”.
Councils have not been able to increase council taxes beyond a very limited amount over recent years, so if it is being permitted now to raise council tax by this modest amount, why has that not been available beyond the 2% limit imposed on local authorities in previous years?
The Statement is worse than that in a way because it goes on to say that councils will be able,
“to support people who need care in their area”,
and show,
“how it improves adult social care services”.
It is not a question of improving adult social care services; it is a question of trying to maintain adult social care services against rising costs and, increasingly, rising demands for which no provision is being made.
It is remarkable that the new homes bonus is relied on to transfer one part of local government money to another area. That rather eliminates the whole point, one would have thought, of the new homes bonus, which was supposed to encourage housebuilding, which the Government may have noticed is desperately in need of increasing.
Local councils and, more importantly, their residents are facing an unprecedented decline in services. It is certainly true that some people are not aware of the damage being done because they do not have intimate family knowledge of it. That is why some of the polling suggests that people regard the service as okay. Unless people happen to know members of the family denied services—not able to use a library that used to exist—or do not have children in a school that is under great pressure, they do not get the true picture. The Government are clearly colluding in an attempt to conceal the true picture of what is happening in communities up and down the country.
I have one final point to make in relation to business rates, because this will apparently be the great answer. We do not know how the business rates system will work. We do not know how it will reflect the different yields that will occur in different parts of the country and what method of redistribution will be applied. We do not know, for that matter, how the appeals system will work against the new valuations, which have been controversial in various parts of the country and which may complicate the picture significantly. This finance settlement is unsatisfactory. It is entirely the responsibility of the Government to see that there is a fair distribution directed at meeting needs, and this Statement does nothing to do that.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord, Lord Beecham, for what was perhaps more a diatribe than a series of questions, but I will try to extract some points that were made in what seemed to me an excessively gloomy speech, although with the noble Lord’s characteristic lightness of touch.
First, it is worth pointing out that 97% of councils, across the political divide, have signed up to the four-year deal. The settlement that we have reached recognises that there has to be a balance of interests—of council tax payers and looking at the problems of the age, specifically the very serious problem of adult social care. The noble Lord said, incorrectly—I think I am quoting him correctly because I wrote it down—that no provision was being made for adult social care. That is patently not the case.
Lord Bourne of Aberystwyth
I think that is what the noble Lord said. I wrote it down. In fairness, he then went on to cite the use of the £240 million funds, so perhaps a careful reading of what was said will indicate that one of us is wrong. However, I think he did say that no provision was being made for adult social care. We have allocated £240 million in the next financial year, from savings from the new homes bonus, which is specifically to address what I acknowledge is a serious issue. That, together with the precept and the ability to reprofile the increase in the precept of 3% and 3% then 0%, recognises £900 million additional spending in the next two years. That is a significant amount for what is, admittedly, a serious issue.
I will home in on an area that the noble Lord quite fairly raised in relation to the business rate retention. As noble Lords are probably aware, there will be legislation on this in the new year. It will be introduced into the Commons first and will come subsequently to your Lordships’ House, so there will be more detail about how that will operate well ahead of it coming to us.
Lord Shipley (LD)
My Lords, I declare an interest in that I, too, am a vice-president of the Local Government Association. I found the settlement announcement today to be extremely worrying. I think it contains a major mistake in its use of council tax, which is a property tax—and an out-of-date property tax because it needs a number of higher bands. It is being used to make up for a failure by central government to fund adult social care adequately. Despite the extra tax that can be raised, it is still inadequate because there will still be a huge gap between income and expenditure in adult social care. Secondly, councils with a lower council tax base will get less money than councils with a higher council tax base. Thirdly, the settlement will end up leading to further cuts in other services, such as more library closures and reduced levels of service in universal services such as leisure centres that are enjoyed by many local people.
I accept that there was a consultation on the new homes bonus, but it is nevertheless a big worry to see so much money diverted from that to help to fund adult social care. Will the Minister agree to publish the modelling done by the department on the impact of that on individual authorities? I also point out to the Minister that there is no mention in the Statement of planning fees. There is an implicit criticism of local authorities for not building quickly enough, but the constraints on staffing being produced by cuts have meant that there are simply fewer planners in post. It would help enormously if the Government would permit there to be a variation in planning fees to allow local councils to appoint more planners to recoup that cost.
Finally, I associate myself with what was said about business rate devolution. I am in support of 100% business rate devolution, but I am deeply worried by the impact of that on those councils that cannot grow as fast as some others. That is why the fair funding review becomes so important, because we must not end up in a position in which there is full local control of budgets but actually the income for some councils is much lower than they need to run an average level of services that residents and businesses have a right to expect.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord, Lord Shipley, for his contributions and will try to pick up on the points that he quite fairly made. First, in relation to the equity of the settlement, he will be aware—and perhaps I should clarify—that the £240 million fund available next year will be channelled to authorities in relation to need. I hope that that picks up the particular point he raised.
Planning fees are not mentioned in the Statement because its more laser-like focus is on other issues, but that is something that I hope will be covered in the housing White Paper that will be issued in the new year. Perhaps we can pick that up then.
I note the points made by the noble Lord on business rate devolution. They are quite fair, but I repeat that business rate devolution will be the subject of legislation next year which obviously will be considered in detail by both Houses.
On the fair funding review, I have indicated that the Government are very much committed to this. My right honourable friend the Secretary of State has said that he will report on the review in another place in the new year, and no doubt we will pick it up from there. It is an important part of getting this right, as is health and social care integration, which is key to the whole issue and is being driven forward by the Government.
I come back once again to what I think is a very important point. We want to ensure that the performance of the best-performing authorities across the political divide is picked up across the piece by all local authorities.
Baroness Donaghy (Lab)
My Lords, perhaps I may make a couple of points and then ask a question in relation to the schools funding announcement made earlier this week. First, it is always the depths of December when we get the local government finance announcement, and no doubt we will have a debate on it in the depths of January. I do not know if this is absolutely inevitable, but in the six years that I have been in the House, it is during those two months when local government finance announcements are, shall I say, slipped out.
Secondly, the £240 million announced for the adult social care support grant would be just about enough for the London Borough of Southwark where I live, so I do not know how everyone else is going to manage. We are talking about a much larger scale and it is quite wrong of the Government to pretend that that relatively small amount of money is going to make any difference whatever. I think that my noble friend indicated that it was about improving social care; I do not think he said that it would not do anything for social care.
Finally, the council tax precept is probably one of the most cynical political moves I have ever seen. Councils that are able to raise money without actually losing an election are probably those which are the least in need, while those that are most in need would not dare to try for the precept. It is wrong to pretend that this is about local autonomy when it is about the Government hiding behind local authorities for their total abnegation of responsibility.
My question is around the schools funding announcement. If I remember rightly it stated that some schools would get more but others—those in larger urban areas, it turns out—will have the equivalent of a 3% cut in real terms. If inflation is included, it will be a real terms cut of 5%. Can the Minister tell the House how that funding announcement for schools relates in general terms to the local government finance announcement? Has any thought been given to how the two will interrelate, or will it be a double whammy for some local authorities?
Lord Bourne of Aberystwyth
My Lords, I thank the noble Baroness, Lady Donaghy, for her questions. In terms of where she is sitting, she is much closer to the noble Lord, Lord Beecham, than I am and I apologise if I misheard the point that he made. It appears that that may possibly be the case.
As to these announcements being made at this time of year, as the noble Baroness indicated, the fact that they happen every year at this point means that that is the cycle. It will always be the case that some government business is taken at this time of year and there is nothing particularly to be read into that. I understand what she is saying about the £240 million but it is additional money and is nowhere near all the money that is spent on adult social care. I should make the point that it is additional money and will make a difference, and of course there is always the option of moving forward on the precept with additional spending next year and the year after, which, over the two-year period, comes to some £900 million. That is a significant amount.
In relation to the school funding announcement, I hope the noble Baroness will understand that it is not something I am briefed on at the moment, but I will ensure that she gets a response to what I think was an announcement made by the Department for Education on the issue. I hope that that is appropriate.
Lord Blunkett (Lab)
My Lords, I do not have a registered interest but I do have an elderly mother-in-law in her mid-80s who has been in hospital for five weeks, so I have a personal as well as a more general interest in this area. I shall be brief. I want to explore the short-termism of the announcement, leaving aside the post-truth nature of the Statement that the Minister has had to read out to us today. The two years of precept increases which are available if local government is able to implement them are, if I am right, to be followed by clawback. If the money is spent on social care, as we all wish, at the end of the period either further deep cuts will have to be made to existing services which are already being cut to the bone, or the services that will have been put in place using the precept will have to be withdrawn. Either way it is an unacceptable prospect. I wonder if the Minister will be able to talk to his colleagues about thinking again about something that is offering a very small short-term plaster followed by an extremely deep wound. That will reverberate around us in terms of the distrust that already exists in politics. From my time in local government I know that it is now fairly obvious that the most deprived areas have been deprived of money the most, and that the most deprived areas are those that are the least likely to be able to raise sums to deal with and meet the challenge of social care. If the Chancellor can win a battle or two in Downing Street, surely intermediate care and perhaps bringing forward the better care fund would be a way of bridging the gap between those who are in hospital and need substantial support and those in the community who need continuing support—and let us just get this right.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord, Lord Blunkett, for his contribution. I should say first that I do not recognise the charge of “post-truth”. We have responded to what is an immediate need with immediate action. On the particular charge of clawback, that is not the case. What will happen is that it will be 6% over the three years, but of course the base will increase in each of those years. I do not recognise the accusation of clawback as being in any way accurate.
On the broader point about fair funding, it is well made, and I have indicated a commitment to the fair funding formula and suggested, which I will again, that my right honourable friend the Secretary of State will be providing more information on it in the new year because this is key to getting things right over the longer period. I have also indicated that the better care fund, and now the improved better care fund, will have had £6 billion invested in it over the period. It will contribute to the integration of health and social care which, as I say, is key to getting this right. That is why the money is needed both now and in the interim, but we are expecting far better integration by the end of the Parliament in relation to health and social care, as well as addressing the issue of delayed discharges, which should ease the pressures that we are seeing at the moment.
Lord Liddle (Lab)
My Lords, I declare an interest as a county councillor in Cumbria and someone who is not a vice-president of the Local Government Association. Perhaps I may express my sympathy for the Minister in having to come before us with such a pathetic Statement. Does he not recognise that the fundamental problem the Government are facing is that they cannot meet the expectations of the public for decent schools, decent health and decent social care on the financial perspective they have set out of reducing public spending to 36% of GDP by 2020? We have to fundamentally reconsider that objective.
Will the Minister give us some indication that there might be just a little bit of joined-up thinking in the Government and assure us that this extra social care fund which is being provided will be directed at those parts of the country where the NHS is suffering from severe bed-blocking problems, as is the case in my own county of Cumbria? These issues are really threatening the provision of decent healthcare in our area.
Thirdly, I want to make a point that no one else has made. The Statement contains a threat to the most local of local democracies; I am talking about parish and town councils. In my experience—there is a town council in Wigton in the area I represent in Cumbria—they do not have big budgets, but they are trying to use money to make up for community grants for helping swimming pools and local leisure facilities that have inevitably been cut back by county and district councils as a result of the scale of the cuts in grant that the Government have implemented. To try to restrict their freedom of action is, frankly, petty.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord, Lord Liddle, for his contribution. The picture he presents is at odds with the picture of local government achieving, and being recognised as achieving, around the country. Yes, there are challenges we are meeting, not least dealing with delayed discharges. As I have indicated, that is essential to the Government’s thesis; the Statement indicates that too. It is important that we deal with the issue of integrating health and social care, and £6 billion—not an inconsiderable sum—will be invested in that. We hope that by the end of this Parliament the position will be much better than it is now. This is not an entirely new problem—not that I am suggesting the noble Lord said it was—but one that has grown up over time. Therefore, it is a problem that will take time to solve.
On the particular point the noble Lord made about parish and town councils, once again I do not recognise this action we have taken against them. We have recognised the very important role they fulfil. As a Government we are keen to ensure that council tax increases are kept to a minimum. I hope the noble Lord will agree that that is fair. They have gone up excessively in the past under successive Governments, but, as I have indicated, at the end of this Parliament they will be lower in real terms than they were when we came to power in 2010. That is a significant achievement. Meanwhile, I assure the noble Lord that we will work with parish and town councils to ensure they continue to offer the quality of services they currently do, to help them in that regard and to ensure they have continuing value for money on that front.