Local Government Finance

Debate between Catherine McKinnell and Brandon Lewis

Wednesday 18th December 2013 Commons Chamber

[Brandon Lewis]

My hon. Friend makes a good point. This Conservative coalition Government have done what they can to ensure that a council tax freeze is available to every resident in the country, and we are proud of that. Any authority that is looking to put up its council tax and to penalise local residents by charging them more should have the courage to hold a referendum and let the public decide.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

The Minister knows that quoting spending power levels completely ignores the different challenges that areas such as Newcastle and Liverpool are facing. On the new homes bonus, will he explain the fairness of the north-east contributing £42.3 million to the pot while receiving only £29.3 million in return?

[Brandon Lewis]

Actually, the spending power formula goes in completely the opposite direction, in that it represents exactly what affects residents. Calculating spending power per dwelling takes account of the entire pot of money in a local authority area. The hon. Lady is quite right to say that Newcastle has a spending power of almost £2,500 a head compared with other areas that have closer to £1,500. The formula does reflect need. With the new homes bonus, the more houses people build, the more money they will get.

Local Government Finance (England)

Debate between Catherine McKinnell and Brandon Lewis

Wednesday 13th February 2013 Commons Chamber

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I am grateful for the opportunity to speak, and for the additional time to present a deeply concerning issue for the people of Newcastle upon Tyne.

The coalition Government talk about localism and devolving power, but they are clearly trying—and they are fooling no one—to shift the blame, claiming to give power and responsibility to councils while savagely and disproportionately slashing their budgets and ability to do what they do best. That is exemplified by changes to council tax benefit, which devolve responsibility for administering the benefit while cutting funding by 10%, which is effectively 11% in Newcastle, forcing local authorities into the invidious position of having to pass that cut on to local people who are struggling with the rising cost of living. It is also exemplified by the bedroom tax that is coming, as councils will be forced to absorb that into their budget or pass it on to people who are struggling, having been hit by the Government’s economic mismanagement.

I want to focus on the disproportionate cuts imposed on local authorities such as my own, Newcastle city council. My right hon. Friend the shadow Secretary of State referred to the comparison between his local authority, Leeds, and Wokingham, but we are all familiar with the comparison often made between Newcastle upon Tyne and Wokingham. Over the period of the 2010 spending review, the Department will see a 33% cut in real terms in funding. True to form, Conservative and Lib Dem Ministers have passed those cuts on to the most deprived and vulnerable areas in the country. Those who can least afford it are shouldering the greatest reductions in funding.

As hon. Members may be aware, I have raised this with the Minister both in an Adjournment debate and yesterday in Deputy Prime Minister’s questions, because my local authority, Newcastle city council, is in a dire financial position as a result of a combination of ever increasing cost pressures and hugely disproportionate reductions in funding from the coalition Government, which has created a budgetary black hole. The city treasurer has revealed that the funding gap in Newcastle by the end of 2014-15 will not be £90 million, as originally thought. Following further announcements by the Secretary of State at the end of last year, that will increase by an additional £10 million, so the black hole will now be as large as £100 million over the next three years. Around half of this is a direct reduction in central Government grant funding, with the rest being unavoidable cost pressures that the council must absorb. Based on the Department’s own figures, the cut in Newcastle’s spending power between 2012-13 and 2014-15 will be £218 per person, compared with a national average cut of £134 per person. At the same time, as my right hon. Friend the shadow Secretary of State set out, the Prime Minister’s own local authority is getting an increase in spending power of 3.1% in its local government finance settlement for 2013-14. The claim that we are all in this together would be laughable were it not such an insult to the reality that people are facing.

The most deprived areas where the needs are higher are once again being punished by this Government, willingly assisted by Liberal Democrat colleagues. Newcastle city council has produced research that reveals that the 50 worst affected councils will receive a reduction of £160 per head on average, with the 50 councils least affected receiving a cut of £16 per head. Yet the 50 most affected have, on average, a third of children living in poverty, whereas the 50 least affected have child poverty rates of 10%. It is truly shameful.

The excellent heat maps produced by Newcastle city council clearly and easily illustrate where the Government are aiming their cuts: at the most deprived northern areas and inner London boroughs. Put simply, the areas that are being hit hardest are the areas that are most in need and require the most support—the areas where more children are taken into care, the areas where fewer adults are able to fund their own social care, the areas with higher levels of statutory concessionary travel, areas with more specialist housing need and higher levels of homelessness.

When we raise the situation currently faced by Newcastle and many cities like it, Ministers are fond of touting the tired comparison between my city and the town of Wokingham. Let me continue in that vein. By 2015 Newcastle will receive funding cuts of £218 per head. In the same period Wokingham will receive cuts of just £27 per head.

[Brandon Lewis]

Will the hon. Lady give way?

[Catherine McKinnell]

I will gladly give way if the Minister can explain how that is fair.

[Brandon Lewis]

Will the hon. Lady acknowledge that her authority will have a spending power cut of just 1.1%? That is below the national average.

[Catherine McKinnell]

The Minister is well aware that he is talking at cross purposes with what I am setting out, which is the impact over the next three years, not in the next financial year. I hesitate in case it is out of order to say that it is very disingenuous for the Government to present these figures in a way that does not match up—

Newcastle upon Tyne City Council

Debate between Catherine McKinnell and Brandon Lewis

Tuesday 8th January 2013 Commons Chamber

[Brandon Lewis]

I have already met a number of councils that have made that case about rural areas. The detrimental impact of damping on some of those areas has been made clear to us in the consultation so far and we are very aware of the issue. My hon. Friend makes a strong point with great passion.

A small number of authorities will require larger savings to be made, but our proposals indicate that no council will face a loss of more than 8.8% in its spending power thanks to a new efficiency support grant. I will declare an interest and return in a moment to the figures mentioned by the hon. Lady because authorities such as mine in Great Yarmouth are suffering thanks to the problems inherited from the previous Labour Government’s funding structure. As the name implies, councils must improve services to qualify for the efficiency support grant. It is unfair to expect, as currently happens, the rest of local government to subsidise other councils’ failure to embrace modernity or move forward to a more efficient delivery of services. The settlement is not about what councils can take but about helping them take the most from what they can make.

Predictably, the doom mongers have been consulting their Mayan calendars and issuing dire warnings about the end of the world as we know it and a billion pound black hole in local budgets. Concerns that the poorest councils or those in the north will suffer disproportionately are well wide of the mark, as made clear in the report by the House of Commons that I cited a moment ago. In fact, the spending power for places in the north compares well—in fact, favourably—with those in the south.

[Catherine McKinnell]

As I said, it is concerning that the Minister and the Secretary of State are referring to just the first year of the budget settlement, rather than the full spending period. The way that core urban city Labour council areas compare with other places—I gave the example of Surrey and Wokingham—is quite significant over the full spending period.

[Brandon Lewis]

I think that Members from Surrey would make the opposite argument in terms of the effect that damping has on their areas, but if the hon. Lady will bear with me, I will move on and try to answer some of the points raised. I have no doubt that some of these issues will be raised in a meeting with Newcastle councils on Thursday. She predicted, quite rightly, that I would mention some of the numbers involved, and I do not want to disappoint her.

As the hon. Lady will know, Newcastle has expected spending power per household of £2,522. She is right that that is almost £700 more than we proposed for Wokingham, but let us not single out Wokingham. I could reel off a list of councils that would love £2,500 spending power per household. My council in Great Yarmouth, which has two of the most deprived wards in the country, is on about £500 less per household. Such deprived areas get far less than areas such as Newcastle, so it is not right to pick out Wokingham.

I could run off a list of councils, but Madam Deputy Speaker would not thank me for listing the majority of councils, which get far less than Newcastle. The figure quoted at the moment compares well with Newcastle’s per household figure for last year, but as the hon. Lady has said, we are still in the consultation process. We expect that Newcastle could do better than the national average next year in terms of overall spending power, and for Liverpool, its co-signatory, to be at the average.

We have maintained the system of damping, which I have mentioned. Some authorities have concerns with damping, but the Government have set a floor below which council funding will not fall.

In the autumn statement, the Chancellor recognised that the sector has risen to the challenge thus far. That is why, unlike most of central Government, local government was exempted from the further 1% top slice next year, which is worth approximately £240 million to councils. However, towards 2014 and beyond, local government needs to continue to find better, more efficient ways of doing things. We need to remember that the money is not created by a central Government money tree; it is hard-earned taxpayers’ money that—

Local Government Spending (Floods)

Debate between Catherine McKinnell and Brandon Lewis

Tuesday 20th November 2012 Westminster Hall

[Brandon Lewis]

I was not eulogising the Government, but making the point that we are spending £470 million a year which, considering the economic mess that we inherited from the previous Labour Administration, is something that we should all know about.

Let me turn now to the role of local authorities. As ever, local authorities have been on the front line of the response to the flooding this summer. Of course, once flooding has subsided, recovery begins. Local authorities support such work from their reserves, which are there to help to meet the costs of emergencies, such as flooding. Of course, Bellwin is also in place.

I am sure that local authorities will look sympathetically at requests for hardship relief from business rates for businesses affected by the flooding. They were urged to do that quickly in the immediate aftermath of the event. If they grant such relief, Government will fund 75% of the cost.

[Catherine McKinnell]

The Minister spoke very quickly, so will he go back a sentence and repeat what he said? On what requests will the Government look sympathetically?

[Brandon Lewis]

I said that I was sure that local authorities will look sympathetically at requests for hardship relief from business rates for businesses affected by flooding. They were urged to do that immediately after the event. If they grant such relief, Government will fund 75% of the cost.

Aside from hardship relief, I am sure that local authorities will have taken advantage of the changes introduced by the Local Government Finance Bill to fund discounts for ratepayers as they see fit. Flooding would seem to be one of the circumstances for which the new power was designed.

Let me deal with transport. My ministerial colleagues at the Department for Transport recognise that many parts of the country have seen high levels of rainfall and significant local flooding incidents, which have impacted on residents, businesses and transport infrastructure. Like me, they pay tribute to the excellent multi-agency response and the ongoing work by local highway authorities to help those who have been affected.

However, local authorities have responsibility for the local roads in their areas and are best placed to determine their own priorities for funding, which include putting in place reasonable resilience measures and contingencies to deal with any incidents, such as flooding, that may occur from time to time.

The Department for Transport is providing more than £91.7 million to North Yorkshire for highways maintenance funding over the spending review period. For this financial year, we are providing more than £24 million. The Department allocated North Yorkshire a further £6.6 million in March 2011 for damage to its highways network caused by the severe winter of 2010.

Despite the current economic situation that we inherited, the Government will continue to provide £3 billion to councils for road maintenance over the next four years to 2015. The Department for Transport also provided a further £200 million in March last year as an exceptional payment to help with much-needed road repairs following the severe weather at the end of 2010.

My hon. Friend the Member for Thirsk and Malton commented on the Emergency Planning College. The college is a Cabinet Office-sponsored facility. Given my responsibility for the Fire Service College, I warmly welcome it and look forward to paying a visit in due course. A great deal of work on interoperability is going on across Government at the moment, to which both colleges are contributing. The joint emergency services interoperability programme aims to deliver significant benefits in future emergency responses. My hon. Friend makes a good point. Over the past few weeks, I, too, have been talking about the facilities at the Fire Service College. The more that we can get our emergency services working and training together in such environments, the better it will be for everybody on the ground.

On the planning case in Filey, I hope that my hon. Friend will appreciate that I cannot comment on individual cases. None the less, the Government have ensured, through the national planning policy framework, that new homes and other buildings will not be built in areas of high flood risk.

As for the comments made by the hon. Member for West Lancashire (Rosie Cooper), the climate change risk assessment identifies increased risk of flooding for the years ahead and informs flood defence investment. We cannot prevent all flooding, so the need to plan well locally is important. The hon. Lady’s constituents who may feel abandoned need to make their councillors aware of their feelings and to demand improvements.

Finance Bill

Debate between Catherine McKinnell and Brandon Lewis

Tuesday 3rd July 2012 Commons Chamber

[Diana Johnson]

rose—

[Brandon Lewis (Great Yarmouth) (Con)]

rose—

[Catherine McKinnell]

I give way to my hon. Friend the Member for Kingston upon Hull North (Diana Johnson), who wanted to intervene earlier.

[Catherine McKinnell]

I thank my hon. Friend for that rational and considered intervention and appreciate that the industry is willing to accept the change, as it is much easier to bear than the original suggestion of 20%, but that is the point I seek to make. The Minister in his opening remarks confirmed that no assessment has been made of the impact of the 5% increase on the industry, and that is gravely concerning, because, as the hon. Member for Brigg and Goole (Andrew Percy) suggested, the industry needs certainty, security and stability to create the jobs that my hon. Friend is so concerned about.

The fact that the proposal is being put in place without a proper assessment of what is a lesser impact but still one of 5% is deeply concerning, because the last thing the industry needs is for the measure to be reviewed 12 months down the line, be seen to have had a detrimental impact, and for it to have to go through the whole process all over again.

[Brandon Lewis]

I thank the hon. Lady for her generosity in giving way. In Great Yarmouth, I represent a £500-million-a-year tourism industry, with about 50% of our bed space in static caravans. Our industry was concerned, but its message to me is that it thinks the 5% rate is not only fair, but better than it had hoped for.

The industry understands the arguments that everyone has to do their bit and that there has been an anomaly for a long time, and feels that the measure is manageable, will not have an impact on its business and is fair. We are very pleased, in fact, that we finally have a Government who say that they will consult and listen, do so and come back with exactly what the industry wants.

[Catherine McKinnell]

The only point I can make is that the industry suffered the serious blow of having a 20% tax announced. That has been reduced to 5%, which it will obviously welcome, but we propose to remove the VAT changes altogether, because at this particular time the last thing that any industry needs, but particularly the holiday, static caravan and manufacturing industries, is a VAT hike. We need to invest in jobs and growth to get the economy moving, to get out of the double-dip recession that we are in and to get back into growth.