(3 years, 10 months ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Housing, Communities and Local Government (Robert Jenrick)
I beg to move,
That the Local Government Finance Report (England) 2021-22 (HC 1200), which was laid before this House on 4 February, be approved.
Madam Deputy Speaker (Dame Eleanor Laing)
With this it will be convenient to consider the following motions:
That the Referendums relating to Council Tax Increases (Alternative Notional Amounts) (England) Report 2021-22 (HC 1201), which was laid before this House on 4 February, be approved.
That the Referendums relating to Council Tax Increases (Principles) (England) Report 2021-22 (HC 1202), which was laid before this House on 4 February, be approved.
Robert Jenrick
Among the many acts of heroism that we have seen over the past year, the quiet dedication, hard work and compassion shown by all who serve their communities in local government has truly shone through. I am sincerely thankful for their efforts. I am grateful to them for protecting the most vulnerable, including those who are shielding from the pandemic, and providing unprecedented levels of support through Everyone In to reduce rough sleeping, bringing it to the lowest levels that we have seen for many years. I am grateful to councils for their support for local businesses, enterprises and entrepreneurs; for keeping essential public services going against the odds; and for the part that they are now playing in the success of our national vaccine programme, ensuring that it reaches all communities and paving the way for our recovery as a nation later this year.
From the outset of the pandemic, we promised to do everything within our power to support local authorities during this most unusual and difficult time. Our local government financial settlement shows that we have kept that promise, with a real-terms increase in core spending power and a guarantee that no council anywhere in the land will receive less funding than it did last year. That stands alongside an unprecedented package of covid-19 support this year and next year, totalling more than £11 billion directly to councils and £30 billion in additional help for local councils and their businesses and communities.
The settlement strengthens social care, with councils able to access an additional £1 billion, comprising £300 million from the social care grant and a 3% adult social care council tax precept. It also supports children’s social care, helping councils to provide better services for the most vulnerable children in society, children in care and children with disabilities. Those vital services have experienced severe disruption over the last few months and will no doubt experience further demand as we ease lockdown and move forward as a country.
Balancing the contributions of national and local taxpayers, this settlement gives councils increased flexibility, with a 2% council tax referendum limit for most authorities and an extra 3% for social care authorities, which councils may choose to defer until 2022-23. I can inform the House that many councils, particularly Conservative ones, are indeed doing so. The council tax referendum principles are not a cap, nor do they force councils to set taxes at the threshold level. Councils should and must consider the financial concerns of local residents at this most challenging time, alongside the public’s support for action on keeping our streets safe and providing essential services.
Recognising the vital door-to-door services that councils deliver day in, day out to the most isolated, our settlement provides an extra £4 million to authorities in remote rural areas through the rural services delivery grant, taking the total to £85 million—the highest contribution to the delivery of public services in our rural areas to date. Lower- tier local councils will also receive a new £111 million lower-tier services grant, with main funding allocations for the full range of council services rising in line with inflation.
Finally, we know that the new homes bonus accounts for a considerable part of funding for many councils. We are therefore implementing a further round of the bonus allocations, with the same 0.4% funding baseline as last year and no new legacy payments on the new round. We will reform it over the course of next year to ensure that this significant amount of money is focused on the councils that are keenest to build, build, build and get the homes this country needs under way.
While these measures are providing confidence and stability, we know that councils will continue to face very unusual challenges as a result of covid-19 for quite some time, despite all the success of the vaccine roll-out, so today I am setting out further details of nearly £3 billion in additional covid-19 support for councils next year. We were able to provide certainty to local councils in December on allocations for £1.55 billion of unring-fenced funding, and I am now very pleased to confirm, on top of the funding already provided in the settlement, the final allocations for £670 million of grant funding for local council tax support. This helps local authorities to continue reducing council tax bills for those who are finding it hardest to pay.
We have also provided our published final position on the extension of the sales, fees and charges scheme from April to June 2021, a vital safety net for councils facing lost income as a result of covid-19, ensuring that everything—from the local car parks to our theatres, heritage attractions and all the things that local councils provide and which demand income to keep going—will have that guarantee of certainty and confidence to move forward until at least the mid-point of this calendar year. They will soon receive grant funding reflecting 75% of irrecoverable losses in their council tax and business rates income from 2020-21, with an up-front payment early in the financial year to aid cash flow. In both respects, we have listened to the sector, acted and provided them with the certainty and the resources they need. We made promises and we have kept them, and we are making sure that local councils can continue to deliver for their citizens.
We know that a handful of councils face serious financial challenges—some, it has to be said, due to very poor management, but others due to the exceptional events of the past year. There is quite a broad range, and today we are publishing details of the targeted support that we are providing to four councils unable to balance their budgets without some additional recourse to Government. This aid is provided on an exceptional basis, with these councils being subject to rigorous reviews of their financial positions, their governance and their ability to meet some or all of their budget gaps for the next year without Government funding. Taxpayer support of this kind is never provided lightly, and in return for the increased flexibility afforded to councils next year, we expect sound financial management, with residents shielded from unaffordable increases.
I wish I could say that here, in our nation’s great capital, the Greater London Authority is blazing a trail that others might wish to follow, but, sadly, the opposite is true. I have reluctantly placed before the House today a principle to allow for the Mayor of London’s request to increase council tax by £15 on band D properties without holding a referendum in order to fund transport concessions above the level available elsewhere. This brings the total increase in precept he is seeking from Londoners to nearly 10%. While the final decision on the increases rests with the Mayor, and with the Mayor alone, I would urge him to abandon this ill-judged pursuit of tax hikes and to behave responsibly at a time of great difficulty for Londoners.
We want to unite and level up our councils, as we do the whole of the country, and to build back better from this pandemic and stronger than before. That starts with holding local polls in May this year. We said that further delaying elections would require a high bar, and the huge success of our vaccine programme gives us confidence that we can and should now move forwards. More than ever, people deserve their say on issues ranging from safer streets to the level of council tax, and we are providing £15 million to ensure that our polls are made covid- secure. My Department and the Cabinet Office will do all we can to support local council officers and the brilliant staff and volunteers of polling stations the length and breadth of England with the hard work and challenges that lie ahead. We want to ensure that the process is as smooth as possible and, in particular, that as many schools as possible can remain open.
We know that there are challenges posed by the pandemic, of course there are, and we also know that the scars are likely to take time to heal, but we are not cowed by them. We want to work together to learn from our experiences and to solve long-term problems in local government, because councils will be the thread running through our response to each and every one of these issues. We will empower them to reboot and restart vital public services on which communities depend, from health to justice: making sure that vulnerable children get the care that they need; helping schools to see children returned safely and address lost learning, particularly in our most deprived communities; and increasing funding for social care to help tackle the backlog in assessments while laying the foundations for future reforms and a sustainable future for the sector for decades to come.
As we tackle those issues, we will help councils to grapple with the sharp drops in footfall that we have seen on our high streets, and the knock-on effects for local businesses. Our £3.6 billion towns fund and the urban centre recovery taskforce will ensure that our towns and city centres are renewed and become once again the vibrant places that we love and that we want to see people living, working and shopping in again, and attracting tourists from home and abroad.
Our £900 million getting building fund is integral to this work, kickstarting local recoveries and delivering the next generation of roads, bridges, 5G networks and full-fibre broadband, with more than 50% of the shovel-ready projects already started, creating thousands of jobs all over the country. Our £4 billion new levelling up fund will invest in high-value local projects, regenerating eyesores, upgrading town centres, breathing new life into local arts and culture and, above all, creating and sustaining jobs. We will be setting out more details on that shortly through my right hon Friend the Chancellor.
In each and every one of these endeavours, we see a very strong role for local councils, knowing their communities best and being at the heart of their future economic recovery. We do this while helping councils to seize new opportunities, particularly in technology. We do not intend to return to the way that things were done before by default. As we leave the pandemic, we want to ensure that councils build back better, build better public services and embrace some of the good things that have come out of this unusual period. Councils have rightly embraced meeting and working remotely, and we will build on reforms to digitise our planning system, utilise our local digital fund and ensure that local authorities fully embrace moving more meetings, services and processes online, transforming how they deliver for residents, for their staff and for the country.
We will work with councils to build back better from the pandemic, becoming a more prosperous, greener, safer and more neighbourly country. Local councillors will be a golden thread woven through the fabric of that better country. The settlement that we are debating today provides local councils with the resources that they need to plan for the future. It recognises the role that councils have played every day at the forefront of our response to covid-19, and we thank and salute them for the hard work that they have done on our behalf. This settlement places them at the heart of our national recovery. I commend this motion to the House.
Madam Deputy Speaker (Dame Eleanor Laing)
I should inform the House that the Order Paper notes that these instruments have not yet been considered by the Select Committee on Statutory Instruments. I have now just been informed that the Committee has in fact considered the instruments and has not drawn them to the attention of the House. The Committee’s report will be published on Friday.
Steve Reed (Croydon North) (Lab/Co-op)
I start by echoing the Secretary of State’s praise for frontline council workers and others involved in delivering frontline public services, including volunteers. They really have done a tremendous, heroic job in supporting communities through the unprecedented circumstances of the past year.
Last November, the Chancellor of the Exchequer told councils that he would
“increase their core spending power by 4.5%.”—[Official Report, 25 November 2020; Vol. 684, c. 829.]
The Communities Secretary followed suit, telling us that English councils would see a
“4.5% real-terms cash increase in core spending power”—[Official Report, 17 December 2020; Vol. 686, c. 431.]
What they did not make quite so clear was that those funding increases were based on the assumption that council tax would go up by 5%. To be clear, in the Treasury spreadsheets, that is an assumption, not an option.
It is hard to believe, but this Conservative Government have chosen to clobber hard-working families with a council tax hike after the Government’s incompetence left the country facing the worst crisis of any major economy. Household budgets are under pressure like never before. Millions of people are fearful for their job security. Millions have seen their incomes plunge. Millions more families are using food banks or going into debt just to survive, and now, thanks to the Government, families are being forced to pay the price for Conservative failure with a council tax hike made in Downing Street.
We know that Government Members have been coached to say that councils have a choice in this, but with social care by far the biggest factor driving up councils’ costs, there is no real choice at all. Councils that refused to implement the Tory council tax hike would have to cut social care for older people in the middle of an unprecedented health crisis that is primarily affecting the same older people.
Let us not forget that because a council tax increase raises less money in poorer areas, the Government are deepening the postcode lottery for social care, instead of ensuring that every older and disabled person gets the care they need, wherever they live. The Government are not levelling the country up, in the way the Secretary of State just described. Instead, they are pulling it apart.
We know the Government recognise that there is a social care crisis, because the Prime Minister admitted it on the day he entered No. 10 Downing Street. He boasted that he had a plan to fix it, but no one has seen a dot or a comma of it ever since. All we have seen are sticking plasters while the crisis rages on and more and more older people are denied the care they need and deserve. The Government’s failure is simply increasing the pressure on our NHS when we should be doing all we can to protect it.
Last March, the Chancellor told councils that he would fund them to do “whatever it takes” to get communities through the pandemic. On the back of that promise, councils set to work correcting the Government’s failures on personal protective equipment distribution, contact tracing, shielding and much more, but the Government did not repay those costs. Instead, they left councils facing a £2.5 billion funding black hole. That is not my figure; it comes from the Conservative-led Local Government Association. If the Government had not broken their promises, there would be no need to plug the gap now with a council tax increase.
Perhaps the Government could not find £2 billion to prevent a council tax rise because they had already stuffed the money into their friends’ pockets. Despite stark warnings from the National Audit Office last November, the Government have handed out £2 billion in crony contracts to companies with close personal links to senior Conservative party politicians. More than 500 companies were fast-tracked for covid-related contracts simply because they had relationships with Conservative MPs. That made them 10 times more likely to secure contracts than other businesses that could well have done the job better.
The chairman of Clipper Logistics donated £725,000 to the Conservative party. He was rewarded with a £1.3 million contract to set up an Amazon-style PPE distribution network. Instead of the next-day delivery service that care workers were promised, they had to wait so long to receive any PPE at all that town halls had to pay to go out and find their own. Then there is Randox, which pays the Conservative right hon. Member for North Shropshire (Mr Paterson) handsomely to act as an adviser. The Government gave Randox a contract worth half a billion pounds last year to provide covid tests, but they were so defective that 750,000 had to be recalled.
Serco, of course, is responsible for the Prime Minister’s “world-beating” test and trace system, which is so world-beating that the Government’s Scientific Advisory Group for Emergencies described it last year as having only a “marginal impact” on reducing the spread of the virus. It never worked properly, but it cost £22 billion. Serco’s chief executive is the brother of a former Conservative MP and his wife has donated thousands of pounds to the Conservative party. The company counts among its former senior executives the current Minister for Health. The Government handed Serco a £108 million contract for a failing system that could have been run better by directors of public health for a fraction of the cost, and then Ministers rewarded that catastrophic failure with another £57 million contract for “management services support” at testing sites. This is not the behaviour we would expect in an advanced democracy such as our great country; it is the wilful incompetence and endemic cronyism that we would expect in a tinpot dictatorship.
The Government are simply wrong to force councils to hike up council tax after their own mistakes led this country into the deepest recession of any major economy. Not only is it unfair on the families forced to pay the price of Tory failure, but it is economically illiterate, because hitting people with tax rises in the middle of a pandemic makes them tighten their belts and stop spending, when we should be rebuilding confidence to promote economic recovery.
The Conservatives’ priorities are wrong, which is why Labour will not vote for their Tory tax hikes today. They should be helping families manage hard-pressed household budgets, not stuffing billions of pounds into the pockets of Tory party donors. They should be fixing the social care crisis, not forcing hard-working people to pay more but get less as social care is cut back even harder. They should be promoting economic recovery on our high streets, not choking off spending with tax hikes at a time when families are struggling simply to make ends meet. But it is still not too late. I urge the Government to think again, scrap Rishi Sunak’s council tax bombshell—
Madam Deputy Speaker (Dame Eleanor Laing)
Order. The hon. Gentleman must refer to the Chancellor of the Exchequer as the Chancellor of the Exchequer or as the right hon. Gentleman, and not refer to him by using his name.
Steve Reed
I absolutely agree. I urge the Government to think again, scrap the Chancellor’s council tax bomb- shell, stop stuffing billions of pounds into Conservative party donors’ pockets and stand by their commitment to support councils and communities to get through this crisis.
Madam Deputy Speaker
I am sorry to have stopped the hon. Gentleman in his peroration, but it is really important in these times, when things are not normal in this Chamber, that we stick to the highest standards, and I thank him for immediately putting right his phraseology. It was not a great mistake, and I am grateful for his support.
John Redwood (Wokingham) (Con) [V]
I thank the Government for their generous assistance to councils to help us through the pandemic crisis. My constituency is served by West Berkshire Council and Wokingham District Council—both are unitaries. They certainly needed money to assist with the extra costs that covid-19 has caused, and there was a scheme, the pressures grant, to do that. The councils certainly needed assistance to deal with losses of tax revenues, and there was a scheme to reimburse 75% of lost tax revenues during these extraordinary times of business closures and business stress. There were clearly difficulties with shortfalls on sales, fees and charges, and again a scheme was introduced —I am pleased to see today that that is being extended for another quarter, because it looks as though there still will be an overhang into the second quarter of this calendar year. I am particularly pleased that there is additional assistance to allow councils to be sympathetic to people who are struggling to pay their council tax. The one little niggle that Wokingham has still suffered from is that where the council has brought in private sector management for a leisure sector, there can be difficulties with reimbursement for lost revenues. I would like to see further progress in sorting that out.
In the past, both West Berkshire Council and Wokingham Borough Council have suffered from pretty tight, or low, social care grants, and I am pleased to see a reasonable increase in social care grant going through for the next year. I urge Ministers to continue to look at that grant, because there is growth in demand and need, and we want high standards of care for people who require assistance. Certain councils, particularly the two serving my constituency, which were right at the bottom of the pack in terms of the amount of grant in relation to population, needed some tweaking of the sums. It is a very difficult situation. It is as costly looking after the elderly or children in Wokingham and west Berkshire as it is in the rest of the country, so we need at least as much, proportionately, as other places. We have often suffered from that.
I want to reinforce the Secretary of State’s important message about the role that councils can and should play in getting the country back to work and, in particular, in revitalising, refreshing and renewing our town centres, our village shopping areas and some of the shopping centres in which councils are engaged or have a stake. It is true that councils are very important agents in setting the tone, providing the regulations, sorting out the planning, and sometimes, as co-owners or landlords, creating the right kinds of spaces in our town centres and facilitating or providing the right environment for a return to vibrant life.
Let us be in no doubt: this is going to be a big ask and a difficult task, because the covid crisis and the resulting closures have accelerated a number of trends that were already under way. There will be more online shopping relative to shopping in shops, even after we get some return to normal and people can get out more and more shops can open. People will need to be tempted back to the restaurants and the cafés. We will need to work carefully with the businesses that own and run the shops and manage the cafés and restaurants to make sure that government, where it can, assists them and allows for the adaptation and development of town and village centres so that they can flourish again, with probably a different mix of services and businesses from that which preceded the covid crisis.
For example, as councils are usually the highways authority and they control access to town or village centres, surely the first thing they need to do is to review that access. A lot of families are going to need the car for elderly people, for children or because of the distance they are from the town centre in order to get there in the first place. They may need the car because if they are buying too much shopping to carry easily, they will need the boot to take the shopping back home. We need to make sure that car access is permitted. That requires looking at junctions to smooth them and make them safer, but also to improve the safe flow of traffic. I was pleased to hear the Secretary of State mention that there will be money for bridges, because quite often impediments to getting into towns are created by railway lines and rivers, and we may need more bridging capacity. I hope that the Government will look particularly at light-controlled junctions, because those with the wrong phasing can be clumsy and impede progress for people into town, city and village centres.
Councils often either own the parking provision or are important in making sure that it is adequate, and they sometimes regulate the car parks. I therefore hope that they will understand that in order to tempt people back into these centres to turn them back into the vibrant spaces we want, there may need to be a discount or a generous offer, certainly in the early days, to give people the idea that it is safe to go back into the town, that they are wanted there, and that they can then park for long enough. Increasingly, visits to our towns and shopping centres will not just be for be an hour or so to go and do a bit of quick shopping—people will want to sit down and have a coffee or lunch. They may want to take advantage of some of the services in the town centre, as well as actually buying physical goods. They may wish to enjoy the experience of lingering a bit longer in the shops, having been denied that for so long. I hope councils will look carefully at parking arrangements, and be generous.
I hope planning authorities will look carefully at flexibility so that owners, who may include the councils themselves, are allowed to carry out sensible plans for optimising the use of the building. The Secretary of State has been doing a lot of work on ensuring that planning restrictions and designations do not get in the way of sensible flexibility. Indeed, we will need plenty of flexibility and imagination, because a number of businesses that operated in town and city centres a year or more ago will not be available. A great number of large chains of shops have gone through receivership or made major reductions, having come to the conclusion, one way or another, that they want fewer physical stores. Even if they have a good online offer, which will work with their favoured locations, we will see a lot of those chains retreat from high streets and shopping centres. I also fear that, wherever possible, a lot of small shops may need a friendly arm around them from the council and the Government, as otherwise we could lose a lot of capacity in the small shop area.
I trust that councils and the Government will work to make the situation as attractive as possible. A bit of money may need to be spent on beautifying towns and village centres, and ensuring they are in good order to welcome people back. Councils often have town or shopping centre managers, who need to be given backing in order to come up with imaginative solutions.
This huge task is in everybody’s interests, including shoppers, landlords, employees and the councils. Above all, councils need to help the Government to rebuild the tax base of our towns, cities and village centres, and ensure that there will be that flow of business revenue in future—not just business rates, but the trading revenues that the national taxation system can collect and reroute to local government. Without prosperity there is not sufficient money for great public services, and councils must be part of the process through which that prosperity is rebuilt. I thank the Secretary of State for the help he has offered local councils. I urge him to please be generous on social care, and to do everything he can to promote the recovery we desperately need.
Mr Clive Betts (Sheffield South East) (Lab)
I declare an interest as I am a vice-president of the Local Government Association. I also echo the thanks that the Secretary of State and shadow Secretary of State have rightly given to local authorities, councillors, and their staff for the incredible work they have done for our communities in the past 12 months. Whether that work was particular to covid-related issues, or whether it involved social care, public health, environmental services, paying business grants, or keeping day-to-day essential services such as refuse collection going, they have been a credit to our communities and we should thank them for their work.
Recently, the Housing, Communities and Local Government Committee held hearings into local government finance, and we heard from Councillor James Jamieson, chair of the LGA, and Councillor Richard Watts, chair of the LGA resources board, which showed how the LGA works cross-party. They both gave us the same message: a recognition of the help that the Government have given to councils to meet the costs of the covid crisis, but also a recognition that those costs, particularly the loss of revenue that has affected many councils in different ways, have not been fully compensated. They estimated a gap of around £2.6 billion between the money that councils spent and have not received in income, and what the Government have compensated them for.
It is not often that I agree with the right hon. Member for Wokingham (John Redwood), but he referred to the problems faced by some councils that do not run their leisure services directly, and that is equally true of Sheffield. Ours is run by an arm’s length trust, and because the losses of the trust are paid for by the council, with the council paying more than £12 million to keep our leisure services sustainable, that is not regarded as a loss of council income but a council cost—extra expenditure—and has not been compensated for in the same way. There is an unfairness there that affects many authorities in the country, and it needs addressing.
The Government’s scheme to compensate councils for losses in council tax and business rate collection is welcome, but it is only for 75% of the losses. That needs to be monitored, because we can all see that, as the economy hits rocky times in the next 12 months and more people lose their jobs and more businesses are liquidated, councils will need extra support. We do not know what the ongoing costs of covid will be or how long the lockdown will extend for, so we still cannot estimate all the pressures on councils for the next financial year. I hope the Government will retain a degree of flexibility about any further support that councils may need in the next 12 months.
Of course, the costs of covid come on top of a very precarious situation for local government finance as a whole and for many local councils in particular. Estimates from the LGA and others show about a £5 billion gap before covid hit, due to councils facing the biggest cuts of any part of the public sector since 2010 and the rising costs of social care. Those pressures have led to really heavy cuts to important services such as road safety, bus services, libraries, street cleaning and many others.
The position is unsustainable. Rob Whiteman, the chief executive of the Chartered Institute of Public Finance and Accountancy, told the Select Committee the other day that he knew of 12 authorities that have had to go to Government to ask for extra capitalisation of revenue expenditure, to ensure that their books can balance. Some of those councils may have particular problems, some may have created particular problems and others may be badly hit by covid, but in the end, it reflects a long-term problem for councils. As Rob Whiteman said, those 12 councils are probably only the tip of the iceberg. Many other councils could be entering very similar grounds for having to come to the Government for extra help in the near term, as their position substantially worsens. That is not a sustainable position for the long term.
Councillor Jamieson and Councillor Watts both said that when looking to the future of local government finance, we simply have to sort out the funding of social care. The 4.6% extra spending for councils next year is welcome, but it is clear that the costs of adult social care and children’s social care, rising above inflation in the future, cannot continue to be funded by council tax and business rates. It is simply not sustainable, so finding another way forward to fund social care is essential. I draw the Secretary of State’s attention again to the joint Select Committee report published nearly four years ago, which the Government still have not responded to. In that report, we put forward a social care premium as a solution, similar to arrangements that have worked for the long term in Germany and Japan. The Government have not yet come back to us. My Select Committee may look at this issue again, because until we sort out the problem of social care funding, the rest of local government finance will always remain challenged and not properly addressed.
The Local Government Association emphasised again that it understands, as does the Select Committee, precisely why the Government could only give a one-year settlement this year. However, as well as asking the Government to sort out the long-term funding of social care, we want to say as strongly as we can to them that local government must have a four-year settlement as soon as possible, by which we mean for the financial year from 2022 onwards. That will give local government the certainty to be able to plan ahead in a way that makes the best use of the resources available to it and gives the best value for money for its constituents.
Ben Everitt (Milton Keynes North) (Con)
It is a pleasure to speak in a local government finance debate, because it is an area close to my heart. I want to begin by echoing words that have been spoken on both sides of the Chamber: councils have absolutely played a blinder during the pandemic. We have asked a lot of our local authorities at every level, and they have consistently delivered in the most challenging circumstances. Those circumstances are challenging not just because of the pandemic, but because of the financial situation councils have faced over the past few years.
The structure of the settlement between local and central Government needs to be reformed. There is something fundamental about the revenue support grant and financial settlement that needs to be reformed. Put bluntly, it is broken. We cannot keep bailing it out year after year. The fair funding review, which was set to come in about 18 months ago, and then again this year, was a very good way of going about that reform, and I commend the Department for the work it has done to identify and address the issues. It is unfortunate that emergency measures had to be put in place during the pandemic and that we did not get to the stage we needed to in implementing the review.
The problem is that it is about much more than simply tweaking the formula. We need to look at the whole relationship between where revenue is raised and where it is spent, and that involves looking much wider than simply at council tax, formula grant and the new homes bonus, which has been such a lifeline to councils over the last few years. We need to look at how we reform business rates. Some in this Chamber have argued for 100% retention of business rates, and there is definitely an argument for that, although it might make some London authorities richer than some small European countries. Some might see that as no bad thing, but we need to make sure that there is an equitable distribution of business rate revenue that supports our wider goals.
It is those wider goals that I want to spend a couple of moments talking about. The first is levelling up and the second—not to sound like a broken record from the Housing, Communities and Local Government Committee—is of course social care. Let us take levelling up first. We cannot level up until we reform the way we distribute financial support for house building. At the moment, we are supporting houses in areas where the markets need it; what we need to do is recognise that housing is part of the solution to levelling up. We have to make a choice: are people going to live in an area, or are we going to put the jobs there? It is about pump-priming, and we need to make a call on investing in housing in the former red wall areas and other areas that need levelling up. I am passionate about that, and I know that the Minister and the Secretary of State are aware of that.
We also need to recognise that we do not level up without providing sustainable enterprise—jobs for the people who live in those houses. We need to make sure that we are not just looking at this from a departmental point of view, but working across Government to realise this country’s ambition to be truly one nation and a global Britain in a newly connected world.
Looking specifically at the problems we face in the formula grant and the amount allocated to local government to spend on services, the elephant in the room is of course social care. Reforming the social care element of funding—how the revenue is raised and how it is distributed —is urgent now. It is the one big thing we need to fix. There are many solutions, and I believe there is cross-party support for many of them. We are in the middle of dealing with a pandemic—in fact, no, we are hopefully near the end of dealing with a pandemic—and now is the time to reach across the aisle, to look at how we fund social care in a sustainable way and to take these things forward in a non-partisan manner.
Mr Deputy Speaker (Mr Nigel Evans)
There will now be a time limit and I hope that Dame Diana Johnson has been told that it is six minutes—[Interruption.] No? Well, you know now, Dame Diana. I am sure you will be incredibly flexible with your speech. The wind-ups will begin no later than 7 o’clock.
Dame Diana Johnson (Kingston upon Hull North) (Lab) [V]
Thank you, Mr Deputy Speaker. I am very pleased that both the Secretary of State and the shadow Secretary of State opened the debate by paying tribute to the vital role that local government has played in our national response on covid. I would like to personally thank all the local government officers in Hull for their amazing work over the past 12 months in supporting our community. In my view, local government must be central to any serious plan for levelling up that the Government bring forward, but sadly, in Hull over the past decade it has felt more like levelling down.
The Chancellor, who was previously so adept at locating the forest of magic money trees, has made the deliberate and calculated political decision to underfund local government by around £2 billion and to invite local councillors to make up that funding shortfall by levying a large council tax increase of up to 5%. That would be around 4% above the current rate of inflation even before the fire and police precepts were added. I find it disgraceful that the Chancellor is playing political games at a time of a national public health and economic crisis, devolving blame and not power, and yet again providing only a sticking plaster solution to the issue of social care, despite the Prime Minister’s promises. As the Chair of the Select Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), said, there was a joint report from the Health Committee and the Local Government Committee a few years ago—I was a Member of the Health Committee at the time—that set out a way forward. It is unfortunate that we still have not had a response from the Government on those very sensible proposals.
It is not just that local authorities in the poorest areas have had the deepest funding cuts since 2010. The areas that those councils represent also have the poorest families who have been hardest hit by the decade of austerity and then by the covid crisis over the past year, as unemployment, which is always higher in those areas, has risen sharply. Many of those families are currently having to choose between heating and eating, and they simply cannot afford the large increase in council tax made in Downing Street. The council tax is a regressive tax that hits hardest the low-income working families who are just outside the scope of benefit entitlement, so a 5% council tax hike would be a major act of austerity targeted at those families at the worst of times.
In Hull, a 5%-plus council tax increase would raise little for local services such as adult social care and children’s services, which are already under huge pressure; it would instead cause disproportionate misery for families who simply cannot afford any extra tax burdens at this time. Council tax increases also raise less for services in disadvantaged and deprived areas than in wealthier areas. A 1% council tax hike in Hull who would bring in around £883,000. In the East Riding, our wealthier neighbour, that same 1% would bring in £1.7 million. So a 5% council tax increase in Hull would generate £4.4 million, but that would not close the budget gap of £13 million that Hull City Council will face in 2022-23. Given the 80-seat Tory majority, this council tax bombshell will no doubt be forced through the House tonight. It will then fall to local councillors to make the unenviable choice of whether to pass on this austerity measure made in Downing Street to low-income working families to maintain services, or to reject this austerity made in Downing Street and make further cuts to services. This puts councils between a rock and a hard place.
In conclusion, it is worth reflecting once again, in this centenary year, on the events in Poplar in 1921, when Labour borough councillors rejected the idea that the poor should keep the poor and refused to impose austerity on the poorest families. They went to prison for it. Their victory secured equalisation of the rates—a fairer system of local government finance that lasted decades, apart from a few episodes such as the poll tax, until the Tories and the Lib Dems in the 2010 coalition Government started year by year to dismantle the idea of fairer funding for poorer areas. We now face the renewed need to battle for a fairer deal for areas such as Hull and other disadvantaged areas in our country, and for funding that works for working families in those communities.
Mr Deputy Speaker (Mr Nigel Evans)
I am sorry, Dame Diana, that you were not earlier informed of the time limits. I understand that you have been, Nickie.
Nickie Aiken (Cities of London and Westminster) (Con) [V]
I am delighted to be able to contribute to this debate on local government finance. I declare an interest as a current local councillor, although with no executive responsibility. As a former council leader, I believe wholeheartedly in the importance of local services for local people, now more than ever. The covid-19 pandemic has clearly shown that local councils are crucial to delivering local services and prioritising local need. I pay tribute to councillors and officers up and down the country for their outstanding work, particularly over these most difficult times we are experiencing.
Whether it is Westminster City Council supporting and enabling community volunteering through Westminster Connects, we have all come to rely on local services, perhaps much more than ever before. I and residents in my constituency are grateful for the support that central Government have provided to local authorities to aid the response to the pandemic. Westminster received more than £29 million last year to support its crucial services, and the City of London just over £1 million. Looking forward, I understand that Westminster City Council can expect to receive almost £10 million in further covid-19 emergency funding in the coming year, and the City of London almost £300,000. Sadly, that support remains necessary.
Colleagues in Westminster City Council tell me that there has been a 10% reduction in business rate collections and a 6% reduction in council tax collections in comparison with the previous financial year. The deficit for 2020-21 is estimated to be £231 million. I welcome the increase in funding for local services included within this settlement, particularly the support it plans to offer authorities to further improve our response to rough sleeping and homelessness. I care deeply about that issue, particularly rough sleeping. One way to support local councils in this area would be to work cross-party and cross-Department to repeal and replace the outdated Vagrancy Act 1824. I am working with charities, including Crisis, St Mungo’s and The Passage to present Ministers with a workable policy for updated legislation to improve the prospects of those currently living on the streets.
As much as the pandemic has highlighted many strengths in delivering local services, it has also highlighted some weaknesses. I am sure that my right hon. Friend the Secretary of State is all too aware of the fragmented delivery of services in London. The current Mayor of London has let down local people and local authorities across the capital. I would welcome a reassessment of London devolution. Perhaps local London councils could be provided with some of the executive roles currently undertaken by City Hall.
Last year, I made my maiden speech during the debate on the local government finance report, and I highlighted then, before covid had even struck, the weaknesses I perceive in our financing of local government. The problems are systemic and chronic. Covid, I have no doubt, will be a catalyst for change in how the private sector will do business. Likewise, it should be a catalyst in the public sector. Councils remain far too dependent on central Government for support. Council tax remains a regressive tax, impacting on the poorest in our society, and it is ripe for reform.
A flat property tax to replace council tax and rates has been recently mooted. Although I certainly welcome fresh thinking on the issue, I did not agree with Jeremy Corbyn’s Labour party’s idea of a mansion tax, and I do not agree with a property tax either. One straightforward solution would be to give local authorities the power to introduce additional council tax bands above band H. It does not make sense that a person living in a £15 million apartment in Westminster still only pays £2,000 in council tax. An approach of having extra bands would raise much needed extra revenues.
Westminster Council’s hugely successful community contribution scheme, introduced under my leadership, raised over £1 million in two years. That clearly demonstrates that people living in higher-valued properties are prepared to contribute more, and they need to be allowed to do so.
Business rate reform must also be escalated, as bricks and mortar retail suffers against online retail. Given the recent pressure of retail lockdowns, and as office workers consider their working patterns, it is inevitable that the commercial market will change. Business rates must adapt and change with the market, to support local authorities in being able to offer residents the local retail and business environment that they desire. I welcome the Government’s review and stated aim of increasing parity between digital and bricks and mortar businesses. I also hope that the forthcoming Budget will announce the continuation of the business rates holiday. Reforming council tax, business rates and the whole of local government finance is vital if we are to address desperately needed reform in areas such as social care.
If you will forgive me, Mr Deputy Speaker, I would like to end by plagiarising the summing up of my own maiden speech a year ago. Now is the time for brave, bold reforms and for new thinking to ensure that those on the frontline in local government are given the freedoms they need and are calling out for to help their communities to thrive and to grow in a truly open, global Britain.
Rebecca Long Bailey (Salford and Eccles) (Lab) [V]
I certainly echo the thanks that have been given to our amazing public sector workforce during the pandemic. In Salford they have been nothing short of outstanding.
The charity StepChange has found that the number of people who are in severe problem debt because of the covid crisis has risen to 1.2 million—the figure has nearly doubled since March—with a further 3 million at risk. It warns that we are facing a new and unprecedented debt crisis unless the Government implement a clear, preventive plan to tackle it.
Worse still, the Office for Budget Responsibility estimated at the time of the 2020 spending review that the number of unemployed people would hit 2.26 million by the middle of this year. Three million people have been completely excluded from any coronavirus income support, leaving them in dire financial situations. Along with proposed cuts to universal credit, this will contribute to one of the worst recessions in our economic history. I say to the Secretary of State that in effect forcing people to pay more in council tax at this time, instead of increasing the overall level of funding for local authorities, is not just morally reprehensible; it makes no economic sense, and it will not pave the way to recovery, as he says it will.
Already Salford has experienced a council tax collection deficit of £9.1 million this year, which is creating financial pressures for future budgets. The fact is that people simply do not have enough money to pay for it. There is also a £19.3 million budget deficit in business rate revenue due to covid-related business rate relief and a forecast reduction in rateable values. With covid alone, we have seen our budgets hammered, but the big financial damage was, sadly, inflicted by Government cuts long before covid hit.
Of course, the Government will wax lyrical about how they have provided more money to local government and ring-fenced pots of money for social care and covid, but that is strictly not true. At least 12 authorities that are in or around a section 114 position—the equivalent of bankruptcy for local authorities—are in talks with the Ministry of Housing, Communities and Local Government. Indeed, Richard Watts, the chair of the resources board of the Local Government Association, said on Monday that
“councils had seen a £15bn cumulative cut in their Whitehall grants since 2010.”
Also since 2010, £211 million has been taken out of Salford’s revenue budget—that is 53% of core funding from central Government being taken away from the city of Salford.
Despite all that, and in the face of such adversity, we have one of the most forward-thinking and progressive councils in the UK. The council has stretched every sinew and dipped into its reserves to set out a no-cuts budget this year. But that is just to break even. As the UK’s 18th most deprived authority, and with Salford seeing cuts 35% worse than the national average, forced increases in council tax and no commitment from the Government to increase the overall level of funding that we receive, the future is not just uncertain but unsustainable. This is not the levelling up that we were promised; it is levelling down.
Let me be clear to the Secretary of State: his proposals are not some grand Government efficiency project to streamline our public services and provide us with local revenue-generating powers; they will exacerbate regional inequality, cause further financial misery for people across Salford and steal from their future. His proposals steal the right to decent services, steal the right to a vibrant local economy and steal the right to decent social care. What we need from the Secretary of State today is Government funding, not austerity by stealth.
Mrs Sheryll Murray (South East Cornwall) (Con) [V]
I thank the Government for the assistance that they have given to Cornwall to fund many aspects of life throughout what has been an incredibly difficult time. Much has been given through Cornwall Council, and I thank those who have redistributed Government funds to the people of Cornwall. I also thank the hard-working council staff at Cornwall Council who have done so much during this pandemic.
However, I have a few concerns. First, there is the curious case of Cornwall’s embassy in Brussels. I find it frankly bizarre that hard-working Cornish taxpayers, who are in many cases struggling because of the pandemic, are funding an office in the heart of the EU. I know that the Liberal Democrats, who form the administration with the Independents, did not agree with our leaving the EU, but I remind them that in 2016 Cornwall voted to leave, and last year this Government got Brexit done.
Secondly, I understand that the new IT systems are over budget and that a massive amount of money has been spent on licences that were not even needed.
Thirdly, I am concerned about the many millions being spent on consultants. I understand that the amount spent has increased massively in recent years, and worry that we are paying people to talk about issues rather than focusing on delivering.
When I was in local government in Cornwall, one of the first questions I always asked—as I do now, as an MP—was, “Can you give me a timeline for delivery?” I want to see a council that actually gets things done. The Cornish people are the ultimate arbiters of who can best target the resources for Cornwall, and they will have that opportunity in May.
I thank the Government for the resource that they have given to Cornwall during this incredibly difficult time. I also thank the Prime Minister for choosing Cornwall as the location for the G7 summit and look forward to the best economic benefit that it will bring to Cornwall.
Margaret Greenwood (Wirral West) (Lab) [V]
I begin by paying tribute to the hard work and dedication of Wirral Council workers and Wirral Council throughout the pandemic.
Sadly, financial challenges are nothing new to our local councils. More than a decade of Conservative Government austerity has put immense pressure on our local authorities and pushed many of the services that we all rely on to near breaking point. According to the Special Interest Group of Municipal Authorities, Wirral Council has had its spending power reduced by £124 million, or 30%, since 2010-11. The authority was in a position in which it had to save around £40 million next year, and it has recently been forced to consult on difficult proposals that impact on public services because of the Government’s austerity measures. Other councils up and down the country have also found themselves in extremely difficult positions because of the Government’s actions. In addition—and as a result of the pandemic and measures to combat it—councils around the country face huge financial uncertainty over the next few years and into the foreseeable future.
It is therefore a matter of real concern that the Government have given no clarity over funding levels after March 2022. As the Local Government Association has called for and as council officers in Wirral have emphasised to me, it is vital that the Government provide a multi-year settlement in 2022-23 to put councils on a long-term and sustainable footing. Ministers must also demonstrate meaningful progress towards a solution to the funding crisis in adult social care. Hidden in the fine print of the Chancellor’s November spending review was an assumption that councils would raise council tax by up to 5%. Surely the Chancellor must have been aware that such a move would place a significant financial burden on households, particularly those in hardship, in a year of economic uncertainty.
Our country has had the worst recession of any major economy, and families up and down the country are already worried about paying the bills and putting food on the table. A decade of irresponsible choices by the Conservatives has had an impact on household finances, even before covid hit. A quarter of UK households went into the covid-19 crisis with less than £100 in their bank; 3.6 million people were trapped in insecure work; and the UK was one of the most unequal countries in Europe. To make matters worse, the Government plan to cut universal credit by £1,000 a year, despite campaigning by Labour and numerous charities on this issue. In November last year, a coalition of more than 60 organisations, including the Joseph Rowntree Foundation, Child Poverty Action Group and the Trussell Trust, said that this cut would be “a terrible mistake” and that,
“The removal of this support would not only be immoral, but it will also damage the UK’s recovery”
from the pandemic.
The Office for Budget Responsibility estimated at the time of the 2020 spending review that the number of unemployed people would surge to 2.6 million by the middle of this year. For the Government to undermine council funding to such an extent that local authorities have to increase council tax to continue paying for crucial services such as adult social care is nothing short of shameful.
Ministers should address the crisis in social care and come forward with the necessary funding. It is disappointing that the public health grant for 2021-22 has still not been announced, leaving councils with yet more uncertainty. I have made this point previously in the House, but it is worth making again: the Government must increase the public health grant for next year. The Health Secretary told me in November that the Government would increase it, but that is not what the Treasury said; it said that the public health grant would simply be maintained. The Association of Directors of Public Health has said:
“In the current circumstances, and following years of cuts to public health, it is completely incomprehensible that the Government is not increasing the public health grant”
to local authorities next year. I urge the Minister to work with colleagues across the Government to ensure that local public health teams get the funding they need to continue to meet their public health responsibilities.
In March last year, the Government told more than 300 council leaders that they stood ready to do
“whatever is necessary to support councils in their response to COVID-19.”
However, they later backtracked and said that councils would not be fully reimbursed for costs during a pandemic and that they should not
“labour under a false impression that what they are doing will be guaranteed funded by central government”.
This is a complete betrayal of our communities and the councils that serve them by the Government at this extraordinarily difficult time. Instead of putting councils in the position of having to increase council tax, the Government should stand by their pledge to do whatever is necessary to support councils and give them the funding they need to run local services. The Government should also give local authorities the confidence that they need to plan ahead in these desperately uncertain times by giving them clarity over longer-term funding.
Mr Deputy Speaker (Mr Nigel Evans)
We now go via videolink to Ian Liddell-Grainger. [Interruption.] Ian, have you got a jacket, please? You should have a jacket. We will pause briefly while the jacket is put on. Thank goodness we cannot see below the jacket.
Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)
I apologise unreservedly to you for that, Mr Deputy Speaker. That was a very stupid faux pas that I made, and I apologise to you and the House for that piece of stupidity.
I would like to bring to the House’s attention some of the problems we are facing here. As all colleagues have done, I thank so many of my local council workers for the remarkable job that they have done. My right hon. Friend the Secretary of State is fully aware that Somerset County Council is still misusing covid funds and its money. I have raised this matter publicly in the House, including at Prime Minister’s questions today, and I know that my right hon. Friend the Prime Minister is aware of it. It pains me yet again to tell the Secretary of State that his Department has misled the Prime Minister, and I find that very hard to say.
The leader of Somerset County Council wrote to the Prime Minister, hoping to refute my criticism. The Prime Minister checked back with the Ministry and the Secretary of State and was told that Somerset always gives any information that is required. The sad truth, however, is that the Ministry did not even ask for details. It simply does not add up to look at the total spending from every council without having a clue how the grants are used.
Somerset County Council has the most appalling reputation for financial management. It has applied to the Secretary of State to become a new unitary authority. Those plans are fiercely opposed by all four districts, which have acted impeccably throughout, giving up-to-date information and dealing with grants superbly. A large majority of the elected councillors throughout the area, regardless of party, have said that to have the county running everything is not a workable solution.
Today at Prime Minister’s questions, I asked the Prime Minister to reiterate that the people of Somerset need a proper referendum. I think I got the clear impression that he was very sympathetic, so I was horrified to learn that the Ministry intends to use an online survey instead. I had a look at Citizen Space, as it is called. Anybody from anywhere can fill in a Citizen Space survey; there is no verification. Someone could log in, dare I say it, from Beijing or Moscow. It is wide open to abuse.
I say bluntly that where finance or anything else is concerned, that is not good enough, and Somerset should not have to put up with such shoddy behaviour. The people want a referendum, because they need to be asked what they want their money to be spent on. The districts, towns and parishes want a referendum. I ask the Secretary of State not to force on a county something that it does not want.
Local government is set to have elections on 6 May, and to postpone them in Somerset would look absurd and shoddy. The Cabinet Office has already included Somerset on the election list. It is up to the Secretary of State to sort this out. I hope that he does not put a spanner in the works, because Somerset ultimately needs to be put back together. I have said time and again that the county needs to be rebuilt. The system that we have at the moment will not work, because unfortunately the county does not care and does not listen to what the local people want. That has been proven time and again. The Secretary of State needs to have a conversation with the Members of Parliament and with the parishes, rather than just finding some clever way to get around it, because the situation is not acceptable.
I have been through the same thing once already with Taunton Deane, where the Government went from completely controlling the council to having two councillors left. People are not fooled. They understand money, they understand abuse of power and they understand when people are not doing what they want them to do. I say this to the Secretary of State: this is a chance to step up to the mark and to be listened to. He should listen to the people and not just presume that he can put in a civil servant, who will talk to the fire brigade based in Exeter, the police based in Bristol and then say, “Well, we will talk to others as we so wish.” The local enterprise partnership and its chief executive officer are based in Exeter. The chairman is a very well-known man and does a great job. At the end of the day, I worry enormously about what is going on with this entire situation, so I ask the Secretary of State to please think again when it comes to the funding of local government.
Helen Hayes (Dulwich and West Norwood) (Lab) [V]
I declare an interest as a vice-president of the Local Government Association.
Let me start by paying tribute to my local councils, Lambeth and Southwark, for the work that they have been doing to support local residents and deliver essential services over the past year. It has been an incredibly challenging time, but our local councils have been on the frontline of the coronavirus response, delivering emergency help and support at the same time as the need for many core services has also increased.
I pay particular tribute to Lambeth and Southwark council staff for their tireless work. Many frontline staff are from black, Asian and minority ethnic backgrounds and have continued to work on the frontline, despite knowing that they are at increased risk. Many are also parents who have been juggling their work, delivering services while home-schooling young children. I pay tribute to them for their commitment and public service at this very difficult time.
Our councils have also stepped up to meet needs where the Government have failed, particularly in relation to effective contact tracing and the provision of laptops for children struggling to access online learning. The Government promised councils that the additional costs incurred in responding to the coronavirus pandemic would be covered. Our councils took that commitment in good faith and incurred the costs that were necessary to support local residents, but they have been badly let down by this Government.
Councils across the country, including Lambeth and Southwark, are heading into the new financial year millions of pounds short of the funding they need. Councils have faced a triple whammy of additional costs arising from the pandemic and increased pressure on some existing services. They have faced a loss of income arising from the business rates holiday and the wider pressures on household incomes affecting council tax receipts and a loss of funding from fees and charges as local facilities such as swimming pools have had to close. Southwark Council has recently calculated that the additional costs of the coronavirus pandemic, combined with the loss of income over the past year, amount to £100 million.
After the additional Government measures, Southwark still has a shortfall of £23 million. That is the amount of the Government’s broken promise. The approach to this funding settlement exemplifies the Government’s lack of regard for local government and the vital role that it plays. Our local councils have seen more than a decade of cuts, which, in Lambeth and Southwark, has reduced their grant from central Government by more than 60%. The same public servants who have stepped up to respond to the coronavirus pandemic had already been stretched to breaking point by relentless austerity.
The public will not be fooled by the Government’s announcement of one-off single-year pots of money, which are sticking plasters on the gaping hole in local government finance. Forcing councils to increase council tax, a regressive tax that hits low-income residents hardest, does not raise anything approaching the level of funding that our councils need and is a very cynical approach.
Central to the challenges facing local government is the Government’s shameful neglect of adult social care. The need for social care reform and a new sustainable funding model has been clear for the whole of the decade that the Tories have been in power, but they have done nothing about it. The funding deficit in social care has been quantified many times. A total of £3 billion is needed just to meet current needs. The failure to come forward with practical proposals for social care reform and to publish the long promised White Paper means that 1.5 million people who are in need of care receive nothing and many more do not receive the level of support they need or, indeed, the level of support that any one of us would wish for our loved ones. Thousands of care staff are paid less than the living wage. Social care is the forgotten frontline of the coronavirus pandemic, left unprotected without personal protective equipment, while the Government allowed covid-positive patients to be discharged into care homes.
As a co-chair of the all-party group on adult social care and a former member of the Housing, Communities and Local Government Committee, I can confirm that there has been no lack of cross-party work on social care reform. That social care has been neglected and council finances stretched to breaking point as a result, is the Tories’ responsibility alone. The Government’s approach to local government can be summarised as “Cut the funding and devolve the blame”. Our councils and our communities deserve far better than Tory cuts, cynical blame and regressive tax rises. I urge the Government to think again, and to scrap the regressive council tax hike, bring forward proposals for the reform of social care and provide the sustainable funding of our councils to deliver the services our communities rely on.
David Simmonds (Ruislip, Northwood and Pinner) (Con) [V]
I draw the House’s attention to my entry in the Register of Members’ Financial Interests, particularly my roles as a vice-president of the Local Government Association and as a serving councillor.
I have listened intently to the remarks that have been made during the debate, and I think we need to reflect on the fact that local government finance has been on a journey over many decades, as Governments of all parties have sought reform and efficiency with varying results. My first ever council tax fixing meeting saw the last Labour administration in the London Borough of Hillingdon proposing a 14.8% council tax rise—not untypical under the Labour regime in the late 1990s—with £60 million of unspecified efficiency savings, in a budget described at the time as legal only for the duration of the meeting at which it was set. Labour Members do need to reflect, when commenting on this, that they are past masters of the art of putting up local taxes. In that case, it was very much as Labour funnelled money to northern authorities, rather than ensuring an equitable distribution of funding, which the revised funding formula that the Government have brought forward seeks to achieve.
The big challenges remain, and in particular I would highlight the differential impact and the differential benefit that we see from council tax rises. If we look at London alone, there are 33 authorities with essentially the same set of responsibilities, governed by statute, to the residents. However, because of the different proportions of budgets that are raised by council tax, the amount that the maximum possible social care precept, if applied, would raise in one of those authorities is, at one end, an additional 0.2% of resource and, at the highest end, an additional 1.8%. That is because we see a variation between the around 90% and the around 10% of funding being reached through the council tax, with the rest coming from other sources. So it is very clear, and I very much agree with the remarks that have been made during the debate, that council tax is not a long-term and sustainable solution to the challenge of social care funding.
It is also clear that the solutions are likely to be local. One of the key lessons I have seen in the course of the covid pandemic—and this is true throughout the world—is that strong local services have been crucial in saving lives and mitigating the impact on communities. The UK will do well, for the purposes of its future resilience, to emulate places that have highly autonomous, devolved local authorities that have made good decisions over many decades, meaning that they were in a good position to support their residents when a crisis of this nature hit. So we need to be thinking as a Parliament, in my view, about which are those things that we most effectively do at the centre and which are those things that we need to finance but we believe are most effectively done locally.
I would particularly like to associate myself with the remarks of my right hon. Friend the Secretary of State in opening this debate. It is clear that councils have done a remarkable job in supporting residents, and perhaps almost uniquely across the public sector, have been exceptionally efficient and effective in knowing their communities and ensuring that the resources, whether from central Government or locally raised, have got to the sharp end.
As we consider the local government finance position today, we need to reflect on a decade that began with a council tax freeze grant—councils being encouraged with extra resources to freeze council tax and have no rise at all—to a position where 85% of the extra resources that become available as a result of these initiatives will be financed through rises in council tax. We need to ensure that these local authorities, which have a very strong and very clear democratic mandate—for the most part led by exactly the sort of people all our communities want to see more of in politics, and by people who are more trusted than we are as Members of Parliament to make decisions in the local interest—have genuine autonomy and control over those things for which they are responsible and are properly resourced for doing those things that we in this House have decided we will require them to do. That is clear from the feedback that I have had from across London. I draw Members’ attention to the London Councils finance report, which highlighted that the grant for covid costs provided by the Department is likely to meet those costs pretty much in full, and that was very much welcomed. That also reflects the efficiency of local authorities and their ability to get the money to the sharp end.
Although it is absolutely right that the Government have made additional resources available, they have capitalised on local authorities’ knowledge of their communities and their ability to find people who may be reluctant to have a vaccination, identify communities that they need to get into because they need extra support and help, and redeploy staff from libraries and all sorts of different services to do the door-knocking for test, track and trace. Those are the people who have unequivocally stepped up to the plate and gone beyond what is required during this crisis.
As we go beyond this one-year settlement, welcome as many of its provisions are, we need to ensure that we properly reflect on how we sustain those services for the future. We must move away from the annual wrangling between Government and local government; each needs a much more settled view of what the other’s role is and of how we will finance it for the long term. The settlement that is to be voted on today is most definitely an important step in the right direction, and I very much welcome it, but it is clear that we need to find a different way of formulating that relationship for the long-term future and the good of our communities.
Paul Howell (Sedgefield) (Con)
Before coming to this place, I had the privilege of sitting as a Conservative councillor in Durham unitary authority and Darlington Borough Council, which cover my Sedgefield constituency, and as such I fully understand the importance of these settlements. I declare an interest: due to the delayed elections I am still a councillor in both, although I decline the allowances and I have no executive responsibility.
In recent years, there has been a clear apprehension in both councils, as the settlements were due to be announced, about what level of savings would be required and whether they would get their fair share. I am in regular discussions with Durham and Darlington councils, and I have been pleased to observe the extra support delivered this year—£147 million extra has been received between them since March. Their natural pessimism has proved unfounded. I applaud both councils for the speed with which they delivered the Government support to the point of need. I thank the outstanding volunteers and council employees throughout the constituency for standing up and supporting their residents.
For both councils, a longer-term settlement needs to be delivered as soon as practicable. They fully understand the exceptional circumstances that have frustrated things this year, but they reiterate the need to give longer planning horizons as soon as possible. When the longer-term settlements are determined, I ask that a review of the metrics for future funding be undertaken, because I find it very difficult to understand, for example, why a county such as Durham, which covers 223,000 hectares, is not classed as rural. It is that sort of conundrum that underpins concerns about whether the fair funding review and the shared prosperity fund will reach my communities as they should. I remain perplexed about why the Labour-controlled Durham County Council is to spend £50 million on a new county hall in the centre of Durham. In my opinion, it would be better if it remained where it is.
I have concerns that the push towards local council tax funding will disproportionately affect communities where the underlying affordability is poorer and the demand for adult social care is typically higher. I ask the Minister to incorporate that consideration into his evaluation of future funding models, and potentially look for a different model to support adult social care.
One of the biggest concerns for my authorities is the lack of understanding by Whitehall officials of what our reality is. That is why I believe it is particularly important that the proposed relocation of Departments, whether the Treasury, the Ministry of Housing, Communities and Local Government or any other Department, is not to another metropolitan centre. If officials and Ministers are to fully understand the world outside our cities, they need to get up close and see them. There is nowhere better than the Tees Valley Mayor’s proposed location of Teesside.
I welcome the Government’s settlements this year and their plans to level up and build back better. I see initiatives such as the fair funding review and the levelling-up fund as critical pillars in the delivery of those plans, and I hope that the future funding of our local government allows it to play its full part.
Peter Aldous (Waveney) (Con) [V]
The comments I shall make are provided from the perspective of county areas, and I provide them both as an MP in the county of Suffolk and as chairman of the county all-party group. It is to be welcomed that the Government have listened to the concerns of county councils, including Suffolk County Council, and the County Councils Network, and have used the local government funding settlement to provide further funding to councils in recognition of the additional cost pressures they have absorbed as part of their response to covid-19, at a time when the pandemic is also putting enormous strain on their income. That said, there is a significant funding gap that predates the pandemic that remains, like an elephant in the room, which the settlement has not addressed. This can be properly tackled only by completing the fair funding review.
Shortly before the announcement of the spending review and the provisional settlement, the County Councils Network, representing 36 English local authorities serving county areas, published the results of its autumn budget survey. It showed that for 2021-22 only one in five of its member councils were confident that they could deliver a balanced budget this coming year without dramatic reductions to services. In that context, the settlement and the further announcement that the Secretary of State has made today are to be welcomed, as they head off this nightmare and provide some certainty by ensuring a roll-over of all existing grants for councils, alongside some additional resources to meet the underlying pressures on council budgets that predated the impact of covid-19. However, this is only temporary respite; councils still face a significant funding gap that they will need to close next year.
The local tax income guarantee scheme is to be welcomed, as it provides essential support for local authorities suffering losses in tax income in 2020-21. As a result, councils will be able to deliver balanced budgets in 2021-22, without dramatic reductions to services. However, it must be pointed out that the scheme is less favourable for council tax losses than for losses in business rates. As county councils receive a much higher share of council tax income compared with their share of business rates income, county councils will be disadvantaged.
This settlement gets us through an incredibly challenging and highly unusual time for local government, but it does not address that elephant in the room: the funding gap that predated the pandemic. It can be tackled only by implementing the fair funding review, which has the potential to deliver fairer settlements for councils all around the council, be they rural or metropolitan, be they from the north, the south, the west or the east, and for coastal communities such as Lowestoft and Waveney. I therefore urge the Minister to confirm in his summing up that a final consultation and indicative allocations under the new formula will be published this year, in 2020-21, so that the review can be implemented in 2022-23.
Antony Higginbotham (Burnley) (Con)
I am grateful for the opportunity to speak in the debate. I want to start in the same way that many others have, in my case by thanking Lancashire County Council and Burnley Borough Council for all they have done to support our local residents to get through covid, from providing social care to our most vulnerable residents and working with businesses to get them covid-secure through to administering so many of the Government’s support schemes, which have proved essential to keeping our economy going. While not everything they do is in the public’s sight—lots of it is behind the scenes—it is essential none the less.
Unfortunately, some of the lines coming from the Labour party in this debate are simply untrue. Labour’s approach to funding seems to resemble that of Goldilocks —it does not matter what is done, how much is provided or what the scheme looks like; it is never quite right. I made a promise to the people of Burnley and Padiham that I would bring Government focus and Government investment, and this funding settlement and the broader actions that the Government are taking demonstrate that that is exactly what we are doing. This Government are laser-focused on levelling up and tackling covid-19.
In the last year alone, more than £11 billion has been provided to local authorities. That includes more than £50 million to Burnley Borough Council and £141 million to Lancashire County Council for nothing other than covid. Let me break that funding down, because it has helped residents, businesses and families. Just for Burnley, that is £34.27 million of total grant funding for businesses; £1.48 million of council tax hardship funding; £11.1 million of business rates relief; £95,000 for domestic abuse services; £114,000 of self-isolation grant funding; £100,000 funding for a community champion, announced just the other week; £350,000 for compensation for lost income from car parking charges and so on; £78,000 for reopening high streets—the list goes on.
Then there is an extra £2.11 million of funding for the council’s day-to-day services that have been impacted by covid-19—for example, refuse collection and green spaces. That is not to mention the extra £2 million that the Prime Minister announced for Pioneer Place in Burnley town centre as one of his shovel-ready schemes—something the local Labour council likes to avoid mentioning. Does that sound like a council that is seeing Government funding withheld? Does it sound like a Government who are going back on their promise to do whatever it takes? I do not think it does. That approach continues into next year, which is evident from the finance settlement that we are debating.
My Labour council leader likes to claim that it is never enough. He was in the press just the other day saying, “We’ve had an increase, but—”. Well, there is no “but”. If we add up all the funding that I just spoke about, it translates to £24 per capita in Burnley—£24 per person to deal with covid-19. That is in addition to the core grant that the Government give the council for its day-to-day services and the income it gets from council tax. In comparison, the national average is £15 for a typical district or borough council—£24 for Burnley and £15 on average.
I will never stop lobbying the Government and standing up in the House to ask for more support for Burnley, and those on the Government Front Bench know that. I will work with whatever administration we have in Burnley town hall, but we have to focus on the facts, and the facts show us that this Government are providing the support needed. Core spending power going into next year will be higher than it is this year. That is not a Government who are taking money away; it is a Government who are supporting residents across Burnley and Padiham. None of us should apologise for trying to ensure value for money in town halls. Every penny spent in a town hall is money raised through either council tax or general taxation, but it all comes from the same pot—it all comes from the same local residents and local businesses that work day in, day out to earn that money.
We need a bit more transparency. If local authorities are going to raise council tax, they need to be much clearer about why they are doing it, particularly if they are inserting that “but” at the end: “We have had more funding from Government, but—”. That “but” tells us that they want to increase council tax, so residents should feel free to write to their local councillors and say, “What is it that you need the extra money for that isn’t being provided for by Government?” The answer cannot always be more tax rises. We have to squeeze every penny and pound out of the money we give to our local authorities. That is what our residents deserve.
Peter Gibson (Darlington) (Con) [V]
After 28 years of hard Labour in Darlington, with ever-increasing council tax, ever-decreasing quality of services, our arts centre closed, daft traffic management experiments and our precious Crown Street library under threat, in May 2019 the people of Darlington voted for change. The new Conservative-led administration has reversed the traffic experiment, saved the library, putting it in the hands of trustees, and made sure that our town is much cleaner than it has been in a very long time.
Throughout 2020, Darlington really stepped up to the plate, rolling out community testing, dispatching Government grants quickly, and now providing call centre support to the vaccine effort. I must record my thanks to everyone at Darlington Borough Council for their amazing efforts—every street sweeper, every administrator and every leisure team member who has taken on new roles. This help has been enabled, in part, thanks to the swift provision of funds from Government, which has enabled local authorities like mine to truly serve their communities, together with the prudent financial management of a Conservative-led council like Darlington’s that has this year balanced its books.
My right hon. Friend the Secretary of State and Ministers have worked quickly with councils to ensure that they have the resources to support those affected by the virus, including the much-appreciated covid winter grant helping families with food and bills at this time of need. The Government have already provided £8 billion directly to relieve financial pressures during the pandemic. It is right that the local government finance settlement for 2021-22 reflects fresh challenges as we emerge from the pandemic. I am delighted that local government will receive an extra £2.3 billion, including a £300 million boost to the social care grant, bringing total core funding to £51.2 billion, with Darlington Borough Council set to see an increase in core spending power from £88.2 million to £92.5 million.
Putting a freeze on the business rates multiplier is a welcome move for local businesses. Keeping it at 49.9p will alleviate some concerns, and I am relieved that central Government have committed to make up the shortfall, but in the long term our business rates system does need reform.
For all top-tier local authorities, adult social care and children’s social care remains one of the biggest responsibilities they have in providing the care that many of our youngest and oldest vulnerable citizens depend on. This is important in addressing the issues facing local government and our society. Social care requires a serious debate about how we fund it into the future, without petty point-scoring stifling discussion.
The challenges of our high street, with the shift to online shopping, demand a discussion of how we raise the money needed in a fair way that does not discourage investment in our high streets. My right hon. Friend the Chancellor has done an incredible job in supporting businesses in Darlington through furlough and the self-employed scheme, alongside the continued commitment to the investment in our mainline station. Indeed, having set out how great Darlington is, with its excellent Conservative-led authority, and echoing the words of my hon. Friend and neighbour the Member for Sedgefield (Paul Howell), I firmly hope that the Chancellor will consider us as a location for Treasury North.
In thanking the Chancellor, I must also thank my right hon. Friend the Secretary of State for the £23.3 million under the towns fund, which will help us to rejuvenate our town and establish our railway heritage quarter—the real home of Locomotion No. 1. We look forward to the levelling-up fund and the opportunity to bid for more funds that will help us to fulfil the Prime Minister’s ambition of a truly one nation country. This finance settlement is welcome and will help us to bounce back. I know the people of Darlington welcome the support that we have had and continue to have.
Imran Ahmad Khan (Wakefield) (Con) [V]
During this past year, Her Majesty’s Government have provided unprecedented support to businesses and individuals who have struggled throughout the pandemic. All councils and local governments throughout the United Kingdom have received vast support from the Conservative central Government to help them to meet their responsibilities and the challenges brought on by covid-19.
Since the outbreak of pandemic, Her Majesty’s Government have provided more than £8 billion directly to support local government throughout England and to help to relieve some of the pressures that local services have faced and continue to face. In March 2020, a £500 million hardship fund was announced for councils to help people through council tax relief. In May, £600 million was announced for local authorities through the infection control fund to help to assist care homes.
I fully support the motion on the local government finance report 2020-21 and welcome the fact that local government is receiving an increase of £2.3 billion in spending power for the upcoming financial year. Our local services will continue to suffer from the repercussions of the pandemic for a long time after the last vaccine has been administered; this financial settlement ensures that key services can continue to operate despite the ravages of covid-19.
I have heard Labour criticise the local government finance settlement for the next financial year and suggest that the funding relies solely on increases in council tax. It is crucial to point out that it is Labour-controlled councils that are widely characterised by spending money and employing resources in an imprudent and often chaotic manner that, quite predictably but lamentably, frequently results in deficits, for which the poor taxpayer must ultimately pay and suffer.
In my constituency of Wakefield, Labour-controlled Wakefield Metropolitan District Council has overseen a deterioration of our once great and proud city. In 2008, the council pushed through plans for a multimillion-pound market hall. The city’s market traders and residents did not want it, and it has lost an average of £190,000 a year and been largely shut to business. And that is only the cost to the council: our market town, which has roots in the medieval days, has almost entirely died.
In July, in the midst of the pandemic, Wakefield Metropolitan District Council attempted to shut the major thoroughfare of Northgate in the heart of the city of Wakefield, which would have destroyed any chance that local businesses had to recover from the first lockdown. Thankfully, for the first time in 89 years the people of Wakefield had not a Labour MP but a Conservative to represent them and listen to them. Together, we made the council listen to the people and businesses of Wakefield, who had felt ignored and poorly served for too long.
The increase in spending power does not have to equate to an increase in taxes. Where there are deficiencies, waste or profligate overspending, rectifications should be made to ensure the most effective and efficient allocation of resources. The increase in local government spending power will ensure that vital services can continue. However, councils should not immediately seek to increase taxes, but rather examine their own spending patterns to ensure that taxpayers get the best services possible for as low a cost as possible.
In short, local governments work best and serve their residents best when they are run by Conservatives, characterised by belief and pride in their communities, faith groups and families and, of course, their local communities and their country.
Steve Double (St Austell and Newquay) (Con) [V]
There is no doubt about the vital role that our local councils have played in supporting our country and the communities they serve through this pandemic. The Government have recognised that by providing unprecedented levels of financial support to councils. Cornwall Council alone has received more than £555 million from the Government to support its work, businesses, communities and households over the past year. I welcome this local government financial settlement, the Government’s continued support to local councils and, indeed, the increase in funding for our councils.
I have listened carefully to the debate, and I am somewhat puzzled by much of what we have heard from those on the Opposition Benches. They criticise the Government for not providing more funding for local authorities, and at the same time they criticise them for allowing councils to increase council tax, as though money that comes from central Government is somehow free money. Well, I have news for everyone: it is all taxpayers’ money, whether it comes from centrally raised or locally raised taxes. We will certainly take no lessons from the Labour party, under which we saw council tax double the last time it was in government.
Of course, it is not just about the amount of money councils get; how they spend it is just as important. Councils need to ensure that they provide value for money to taxpayers and that their funding is focused on the core services that matter most to local people. Sadly, Cornwall Council continues to show that it is unable to do that. All too often, there are examples of how the current administration continually complains that it needs more money from central Government but then seems always to find the money for its own priorities, which regrettably do not always reflect those of the people it is meant to be serving.
My hon. Friend the Member for South East Cornwall (Mrs Murray) has already highlighted the tens of thousands of pounds the council wastes every year on continuing to maintain an office in Brussels, even though we voted to leave the EU five years ago. However, most shocking of all is possibly the recent revelation that Cornwall Council paid a staggering £20 million to consultants last year. That is more than double the amount it spent in 2017-18 and amounts to more than £400,000 a week, every week. I struggle to imagine what could possibly need so many consultants to be paid so much Cornish taxpayers’ money. To date, the administration has failed to explain who has been paid the money and for what possible reason. Paying that much money to consultants is bad enough, but when we factor in the fact that in 2020 Cornwall Council had the highest number of officers being paid over £100,000 a year in the south-west, we wonder why it needs all those highly paid consultants as well as 19 officers receiving over £100,000.
Many people are also concerned that the council will use the impact of the past year to further reduce the face-to-face services it provides and to cut back on its physical presence in our towns. Despite being told by the administration that having staff working from home is more efficient, we have seen a reduction in the level of services. One specific issue is the time it takes for local conveyancing searches to be completed. In recent months, it has been taking over 10 weeks for searches to be returned, which has caused no end of stress and anxiety to homebuyers. When challenged as to why it has taken so long, the council blamed the pandemic and the impact of staff working from home. Yet, at the same, it tells us that it is more efficient for staff to work from home. It cannot have it both ways. I ask the Minister to confirm that we expect councils to reopen their face-to-face services and get staff back in their offices as soon as it is safe to do so. Can we also look at what we can do about the delay in local searches? This is clogging up the housing market at a time when hundreds of people are seeking to complete before the end of the stamp duty holiday.
Finally, it would be remiss of me not to mention the need for the fair funding review to be completed. It has been well established that the cost of delivering services in rural areas is higher than in urban centres. The Government recognised this through the rural services delivery grant. I thank the Secretary of State for the extension of the grant, but we have been waiting for the fair funding review for too long now. As we emerge from this pandemic there is an urgent need to review the way in which councils are funded, particularly in rural areas, that recognises the additional costs that rural councils face and to ensure that a fit-for-purpose formula is in place. For too long, we have said that the warped funding formula created by the previous Labour Government that favours urban councils and sees them receive a disproportionately high level of funding needs to be addressed. Will the Minister make this an urgent priority in the coming months, so that we can make sure that a fair formula is in place ahead of next year?
Andy Carter (Warrington South) (Con) [V]
Let me start by saying what an incredible job the people who work on the frontline of our local council services are doing. That includes Warrington’s binmen, social workers and environmental health teams—local people who have been supporting communities across Warrington South throughout the pandemic. I want to put on record my thanks for their efforts, because the last few times that I have spoken about the decisions taken by elected Labour councillors in Warrington, they have suggested that I am criticising the frontline efforts of the hard-working people who deliver our services. To be clear, those brilliant public sector workers have stepped up to support the most vulnerable people when they have needed it, and I thank them for their efforts.
In recent weeks, as well as dealing with the impact of covid-19, our council workers have also dealt with the fallout of Storm Christoph, with more than 700 homes flooded across the town, affecting homes in Dallam, Sankey Bridges and Lymm. There is no doubt that the challenge of dealing with the floods will be costly, and I am keen for the Secretary of State to look at how central Government can assist locally.
Let me turn to local government finances. I thank the Government for the assistance that they have given to local authorities. During the current year, Warrington Borough Council has received £102 million from central Government, including support for businesses in our town. It is worth breaking that down: £32 million in business rates relief; £15.5 million pounds in additional un-ringfenced support for the council; £1.6 million in council tax hardship funding; £1.14 million for test and trace; £4.76 million for infection control; £400,000 for emergency accommodation funding; and £580,000 for the covid winter grant scheme to help fund families and those on free school meals during the holidays. The list goes on. The Government are backing councils with the resources that they need during this challenging period.
For the year ahead, Warrington will see a real-terms increase in its spending power of 4.5%. There is an additional £6.7 million for Warrington Council, but, quite rightly, it is down to local councillors to decide how much they want to raise in council tax each year. They are elected and they hold the tax-raising powers.
Let us just go back to 2015-16, long before covid hit. The average council tax band D property in Warrington was paying £1,206 a year. The average band D figure for 2021-22, which has just been agreed by the council, will be £1,565. That is just short of a 30% increase over the period. That is an extra £360 per household for a band D home in Warrington, before police and fire precepts are added. Under Labour in Warrington, we have seen an almost 30% increase in council tax. At the same time, some Conservative Councils are freezing council tax again. At every opportunity, Labour says that it is down to the Government that council tax has increased so significantly, but we know that that is simply not the case. Local councillors decide the services to be delivered and local levels of taxation, and Labour authorities are past masters at putting up council taxes.
In the time remaining, I will turn to a number of other concerns regarding local government finance in Warrington. As the Secretary of State will know, Warrington Borough Council’s statement of accounts is yet to be signed off by the independent auditor. I refer not to the current year, which is due to end shortly, nor to the previous year, nor, for that matter, to the year before that; the statement of accounts in Warrington has not yet been signed off for 2017-18, due to an objection over a £30 million investment in Redwood Bank. Despite promises after promises, there are still technical issues as to why Grant Thornton has not signed those statements off. We do not know those technical reasons, and I have lost count of the number of times that we have had promises that the statement of accounts will be signed off.
There is increasing concern locally that public money is being used for commercial purposes and it is not being used in a transparent way. That is not a good thing. It is not a plc with shareholders; it is a local council, and the risks are borne by local people. We also have not seen the full report from the auditor who investigated the objection that was raised by a member of the public about that £30 million investment. The council could choose to make it public, but so far it has not done so.
Before Christmas I raised my concerns about the level of borrowing by the council to invest in commercial ventures. Those concerns have not gone away, with £1.3 billion borrowed, at preferential rates, to purchase commercial property, invest in an energy company and buy a solar farm. The uncertainty caused by covid confirms the need for new measures to restrict and monitor these investment activities. Analysis by the TaxPayers Alliance shows yields well below forecast for a sample of local authorities that have been down this route. There are no guarantees with any of these investments. Today we may well find that there are no shortfalls in income in Warrington, but there are no guarantees as we navigate our way through the rocky times ahead. They will continue to deliver and ultimately it is down to ratepayers, who will end up footing the bill for underperforming portfolios.
Perhaps one of the most frustrating elements of the level of borrowing is that services such as Broomfields leisure centre in Appleton, which is in such an awful state, are not able to reopen, yet at the same time money is being spent on a superstore in Salford and a new set of council offices in Time Square—a project that was originally priced at £107 million, but finally came in at £142 million.
Mr Steve Baker (Wycombe) (Con)
I begin by paying tribute to Buckinghamshire Council, which has been working fabulously during this coronavirus crisis. The crisis has pushed MPs and the council together like never before, and that has only served to increase my admiration for its hard work, innovative spirit and creativity. I am, therefore, pleased to see the Government’s proposals to make sure that councils are reimbursed for their lost income. That is a major factor for our council.
I also want to pay tribute to our local fire services. I could easily spend the time available praising the innovative work of our fire officers and local management. The way in which they have risen to the challenge of changing times has been an inspiration, and I am tremendously impressed by the professionalism of our firefighters whenever I meet them.
The particular issue that I want to air today with the House and the Minister is the problem of finance for our firefighters. In the 2020 inspection report, Bucks Fire and Rescue Service was graded as “requires improvement”. One might ask why that has happened, but the report says that
“in one sense, it is highly efficient: it has an innovative deployment model which, if better funded, would be a cost-effective way of keeping people safe.”
The reason that efficiency has been graded as “requires improvement” is stated clearly:
“This is fundamentally because it does not have enough money and people.”
The report concludes by saying of Bucks fire service:
“Overall, we would like to see improvements in the year ahead, but without increased funding, it is difficult to see where progress can be made.”
I am confident that Ministers will feel that they have heard all of this before, but the reality is that Buckinghamshire fire services are in this position because of the outstanding calibre of their managers, who have been parsimonious with public money. In 2013-14, when they could have taken an increase of £5 a year in council tax, they did not take the money because it was not needed at the time. They were the only fire and rescue service not to exercise that option. They were trying to do the right thing, and at the time it was noted that they might need flexibility in future years. Now, as we see in the inspection report, that time has come.
I ask Ministers to work with colleagues in other Departments, including the Treasury and the Home Office, to make possible an increase in the precept for our fire services. I listened to the opening remarks of my right hon. Friend the Secretary of State as he talked about safety and fairness, but my goodness don’t we know in this Parliament that fire safety is one of the fundamental jobs and duties of the state. We need to make sure, since it has nowhere else to go, that Buckinghamshire Fire and Rescue Service enjoys increased funding. That is an absolute imperative. In High Wycombe, we need to refurbish our fire station, but we have limited ability to do that locally because of the need to convert revenue into capital spending.
In the past, I have written to several Ministers about this problem, and I rather fear, particularly having worked in government myself, that this problem is now trapped between the three Departments that I mentioned. I suspect what is needed is a multilateral meeting between someone at the Treasury, someone in MHCLG and someone in the Home Office, and I will continue to press Ministers to get their heads together on this subject. We are not going to go away, and we cannot possibly allow our local fire service to be underfunded, and for that reason I say to the House and to Ministers that we are going to keep pressing this issue.
I do not like being here today saying we need £5 a year on a band D property for fire safety, but that is less than 10p a week extra to make sure that we are properly funding our fire services. What I say to Ministers is this: imagine a situation arising where it turns out we do not have enough engines and staff when there is a major need for them. I am not willing to look back with hindsight and say I did nothing. Indeed, today I am saying to Ministers that we need to act, and very soon.
I have written to Ministers. I have pleaded with Ministers. I know that Ministers have been very busy indeed, diligently working on other priorities. I am saying to them today: please prioritise the funding of Buckinghamshire and Milton Keynes fire service by putting heads together and getting that extra precept in place.
I finish by thanking Ministers, the Secretary of State and the Treasury for what they are doing overall on council tax. I am extremely pleased that our new unitary in Buckinghamshire is working so well, and in the context of just being formed through the coronavirus crisis. I am very grateful to Martin Tett, the leader of the council, to Rachael Shimmin, the chief executive and to all the officers, the council members and the council cabinet for all the work they are doing to carry our community through this crisis. It has been a real privilege working with them, and I am looking forward to doing so in the future.
Bob Seely (Isle of Wight) (Con)
I will not take up too much time. First, I thank Ministers for the excellent work they have done over covid. We on the Isle of Wight have had an additional £100 million in the course of the past year in loans and grants to support businesses and individuals, and that money has flowed pretty quickly through the Isle of Wight Council. I am very grateful for the Isle of Wight chief exec, the council leader and, in fact, the entire team on the Island, who have done a great job.
I thank my hon. Friend the Member for Thornbury and Yate (Luke Hall) for his attention to this matter and, indeed, the entire ministerial team, because I talk to them quite a bit on this issue. As he knows, we have been in discussions about the fair funding formula in regard to the Isle of Wight. It was mentioned in the fair funding formula review specifically as an island, recognising the potential additional costs, and that is the first time, as far as I can see, in modern local government history that the Isle of Wight has been recognised as an island. That is an important moment for us, and I am grateful to the Ministers who have been dealing with that, including the Chancellor when he was in a previous job.
It is hugely frustrating that the fair funding formula has been put on hold. We completely understand the reasons why. Clearly Ministers are acting in good faith when they say they have had to put it on hold because of the covid crisis, and they will look to get back to instigating that fair funding formula as soon as possible. Having talked to the Minister just this morning, I understand why we cannot tinker with the current system. Indeed, it would probably be illegal and open to challenge if they tried to do so and apply some additional fair funding formula to the Island now. I am grateful for what the Minister agreed this morning, which was a funding package that will be used for research to be conducted by Whitehall—by his Ministry—and the Isle of Wight Council to investigate the true additional costs of providing public services on the Island.
I know that the Minister is aware of the work of the University of Portsmouth, but I fully accept that, in order for the Government to make sure that they are spending taxpayers’ money wisely, it is right and proper that they commission additional work. Let me remind the Minister that the University of Portsmouth found three reasons why additional costs were needed to provide public services on the Island that are of the same standard as those on the mainland. First, there is the lack of spill-over of public services. For example, we cannot share a fire engine with Portsmouth until somebody designs a fire engine that can float on water, because we are separated from the mainland. Secondly, there are additional costs of providing services to communities on an island. There are not only additional transport costs, but issues arising from economies of scale, which mean that care home providers on the mainland may not necessarily want to set up on the Isle of Wight. Thirdly, there is the perceived separation factor that may prevent skilled workers either moving to the Island from the mainland or, indeed, moving from the Island to the mainland.
I am very grateful for the discussion that we had this morning and for the Minister’s promise of funding. I think that it showed great diligence and also creative thinking on his part. There is one thing that I should have asked him this morning. If we show that there are additional costs, which there undoubtedly are, and those are caused by our separation by sea, and the aim of the fair funding formula is actually to be fair, will the Government give me a commitment, within reason, that, if those additional costs are identified in the research that will be done by his Department and the council, those additional costs will be met? In terms of his budget, we are not talking about large sums of money. Even a few million pounds in additional costs would be very valuable for the Isle of Wight and for our local government, which is the smallest unitary authority. I echo the words of my right hon. Friend the Secretary of State who opened this debate that this is about fairness. If we cannot provide the same level of services as the mainland because of the additional costs of being an island, it is obviously important for those additional costs to be met.
I have one final point, which is partly relevant to the relationship with my right hon. Friend’s Ministry, but also with others. If the Government want to treat the Isle of Wight as being part of the mainland, they need to provide a fixed link. We are very happy being an island, but the dynamic of islands is different from that of the mainland. If we are given targets that effectively treat us as part of the mainland—be it for housing or for anything else—there is an understanding potentially that the Government need to connect us with the mainland. If we are not connected to the mainland, the Government need to understand that there is an island dynamic, which has an impact on us as a society but also on us economically.
For example, we have an unavoidably small hospital on the Isle of Wight. We need a hospital, because we do not have a fixed link to the mainland, but that hospital is not as economically viable as other district general hospitals, because our population size is different from that using other district general hospitals. That is just a generalised plea to this Minister and also to the Government that islands have to be treated and understood as islands. None the less, I am delighted and very grateful to the Minister for his call this morning and the agreement that we will have, I think, £50,000 to work on research to make sure that the Government are satisfied that the additional costs that we talk about on the Island are genuine and should therefore be a matter for public support.
Duncan Baker (North Norfolk) (Con) [V]
For those of us who have come up through the ranks of local government, we know only too well that local councils decide on local increases to council tax. There are parameters to work within to protect tax payers, but I welcome the fact that local councils make local decisions and that local democracy gives them the power to do that. It will be for them to set their council tax rates. I would be the first to say that all councils must think very hard about what they do this year, recognising the immense stresses that many constituents are under.
I thank all the staff and the officers at Norfolk County Council and North Norfolk District Council for all they have been doing during the pandemic. It is a pleasure to work so closely with so many of them. What the Government propose here with a core spending power increase of 4.6% in cash terms next year is a significant step forward and is one of the larger increases in council funding in the past five years. This is worth an estimated additional £2.2 billion in funding for local government services. We should not underestimate the fact that the Government have already given local councils around £8 billion in extra funding for a range of services so councils can support the most vulnerable during this pandemic.
While this is only right, councils must play their part and run themselves efficiently in delivering services, not waste taxpayers’ money. A well-run council should behave like a well-run business: its residents are its shareholders, and councillors are just as accountable for their decisions. Well-run councils build up reserves to ensure that they can support and weather the most difficult of challenges. This is what had happened under the Conservatives’ control in North Norfolk. No one prepares for a pandemic, but to a large extent the Government have compensated councils for the additional costs they have had to bear.
It is worth noting that my local council, North Norfolk District Council, when it was Conservative-controlled put up council tax just once in seven years, but when the Liberal Democrats took control it took them just a matter of months before they increased taxes. Sadly, my constituents have watched as the Liberal Democrat administration has wasted vast quantities of taxpayers’ money on a redundancy and reorganisation programme throughout the pandemic, not to mention cancelling Conservative-initiated projects during their tenure which, as we emerge from the pandemic, would have contributed greatly to the district—over half a million pounds of local people’s money wasted, while actually proposing very little themselves. It is an administration devoid of ideas, and many will tell themselves, when their council tax bills increase, how all that wasted money could so easily have been put towards softening the blow and alleviating some of the council tax rises they will have to pay.
Within this local government finance settlement, we have the largest rural services delivery grant ever—an increase of £4 million or 4.9% on last year—and this funding will be gladly received in sparsely populated rural local authorities such as mine. On that note, it has been mentioned that councils with seasonal economies like mine could be negatively affected by the structuring of the sales, fees and charges scheme, because they might receive a large proportion of their annual income in the period from April to June and this would not be reflected in the compensation they will receive through the scheme. Could the Minister update us, in his closing remarks, on what action he is going to take on this?
Everyone in society will be affected by this pandemic, and councils will be no different, but the Government have in real terms increased funding to them. Yes, local decision makers need to look hard at what they will do with the council tax, but no one can argue that the Government have not done a seismic job in giving them the very best tools to manage this pandemic.
Sir Robert Neill (Bromley and Chislehurst) (Con) [V]
It is a pleasure to speak in this debate. The funding settlement with an above inflation increase, given the circumstances and the economic pressures, particularly those of the pandemic, is very welcome to my local authority in Bromley and elsewhere. However, I hope the Minister will recognise that that ought to be the product purely of those extreme circumstances and that we should return to multi-year settlements as soon as possible—next year, I very much hope. I hope he will confirm that that is the Government’s intention, and I hope that in the long run we can move beyond two to three-year settlements to perhaps three to four-year settlements to give local authorities much greater mid-term financial stability.
Within the welcome settlement, there are none the less still pressures that need to be recognised. The covid funding is very helpful to my authority and others, but of course that element was consulted on and published before we found the new variants and before the likelihood of further extensions of the lockdown. That will inevitably mean some continued recession in the economy for more months than was perhaps anticipated at the time, and that therefore means business rates are likely to be collected at much lower levels than those forecast in the settlement. Some businesses, of course, may well close permanently, sadly, and others will take longer to gear up, and of course there is uncertainty at the moment about new reliefs coming through. That, of course, means that the tax base is likely to be much lower than was assumed for the five-year average that was taken in the settlement figure. That is affected, too, by the pause in construction that happened during the spring 2020 lockdown, which will affect new homes and other premises coming up. I do hope there will be a means of revisiting those figures in year, perhaps, or with an adjustment next year to make sure that that is properly picked up.
Bromley has noticed that the slowdown in economic activity will have an effect on fee income, as well as the business rate and new homes bonus elements of the tax base. Parking fees, other fees and charges, and other commercial activities are much reduced, so local authorities’ incomes will be reduced in that area as well. There is a need to monitor the situation throughout the year, and I hope that the Minister will be open to some additional financial support in year, if it is proved that the position of local authorities is becoming particularly stressed.
In relation to the various business grants, Bromley received an additional £55 million in covid-related business rate relief for 2020-21. I hope that that will be extended into 2021-22 to reflect the ongoing pressure on the broader economy.
I want to touch on adult social care, which is perhaps the biggest cost pressure for top-tier authorities such as my own. With a growing population, Bromley has the largest population of over-65s of any London borough. A one-size-fits-all approach does not work for us, and we have particular pressures that I hope the Minister will bear in mind. The real issue here is that the increase across London will not keep pace with the growing funding gap in adult and children’s social care. Across London, that was estimated to be about £400 million pre-pandemic.
We have found that there is a strong interdependency between social care and NHS provision, and the two need to work together. Unless social care is properly funded and delivered, the job of the NHS is very often made harder, and it is not always possible to get people out of NHS facilities into local authority social care facilities. Of course, the substantial increases that the NHS has received in funding are still significantly more than what has been made available to adult social care within the settlement figures, even allowing for the use of the social care precept. There is a need to revisit the interdependency of the two and link the funding together. If that cannot be done this year, I hope it will be regarded as a priority for the future. I hope that the Minister will take that on board, too.
We need a better mechanism for properly and fully funding new burdens. That has always been the approach of the Conservative Government, but frequently we have found that there is a lag time in the calculation of the amount that is made available for the spending incurred by local authorities. It is important that we develop a swifter and more precise means of funding new burdens to the full extent that local authorities have to pick up the tab.
The last point I will make is that Bromley is historically a very low-cost authority—an efficient authority. That has been a problem since I sat in the Minister’s place and had to deal with these matters. The system does not incentivise efficiency, of itself, in the local government financial settlement. There is no financial incentive in the system to keep unit costs low. Ours is the lowest unit cost for delivering services in London, but there is no recognition, at the moment, of historical financial efficiency. If an authority has a low base to start with, it does not get rewarded for that; it can potentially be penalised, given that the system depends to a great extent on uprating.
That is an important long-term matter, and we need to start work on it straightaway. I know that the Minister gets that point, and I know he has ambitions to look at the system. I hope he will bear that in mind and start work on it. Authorities such as mine are very happy to co-operate with the Department in finding ways forward from our own experience in these matters.
Adam Afriyie (Windsor) (Con)
I am delighted to follow my hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill); my grandparents and my mother lived in his constituency for most of their lives.
I very much welcome this local government settlement. The Government have been flexible. I dare not use the word, but they have generous in how they have responded to the recent demands caused by the pandemic, and that is certainly welcomed by me, by the public, by my constituents and by local authorities. Our local authorities are the first responders—they are the frontline—particularly in delivering services and responding to what people perceive to be the challenges on the ground.
When the coronavirus pandemic began, it was striking from my interaction with my three local authorities just how on the ball they were; they knew where the businesses were, and if they did not, they physically went out to find them to ensure that they had access to the important schemes that the Government had created to support local business finance. The Government took a wonderful stance on homelessness, which has meant that across the country, homelessness has almost ceased to exist at the moment. It was local authorities, local housing charities and trusts and support mechanisms that brought that policy into reality. I want to thank the Pilgrim Hearts Trust and Windsor Homeless Project.
It is right that in these very challenging times, this is a one-year settlement, because any settlement beyond one year would involve speculation about the state of local government finances after that period. It is also right that the Government’s policy is that, if any local authority wants to increase its council tax rates, it needs to take that to the people to get their consent. Overall, I congratulate the Government on their flexibility and their approach during these really trying times.
I have three local authorities in my constituency, and I want to briefly focus on two. The Royal Borough of Windsor and Maidenhead has pretty much the lowest council tax in the entire country outside London boroughs, and Bracknell Forest Council is pretty close behind it. I want to say a big thank you to Duncan Sharkey and Tim Wheadon, who run those local authorities, and, in particular, Andrew Johnson, whose behaviour has been to be commended in leading the Royal Borough of Windsor and Maidenhead.
We have not only the lowest council tax in the country but the highest rated services in both Bracknell Forest and the Royal Borough of Windsor and Maidenhead. We have fabulous state schools, with a particular focus in Bracknell Forest on special educational needs, and the local authorities are managing them incredibly well, to ensure that our young people are very well taken care of. It is, I would argue, the most beautiful constituency in the country, and again, that is largely thanks to the local authorities. The green spaces, public spaces and parks and gardens are incredibly well maintained in a very cost-effective manner.
Our town centres were amazing before last year, particularly Windsor town centre, with its café culture, castle, massive hospitality sector and lots of tourist attractions. The commercial focus of the local authorities has been on developing commercial and retail properties, so that the council tax payer is subsidised by those commercial activities to a degree and people keep their jobs, which in the current circumstances means that they keep their homes. That is a wise approach. Parking has been improved immensely. We still have weekly bin collections. Quite often the only thing that people recognise as coming from local authorities is that their bins are collected, so it is really important to try to keep it that way. Despite the challenges with adult social care budgets, our care homes are some of the best run in the country and had the fastest response in the current climate.
Business rates are a challenge. It is good that a large proportion of the rates is retained locally, to keep down council tax, serve residents and ensure that businesses and the local authority can thrive. However, it is a challenge, particularly in the pandemic, because we do not know how much of the business rates or the commercial rents to the local authority will survive. It is important that we look at business rates, to ensure in particular that if retail is suffering on the high street, we redress the balance, potentially by increasing rates on the out-of-town warehouses of Amazon and other big online retailers. Otherwise, wonderful department stores such as Daniel of Windsor will go out of business, because people use them as a shop front to view products but then go and buy them online, enjoying the benefits of lower business rates out of town centres.
I want to flag three things with the Minister, the first of which is flooding. Sadly, the part of the lower Thames alleviation scheme that is in my constituency has not gone ahead because the local authority was not allowed to raise a flooding precept, which I think local people would have accepted because a number of houses and businesses would be protected. I ask the Minister to look at that.
The second is rewards for good behaviour. Why is it that Lib Dem and Labour local authorities that waste money on initiatives that never work out and rack up their council tax year on year get the reward of being able to increase their council tax more than careful and efficient Conservative authorities that keep council tax low because it is a percentage rate rise? I ask the Minister to have a quick look at whether there can be some mechanism for rewarding local authorities that have kept the council tax low for their residents but now find that they cannot increase it by a sufficient amount to even vaguely catch up with those reprobates in Labour local authorities across the country. With that, I would like to say thank you very much, Mr Deputy Speaker, and I thank the Government for such a good settlement.
Kate Hollern (Blackburn) (Lab) [V]
Like other Members, I pay tribute to the fantastic work carried out by Blackburn with Darwen Borough Council staff to enable communities to come through this dreadful time. I also thank the communities of Blackburn, which have pulled together to support those in vulnerable situations and those who are less well off than others.
There have been some excellent contributions to this debate. My hon. Friend the Member for Sheffield South East (Mr Betts) spoke about the unfairness of this proposal and the failure to recognise the £5 billion pressure on councils before covid, and we also heard that from my hon. Friends the Members for Salford and Eccles (Rebecca Long Bailey) and for Wirral West (Margaret Greenwood). My hon. Friend the Member for Kingston upon Hull North (Dame Diana Johnson) said that this is not levelling up communities. Like my hon. Friend the Member for Salford and Eccles, I see this as a levelling down. My hon. Friend the Member for Dulwich and West Norwood (Helen Hayes) said that this is a regressive tax that will not fix the problems of social care. That has been a constant theme throughout this debate.
The cat is out of the bag, and the Government’s plans have been exposed for what they really are. They are not giving councils additional funding to protect services; they are hiking council tax. I have serious concerns that, once again, they are mis-selling this to the public. The Conservatives are burdening the public with a £2 billion council tax bombshell, which would never had been needed if the Secretary of State had kept his promise to do whatever it takes. This council tax bombshell is central Government passing the burden over to local councils and, ultimately, to families across the country—the same people he described as heroes, hard-working and compassionate.
This rise is not only wrong; it is economically illiterate in the middle of a pandemic, and following the worst economic crisis of any major economy. The Secretary of State says that he always follows the professional advice. Well, you would struggle to find an economist who thinks that what he is doing is right, Mr Deputy Speaker. It is not the right time to hike taxes, but that is what he is proposing.
My hon. Friend the Member for Wirral West said that, going into this crisis, a quarter of UK households had less than £100 in the bank, 3.6 million people were trapped in insecure work, and in-work poverty was at record levels. For almost a year, many families have been on reduced incomes through self-isolation and furlough, many have been excluded from any support at all, and there have been sadly too many job losses.
The Conservatives have failed to invest properly in public services. They have let high streets go to the wall and have slashed the safety net that people depend on when times get tough. The Government are going to hit people with tax rises in the middle of the pandemic. People cannot afford to loosen their purse strings. The purses are empty for many. This is an additional financial burden on top of the Chancellor’s pay freezes and benefit cuts. It will blow a hole in people’s pockets and, ultimately, undermine the recovery as we come out of the crisis.
With that in mind, it is all the more disappointing that the Government have broken their promise to do whatever it takes to support councils, as evidenced by councils of all political persuasions. I gently suggest that the hon. Member for Burnley (Antony Higginbotham) check with his council how much it received and how much the cost was. It would also be useful for him to check how many people received no support at all—either support to self-isolate or business support. The Local Government Secretary has a good poker face to stand at that Dispatch Box and claim otherwise, because time after time the Chancellor has put the economy before public health, against the advice of the experts, and now he is coming back on economic support, when the evidence clearly shows it is still needed. As my hon. Friend the Member for Croydon North (Steve Reed) says, the Conservatives have had no trouble in handing £2 billion of public contracts to their friends and donors; they have wasted billions on outsourcing projects to their friends that have not delivered; and they have spent £22 billion on a test, trace and isolate system that is far from “world-beating”, leaving councils to pick up this function.
Covid might have closed our economy but, as a result of their incompetence and irresponsibility, the Conservatives have crashed it. The Prime Minister only today said that he bitterly regretted the burden this pandemic has put on families, so perhaps now he will listen to my hon. Friend the Member for Croydon North, who has made it crystal clear that the Government should scrap this council tax bombshell and stand by their pledge to do whatever it takes to support councils and ease the burden that the Prime Minister accepts has been placed on families.
The Minister for Regional Growth and Local Government (Luke Hall)
May I begin, like so many Members, by expressing my huge appreciation for the incredible work that councils across the country have been doing to lead the response to the pandemic? Social workers, refuse collectors, carers, teachers, council officers and so many more have been on the frontline of our response to covid-19, and they have been unwavering in their determination to deliver the essential services we all rely on every day. That is why this Government have backed councils with the funding and resources they need to support our communities, businesses and local economies in this local government finance settlement.
This settlement delivers a 4.6% cash-terms increase in core spending power next year, an increase in real terms, guaranteeing that no council in England will have less funding available than last year. That comes on top of the settlement for this current financial year, which was a 4.5% rise in core spending power. That in itself was the best settlement for a decade and it was supported by every Member of this House. Alongside this settlement, in recognition of the fact that the pandemic is not yet over, we are providing a further at least £3 billion in covid-19 funding next year to support councils’ income and expenditure. That takes the total support already committed to covid-19 income and expenditure pressures to more than £11 billion.
May I thank a number of my hon. Friends for their contributions today? My hon. Friends the Members for South East Cornwall (Mrs Murray) and for St Austell and Newquay (Steve Double) both highlighted the increase in resource going to Cornwall Council, with that 4.7% rise in core spending power in cash terms. My hon. Friend the Member for Burnley (Antony Higginbotham) welcomed the rise in core spending power. The hon. Member for Blackburn (Kate Hollern) questioned how much was going to Burnley; I can tell him that it is a 2.6% rise, alongside the 5.3% rise going to Lancashire County Council. My hon. Friend the Member for Darlington (Peter Gibson) welcomed the extra support and swift provision of funds for Darlington Borough Council, with a 4.8% rise in core spending allowing, as he described, the council to deliver for local residents. May I put on record my thanks to Darlington Borough Council for the excellent work it is doing to restore the council to its rightful place?
I was slightly confused by the contribution from the hon. Member for Salford and Eccles (Rebecca Long Bailey) when she said that there was no commitment in this settlement to increase funding in Salford. The opposite is true; in the current financial year there has been a 7.8% increase in core spending power; and the settlement we have published and are debating today sees an increase of 4.7% in core spending power for her council. I am afraid that she is incorrect in her statements.
A number of Members today raised covid support for their councils and talked about what they saw as the gap in funding between what councils spend and what we are providing them with. Councils’ self-reported figures project that covid cost pressures this year will be £6.9 billion. We have already allocated £8 billion to councils, which is over £1 billion more than they are spending in responding to the pandemic. On top of that, we have provided a business rates holiday worth around £10 billion to local retail, hospitality and leisure industries. We have given councils over £17 billion to provide grants to thousands of businesses up and down our country, and they have done an incredible job in distributing those efficiently and speedily to ensure that businesses are getting the support they need. We have also introduced a sales, fees and charges scheme to help councils manage losses in income. We are backing local government all the way with the necessary funding, both now and into the future.
One of the recurring themes of the debate was the issue of social care, which was raised by the hon. Member for Wirral West (Margaret Greenwood), by the Chairman of the Housing, Communities and Local Government Committee, the hon. Member for Sheffield South East (Mr Betts), and by my hon. Friend the Member for Milton Keynes North (Ben Everitt). This settlement helps to support the most vulnerable people in our society, especially in social care. We are providing access to an additional £1 billion in funding for adult social care in the coming financial year, which includes £300 million in grant funding for both adult and children’s social care. We are also providing an additional adult social care tax flexibility of 3% to give councils the tools to make the best decisions for their residents, giving councils access to an extra £790 million. That is all on top of the £1 billion social care grant announced last year, which is being maintained in line with our manifesto commitment. We have responded to the pressures facing councils to ensure that they have the resources they need to provide the best quality care for residents across the country.
A number of Members raised the point about the varying ability to raise resources to pay for the increasing costs of social care, and it is a very valid point. It is indisputable. It is a fact that some local authorities can raise more than others, but I am afraid that those Members have completely missed a key component of this settlement, which is that we have chosen to help councils to bridge that gap through equalisation. We are taking specific action to level the playing field between different councils in different circumstances. Through this settlement, we will redistribute £390 million of social care grant, recognising this exact point that some councils can raise more than others through locally raised tax.
We make this commitment of £240 million this year, on top of the £150 million that is continuing from last year, so that funding is distributed fairly to those who need it most. Liverpool is receiving an extra £10.4 million, Manchester £9.2 million and Sheffield £6.9 million. We are determined to level up every part of the country using all the tools we have, and this is a clear, concrete example of us doing just that. The hon. Member for Kingston upon Hull North (Dame Diana Johnson) made this very point—she talked about the fact that it is more difficult to raise funds in Hull, but if she looks at the detail of the settlement, she will see that Hull is receiving £5.2 million through this equalisation mechanism to support its delivery of services and to ensure that people in her constituency receive access to first-class care.
A number of Members also raised points about council tax. Of course it is right that individual local authorities should make decisions on council tax levels themselves.
Adam Afriyie
Could I just ask the Minister to keep an open mind towards the idea of some local authorities being able to have another, higher council tax band—band I? This would be raised locally, which I hope local people would be comfortable with, rather than being reliant on central Government.
Luke Hall
I thank my hon. Friend for his question. I will come on to talk about funding reform in a minute and perhaps try to address that point.
Importantly, we are giving councils the flexibility to defer rises using the adult social care precept to next year if they think that local circumstances dictate that that should be the case. That is of course a decision for them. Vitally, as my hon. Friend the Member for Waveney (Peter Aldous) pointed out, we are providing councils with up to £670 million of new funding to help them to reduce council tax bills for those who are least able to pay.
The referendum threshold that we have set strikes the right balance between allowing councils to raise income to deliver the services they need and making sure that residents have the final say over any excessive council tax rises. We trust councils to make the right decisions on council tax. I am afraid the Labour party cannot even persuade its own councils of that—they are constantly writing to the Secretary of State and me to ask for the caps to be removed completely. The long-standing policy of the Labour group on the LGA is to see the caps scrapped altogether.
My hon. Friend the Member for North Norfolk (Duncan Baker) made the fair point, raised by councils with particularly seasonal economies during the consultation on the settlement, that they could have lost out because of the proposed structure of the sales, fees and charges scheme for the first quarter of next year, as it might not best account for the impacts of the pandemic on their income from April through to the end of June because usually they receive a large proportion of their annual income in that period, perhaps because of car parking and their having seasonal or coastal economies. We have listened to that point, and I thank my hon. Friend for raising it and the many councils that raised it during the consultation. We will allow them to use their seasonal profile so that they are able to claim a larger proportion of their losses in the April to June quarter of this coming financial year and are therefore better protected from the income losses because of covid-19. That is one of the many ways in which we are trying to support councils as we ensure that they have the resources they need to deliver first-class funding services.
A number of Members, including my hon. Friends the Members for Milton Keynes North, for Sedgefield (Paul Howell), for Waveney and for Windsor (Adam Afriyie), raised the possibility of future funding reform. I can confirm to them that we on the Government Benches still believe that we need an updated and fairer method of distributing funds among local government. This year, of course, we have had to concentrate on supporting councils through the pandemic—we did not think it was right to use this time to engage in detailed conversation about local government finance reform—but I absolutely reassure them that we are committed to the principles of reform and to making sure that we put money where it is needed most. Once we get through this pandemic, we will return to the priorities for financial reform. I am happy to have conversations with councils such as Windsor and others and to listen to their concerns if they have tried, historically, to do the right thing by keeping taxes low and want to understand their options for the future.
My hon. Friend the Member for Sedgefield talked about the fact that he wants to make sure that in any funding reform, rural funding is received in areas that have a large urban population centre but rural fringes. He is right to raise that issue and I am happy to discuss it with him.
Several colleagues raised rural services, and they are right that we have increased the rural services delivery grant this year from £81 million to £85 million, which its highest ever level. We absolutely recognise that there are cost pressures—whether that is the need to drive long distances for refuse collection or to service more hubs across a larger geographic area—on the delivery of services in rural communities.
My hon. Friend the Member for Isle of Wight (Bob Seely) raised the individual circumstances that his constituents face. I am delighted that we are finding a way forward to work with his local authority to ensure that it can help to build the evidence case on the relative challenges facing the Island because of its separation from the mainland, with a particular focus on the impact of the local government finance system.
We are backing local government all the way with the necessary funding, both now and into the future, with a 4.6% rise in core spending power, £3 billion to help councils fight and recover from covid-19 and flexibility for councils to raise revenue, while also giving people the final say on excessive council tax increases. From our future high streets fund to our towns fund, the troubled families programme and increased funding to tackle domestic abuse and support rough sleepers and get them off the streets, we are backing councils, which are at the forefront of our shared recovery. I hope Members from all parties recognise the critical importance of passing the settlement and giving local government the support and confidence they need to plan for the brighter days ahead. I commend the settlement to the House.
Question put and agreed to.
Resolved,
That the Local Government Finance Report (England) 2021-22 (HC 1200), which was laid before this House on 4 February, be approved.
Resolved,
That the Referendums relating to Council Tax Increases (Alternative Notional Amounts) (England) Report 2021-22 (HC 1201), which was laid before this House on 4 February, be approved.—(Michael Tomlinson.)
Resolved,
That the Referendums relating to Council Tax Increases (Principles) (England) Report 2021-22 (HC 1202), which was laid before this House on 4 February, be approved.—(Michael Tomlinson.)