Local Government Finance (England)

Lord Beamish Excerpts

Monday 24th February 2020 Commons Chamber

[Robert Jenrick]

If the hon. Lady is concerned about funding for local public services, she will join me and my colleagues in supporting the best local government settlement we have seen for a decade. She says that council tax is regressive, so what happened under the last Labour Government, when council tax doubled? Under this Government council tax has fallen by 6% in real terms, while we have continued to deliver important public services.

I was determined to champion local government in September’s spending review. I want to thank those who responded so constructively to the two consultations we ran at the end of last year. We can be proud of what we have achieved, and particularly of how the settlement delivers for the most vulnerable in society. It secures £1 billion of new Government funding for social care, alongside the extra £410 million that we invested last year. That is a major new injection of funding that will help local authorities to meet the undoubted rising pressures on the care system, which we all see in our communities and in our own lives.

We will also be maintaining all funding going into the improved better care fund, at the same time as the NHS contribution to the better care fund rises by 3.4% above inflation to over £4 billion, in line with the broader NHS settlement. Alongside this, I am allowing local authorities responsible for adult social care to raise council tax by an additional 2% above the core referendum principle. That is a necessary step that is specifically targeted to meet demand and ensure that vulnerable people are supported.

[Mr Kevan Jones (North Durham) (Lab)]

Councils such as Durham County Council are being disadvantaged, because even if they increase their council tax by 2% to cover that element, it will raise far less than could be raised by some councils in the south, which have larger council tax bases. The demands on Durham County Council are far greater than those on councils in Surrey, for example, because we have fewer self-funders, so how can that be fair?

[Robert Jenrick]

I will turn now to the specifics for the right hon. Gentleman’s constituency. This settlement will see a 7.1% increase in core spending power, and the additional social care grant for next year will be £12.8 million, which is a very significant increase. For the reasons he has just set out, we decided to apply an equalisation to the social care precept, which will ensure that those areas of the country with the lowest tax base will see more funding flow to them, in a redistribution of funding from those areas elsewhere in the country that, as he rightly says, have higher tax bases. We chose to do that at £150 million, which is more than has been done in previous settlements, precisely to answer the point he makes.

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[Andrew Gwynne (Denton and Reddish) (Lab)]

First, I want to thank our dedicated council staff, officers and our local councillors of all political persuasions and none, who over the past decade have had to contend with year-on-year budget cuts and a Government who have failed to take any meaningful action on the largest issues they face—the crises in children’s services and in adult social care. Yet our councils have ploughed on, and they have continued to innovate. They continue to provide good services for many of our local communities, because councils are the linchpin of our communities. They ensure the delivery of proper, cohesive, joined-up services with other agencies—whether housing associations, the police, leisure services or youth services—but it is crucial that our councils and our councillors are given the resources that they need, and that we do not cost-shunt from one area of the public sector to another.

As the Secretary of State will know, the finance settlement is one of the most important events in the local government calendar, so it was disappointing that the settlement this year was subject to delay and a degree of uncertainty because of the general election. It was also disappointing that the Secretary of State did not deliver the provisional settlement by way of the usual oral statement before Christmas, especially considering the cancellation of Housing, Communities and Local Government questions for almost six months.

It is at least pleasing to see the Secretary of State in his place today, after he survived the reshuffle before the recess we have just returned from. Reshuffles can be a tough business—a sigh of relief from the two survivors on the Front Bench facing me, but brutal for those who are moved or dropped. Who knows what will happen after 4 April on this side of the House, so in the spirit of solidarity, I want to pay tribute to the right hon. Member for Tatton (Esther McVey), the former Housing Minister, for all that she did in pushing for greater investment in social housing, in particular. I would also like to thank the right hon. Member for Rossendale and Darwen (Jake Berry), the former Northern Powerhouse Minister. We certainly had a fair few run-ins over the years, but I never doubted his commitment to the job of representing a rejuvenated north of England in Government, and I would like to thank him for his work. I sincerely welcome the new team on the Government Front Bench, as I did earlier today before Housing, Communities and Local Government questions.

I am happy to recognise a local government finance settlement today that at last begins to move in the right direction and provides an overall uplift in spending power. This is an uplift, though, with some big provisos and assumptions. It must be considered in the overall context. Councils are at a low base after 10 years of reductions and cuts, and local authorities still face very significant pressures that this settlement does not address nearly enough.

Today the Secretary of State has offered what the Local Government Association has referred to as the “least worst” financial settlement since 2010. To be honest, after a decade of disappointment, it is easily done. In the past decade, funding for local government has fallen by 43%; since 2015 alone, it has fallen by 32%; and if we look at the Government’s preferred measurement, and include today’s settlement in full, we see that overall spending power is still 11% lower than it was in 2010. That is 11% less funding for our local public services, while residents continue to pay more every year for council tax and services are being cut. [Interruption.] The Secretary of State says it is a reduction; if council tax goes up every year, it is not a reduction for those people. Let me just say to him that the average band D council tax in England in 2010 was £1,439, in 2015 it was £1,484, in 2019-20 it was £1,750, and it is going up again this year too; those are increases in council tax however he tries to spin it.

We know that the cuts have not fallen equally across England. Labour-run authorities have seen their spending power fall on average by 14%, almost twice on average as much as the cuts forced on Tory-run authorities. I do not say that this is all political; it is a fact of geography, because areas like these are also often some of the more deprived areas that have the greatest needs in adult social care and children’s services, that have the greatest health inequalities, and that are more grant-dependent to fund services, because the property types in those areas mean that their council tax base is low, and that cannot be changed quickly or easily. But the difference between the figures for funding and spending power is also revealing, because it shows how much the Government have pushed the burden for funding local services away from the centre and on to local taxpayers.

In an ideal world of localism that is not a bad thing, but the playing field is not level and nor is the game currently fair. We are now in the bizarre situation where people are paying more for less, and that is unsustainable for the long-term viability of the local government sector, something I cherish, having been a councillor for 12 years before entering this House.

In order to achieve the Community Secretary’s stated 4.4% increase in spending power, residents will once again be forced to bear the burden of inflation-busting council tax increases. The Government’s plans are entirely predicated on this increase happening in every town and county hall—and that in itself is not a certainty—and so the “best settlement in a decade” boast from the Secretary of State depends on this happening, or the 4.4% that he quotes will not be reached.

[Mr Kevan Jones]

Not only do we have a system that has been deliberately skewed to benefit certain parts of the country, but there are added pressures on certain councils, such as Durham and other northern councils, in terms of social care and looked-after children. With social care, we have fewer self-funders, and there are over 900 looked-after children in Durham, which should be compared with the figures for some other areas. That means that 60% of the budget is now being spent in just those two areas, and in some places—such as Hartlepool, I think—it is about 65%.

[Andrew Gwynne]

My right hon. Friend is absolutely right, because the people-based services—children’s services and adult social care—are services that most of our constituents never have to use and where they do not see the money being spent, but the things that they care about and think these inflation-busting council tax increases are going towards, the neighbourhood services, are the things that over the past 10 years have been squeezed and squeezed, and in some cases have disappeared altogether.

Let us be clear: I do not expect churlishness or hypocrisy from Ministers or Members of the governing party in the upcoming local elections if councils increase their council tax and the social care levy by the maximum amount, because this finance settlement that we are agreeing tonight requires these increases to happen in full in every town and county hall in the country, to meet the 4.4% claim that is being made. What we know is that one third of this year’s growth would come directly from the general council tax increases of the maximum of 2.99%, with an additional one-fifth of the whole figure of growth coming from the social care levy being charged at the maximum of 2%. That is over 50% of the funding growth that has been lauded tonight coming from local taxation, not Government. As we know, its spread is very unequal, so we do not expect to see Ministers boasting about this settlement and then criticising councils for putting up council tax in the same breath. This settlement also fails to move beyond the sticking-plaster solutions that have been offered in recent years.

Solace’s local government finance spokesman, Martin Reeves, has criticised the Government’s approach, saying:

“the constraints placed on these pots usually means the money is spent on dealing with existing demand, demand that is itself often a symptom of structural (and often longstanding) funding shortfalls elsewhere in the system.”

Rather than this reactionary approach to funding, we need to be dealing with a system that is at breaking point, proactively investing in reforms to improve outcomes, particularly for the more vulnerable people in our communities. The National Audit Office has warned that a continuation could

“undermine strategic planning and create risks to value for money.”

I trust that the Secretary of State is working closely with the NAO on its review.

What I am speaking of today should not be any surprise to the Communities Secretary, because I am not the first person to raise concerns over the Government’s funding plans. Indeed, over one in 10 who responded to the Government’s consultation on the financial settlement objected to the way that the Government are increasingly using council tax to address the funding pressures the Government themselves have created, arguing that that would transfer the burden to local taxpayers. They argue, and they are right, that additional council tax flexibilities can have an uneven distributional effect, benefiting areas with larger tax bases while those with smaller tax bases continue to see gaps in their budgets grow.

Unfortunately, those same areas are often the ones that face the largest pressures on adult and children’s social care. For example, while Wigan has the potential to raise around £4.5 million from the council tax changes, Buckinghamshire can raise £12 million. For Wigan, that would barely let it break even on last year’s overspend as it managed increasing demand on care services, particularly caused by pressures in children’s services. Growth in demand is not slowing down, but the money to ensure that these essential services are in place is not coming from the Government and cannot be sufficiently raised in many parts of the country with the greatest call on these services.

A quarter of people who responded to the Government’s consultation were concerned, stating that the additional flexibility on council tax was not enough to meet the growing pressures on children’s services. One in five raised that concern in relation to adult social care. In 2018, the Local Government Association warned that the funding gap for adult social care alone will grow by £3.5 billion by 2025. Today it reported that over the past five years pressures on children’s services have pushed overspending to £3.2 billion. The number of children in care has grown by 28% in the past decade, and the number of children at risk of physical, emotional or sexual abuse or neglect has increased by 53%. I do not say that to make a political point. It should shame each and every one of us, on whichever side of the House we sit, that those most vulnerable children are being let down by a system that is broken.

The LGA has also warned that the funding promised in the finance settlement will not even be enough to cover the increase in costs from the rise in the national living wage from April. Even though demand continues to grow, councils will be forced to cut back on these services. This is not sustainable. I appreciate that there are no quick fixes. The Secretary of State knows my concern about the so-called fair funding review, but the figures that were used by the Local Government Association Labour Group were produced by the Tory-led LGA, whether he likes it or not. His Ministry was asked for clarification of whether or not those were in line with Government trends and thinking, and it gave its acknowledgement that they were.

I repeat my offer to the Secretary of State: we in the Opposition are willing to work with anyone who genuinely wants to fix our outdated and broken local government finance system, but it has to be genuinely fair and based on real needs. It needs to reflect the circumstances facing each local authority, including their ability to raise income, and it must properly take account of all kinds of need, including deprivation and health inequalities.

After a decade of decline and neglect, there is little surprise that the promise today of an uptick in spending power has largely been welcomed by the sector, and indeed, by us. We will not oppose the local government settlement. We will not oppose councils receiving any additional funding in today’s settlement, but let us be honest: this settlement, while welcome for a limited uplift, does not solve the financial crises faced by our town and county halls. It does not fix the two cost and demand-led services of adult and children’s social care, and it does not ease the squeeze on our hard-pressed neighbourhood services—all the things that our constituents think that their ever-increasing council tax bills go towards: the parks, the road repairs, the ground maintenance, community centres, street cleaning, libraries, street lighting and bins. There are also the contributions that are less tangible, such as the sense of place, community and local identity—the things that make us proud, or sometimes not proud, of where we live. All these things will continue to be cut or squeezed until or unless the funding crisis in children’s and adult social care is properly addressed and councils can start to rebuild our neighbourhood services again. Once we get to that place, that will be the time to welcome what is happening in local government. That will be the time to cheer. We will support the Secretary of State tonight, but let us get local government back to where it always should have been—at the heart of rebuilding our communities.

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[Mr Richard Holden (North West Durham) (Con)]

With a 7.1% increase for County Durham today in the local government finance settlement and a 7.9% increase in police funding, both above the national average, I am delighted that the Opposition are not voting against these measures, especially given that the hon. Member for Denton and Reddish (Andrew Gwynne) wrote a letter to me just a few weeks ago saying that actually we were going to be facing cuts. It looks like quite the opposite is the case. I am looking forward to his letter outlining the increases we will be facing and welcoming the Government’s approach, especially given that Labour-controlled Durham County Council is still spending more than £50 million building a council headquarters on a floodplain, although this is a massively opposed by local people. I would quickly like to declare an interest in respect of the one point I would like to make in this debate.

[Mr Kevan Jones]

Will the hon. Gentleman give way?

[Mr Holden]

I am going to be very quick today. I wish to declare an interest, in that I am co-chair of the all-party group on local democracy. I pay tribute to my hon. Friend the Member for Cities of London and Westminster (Nickie Aiken), who said that she wants the most bottom-up approach possible when it comes to councils. As such, I urge my right hon. Friend the Secretary of State to reintroduce the Bill to exclude public lavatories from business rates. That is exactly what most local councils want. It would save Wolsingham parish council in my constituency £750 a year, and it would save local councils throughout the country more than £8 million a year.

In conclusion, I welcome what I hope is the start of levelling up, from both the Ministry of Housing, Communities and Local Government and from the Home Office in the form of the police settlement. I hope this is the start of things to come.

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[Mr Kevan Jones (North Durham) (Lab)]

The Secretary of State opened the debate by announcing that this is the best local government funding settlement for a decade. That would not take much beating when we consider what has happened over the past 10 years. In the previous debate, on police funding, I referred to the year-zero approach, because it is as though anything that happened before December 2019 was someone else’s fault and had nothing at all to do with this Government; as though they are a new Administration who are coming in to put everything right. But most of the Ministers now on the Front Bench voted for the austerity of the past 10 years, so it is with some chutzpah that they are now trying to convince us that they had nothing to do with it.

We also now have a key in-word, which we will hear a lot more of. The hon. Member for North West Durham (Mr Holden) mentioned it when he talked about “levelling up”. Well, it will take a hell of a lot of levelling up. I will come on to answer his points about Durham County Council in a minute, because he is clearly going to try to play dog-whistle politics, which does not surprise me at all. He welcomes this statement as though it means extra money for the county council. Yes, this settlement is for this year—it is a one-year settlement. I hope that when the council and the police commissioner put up the local government tax, he does not blame Durham County Council. To do that would be to abnegate his responsibilities, as he would be welcoming it in this place, but saying another thing in County Durham. I look forward to him supporting whatever difficult decision the police commissioner and Durham County Council have to make on the local council tax precept. No doubt, he will try to say something different locally.

This is a one-year settlement. We now have the so-called new fairer funding formula coming in, but we need to remind ourselves about what has gone on previously. Durham County Council has lost 40% of its budget in the past 10 years. That is £232 million. In the early days, when we had Eric Pickles as Secretary of State, this could all be done by cutting back on pot plants and getting rid of chief officers. Well, I am sorry, but I defy anybody who says that we can get 40% efficiencies out of an organisation and still deliver the same services, because we clearly cannot.

What we have had today is the Secretary of State saying that we will have a fairer funding settlement that respects need. That is not what the Government have been doing over the past 10 years. On every indication, the funding formula is seeing money being moved from areas of deprivation to areas of affluence. The National Audit Office has identified that. While Durham County Council has taken huge cuts, places such as Surrey and Wokingham have had increases in their core spending budget. We get to a ridiculous situation now where, if we look at 2019-20, core spending per dwelling for Durham is £1,727, whereas for Surrey it is £2,004. People might ask what difference it makes. It comes back to what we have heard for the past 10 years, which is not only that austerity is needed, but that, somehow, everywhere in the country is the same in terms of delivering services—whether in Surrey, in an inner-city metropolitan area or in County Durham. The two main drivers that are swallowing up most of the budget of counties such as Durham are adult social care and looked-after children.

[Matt Western (Warwick and Leamington) (Lab)]

My right hon. Friend is being very generous. He is making a terrific speech as usual. Does he agree that this issue, as he is describing it, is actually compounded by the deceit that, as part of the devolution of power and fiscal responsibility, these authorities would be able to retain more business rates, but the reality is that the Government do not want increases in business rates, and neither do businesses, because they cannot afford them. The reality is that those authorities will not be given those moneys in any event.

[Mr Jones]

I will come on to business rates in a minute. I will give an explanation as to why, for example, Durham County Council is doing what it is doing with its headquarters. I would argue that it is a response to Government policy.

If we look at adult social care in Durham, we see that there are 3,295 people in home care, 3,151 in residential care, 736 in supported living schemes, and another 763 receiving direct payments. The difference between Durham and places such as Surrey is that we have a higher proportion of people requiring council support. As my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy) identified, we do not have a large package of support. We actually self-finance, and that makes a big difference in terms of the pressures on local councils.

The same is true if we consider looked-after children not just in Durham, but across the north-east. In Durham, we have 900 children in local authority care. As was said earlier, the number of looked-after children has increased by 20% in the last decade, but in the north-east it increased by 72% in the same period. Two councils in the north-east, Hartlepool Borough Council and Middlesbrough Council, have more than twice the national average number, and five times more looked-after children than Wokingham Borough Council. The new funding formula has to take that need into account. The idea that everywhere is the same is complete and utter nonsense.

The bigger debate, which has not really been had, is about the Government’s direction of travel over the past 10 years, which has been to reduce the amount of central Government funding to local authorities and to push the burden on to the local council tax base. Again, County Durham is at a disadvantage. More than 50% of our properties are in band A, so an increase of 1% in Durham raises very little compared to such an increase in more affluent areas with large numbers of higher-band properties. That will have to be taken into consideration. For true levelling up, there will have to be a complete reversal of what has happened over the past 10 years. If we get to a situation in which what a local authority requires is raised locally, councils such as mine will be at a huge disadvantage, certainly given the increase in the number of looked-after children and individuals in care in the area.

[Preet Kaur Gill (Birmingham, Edgbaston) (Lab/Co-op)]

My right hon. Friend is making an excellent speech. Does he agree that the Government have to stop running councils into the ground with their cuts, and should instead invest properly to halt and reverse the real-world implications of their ideologically driven austerity policy?

[Mr Jones]

That has to be what we want local government to do. The Chairman of the Select Committee, my hon. Friend the Member for Sheffield South East (Mr Betts) said that, too. It is no good deluding people if, locally, more than 60% of the budget has been taken up by two areas. As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, most people do not have any visibility of that. When they pay their council tax, they see their bins emptied and environmental improvements, but if 60-odd per cent. of a council’s budget—I think the figure is higher for some councils—is going on two sectors, that will be difficult to explain to people.

A decision has to be taken about what proposals will be put forward on business rate retention. If it is not, the lack of the clarity that local government needs will create real problems for councils such as Durham County Council. There is an opportunity to grow the business rate. I will explain to the hon. Member for North West Durham (Mr Holden) why Durham County Council decided to downsize its headquarters and move to the centre of the city: to open up an area for investment and create up to 7,000 jobs in order to grow the council tax base. It is doing exactly what the Government want. In addition, it has moved jobs away from County Hall to places such as Crook in his constituency. I do not hear him arguing against moving county jobs to his constituency. Dog-whistle politics is fine, but he needs to look at the facts first.

[Mr Holden]

Will the right hon. Gentleman give way, as he is attacking me directly?

[Mr Jones]

In a minute. If he wants to say that he does not welcome county council jobs to Crook, that is fine; I will have them in Chester-le-Street.

[Mr Holden]

I would be very happy if the county council was just downsizing its current office; what I do not understand is why the Labour-controlled county council is spending £50 million building a brand new centre on a floodplain. Why not just make better use of the current site?

[Mr Jones]

If the hon. Gentleman has been in the current building, he will know that large sections of it are empty.

[Mr Holden]

Exactly!

[Mr Jones]

Wait a minute. It was built in the 1960s, it is full of asbestos and it is very energy-inefficient. If he wants to put capital—public money—into it, fine, but it will not happen, because the money is not there, and what he suggests would cost a lot more than what has been proposed. In addition to that, the council is going to save somewhere in the region of £300,000 a year in running costs. In terms of trying to grow our council tax base in County Durham, that is what the Government want us to do. That is a good, prudent way in which the council is operating. As I say, if the hon. Gentleman is against jobs going to his constituency, please redirect them to mine, because I will have them. [Interruption.] Well, I just ask him to learn his facts. If he wants dog-whistle politics, which he obviously does, then fine, but let us see what is to the benefit—[Interruption.]

[Mr Speaker]

Order. If the hon. Member wants to intervene, he should intervene. I am not having continuous noise across the Chamber.

[Mr Jones]

I am sorry, Mr Speaker—I never had this problem with the hon. Gentleman’s predecessor.

The Secretary of State referred to the grants on public health. Again, this issue needs to be addressed, because it is a driver of inequalities. In the police precept debate earlier, we talked about mental health and support for the most vulnerable in our community. The Advisory Committee on Resource Allocation came forward with a formula that meant that from April 2020 County Durham would have lost £19 million whereas Surrey would have gained £14 million. I say in a spirit of genuine co-operation with the hon. Member for North West Durham (Mr Holden) that I hope he is going to argue, and lobby his Government, to ensure that this inequality, which has been there for the past 10 years, will not continue.

Let me turn to the new homes bonus, which, again, disadvantages not only Durham but other councils. The top-slicing of the new homes bonus leads to a situation where, again, southern councils are gaining from this allocation and Durham and others are losing. That cannot be fair in any type of system. I therefore look forward to the new, radical approach that has been announced by the Secretary of State in arguing that we will level up these grants and the new formula will recognise need, because if it does genuinely recognise need, then the likes of County Durham will gain through this process. It is not acceptable to say that we can wash away the past 10 years as though they did not happen; they did happen. Without the fundamental question about what we want local government to do and how we want to fund it—

[Mr Holden]

If the right hon. Gentleman wants to talk about a year zero starting last year, I wonder whether he would like to talk about a year zero starting in 2010—as if nothing was a problem then, when this country was borrowing £1 in every £4 it was spending due to the policies he had voted for since 2001.

[Mr Jones]

I do not want to get off the subject, but the hon. Gentleman will have to try better than that, because I was a Member then, and I remember, for example, the investment in Sure Start in County Durham, in my constituency and his constituency. I remember the six new schools, two new hospitals and three new doctors surgeries that were built in my constituency—all that investment. With regard to this nonsense that Labour spent too much, he should look back to just before the crash. What were David Cameron and George Osborne, and their Front Benchers, doing then? They were not just matching our spending—they were calling for more expenditure. So if we were profligate, then they, frankly, were completely reckless. When I was a Defence Minister, if I had followed what they wanted to do then, we would have increased the defence budget by billions. What did they do when they first came in in 2010? They slashed it by 16%. So I shall take no lessons from anyone on the Conservative Benches about Labour spending too much, because the Conservative party at the time was calling for more. I was going to —[Interruption.] I will carry on if those on the Front Bench want me to.

The hon. Member for North West Durham cannot ignore the fact that his party, in coalition and in government, has been in power for 10 years. Decisions being taken now are affecting the lives of his and my constituents, and we must put those right. I am prepared to work with him to argue for more money for Durham County Council and others, but I will not get into the petty dog-whistle politics of his portrayal of Durham County Council.

I genuinely think that there is an opportunity here. If the Government get this right and follow through on a fairer funding formula, they will have my full support, but it must be fairer. There was a time when I was in local government that it was not only a proud achievement for many Labour politicians but it was something that the Conservative party was proud of too.

Ministry of Housing, Communities and Local Government

Lord Beamish Excerpts

1st reading: House of Commons
Tuesday 2nd July 2019 Commons Chamber

[Mr Kevan Jones (North Durham) (Lab)]

I would like to begin by addressing the remarks of the hon. Member for Oxford West and Abingdon (Layla Moran). I am sorry, but her party, the Liberal Democrats, were not innocent bystanders in austerity. They were active participants. She says she wants to look to the future—fine—but the effects of the decisions taken under the coalition Government are still biting today, not just in local government but across a whole host of Government policies. I am sorry, but people need to keep being reminded of that.

The National Audit Office and the Centre for Cities produced very robust reports on the effects of the cuts by the coalition Government and this Government to local government funding. Those cuts have been, as my hon. Friend the Member for Sheffield South East (Mr Betts) said, most severe in their effect. They have also not been very fair. For example, the most deprived areas in the north have borne the biggest share of the cuts, while areas such as Surrey and Wokingham have had few cuts that have had very little effect.

Durham County Council has faced massive cuts. Since 2010-11, its budget has been cut by £242 million. It has also been put at a disadvantage. As my hon. Friend the Member for Sheffield South East alluded to earlier, the Government have been moving funding from central Government to locally raised taxation. That puts authorities such as Durham at a huge disadvantage, because we have a low council tax base and a low business tax rate base. Some 50% of properties in County Durham are in council tax band A, so its ability to raise local taxation, even if it wanted to, is limited compared to others that have a larger and more diverse council tax base. If that was not bad enough, in addition to what is coming down the road with the fairer funding formula, County Durham will have to find another £39 million of cuts over the next four years. Under that strangely named fairer funding formula, County Durham loses an additional £10 million. Even though it is a deprived area, since 2011 it has already faced a higher than average core spending cut. Yet if we look at the average across the country, Durham is below average, so I do not know how that can be fair.

There is an idea, not just in local government funding but in education funding and everything else, that somehow every single part of the country is the same. We heard it from the hon. Member for The Cotswolds (Sir Geoffrey Clifton-Brown), who argued that the Cotswolds could somehow be compared to an inner-city borough such as Hackney. It is quite clear that deprived areas such as County Durham have a huge call on their resources from the two great drivers, adult social care and children’s care.

In 2018, there were 1,157 looked-after children in County Durham. Wokingham, which has not had the savage cuts that County Durham has had to face, looks after 141 children. We not comparing like with like. These are not services that councils can pick and choose from either; they fall under statutory provision. I have to say that Durham does them very well, but they create huge demands on the council budget that are not reflected in the support received from central Government. The cut in core spending has been dramatic in County Durham. Government figures show that the average core spending per dwelling is £1,908. In Durham, it is £1,727. In Surrey, which I would argue is a little bit more affluent than County Durham, it is £2,004. If we were brought up to even the England average, County Durham would get an additional £44 million.

This is about not only the savage effects of austerity on local government, but the pork barrel way in which the Government have distributed the money, clearly favouring areas that have supported the Conservative party and its coalition partners in the past, and punishing northern councils. In addition to the cuts that have taken place already, we have the public health funding formula, on which I led a Westminster Hall debate a few weeks ago. How can it be right that County Durham will lose £19 million a year—35% of its budget—while Surrey County Council increases its public health budget by £14 million a year?

Those funding decisions are clearly designed to support certain areas. [Interruption.] The right hon. Member for Gainsborough (Sir Edward Leigh) chunters from a sedentary position, but the facts are there in black and white. It has been a deliberate policy of this Government since—[Interruption.] Oh, he has got tired and gone off for a sleep. Clearly, as my hon. Friend the Member for Sheffield South East said, we need not only to look at fairer funding for local government but to ask what we need it to do. Like him, I feel that we will end up in a situation where some councils go bankrupt—some already have—and others struggle on delivering services, while being blamed by the Government for not doing so, when they have limited ability even to raise council tax locally.

In the 1980s, when I was first elected to local government, the Conservative party was a proud party of local government. It actively supported local government, cared about it and, as my hon. Friend said, thought it was an important part of the glue of democracy and of how we provided for communities. Alas, that seems a distant past: as I said, local government clearly will not be a priority for whoever wins the Conservative party leadership contest. This cannot go on, or we will end up in a situation where the people we were elected to serve suffer and councils throughout the country become unsustainable.

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[Mr Kevan Jones]

My hon. Friend is making some good points, but does he also agree that one of the Government’s mistakes in terms of devolution is holding to the idea that that can be done only if there is a mayor? That has led to some very strange situations. For example, in the north-east we have a hotch-potch of different responsibilities in different areas.

[Gareth Snell]

I entirely agree, and the same goes for LEP boundaries. If we are going to do this, there has to be a way forward that fits local area needs.

According to the NAO, £6 billion is currently tied up between section 106 agreements and the community infrastructure levy. That is a huge amount of money, but the CIL aspect of that cannot be spent on building new affordable housing because it is for low-level infrastructure. I urge the Minister to review that. It is a pot of money that exists in local authorities that could be unlocked to readily transform the way in which our local authorities work.

At its best local government is flexible, lean and hungry to do things, but that agility is fast becoming fragility, and I fear that if there is one more knock to the system everything will shatter.

Local Government Finance

Lord Beamish Excerpts

Tuesday 5th February 2019 Commons Chamber

[Mr Kevan Jones (North Durham) (Lab)]

Let me start with a couple of facts: there has been a 49.1% reduction in Government core funding to local authorities and a 28.6% real terms reduction in spending power, which means Government funding plus local council tax, since 2010; and there has been a 32% real-terms reduction in spending on non-social care areas. Those are not my figures, but those of the National Audit Office.

My hon. Friend the Member for Liverpool, West Derby (Stephen Twigg) mentioned the Centre for Cities report, which shows that those cuts have not been fairly distributed; they have been targeted at northern cities and northern councils. Some of the more affluent areas, such as Wokingham in Surrey, have had no reduction in core spending at all. This Government have used local government funding like a pork barrel, putting it into areas that support the Conservative party and penalising areas that do not. Since 2010, Durham County Council has lost £224 million in its budget, and it is predicted that in the next four years it will have to slash another £39 million. That is being done by a Conservative Government, but I do not want to let the Liberal Democrats off, because they also signed up to these cuts when they were in coalition.

On the ability to raise finance, Durham has a similar problem to that outlined by my hon. Friend the Member for Liverpool, West Derby, as 55% of its properties are in band A. The more core funding from national Government is cut, the more Durham County Council’s ability to raise funding is limited. In addition, Durham can raise only a limited amount through the retention of business rates compared with what can be raised in Westminster and other places. So the future does not look bright for Durham County Council, a well-run authority, under this Government’s proposals. If we look at core spending power per dwelling, which is what the Government are looking at, we see that the national average is £1,908 whereas the figure for Durham is £1,727 and Surrey’s figure is £2,004. Areas of deprivation in Surrey would not even register on any type of social index compared with what we have in Durham, a former industrial area, which just shows us the way in which this Government have used the system to reward their own areas.

My hon. Friend the Member for Sheffield South East (Mr Betts) raised the issue of public health funding. If the Government go forward with the notion of the fair funding formula—that should be getting done under the Trade Descriptions Act—Durham County Council is forecast to lose some £19 million, or 35% of its public health budget. That is happening in some of the most deprived communities anywhere in the country. It is a rural county, but it has deprivation on a par with some inner cities and parts of the former coalfields. How can it be right that under that formula Surrey would gain, and deprived areas such as County Durham would lose? The Government are taking political decisions about where the funding goes. There is this notion among those on the Government Benches that somehow every single council is the same, but I am sorry, they are not. The demands on my local council and councils such as Liverpool in respect of adult social care and looked-after children are a lot more severe than the demands in some of the areas that are getting extra funding.

In her statement on Europe on 10 December, the Prime Minister said:

“It means working across all areas to make this a country that truly works for everyone, and a country where nowhere and nobody is left behind.”—[Official Report, 10 December 2018; Vol. 651, c. 25.]

I am sorry, but the policies of this Government over the past eight years have run counter to the Prime Minister’s promise. That just shows how hollow her words are.

Northamptonshire County Council

Lord Beamish Excerpts

Tuesday 27th March 2018 Commons Chamber

[Sajid Javid]

I thank my hon. Friend for the work that he has done and continues to do for the people of Northamptonshire. He is right to raise the pressures being felt by Northamptonshire County Council and many other councils, particularly on adult social care and children’s social care. He will know that at last year’s spring Budget there was a record settlement, with an additional £2 billion going into adult social are. Looking to the long term, that is exactly why we have the Green Paper, and I hope that he will provide input into that process.

[Mr Kevan Jones (North Durham) (Lab)]

The Secretary of State talks about being crystal clear. What is crystal clear is the mess that Northamptonshire County Council finds itself in as a result of the incompetence and mismanagement of local Conservative politicians. Will he therefore issue an apology to the electors of Northamptonshire, on behalf of the Tory party, for the mess that they have found themselves in?

Local Government Finance

Lord Beamish Excerpts

Wednesday 7th February 2018 Commons Chamber

[Mr Kevan Jones (North Durham) (Lab)]

The Secretary of State talks about core funding. I think the average for county councils—[Interruption.] Mine is Durham, by the way, for the Parliamentary Private Secretary who is looking it up. [Laughter.] The average is a 2.1% increase, but for Durham it is only 1.4%. The reason for that—[Interruption.] Durham County Council—the PPS has got the wrong one! [Laughter.] The reason is the low council tax base, as 55% of properties in County Durham are in band A, which affects the council’s funds—County Durham, if the PPS has still not got it.

[Sajid Javid]

The hon. Gentleman is obviously familiar with the numbers for his own council, which is good to see, and his council is getting an increase. As I have said, and this will be a theme throughout the settlement, we have to always make sure that we are striking the right balance between providing increased resources and keeping any burden on taxpayers to an absolute minimum. I hope that the hon. Gentleman would support that.

We are creating a whole system of local government that is fit for the future. The current formula for financial allocations has served local areas well over the years.

--- Later in debate ---

[Mr Kevan Jones (North Durham) (Lab)]

Since 2010, Durham County Council has had its expenditure cut by £224 million, although after hearing the Secretary of State speak today, we might think that local government is somehow in a strong position. My hon. Friend the Member for Sheffield South East (Mr Betts) was right: the root cause of this is the austerity during the last seven years. I will not let the Liberal Democrats off the hook for their responsibility for that, because they were in government and agreed to it.

This year alone, Durham County Council faces pay inflation of £4.8 million and general inflation of £3.2 million. The impact of the national living wage increase of 4.4% means another £3 million. There is a £3 million cost relating to the demographics of elderly people, and an additional £5 million due to pressures on children’s services, which has been mentioned. That means that, in 2018-19, Durham County Council will have to make further savings of £15.3 million.

Much reference has been made to the fairer funding formula, but I think it should get done under the Trade Descriptions Act, because the Government are doing what they have been doing for the last seven years. This is about the pork barrel—they put the money where they can get the votes. That is why, for example, it is not surprising that rural sparsity funding is going to Conservative-controlled areas. Lo and behold, even though Durham is a beautifully rural county, it does not get any of that funding.

If we look at core spending power, the average increase for county councils for 2018-19 is 2.1%; for County Durham, it is 1.4%. The reason for that is what we heard in our debate on police funding: it comes back to areas with a low council tax base. If we look, for example, at the effect of a 1% increase in council tax, it is not surprising that the ones that score for core spending on that are Wokingham, with 0.8%, and Buckinghamshire, Surrey and Dorset. It was interesting to listen to the hon. Members for Wellingborough (Mr Bone) and for Corby (Tom Pursglove) talking about Northamptonshire, because under the system that is being brought in, their core expenditure will rise by 3.8%, compared with County Durham’s at 0.5%.

The root cause lies in the clamour for so-called fairer funding back when the coalition Government entered office. I hear what people say about need, but the needs assessment was taken out of the formula, and that has continued under this Government. As a result, the formula does not recognise that areas have particular needs, such as in relation to looked-after children or growing demand for elderly care. Instead, the Government are rewarding their own areas. I do not for one minute accept the idea that there is not poverty in rural areas—there is—but, as my hon. Friend the Member for Oldham West and Royton (Jim McMahon) said, the evidence does not prove that it is more costly to deliver services in those areas than in the constituency of my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell), for example, or some other urban conurbations.

Government Members are comparing apples and oranges, and we should think about the pressures in urban areas such as those of my hon. Friends the Members for Stoke-on-Trent Central and for Nottingham North (Alex Norris) regarding looked-after children, to take just one example. I am sure that the number of looked-after children in those areas is larger than that in some rural counties—even one such as County Durham—and that creates great pressure. It is not one of those services in which councils can pick and choose what they deliver. They have to deliver the service, and, whatever anyone says, it is very expensive to provide.

In 2010, the Government set out, as my hon. Friend the Member for Sheffield South East said, to make savings from local government. I was interested in what my hon. Friend the Member for Nottingham North said: the Treasury could guarantee getting the money because it was the councils that would have to do the implementation. We are now suffering as a result, however. If we are to make local councils more reliant on raising finances from council tax, areas such as mine—55% of its properties are band A—will always be at a disadvantage, even though our elderly population is growing and the demands on our services across the piece are growing.

I agree with the hon. Member for Wellingborough about social care. We need to take a cross-party look at this, because the problem will not go away, whoever is in government. The situation is not made any easier, however, with some of the nonsense in this funding formula, such as the 7% cut to public health, which will have a direct impact on that area. What we have is more of the same: a Conservative Government rewarding Conservative areas and dressing that up as a funding formula, when it is actually a pork barrel. Unless we address the situation fairly and prioritise need, this scandal in local government—and it is a scandal—will continue.