Budget Resolutions and Economic Situation

Baroness Keeley Excerpts

Monday 21st March 2016 Commons Chamber

[Greg Clark]

As the right hon. Gentleman knows, provision was made in the local government financial settlement and the spending review to allocate up to £3.5 billion for adult social care by the end of the Parliament. The directors of social services and the Local Government Association actually asked for £2.9 billion, so our provision went beyond that. We also need to bring together the treatment of our elderly members of society so that councils and the NHS can, between them, look after those people well. After all, those requiring health care and social care are often the very same people. I know that, as a former Minister in the Department of Health, the right hon. Gentleman will favour that. Part of the devolution deals that we are pursuing will do that. We are seeing it happening in Manchester, and I hope that he will follow that with interest.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

Will the Minister give way?

[Greg Clark]

I am going to make some progress, as I have said.

This Budget announces a number of new devolution deals establishing combined authorities for the West of England, Greater Lincolnshire and East Anglia, and there are more to come soon. Far from erasing local diversity, the deals make the most of it—for example, by bringing together shire, unitary and district authorities to work together for the common interests of their area. The Budget announces further transfers of power to the Liverpool city region and to Greater Manchester. This shows that establishing a combined authority, with the accountability of a directly elected Mayor, is just the beginning: a democratic basis for the ongoing devolution of power.

Growth deals are another front for the advance of localism. Through the business-led local enterprise partnerships, we are devolving control over the £12 billion local growth fund. The Budget explains how we will allocate the latest tranches of the fund. It will be done on a truly competitive basis to encourage ambition, innovation and the productive use of taxpayers’ money. I am also delighted to see the announcement of new city deals in Wales and Scotland. Specifically, the conclusion of a deal with the Cardiff capital region and the opening of negotiations with Edinburgh and south-east Scotland are important steps forward.

From north to south and from east to west, devolution is transforming our nation. In 2010, the UK was one of the most centralised countries in the free world. There were no combined authorities, and only one big city mayor. Nearly 80% of local government expenditure was centrally controlled. By 2020, there will be combined authorities across the country, and at least eight big city mayors. Local authorities will keep 100% of the income that they collect. This Budget describes and accelerates a process of profound change involving the revival and rebalancing of our economy, the rebuilding of our national infrastructure and the redistribution of power from the few to the many. I commend it to the House.

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[Jon Trickett]

The hon. Gentleman will not get away with that. The truth is that this Chancellor has been in charge of the nation’s finances for six years and he now wants to wash his hands of the mess he is making of the economy.

I was talking about an ethical hole at the Government’s core. We still remember Conservative Members cheering last Wednesday. They thought it was okay to rob the benefits of the most vulnerable for the purpose of cutting taxes for the better-off. It is not only the cuts to the welfare budget that illustrate the Government’s willingness to attack the poor; it is also the cuts to local government. Furthermore, the way in which the cuts are being distributed across local government equally illustrates the ethical hole that I have described. Those councils that face the greatest social needs are now suffering the greatest grant reductions.

[Barbara Keeley]

The Secretary of State would not give way to answer questions on social care, and that is unfair because it is a key responsibility. He keeps trotting out the usual figure of £3.5 billion, but that is a false premise because the Local Government Association wanted £700 million to cover the two years that will not be covered by the better care fund. My local authority can bring in £1.6 million from the 2% social care precept but it is going to cost £2.7 million to pay for the national living wage in the care sector. That is the sort of gap that we are faced with.

[Jon Trickett]

My hon. Friend is right. I shall come to that point shortly.

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[Barbara Keeley]

Does the hon. Gentleman agree with the Chancellor, who, as part of devolution, has forced an elected mayor on Greater Manchester? Does he think we should have devolution without forcing elected mayors on areas that do not want them and never voted for them?

[Sir Henry Bellingham]

This discussion is going to have to continue, because the most important thing is to have the support of the local authority.

I am worried about empire building. The new mayor is not going to operate out of a garden shed, although if one of us is elected in East Anglia perhaps we will do so. He or she is going to want to build a large empire and have a large number of staff, including directors of this and that division and department. Before too long, there will be a lot of pressure to have an elected assembly, and the heads of highways, infrastructure and housing will then become elected. Before we know where we are, we could well have an elected assembly.

I am glad that the Secretary of State has shown the courtesy to stay for my speech, because he has obviously been here a long time. People in Birmingham, Manchester, Newcastle and London feel an affinity with and an attachment to their city, so they are more likely to support the idea of having a mayor. I feel absolutely no affinity whatsoever with East Anglia, but I do feel an affinity with Norfolk. Does East Anglia include the three counties of Norfolk, Suffolk and Cambridgeshire that will be in the combined authority? Does it include Essex as well? No, it does not. What about Bedfordshire and Lincolnshire, just north of my county boundary?

I think that a mayoral election would face the problem of a pitiful turnout of perhaps 12% or 15%, so there would be no mandate. I am also worried that the institutions of Norfolk county could be undermined: this could be the death knell of Norfolk County Council, Suffolk County Council and Cambridgeshire County Council.

I also think this could lead to conflict with MPs. If I open a factory or campaign on a big issue and the elected mayor comes along and says, “Hang on, I also have a mandate of all of 12%,” and starts ordering us around, that is not good for the constitutional relationship between MPs and their voters. I am bruised by my experience of campaigning against the incinerator proposed by Norfolk County Council, when the local enterprise partnership suddenly waded in behind the county council.

I ask my right hon. Friend: can we have devolution, but can we also look very carefully at the idea of an elected mayor? Let us have devolution first, perhaps with a Minister for East Anglia. Perhaps that could be his colleague, the Minister for Housing and Planning, my hon. Friend the Member for Great Yarmouth (Brandon Lewis). Let us then move very cautiously before we turn to the election of a mayor. If I do not have an assurance from my right hon. Friend, it will wreck what is an absolutely outstanding Budget.

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[Mr Clive Betts (Sheffield South East) (Lab)]

I want to get beyond the Budget headlines, which often lead to cheers from the Government Benches, and instead consider some of the details and try to get some answers.

I want to return to the point I raised in Communities and Local Government questions earlier, in an intervention on the Secretary of State and then in a point of order, because I still have not had an answer. The Government have said that local authorities will be compensated for the change to small business rates relief, which amounts to £1.7 billion in the next financial year—2017-18—and to similar amounts in years after. He said it was mentioned on page 84, line 15, of the Red Book, but that refers to the cost to the Government of the small business rates relief changes; it does not show how local authorities will be compensated for that loss by a section 31 grant. Will someone please show me where in the Red Book the section 31 grant is described as compensating local authorities?

[Barbara Keeley]

Does my hon. Friend agree that this is a very pressing issue? In Greater Manchester, the business rates retention scheme could be put in place as early as 2017. Will the Government even have finished the consultation by then? Where are we? We need to know where we are.

[Mr Betts]

Local authorities are entitled to absolute certainty. We can welcome the help for small businesses but not at the cost of local authorities and their services. If the Minister cannot explain this today, I hope that the Secretary of State, to whom I have written, can at least give us a written answer that can be made available to everyone else through the Library.

The Secretary of State went on to say that after 2020, because no grant will be available, compensation will be provided by a reduction in devolved powers to local councils, so that they will not have as many things to spend their money on—money they now will not get through business rates relief. It is a bit disappointing that the Government’s way out is to reduce devolution. That does not seem to be consistent with their claim to be devolving more powers all the time.

More worryingly, on the change between the retail prices index and the consumer prices index, which comes into force in 2020, how on earth will the Government find a mechanism by which to compensate authorities for that change, given that it will vary year on year? How will they do it, when the only way to provide compensation will be by changing the devolved powers available to local authorities, which cannot be done on a yearly basis? Will the Minister please provide the mechanism and explain it to us?

There will be a fundamental problem here after 2020. If any future Government were to introduce the sorts of changes this Government have made to business rates, where would it leave local authorities? Their income would simply be cut, and there would be no means by which to compensate them because there would be no revenue support grant in existence. Local authorities’ devolved powers cannot be changed on a year-to-year basis. This does not just throw up the need in future to devolve receipt of business rates to local authorities; we also need seriously to consider devolving the right to set business rates and business rates assistance. If that is not done, this will be sham devolution, and it will raise the great risk of future Governments on a whim being able to change the system on which local authorities will rely for a good percentage of their income. This problem has to be thought through.

I turn now to the four-year settlement that the Secretary of State rightly offered to local councils for the rest of the Parliament. Where is that left by the £3.5 billion of efficiency savings the Chancellor announced in his Budget and the £4.4 billion of extra savings that presumably have to be found now that the PIP cuts are not being carried through? In total, it would seem to amount to an extra £7.9 billion that he will have to find. Can we have a categorical assurance from Ministers that this will not affect the four-year settlement offered to local councils? I hope that it will not once again be a case of giving local authorities certainty for the Parliament, only to come back within a few months and ask for more cuts, which would put them in an impossible position.

Moreover, are we going to see further cuts to the public health grant, which the Government have not preserved? In the last Parliament, the public health grant was initially—up to 2013—part of the health budget and ring-fenced accordingly, but it is now part of the local government budget, and already this financial year it has seen a one-off cut of £200 million. It is estimated that there will be £600 million more in real-terms cuts by 2020. Will the grant face any further cuts as a result of the Chancellor’s need to fill the £7.9 billion black hole?

Finally, the Government have announced £115 million of help to tackle rough sleeping. It is a blot on our society and it is right that extra help is being given to deal with it, but to tackle homelessness properly—apart from the prevention at one end—we need more social housing to offer to homeless people. What do the Government have to say about the Chartered Institute of Housing’s report stating that there will be 300,000 fewer social rented homes by the end of the Parliament than there were at the beginning? What about the evidence that St Mungo’s gave to the inquiry by the Communities and Local Government Committee the other day stating that, unless the Government changed the link to the local housing allowance, all its help and provision for homeless people will have been closed by the end of the Parliament? That is a situation that no one can tolerate.

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[Jo Cox (Batley and Spen) (Lab)]

As is now abundantly clear, the Budget was developed with short-term politics in mind rather than compassionate, long-term economics. On one level, we have to admire the sheer audacity of the Chancellor: the audacity of someone who genuinely thought that he could get away with rewarding Tory donors in the City with a cut in corporation tax while attempting to cut benefits for disabled people, get away with cuts affecting those who were least likely to vote Conservative while sticking to his mantra that “we are all in this together”, or get away with preaching about the northern powerhouse just as the Department for Business, Innovation and Skills closes its Sheffield office and moves all 200 jobs to London. Today, all that he has got away with is shirking his duty to come to the House and account for his failure and the black hole in his Budget, and his reputation is now in tatters.

There was never any compassion in trying to cut the benefits of 370,000 of the most vulnerable disabled people in our society by £3,500 a year. As we know, this Government have always hit disabled people hard, through the bedroom tax and cuts in employment and support allowance, but I would have had much more sympathy with today’s U-turn had it been based on the warnings from charities such as Sense, which called last Wednesday’s Budget a

“bleak day for disabled people”.

A constituent of mine is disabled, and determined to carry on working. The personal independence payment helps him to do that. When he gets home, his joints are so stiff that his wife has to help him go to the toilet and have a bath, yet he is determined to go on working. He wants to keep working because he wants to keep his dignity; the Chancellor wanted to take it away. The Chancellor has performed a U-turn, not to help my constituent and help him to keep his dignity, but in an attempt to keep his own dignity. All that we need to know now is who he will pick on next in order to fill the £4.4 billion hole in his Budget. We can be sure of one thing: even after today, the most vulnerable in our society will continue to pay for the Government’s failures.

Let us take the announcement of business rates relief. On the face of it, the announcement was good news for small businesses in my constituency, but our local councils could find themselves cutting more services for those in need in order to make up the shortfall in their budgets. In my local area, we are proud to have more small and medium-sized businesses in the economy. In Kirklees, small business relief accounts for 11% of net rates income, as opposed to 4% in England as a whole. When 100% retention is introduced and the promised compensation for the loss of income ends, the council will be stuck once again, trying the balance the books to pay for a short-term victory for the Chancellor. As my hon. Friend the Member for Sheffield South East (Mr Betts) explained so clearly, despite the vague assurance that we heard today that councils would be compensated, the Red Book includes no explanation of where the money will come from and how long it will last.

The Chancellor was no less audacious in telling us great things about the northern powerhouse. If only we could believe him. Electrification of the trans-Pennine rail route would be a crucial development, but the project has been announced, cancelled, re-announced, delayed, and then re-announced once more, and we still have no clear commitment from the Chancellor as to when it will happen. There is nothing clever about announcing big investments and then running for cover when it comes to their implementation.

Indeed, work has only just started on 9% of the projects in the Chancellor’s infrastructure pipeline. A lack of infrastructure investment fuels poor productivity. Like so many of the Chancellor’s audacious predictions, productivity forecasts—as we now know—have been revised down for the next five years, and, once again, it is the north that suffers as low productivity strangles economic growth, holds back wages, and delays the much-promised recovery. The output of the Leeds city region is now 12% behind the national average.

I am afraid that I can feel no compassion for this Chancellor. He wanted the poorest fifth in our country to lose an average of £550 a year, while the richest fifth gained £250.

[Barbara Keeley]

My hon. Friend is making a great speech, but could she touch on the subject of the Women Against State Pension Inequality Campaign? Women up and down the country must have been very disappointed that the Budget contained no move towards them. Those women, born in the 1950s, are really suffering.

[Jo Cox]

I could not agree more. There was also nothing for long-term social care, nothing for the NHS and nothing for the next generation, despite the Chancellor’s rhetoric.

In fact, the Chancellor was playing politics with some of the neediest people in our society. Those who put politics before economics take a risk. The Chancellor had obviously started to believe some of his own press; I wonder whether he still believes it tonight. He got the economics very wrong, but he also got the politics wrong. He should now come back to the House with a package that addresses the real long-term needs of the country, not his own short-term aspirations. He should stop playing politics, and start planning for an economy that works for the benefit of all, not just his wealthy mates. If he cannot do that, he should have the courage to say so and take the consequences, rather than asking others to pay for his failures.

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[Mr Reed]

I am grateful to my hon. Friend for that intervention. The fact is that the north will succeed despite this Government, not because of them, but we could have a whip-round to buy the Chancellor a map to explain to him where the north actually begins and ends.

My local health economy is currently engaged in the success regime process, which is already being undermined by Ministers in the Department of Health. A necessary body of work—working out how we adapt the Cumbrian health economy to best meet the needs of such a challenging geography and a dispersed population with specific needs—is becoming fatally compromised by the refusal of Ministers to listen to those who have been tasked with undertaking the success regime. To secure the outcomes and achieve the improvements that the clinicians and other experts within this process want, the system requires more resource. This is simple and obvious, and the request is being made, but the response from the Government so far has been a resounding no. Without additional resources, the success regime will fail, yet this Budget offers no help for our effort to recruit more health professionals; to finish the redevelopment of West Cumberland hospital; and to finally achieve the ambitions of everyone in Millom for our local hospital services or of the public and patients concerned about future services at Keswick, Maryport, Cockermouth and Workington hospitals.

[Barbara Keeley]

Is my hon. Friend as concerned as I am that two more cuts to the NHS will hit and cause extra pressures? There will be £650 million of pressure from the pension contributions that have to be paid for NHS staff and a £1.1 billion cut in the maintenance and repairs bill for the NHS. All of that will have to be found.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. A great many people wish to speak in this debate. Every time there is an intervention—and these have been too long—another minute goes by and somebody else drops off the end of the list. Just so long as hon. Members know that when they make interventions, the time available for the debate does not increase but merely prevents their colleagues from speaking. I am not saying for a moment that the hon. Member for Worsley and Eccles South (Barbara Keeley) has done anything wrong. She is perfectly entitled to intervene, but I merely point out the consequences.