Lancashire County Council

Wednesday 22nd February 2017 Westminster Hall

16:14

[David Morris (Morecambe and Lunesdale) (Con)]

I beg to move,

That this House has considered local government funding and Lancashire County Council.

It is a pleasure to serve under your chairmanship, Mr Owen. I have called for this debate because I am concerned that Lancashire County Council has trouble in managing its budget. It talks about Government cuts as an excuse for any problem, and I do not have confidence that it understands how to manage a budget in its entirety. Its deputy leader, David Borrow, recently presented a no-change budget. He went on to say that the budget was

“in the face of massive savings needed because of massive Whitehall grant cuts imposed by this Tory Government”,

which was quite perplexing.

On the back of that statement, I looked up the answer to a question I had asked, which said that on 31 March 2016 the council had £716 million in reserves. Out of that £716 million, £314 million was not ring-fenced, while £402 million was. Figures are bandied about all over the place in the county council, the press and wherever. I am not bothered about that. What I am bothered about is trying to get to the bottom of what is allocated by central Government to the county council in its various forms.

The leader of Lancashire County Council, Jennifer Mein, said:

“These cuts in the Government grant are shocking…They are unprecedented.”

She also said:

“The county council faces the greatest financial challenge in its history, a challenge so great that within a couple of years we will not have the money to deliver the statutory services we must deliver by law.”

All of that focuses on only one area of Government funding, I might add, which is the revenue support grant. That grant is only part of what central Government gives to the county council. In 2016-17, Lancashire County Council received £118.8 million in revenue support grant—that was 7.1% of its actual spend. In 2017-18 it is due to receive £81.5 million, which on last year’s budget, without any savings, would be 4.8% of actual spend.

The revenue support grant is a small amount of the county council’s overall budget. Although it was acknowledged by all political parties after the financial downturn that savings needed to be made, that is not the reason for all the problems the council seems to have in balancing its books. Lancashire County Council’s political leadership seems to focus on the revenue support grant as if it were the only factor in the budget. In fact, in 2015-16 it received £1.1 billion in different Government grants, and only 14% of that was revenue support grant.

As I said, I called the debate to get to the bottom of how much funding Lancashire County Council is getting from central Government. I asked the House of Commons Library to compile a list of the different streams of funding given to Lancashire County Council. They are settlement funding grant; the new homes bonus; adult social care grant; transition grant; rural services delivery grant; the improved better care fund; learning disability and health reform funding; Care Act funding; local welfare provision; the early intervention fund; and lead local flood authorities funding. There are also ring-fenced grants such as the public health grant; the dedicated schools grant; housing benefit administration subsidy; and the former independent living fund grant. Figures show that for that last grant, Lancashire County Council received the largest grant of any council in the country in 2015-16—£4.8 million in nine months. In 2016-17 it is getting £6.07 million, in 2017-18 it will be £5.9 million, in 2018-19 it is projected to be £6.7 million and in 2019-20 it will be £5.5 million, which will still be the largest amount of any county council nationwide. The list continues: the council receives council tax support administration subsidy, as well as money from the highways maintenance fund and the potholes action fund, with funding to fill 23,415 potholes in this financial year and further funding to fill 32,415 potholes next financial year.

As Member of Parliament for Morecambe and Lunesdale, my main concern has been that the political leadership of the county council is failing my constituents. It seems that the leadership seek to hold back my constituency. They blame Government cuts, but they have consistently held back my plans for an enterprise zone—I know those zones may be phased out, but I am sure they will be replaced with some other kind of funding stream—and ensured, with their seats on the local enterprise partnership, that funding for my constituency was not applied for. I firmly believe that.

In response to that charge, Jennifer Mein said:

“I’m proud of our track record of promoting jobs and growth right across the county and particularly in the Lancaster & Morecambe area. I can think of several initiatives that the county council, the Lancashire Enterprise Zone and Lancaster City Council have worked jointly on: The delivery of the long-awaited Bay gateway which has opened huge opportunities for employment and business growth across the county.”

Incidentally, neither she nor the current Labour administration had anything to do with the bay gateway; I secured the funding and it was a Tory-led county council that enacted it.

Mrs Mein went on to wax lyrical about funding from the Government, which features no cuts at all and in most cases is awarded to stakeholders outside of the county council’s direct influence:

“Working with the University and the Enterprise Partnership, as well as the City Council, we have: assisted in bringing forward the Health Innovation Campus with an investment worth over £17m; Secured Garden Village status for South Lancaster—”

which is effectively a new town—

“(one of only 14 such designations in the country) with extra funding for infrastructure work at Junction 33—”

on the back of the new town—

“Seen investment of £2.5m in the Lancaster Teaching Hub of Cumbria University aimed at training new nurses and care workers; Facilitated £4m of commercial lending in support of the Luneside East development. Our Business Growth Hub, ‘Boost’, has worked with over 140 growing SME businesses in Lancaster over the past two years. This work looks to continue and grow following the County Council’s further investment of £3m to support the work of ‘Boost’.”

I am sure that is very welcome in those vicinities, but in response to my charge, she failed to list one project that the current administration has directly funded in Morecambe and Lunesdale. The link road was given the green light before the local enterprise partnership—and that administration—came along, so I fail to see exactly what she claims has been done in my constituency.

[Julie Cooper (Burnley) (Lab)]

On the hon. Gentleman’s comments about the failure of political leadership in Lancashire County Council, is he aware that the leader of the council, together with the deputy leader of the Conservative group and the leader of the Liberal Democrat group, all recently attended Parliament to meet Labour MPs? All were of one voice in speaking of the inadequate funding provided by the Government.

[David Morris]

I know that the leader of the county council also went to see the special advisers in the Department for Communities and Local Government. They told her categorically, if she needs more money or thinks the council will go bankrupt, to go and see the Secretary of State.

The politicisation of the LEP seems to be a huge problem in Lancashire. It is extremely rare to have county council officers also officiating over the LEP. The LEP’s agenda seems to be the same as the county council’s, meaning that the growth deal funding is used in Preston and is Preston-centric. Lancashire County Council also prioritises Blackpool, presumably because of the combined authority proposals. The LEP currently presides over £1 billion of funding, of which not one penny has been scheduled to be spent in Morecambe and Lunesdale.

The county council commissioned a £7 million-plus report from PricewaterhouseCoopers, which stated that, if the council does nothing, it will go bankrupt and the Government will need to take over statutory services—that is what I was alluding to in my answer to the hon. Lady’s question. That money was wasted on a report that told the council that it needs to take action to manage its budget, with PwC also asking what services could have been protected for that money. The report into statutory services cost £1 million alone, and the social care report cost £6.6 million. That money was spent to find out how to save £36 million, but the report’s proposals are the same as what is happening in the “Better Care Together” strategy that is already being piloted in Lancashire.

Will the Minister tell me the full breakdown of each grant given to Lancashire County Council by central Government over the past four years? Will he assure me that the Department will investigate Lancashire County Council, to ensure that money is being spent appropriately and not on vanity projects while services are being cut? Will he also reassure me that political neutrality is being adhered to on the LEP, and that the political leadership of the county council does not have undue influence over the running of the LEP by county council officers who are effectively dual-jobbing?

Finally, I would love the Minister to assure me that any changes announced within the last hour by the Secretary of State for Communities and Local Government, either to devolve further spending and revenue responsibilities or to form a combined authority, are heavily scrutinised and are given the green light only once Lancashire County Council can prove that it can manage its budget.

[Albert Owen (in the Chair)]

The mover of the motion, the hon. Member for Morecambe and Lunesdale (David Morris), and the Minister have agreed that the hon. Member for Preston (Mr Hendrick) can make a short contribution. The debate will end at 4.44 pm.

16:26

[Mr Mark Hendrick (Preston) (Lab/Co-op)]

First, I congratulate the hon. Member for Morecambe and Lunesdale (David Morris) on securing the debate. I will make a few brief points and then await the Minister’s response.

The hon. Gentleman rightly referred to the independent PricewaterhouseCoopers report, which made the point that Lancashire County Council is currently underfunded and has been for many years—we do not have the time to go into the figures. Lancashire County Council has the third lowest tax base of any of the shire authorities. The list of grants to which the hon. Gentleman referred showed the top-slicing of local government, which is such that prescriptive packets of funding are now given in addition to the rate support grant. He quoted the rate support grant as being only 14% of the total amount of money received. That is right, but only because the RSG has been reduced such that the Government can be more prescriptive about how other grants are spent.

The adult social care grant is obviously important. Despite the linkage between adult social care and the health service, we have seen a £4.6 billion hole in adult social care funding over the past five years, which needs to be filled. The Minister and myself were in the Chamber just now to hear the Communities and Local Government Committee Secretary talk of increases in adult social care funding. Those increases are welcome, but they will not get anywhere near the £4.6 billion required to fill the hole that has been generated over the past five years.

The hon. Gentleman also mentioned that Lancashire, of which Preston is the centre, received the highest rate support grant of any shire authority. It has, because it is the second largest authority in the country after Birmingham City Council. It is a huge area that spends huge amounts of money, much of which has been taken away from it in recent years. Lancashire also has a much higher proportion of older people and people who cannot pay for their own care than any other shire authority. That ageing population puts particular pressures on social services.

Levying the 2% precept on council tax to pay for adult social care will raise just less than £8 million, but Lancashire County Council needs £14 million annually to keep up with the living wage and cost of living increases. However, levying the 2% precept in Surrey will raise £12 million. Is it not time that the hon. Member for Morecambe and Lunesdale does what those Conservative politicians in Surrey did and perhaps asks for a sweetheart deal with the Government that could make Lancashire better funded?

PricewaterhouseCoopers says that, even if Lancashire County Council is in the lowest quartile of spend on every service, it will still have a £94 million gap by 2021— even if the 2% precept is levied every year.

Given the brief word the hon. Gentleman and I had before this debate about it not being party political, I was surprised to hear him mention consistently points made by County Councillor Jennifer Mein, the leader of the council. The county council is supposed to be—

[Albert Owen (in the Chair)]

Order. I am sure the hon. Gentleman is coming to the end of his contribution.

[Mr Hendrick]

Yes. I will be 30 seconds.

The hon. Gentleman talked about funding being Preston-centric. He has not accepted invitations to county hall or Westminster to talk about these issues with other MPs from Lancashire. If he looks at the reports from the LEP, he will see that many of those projects are spread throughout Lancashire and are not focused particularly on Preston.

16:30

[The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Percy)]

It is a pleasure to serve under your chairmanship, Mr Owen. I congratulate my hon. Friend the Member for Morecambe and Lunesdale (David Morris) on securing this important debate. He is a doughty champion for Morecambe and Lunesdale, with a record of delivering for his constituency on a whole range of issues and helping to secure funding for it. This afternoon he is, again, battling away for his constituents and, indeed, for Lancashire.

Only this morning, I was in what I consider Lancashire —albeit Manchester now, which has been slightly carved out. This is an area of the country I take some interest in, given my direct role through the northern powerhouse portfolio. I apologise on behalf of the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Nuneaton (Mr Jones), that because of what is going on in the main Chamber, he is not able to respond to this debate.

We should start any debate on local government finance by being honest about what we, as politicians and political parties, went into the last election promising. I am not so sure about the manifesto policies of the Democratic Unionist party and the Scottish National party on local government finance in England at the last election—or, indeed, whether they had such policies; I suspect not. However, it is certainly true that the Labour and Conservative manifestos both included a commitment to no extra funding on top of that which is being delivered for local government. We all need to be honest about that. Nobody promised the electorate that there would suddenly be a cash windfall for local government if there were a change of Government. That is the appropriate starting point.

Local authorities are democratically elected organisations. They are independent of central Government and are, of course, responsible for managing their own budgets themselves. I must pick the hon. Member for Preston (Mr Hendrick) up on this nonsense about a special deal for Surrey. That has been wholly debunked and disproven, and it is completely inappropriate for Opposition Members to continue peddling that line. It is not the case.

[Albert Owen (in the Chair)]

Order. We need to stick to the subject before us.

[Andrew Percy]

Indeed. I am simply responding to a point made by the hon. Member for Preston, but I will take your guidance on that, Mr Owen.

Over the previous Parliament, councils showed that they are capable of finding savings and efficiencies, and some have delivered them very well. Many councils that have much lower proportionate per head funding have been able to deliver incredible savings and services as a result. A lot of this is down to local leadership, as my hon. Friend the Member for Morecambe and Lunesdale made clear.

Our sustainable financial settlement, which we are confirming at the moment, means that local authorities can take on the challenge of making savings, while continuing to provide excellent local services if they have the appropriate leadership. We have provided councils with a financial settlement that is over the next few years essentially flat in cash terms, moving from £44.5 billion in 2015-16 to £44.7 billion in 2019-20. Over the course of this Parliament, councils will have £200 billion to spend on local services. When we talk about local government finance reductions, we often forget about the £200 billion of spending on local services over the lifetime of this Parliament.

We have recognised, as both my hon. Friend the Member for Morecambe and Lunesdale and the hon. Member for Preston highlighted, that social care pressures for councils are very significant at the moment, as our population ages and as, I am afraid to say, we reap the failure of Governments of both colours years ago to properly plan for demographic shifts. However, we have enabled local authorities to access up to £7.6 billion in dedicated social care funding over this spending review period.

I shall now look specifically at Lancashire County Council over the course of this Parliament. Its core spending power is set to increase from £730 million in 2015-16 to £751 million in 2019-20. Unfortunately, the figure for 2019-20 is indicative. The staff who work at Lancashire County Council, as is true of council staff across the country, are dedicated to delivering local services, so this is not a criticism of them. However, the council is sadly among the 3% of local authorities that have not signed up to the long-term funding settlement, so that is an indicative figure. I am disappointed that Lancashire has not accepted our multi-year offer.

The majority of Lancashire County Council’s core spending power is raised locally, as my hon. Friend pointed out. In 2016-17, £402 million will be raised in council tax, and £7.9 million in the adult social care precept; so £410 million of spending for Lancashire County Council is raised locally, and £118 million is provided through the revenue support grant, which, to be perfectly honest, reduces over time, as Members know. We all are committed to local government playing its part as we try to deal with the deficit we inherited.

We accept the particular issues with the changes that the hon. Member for Preston highlighted, which is why we are providing £1.1 million of transition funding this year to Lancashire and will provide £1.2 million in 2017-18. Last month we introduced the Local Government Finance Bill, which will mean that by the end of this Parliament, local authorities will retain 100% of local business rates to spend on services. That move towards self-sufficiency is one that I strongly supported, as a former local councillor for 10 years, and that local government generally has been an advocate of.

As I said, Lancashire County Council is receiving £1.1 million in transition funding this year. That will ease the change between those two systems for Lancashire. The fair funding review, which we heard a lot about in the statement this afternoon, will also establish what the relative needs assessment formula should be in a world in which local government spending is funded mainly by local resources and not central Government grants. It is nearly 10 years since the current local government funding formulae were looked at thoroughly. Demographic pressures, which we also heard a lot about in the main Chamber this afternoon, such as the growth of the elderly population, may have affected areas in different ways. It is appropriate that we have this review.

I know that one of the pressures in Lancashire, as in many parts of the country, relates to social care. Earlier today, we confirmed the new adult social care precept flexibilities and the introduction of the adult social care support grant, which will enable Lancashire County Council to access an additional £9.7 million in funding for adult social care in 2017-18 alone. That is an ability to bring forward the precept increases. It is 3%, 3% and then zero. Unfortunately it is sometimes presented as though in the final year there will be no increase. That, of course, is built into local funding in the council tax base. That is real money, realised in every single one of those years, and bringing it forward levers in nationally nearly £1 billion extra.

I am aware of the independent statutory services budget review by PwC that took place in September last year in respect of Lancashire’s budget to deliver statutory services. As was mentioned, the council met officials in my Department in October last year following the review to discuss the findings. However, it is the responsibility of elected members and officers of the council in Lancashire to find solutions to address the challenges it faces. Similar changes are faced by other councils, which are responding appropriately. In so doing, they can make use of the sector-led support from the Local Government Association, which is funded by this Government.

We expect local authorities to act in an open and transparent way about their service provision and spending locally. It is important that local councils are honest with their constituents. In many of these debates, including in my own area, it is almost as if the entirety of local government spending is what the Government provide to it. When cuts of 20%, 30% or 40% are referenced, it is in a deliberate way to lead people to conclude that the council’s finances are being cut by 20%, 30% or 40%. That is simply not the case. We must all be honest; we all have a responsibility to be honest with our constituents about that. In relation to particular challenges in Lancashire, I urge the council to consider all options to drive forward public service reform and achieve appropriate efficiency savings.

My hon. Friend the Member for Morecambe and Lunesdale also talked about other funding that we have put into the area. It is important to reference that in this debate, because although we can look at the revenue support grant and the changes to it, we must also look at the other Government support. Just this morning I was pleased to launch the northern powerhouse investment fund, which will provide £400 million of lending and debt financing and equity to small and medium-sized enterprises across the north. That is Government funding and funding from other partners as well. It will enable businesses in Lancashire to grow and expand, and of course there will be a knock-on effect on local government finance as a result of that growth.

I hear my hon. Friend’s concerns about the local enterprise partnership and the distribution of some of the projects. He will forgive me if I cannot intrude too much on local grief; it is not for me to dictate to the LEP where the project priorities should be. All I will say is that it is important that the LEP is cognisant of the fact that it represents the whole of its geography and that the funds and projects that it puts forward should be for the benefit of all. Within the £70 million of local growth funding just for Lancashire that we announced just a few weeks ago—I remind hon. Members that that was from a £556 million pot for the north of England; the biggest share of the budget for the whole of England came to the north—there were some projects that will benefit Lancashire on a county-wide basis.

It is not unusual for LEPs to have people who are double-hatting, as my hon. Friend said, in terms of being from local authorities in the area. That is normal and appropriate so long as they always remember that their responsibility is to the whole of the geography of the LEP area.

My hon. Friend referred to the work of the LEP. Through the growth programme, it has been able to invest nearly £1 billion of public investment. The LEP has also established, with the support of the Government, one of the largest enterprise zone programmes in the northern powerhouse, with four EZ sites at Samlesbury, Warton, Blackpool airport, which I visited recently, and Hillhouse. Again, we are talking about significant Government commitments. Those zones come with big incentives for local businesses in Lancashire. Again, all of that helps to create jobs and wealth and to generate tax revenues for the local area.

I was pleased to visit only two weeks ago Lomeshaye industrial estate in Pendle, which my hon. Friend the Member for Pendle (Andrew Stephenson) advocated and lobbied for. That will receive £4 million from the Government to expand and create up to 1,000 jobs. Again, there is an absolute Government commitment to Lancashire in the form of that growth deal.

The Preston, South Ribble and Lancashire city deal is delivering an infrastructure delivery and investment programme worth over £430 million, which will expand transport infrastructure in Preston and South Ribble, create 20,000 new jobs and generate the development of more than 17,000 new homes. It is anticipated that that will leverage in £2.3 billion in new private investment.

The LEP has commercially invested its £20 million Growing Places fund in eight major developments across Lancashire. I cannot comment on the locations of those; that is of course a matter for the LEP. The LEP has also supported the development of four regional growth fund business growth programmes, valued at £40 million. It has an important role to play, but, as I said, must always be cognisant of the geographical challenges and demands of the area.

I will also just say, in terms of another Government commitment—

[Albert Owen (in the Chair)]

Order. The Minister will have to save that for another time.

Motion lapsed (Standing Order No. 10(6).