Harrow Council Funding

Tuesday 18th December 2018 Westminster Hall

[Sir Christopher Chope in the Chair]

16:00

[Gareth Thomas (Harrow West) (Lab/Co-op)]

I beg to move,

That this House has considered the future funding of Harrow council.

I have lived in Harrow all my life and I feel immensely proud of my community. Although I have disagreed a number of times with decisions Harrow Council has taken, I have always been grateful for the hugely important job that it and its staff do for my constituents and the wider borough. Harrow Council should be better funded, and I look to the Minister and his Department to begin to make a significant difference in that regard.

The council faces a number of distinctive challenges in the delivery of public services, which the lack of central Government funding is exacerbating. Harrow is the second most religiously diverse and the fourth most ethnically diverse borough nationally, with 61% from a black and minority ethnic background. Some 157 different languages are spoken in Harrow schools, and 28.5% of residents do not have English as their first language. That is significantly higher than the London average of 20% and the national average of 8%.

The number of Harrow residents aged over 85 is predicted to increase by more than 60% by 2029, and 15% are already aged over 65, compared with the London-wide average of 12.5%. We have the fourth largest EU population in London—it is estimated that around 50,000 EU nationals are resident in the borough. Low wages and in-work poverty are particular problems in Harrow. Wages paid in Harrow workplaces average £575 per week for full-time workers compared with the London-wide average of some £692.

Those challenges mean there is huge pressure on Harrow Council to deliver effective public services. Earlier this month, the council published its draft budget for next year, which spells out both the important work the council is doing and the dire situation it has been put in by Government cuts. After seven years of constant cutbacks, Harrow Council has had to find a further £17 million for the upcoming financial year. Harrow will have seen its main source of central Government funding—revenue support grant—fall by some 97% by 2019-20. It is estimated that over the four-year period from 2015-16 to 2018-19 the council needed to fund an £83 million budget gap to achieve balanced budgets. If we extend that period, it is estimated that by 2020-21 the council will have had to find £125 million to balance its budgets.

In addition to the cuts in revenue support grant, further money has been required to fund growth as a result of demand pressures, including rising homelessness, increased special needs placements and rising social care costs. Moneys have also been needed to fund the impact of inflation, capital financing costs and other reductions in specific grants, such as those to support schools. Under the new methodology for calculating revenue support grant, Harrow was the sixth hardest hit of the London boroughs in 2015-16 and 2016-17, losing some £10 million annually.

Harrow Council is one of the lowest funded councils in London. In 2015-16, its revenue spending power per head was £159, 17% lower than the London average, ranking it 26th out of the 32 London boroughs. A similar comparison with the England average shows Harrow’s revenue spending power per head was £127, 14% below the average, ranking it 105th out of 120 local authorities. Quite how the Prime Minister can claim that austerity is over is beyond me. In Harrow, as nationally, it feels unrelenting—frankly, it is getting worse.

In July, Harrow began the full transition to universal credit. More than 17,000 residents are expected to be on it by the time the transition is completed. Our housing market is under intense pressure—for many, rents are very difficult to afford—and in some parts of the borough 40% of children live in poverty. As in other parts of the country, demand for adult social care outstrips savings, as councils are asked to provide ever more with ever-diminishing resources.

Other public services in the borough with a significant interface with the council are also under severe pressure. Harrow is having to cope with a significant increase in violent crime at a time when police numbers are set to decrease further and funding for youth services has been cut by more than 75% in cash terms since 2010. The clinical commissioning group faces a deficit of approximately £50 million and has already cut popular healthcare services such as the Alexandra Avenue walk-in service in my constituency. With the highest proportion of over-85s in London, the absence of a local NHS service that might absorb with less fight some of the financial pressures arising from having proportionately more vulnerable older adults exacerbates the pressure on the council.

Schools, too, face ever-increasing financial pressures, making it harder for them to accommodate as many requests to help children with special needs as they might want to. As I mentioned, Harrow is having to cope with a significant increase in violent crime. We have already lost just short of 200 police officers, and the fear is that we will have to lose even more.

[Bob Blackman (Harrow East) (Con)]

I thank the hon. Gentleman, who is my constituency neighbour, for giving way. He is painting a bleak picture of the funding position. May I put two points to him? First, if the council were more business friendly and encouraged businesses to invest in Harrow, more business rates would come in. Business rates income in Harrow has been declining for many years, and it is forecast to reduce further.

Secondly, I believe I am correct in saying that at the moment the budget is balanced for next year, but the forecasts for future years are very challenging indeed. Has the hon. Gentleman seen any documentation from Harrow Council that sets out that dire picture? That may lead to a lobbying strategy in which he and I go to see Ministers together, with the aim of securing more money not just for the council but for specific issues such as those he describes—it may lead to our supporting each other to get more money for the services that all our residents depend on.

[Gareth Thomas]

I say gently to my neighbour that I will come on to Harrow’s excellent reputation among businesses and the recognition it has received for its performance in that area. The figures I quote are figures that I sought from the council—I am sure it would be willing to provide him with them were he to approach it. There is one specific issue on which the Minister would be able to assist if he wanted to, and I intend to come to that in due course.

Harrow has always been a prudent borough. Despite its challenges, the council has not overspent for 11 years. Its leadership and supporting councillors have been determined to shield frontline services from the axe as far as they can, but the cuts are now so deep that the council is unable to balance the books without reducing those vital services to the bare bones. Local residents are understandably concerned about the impact of funding cuts on the council’s ability to keep the streets clean and to help to deal with antisocial behaviour, among other things. By continuing to make cuts of such scale, the Government are leaving councils such as Harrow in an impossible situation and leaving our most vulnerable people at risk.

To be fair, the council has already made large efficiency savings and taken great strides to increase revenue. It has led the way in digitalising many services—87% of customer transactions are carried out online, leaving extra resources to look at the most complex and difficult cases. Council tax has been increased year on year—sadly, it is now the third highest in London, but the collection rate is above 97%. The council has commercialised services and looked at innovative ways to supply residents with additional quality services that generate new income while not endangering existing businesses and the private sector. From offering services such as training, a cookery school and gardening services to MOT testing and dealing with food and trade waste, the council has been very innovative. It has also marketed itself successfully for major film locations and for commercial events in our parks. It is a leader in shared services and is working with a number of councils to make significant efficiencies for frontline and back office services together.

As I indicated, Harrow is blessed with very dedicated and hardworking staff; in 2017, its children’s services attained a “good” rating from Ofsted, putting Harrow in the top 25% of councils across the country for performance in that fundamental service—a remarkable achievement in the circumstances. However, the council cannot be expected to deliver first-rate services with a third-rate budget level of funding, and local people know that.

Cuts are already having a big impact. Harrow has closed four libraries and significantly scaled back its work in public health. Drug, alcohol and smoking cessation services have been reduced, and all discretionary grants to the charity sector have been ended. The council has also been forced to reduce taxi card provision for the disabled to the lowest level in London. There has been a significant reduction in the number of children and families that the borough’s children’s centres are able to support. Lack of funding is holding back any ability the council might have to respond appropriately to other identified local needs, such as meeting the needs of young people.

The Young Harrow Foundation, in partnership with the council, conducted a survey of school-aged children between 10 and 19, which received an astonishing 4,500 responses. The results are very worrying. Mental health and violent crime were serious concerns for Harrow’s young people; 10% said they have suicidal thoughts and 15% said they need support relating to self-harm. We all know that lives are blighted when vulnerable members of society cannot access the help they need, and when people are unable to achieve their potential, everyone loses out.

In response to some of the acute issues facing councils, the Government have offered occasional one-off payments to, at best, paper over the cracks. For important services, that means councils are unsure of whether they will have the funding for key provision, and residents do not know whether vital services will continue to exist, from one year to the next. In short, it leaves local authorities unable to make long-term spending commitments to deliver some of the preventative work that would really benefit residents.

Harrow has had success in bidding for some such external funding to tackle some of those challenges. It secured £500,000-worth of investment from the Home Office to help fund early intervention services for young people at risk of joining gangs and becoming involved in youth violence. It also secured £760,000 to help support economic growth locally and was recently granted some £32 million by City Hall to build just over 600 new council homes. While this type of funding is of course welcome, these too are one-off payments for specific activities, offering no guarantees of continued funding, and the council may find itself having to cancel successful programmes if funding is not renewed. I gently suggest that that is not a grown-up, sensible way of funding local government.

[Bob Blackman]

The hon. Gentleman points out, rightly, that the budget in Harrow is balanced this year by one-off payments, I believe, as opposed to long-term arrangements. That is one of the things leading to future problems. Can he also answer this? Harrow is one of a very small minority of councils across the whole of England that failed to sign up for the multi-year settlement, which, although it is not always easy, gives certainty about funding over a number of years. Where councils have done that, they have known and been able to forecast what their income level will be. Harrow refused to do so, and has never answered my question why it refused. That brings the uncertainty of not knowing how much money will come in each year.

[Gareth Thomas]

With all due respect to the hon. Gentleman, he will recognise that even councils that have signed up to the arrangement with the Government that he describes have still faced significant additional pressures from all sorts of sources, be it social care or homelessness, as I have already outlined, exacerbating the difficulties in setting sensible long-term budgets that meet needs. It would certainly be extremely welcome to hear him putting pressure on his ministerial colleagues to allocate additional funding for the London Borough of Harrow.

Despite the difficulties I have set out, the council has continued to play its part in trying to foster economic growth, supporting the regional and sub-regional objectives for business, employment and skills set out by the West London Economic Prosperity Board. The investment pot of £1.1 million from business rates retention is going into supporting businesses in accessing online services. Furthermore, Harrow Council is supporting that by investing £480,000 to try to help to develop the skills of low-paid, low-skilled and self-employed residents in the borough. Indeed, the council has been recognised for its work in this area, winning the Best Small Business Friendly Borough award. The council is also building new housing, making use of the new homes bonus, and has set out a major regeneration programme to maximise use of council-owned sites to support sustainable housing growth, as a result of which it will get some additional income from council tax.

I recognise that Harrow Council is not alone in facing challenges of the scale that I have set out. Surrey, Torbay, Lancashire and many other councils are already in serious financial problems. Commissioners were called in to Northamptonshire council after it ran out of money. Other councils are privately warning of similar difficulties soon. Many councils are having to prop up their budgets with funding from reserves, something that Harrow has not been able to do. I gently ask how many more signs the Government need before they wake up to the crisis in local government.

One area where the Minister could help immediately is financial assistance to help the council to cover the cost of subsidence arising from the sinkhole discovered under Pinner Wood School, which has cost the council some £5.2 million and has obviously exacerbated its already very difficult financial position. We urgently need fairer funding for local government. It is not good enough for the Government to preside over the managed decline of local services. I know that in Harrow and elsewhere councils are doing some great work, but on a shoestring, and the time has come for the Government to reverse the cuts and give councils, particularly my council, Harrow, the proper levels of investment they need.

16:17

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)]

It is a pleasure to serve under your chairmanship, Sir Christopher. I start by congratulating the hon. Member for Harrow West (Gareth Thomas) on securing this debate. His pride in his home is evident to all, and I pay tribute to that. It is good to see my hon. Friend the Member for Harrow East (Bob Blackman) here; he is also a champion of his constituency, particularly when it comes to matters of local government. We are grateful for and appreciate his particular experience and insights in our debates.

I welcome the opportunity to respond to the important points that the hon. Member for Harrow West raised. In doing so, I thought it would be helpful to use a framework that I like to use—my vision of the role of local government, which consists of three main areas. The first is to drive economic growth, the second to help the most vulnerable in our society and the third to build strong communities. If hon. Members will allow me, I would like to take those areas in turn, specifically in relation to Harrow, and address the points raised.

The draft local government finance settlement, which was published last week, confirms that core spending power across the nation is forecast to increase from £45 billion this year to £46.4 billion next year, representing a cash increase of 2.8% and a real-terms increase in resources available to local authorities. In the next financial year, Harrow Council’s core spending power will rise to £180 million, representing a 3.7% cash increase, which is substantially above the average for England and, indeed, other London local authorities. Core spending power is the standard measure of a local council’s financial resources, and it includes money from central Government grant, council tax, business rates baseline and further specific grants for adult social care and the new homes bonus.

Beyond grants, as my hon. Friend the Member for Harrow East said, driving economic growth is the only way to ensure the vibrancy of our local communities and to raise the vital funds we need to sustain our public services. Business rates retention is one such opportunity. Under the current business rates retention system, local authorities estimate that they will retain around £2.5 billion in business rates growth this year, which is a significant revenue stream on top of the core settlement funding.

This year, all London boroughs, the Greater London Authority and the City of London are jointly piloting 100% business rates retention. Based on their forecasts, the London pilot pool would retain an additional £348 million compared with the current system. This vital incremental income supports a number of strategic investment projects in London, including investment in high-speed broadband in Harrow and other west London boroughs.

As we confirmed in the provisional settlement, all London authorities, including Harrow, will continue to pilot increased business rates retention at the level of 75% in forthcoming year. I am confident that, when it comes to supporting growth and financial sustainability, Harrow is getting what it needs.

Beyond growth, one of the most undeniably crucial roles that local government continues to play is in helping the most vulnerable in society. It is local authorities that support the elderly, the disabled and our children in need. I am in no doubt about how challenging it has been for councils to drive efficiencies, particularly in the face of growing pressures on social care, as they contribute to rebuilding our economy and tackling the deficit we inherited from the last Labour Government.

I pay tribute to the work of councillors up and down the country, which is why I was delighted that the Budget committed another £1 billion of extra funding for local services, with a strong focus on supporting some of our most vulnerable groups, including £650 million for adult and children’s social care in the next financial year. Of that, £240 million will go towards easing winter pressures, with the flexibility, as requested by councils, to use the remaining £410 million for either adult or children’s services and, where necessary, to relieve demands on the NHS. I am pleased to confirm that, as a result of these payments, Harrow Council will receive an additional £2.63 million in the next financial year. That is on top of the £240 million announced in October to address winter pressures this year, of which Harrow Council received a further £1 million.

I am pleased to say that the focus on this area and the better joined-up collaboration between the NHS and local authorities, through the Government’s better care fund, is paying dividends. Social care across the country has freed up 949 beds a day since the February 2017 peak—a 39% reduction in social care-related delayed transfers of care. I am also pleased that Harrow performed well, achieving a 58% reduction in social care-related delayed transfers of care since August last year, and now has delayed transfers of care levels significantly below the England average.

The Government’s troubled families programme is also making amazing strides in supporting our society’s most vulnerable families. I am proud to say that £920 million has been committed to the programme during this spending period. As of September this year, nearly 130,000 families have achieved significant and sustained progress against the problems identified when they first entered the programme. Some 1,400 families have been working with the programme in Harrow alone during this period, and the council is forecast to have benefited from more than £3 million over the course of the scheme.

We all see that local authorities’ vital work in building strong communities that thrive is beneficial not only to them, but to wider society. Strong communities are cohesive, and it was with that in mind that the Government announced a £100 million fund to help to ease pressures on local services resulting from recent migration. The fund has so far committed a total of £832,000 to Harrow to contribute to better public services and a more cohesive society.

[Gareth Thomas]

I am grateful to the Minister for acknowledging some of the council’s very good work on social care and working with troubled families. Will he acknowledge that managing the sinkhole underneath Pinner Wood School—a significant and important primary school that had to be moved—is costing the council considerable sums of money? Will he be willing to meet me and a deputation from the council to discuss whether the Government could provide any further funding to help the council manage some of those costs?

[Rishi Sunak]

With all the will in the world, there is little I can do to help on that particular matter. As the local government Minister, I have no authority or control over the schools budget. The issue he raises relates specifically to a school.

I know that council officials have been in conversation with officials from the Department for Education, but I am obviously not privy to those conversations. I am of course happy to meet him and his deputation, but I think he may be better directing that conversation toward the Department for Education. I know that close to £10 million has been invested in maintained and voluntary-aided schools in Harrow over the last few years, and that the Department for Education is refurbishing or rebuilding about 10 different schools in Harrow through the priority schools rebuilding programme, although not the particular school that he mentions.

Beyond schools, £434,000 has been committed to support Harrow in caring for unaccompanied asylum-seeking children, further helping to strengthen community cohesion. However, strong communities need to be connected. The roads that our constituents travel on daily form a key part of their lives, which is why at the Budget the Chancellor announced that an extra £420 million will be made available for local authorities such as Harrow to fix potholes and carry out other road repairs, ensuring safer and better roads across our communities.

Strong communities also need well-built, affordable homes, which is why, through the Budget, the Government are supporting local authorities such as Harrow to get much-needed homes built, including through the widely welcomed lifting of the housing revenue account borrowing cap. I am pleased that we were able to maintain the new homes bonus baseline for the forthcoming year. Harrow will receive more than £4 million in new homes bonus funding in the forthcoming financial year. I am also pleased that Harrow is in conversations with the Department to receive a housing infrastructure fund grant worth almost £10 million to help with the delivery of more than 600 homes at the Grange Farm site.

Strong communities also need vibrant high streets to bring us together and ensure our towns have a beating heart. The Budget provided a boost for our high streets and a new future high streets fund. I strongly urge the local authority, in conjunction with its MPs, to bid for that fund and see what it can do to drive growth along the high streets in its community.

The hon. Member for Harrow West was right to highlight the funding formula. The current funding formula needs to be updated and replaced with a robust, straightforward approach that involves a strong link between local circumstances and the way that we allocate resources. The latest round of that consultation was issued alongside the provisional settlement last week. I know that Harrow Council has contributed to our consultations in the past, and I will be delighted to hear from it again on the particular pressures that it feels it suffers from and that should be captured within a new formula. I am sure that it will be happy to see that some things it talked about in its previous submission are covered, such as the rapidly changing population dynamics that councils such as Harrow experience on the ground. Those are absolutely things that the new formula should accurately capture, to make sure that it is sustainable not only for this year but for years into the future.

I thank the hon. Member for Harrow West for calling the debate and my hon. Friend the Member for Harrow East for contributing. It is my privilege to have this job and to champion local government here in Westminster. Whether it is driving economic growth, caring for the most vulnerable in our society or building those strong, cohesive communities that we cherish, local authorities in London and across the country do an amazing job.

[Bob Blackman]

I gently remind my hon. Friend that Harrow suffers a particular problem of businesses moving out of the area, and it therefore has a declining income from business rates. What will the Government do to help local authorities such as Harrow that suffer this problem?

[Rishi Sunak]

The business rates retention pilots and the extra incentive to retain more business rates, combined with the infrastructure investment that comes through the housing infrastructure fund and the growth funds, give councils the exact powers they need to drive growth and then rewards them with the retained business rates. I will be delighted to meet my hon. Friend to talk through any other ideas that he has. The high street fund will be an excellent place to start.

I am grateful for the dedication of hon. Members and councils. I will continue to ensure that their voices are heard in this place and that they get the support that they need.

Question put and agreed to.