Local Government Finance (England)

Debate between Lord Beamish and Andrew Gwynne

Monday 24th February 2020 Commons Chamber

[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.

Local Government Finance

Debate between Lord Beamish and Andrew Gwynne

Wednesday 5th February 2020 Commons Chamber

[Andrew Gwynne]

My hon. Friend is absolutely right. I will touch on that report later in my speech, but it highlights the impact of 10 years of cuts to our local councils and public services at a time of rising demand, particularly for adult social care and children’s services—the expensive people-based services. Given that the councils with greatest social need and the worst health inequalities have a limited tax base to make up for any financial losses, the problem is that the so-called fair funding formula could be what tips them over the edge.

I know that the Minister for the Northern Powerhouse and Local Growth, the right hon. Member for Rossendale and Darwen (Jake Berry), will stand up and pronounce that the finance settlement that we are set to agree next Wednesday shows that he is investing in local services, but he is a lone voice in saying so. That shows just how detached the Government are from the sector that they are here supposedly to represent, because the truth is that since 2015—just five years—local government funding across England has fallen by 32%.

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

Does my hon. Friend agree that local government is also fearful of last week’s rumours that the Chancellor will ask Departments to cut another 5% from their budgets?

[Andrew Gwynne]

That is very worrying, and I hope the Ministry of Housing, Communities and Local Government will stand up against it. Those of us who have been a Member of this House for some time will remember that the former Secretary of State for Communities and Local Government, Lord Pickles, was only too keen to offer up the maximum cuts from his Department, meaning that local government in England was the part of the public sector that was clobbered the hardest.

It is even worse than the 32% fall over five years because, since the Conservative party entered government in 2010, funding for local councils has been slashed by more than half. We have all seen the consequences of that neglect: the unrepaired roads, the uncollected bins, the cuts to adult learning and the closed children’s centres. Under Conservative leadership, almost a fifth of our libraries have been forced to close because of cuts to funding. One of the previous Labour Government’s greatest achievements, the Sure Start programme, has had its funding slashed in half, forcing as many as 1,000 Sure Start children’s centres to close since 2010.

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[Andrew Gwynne]

As the hon. Gentleman states, the block grant is set by this place, so the Welsh Assembly Government have had to ensure that their spending meets the money granted by Westminster. I have been sent a budget briefing from the Welsh Government about their intentions not only to increase the adult social care budget in the year ahead, but to give a real-terms increase in local government spending. I welcome that overwhelmingly, because Welsh councils, like English councils, need good public services.

[Mr Kevan Jones]

Durham County Council has lost £224 million in core spending since 2010, and the Government’s direction of travel has been to move the expenditure on to the council tax precept. The problem for County Durham is that more than 50% of its properties are in band A so, irrespective of how much the council tax is put up, it will do nothing to plug the gap left by the reduction in core spending.

[Andrew Gwynne]

My right hon. Friend is right on that. Councils cannot change their council tax base overnight. If their properties are predominantly in bands A and B, that is the council tax base for that local area. Governments of all political persuasions over the years have always recognised that not every council has the same baseline and the same ability to bring in enough money for basic, decent statutory public services, which is why we had the rate support grant in the 1980s and the revenue support grant from the 1990s onwards. Those things were in recognition of the need for a redistribution of funding to areas that cannot generate enough funding from council tax and business rates alone.

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[Andrew Gwynne]

I reiterate what I just said: it is for the Conservatives to come forward with their proposals. We will view those in the round with other ideas and see whether we can reach a consensus. I know that there are different views on both sides of the House about a system of insurance, but I am not personally in favour of that. I think that actually the easiest and quickest way to resolve the social care crisis in local government is to make sure that we fund social care through local government.

I want to come on to the issue that could make the situation that I have set out even worse for many of the same local authorities that are already at breaking point. The research from the Local Government Association has exposed the so-called fair funding review for what it really is: a cynical plan that risks leaving more sick and vulnerable people without the care they need. If implemented in the way that the LGA has calculated—and MHCLG apparently told the LGA that its assumptions were along the lines that the Ministry is going—then funding for social care for older people is due to drop in London, the west midlands, the north-east and the north-west, while the south-east and the south-west will see an increase in many areas. For young adults, the largest decreases will be seen in the north-west, the north-east, Yorkshire, the east midlands and west midlands, while the south-east and east of England will see some of the largest increases.

This research from the Tory-led LGA has shown that many of the areas that voted for, and put their trust in, the Conservatives for the first time in 2019—the so-called red wall seats—will see some of the largest cuts to social care funding if the plans go ahead in the way that has been outlined. Indeed, three quarters of those red wall constituencies—the seats that gave the Prime Minister his majority—will see millions of pounds of funding diverted from their hard-pressed councils to another part of the country. The LGA Labour group estimates that that is £300 million of funding that will be funnelled from less affluent councils to the more affluent communities.

But even worse than both those factors is the effect that there will be on the most deprived communities. The 10 most deprived local authorities in England will see, on average, a 13% cut, while the wealthiest communities in England will see their budgets grow by 13%. This model was devised back in 2014 at the height of coalition austerity; perhaps it was then politically expedient for the Conservatives to divert funds to leafy Tory shires at the expense of more deprived metropolitan and urban communities. But given that the Prime Minister’s claim that austerity is over, divvying up an ever-shrinking pot differently is so last Parliament—in fact, it is so the last two Parliaments before the last Parliament—and it is certainly no longer politically expedient.

Last week, I wrote a letter, with council leaders, to the red wall Members on the Government Benches, urging them to speak out against a plan that will see cuts to adult social care—one of the largest cost pressures facing all local councils, particularly those in deprived areas. I know from some of the responses that Government Members have given to the press that the calculations from the LGA have been dismissed as speculation. I say to those Members that this analysis was produced by the cross-party LGA and was released officially to support councils as they plan their budgets in the coming years. The analysis that the LGA produced was also informally shared with MHCLG, whose officials privately confirmed that the assumptions in the analysis are sound.

This new research is also consistent with what we already knew. Last year, researchers in Liverpool warned that removing deprivation from the funding formula would see the 20% most deprived areas lose £390 million a year. The Institute for Fiscal Studies has warned that removing deprivation from the formula would likely hit councils in inner London and most other urban areas, like Manchester, Birmingham, Newcastle, Bristol and Kingston upon Hull, where deprivation tends to be not just concentrated but over-concentrated. The IFS states that

“proposals by the government to base assessments of councils’ needs for spending on services like homelessness prevention, public transport, waste collection, libraries, and planning on population only would shift funding from councils serving deprived areas to those serving more affluent areas.”

It has also warned that the evidence base to justify this decision is weak.

[Mr Kevan Jones]

Will my hon. Friend give way?

[Andrew Gwynne]

I will give way one last time.

[Mr Jones]

It is not just about social care. County Durham, under the formula that is proposed, is likely to lose £39 million in public health funding, whereas Surrey County Council will actually increase its budget by £14 million. I look forward to my new Conservative colleagues in County Durham arguing how that can be fair to County Durham.

[Andrew Gwynne]

My right hon. Friend is absolutely right. It is not just about social care, but the LGA has published the fair funding review calculations based on social care. It has also done the calculations for children’s services, for the foundation formula and for the public health grant. I would hazard a guess that they show exactly the same trends. He is absolutely right about County Durham, because the LGA’s analysis shows that the change in funding there since 2015 alone is already 29% down. The change in funding from the fair funding formula would equate to another 6.71% reduction—a £10,327,679 cut—for his constituency. Contrast that with Beaconsfield, for example, where there would be a 17.5% increase—nearly an extra £15 million of funding. That is not fair by any stretch of the imagination.

The issue is really straightforward for the Government. If they do not agree with the analysis, the response is simple: follow up on the promise made by the Under-Secretary of State for Housing, Communities and Local Government, the hon. Member for Thornbury and Yate (Luke Hall), at the LGA conference in January and publish the exemplifications of the funding formula so that we can see exactly what the impact is. It really is that simple. If the LGA assumptions are now wrong, show us. Let councils, councillors and Members of this House see the exemplifications; we will then know how fair the fair funding review is to the different parts of England.

My worry is that what we know is just the thin end of the wedge. We know that the five least-deprived local authorities have, on average, seen their budgets grow—the least deprived local authority, Wokingham, saw its budget grow by 18%—but that has been gained at the expense of the most deprived. The top 5% most deprived local authorities face cuts of 22% on average. That is not fair. As I said at the start of my contribution, we know that those same local authorities do not have the same ability to raise income from council tax.

This is a scandal for those who claim to be one nation Conservatives. I genuinely believe that across all political parties not one of us stood for election to come to this place and introduce measures that will make life more difficult not just for the people we represent but for the poorest communities in this country. I like to give the benefit of the doubt even to Members from the Conservative party, so I hope that today Members from all parties will support our motion, or at the very least intensively and strenuously lobby Ministers and take a stand against what could cause misery for their constituents. This will be a major test of Conservative Members’ commitment to their constituents. I am sure that local people will not forgive or forget if they fail to stand up for those who put their trust in them at the election, knowing what we already know.

Finally, I say this to Ministers: be open, be transparent and publish the exemplifications. If they are anything like what the LGA, the LGIU and other local government experts fear, scrap the scheme and go back to the drawing board. A fair funding review that is genuinely fair will have our support.

Trade Union Bill

Debate between Lord Beamish and Andrew Gwynne

Ping Pong: House of Commons
Wednesday 27th April 2016 Commons Chamber

[Mr Jones]

I know this Government love things foreign, but may I tell the Minister, with great respect, that he need not go very far to find examples of where e-voting has worked and there have not been any problems? I am referring to the pilots that took place in 2004, including in my constituency and others in the north-east, after which the Electoral Commission’s report found no problems with e-voting. He will obviously want to go on a fact-finding trip to the Philippines to look at this—I am sure we would all welcome his going there—but the fact is that he just needs to look at has happened in this country.

I must say that the Minister put up the very flimsy defence to the question, “If it’s all right for the Conservative party, why is it not all right for the trade union movement?” I would have respected his position if he had come up with concrete reasons why he thought electronic—[Interruption.] Well, he cites the Philippines, but has he actually looked at the Electoral Commission’s report on e-voting in 2004? It quite clearly stated that there was no issue of fraud or any risk to security. The fact that the Government then got cold feet about what I must say was a rather hysterical campaign against postal voting is neither here nor there.

[Andrew Gwynne]

That has been said not just by the Electoral Commission, but by the Electoral Reform Society, which is obviously expert in e-voting. It has certainly conducted a number of internal elections for the Labour party using e-voting, and it would be quite capable of running similar elections for the trade union movement.

[Mr Jones]

My hon. Friend makes a very good point. The Minister backed himself into a corner by saying that such votes were so important that they could not be done electronically. Let us look, for example, at foundation trusts, which elect their governors by electronic voting and are quite happy that such a system is secure. The Minister may think that that is not very important, but my constituents certainly think that choosing those who run their local hospital and have a lot of powers in my area is a pretty important decision.

My hon. Friend is right that electronic voting is used by many organisations, including private companies and charities, to consult their members. Organisations such as the Electoral Reform Society, which are used by many bodies to conduct ballots, whether in electronic or postal form, not only have a track record of impartiality and strict adherence, but are respected not just in this country but internationally—the Minister is interested in international comparisons—so it is pretty pathetic to say we need more evidence.

The other weakness in the Government’s argument is that I am not convinced that, once they have had this so-called review, they will actually implement the proposal. The proposal came from the trade unions, and I congratulate the general secretaries and others who have backed it. It would be a move forward by improving access to voting for trade union members and by improving the situation.

Cities and Local Government Devolution Bill [Lords]

Debate between Lord Beamish and Andrew Gwynne

Wednesday 14th October 2015 Commons Chamber

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

Devolution, localism or whatever we call it is a bit like apple pie and motherhood—it is something that everyone admires and thinks should be sought.

The hon. Member for Bromley and Chislehurst (Robert Neill) suggested that the Secretary of State is a Chamberlain-like reformer and likened the Bill to the great reforms to local government in the 19th century. That is not what is on offer here. What we have here is a clear political agenda from the Chancellor of the Exchequer for a small-state, Conservative Britain. The Bill is part of that process.

The hon. Member for Dudley South (Mike Wood) just said that the process is being driven by local areas. I have to disabuse him of that idea because it is not. The Government will still control 75% of the funding for local authorities and the Government are still dictating the local government settlement. The hon. Member for North Cornwall (Scott Mann) praised Cornwall. Well done to Cornwall for getting its devolution settlement, but there is no insistence on a mayor, as there is in the north-east. The north-east is being told, “Yes, you can have devolution, but you’ve got to have an elected mayor first.”

The hon. Member for Hazel Grove (William Wragg) made a very good speech, in which he asked where the people are in decisions on this process. If in 2004 we had proposed elected regional assemblies and imposed them without allowing local people to decide, there would have been a hue and cry from Conservative Members. What amazes me is that many Conservative Members from the north-east who fought strongly against regional assemblies are now as quiet as mice when accepting the Secretary of State’s proposals. When the Secretary of State meets council leaders in the north-east and they ask him why they must have an elected mayor, the usual response is, “Well, George wants an elected Mayor.” This is not about true devolution and making decisions at local level; this is about moving responsibility to local councils and so on without the resources to carry that through.

Let us imagine that a city is devolved to a Mayor or council in the north-east. Funding for further education will come with a 10% cut, just as public health spending did when it was devolved to local councils. It will then be down to local politicians to make difficult decisions, and what will be the position of the Chancellor and the Secretary of State? It will be, “It’s not our fault guv, it’s a local decision”—except that it will not be, because they will still hold the purse strings.

At the Tory party conference the devolution of 100% of business rates to local councils was announced as a great move forward. [Hon. Members: “Hear hear.”] Members say, “Hear hear,” but in London more than 300,000 properties have an average business rate of £54,000. In the entire north-east there are 54,000 properties with an average rateable value of £30,000. Unless there is some redistribution in that mechanism, all that will do is benefit areas that are already booming and do not need the assistance that is required in areas such as the north-east. People are fooling themselves if they think that the devolution of business rates is a panacea for growth in those areas.

[Andrew Gwynne]

My hon. Friend touches on a real concern because his area, like mine, has a low council tax base. Given cuts in funding, and local authorities’ inability to raise more finance through council tax, does he share my concern that we will need something like Chinese-style growth to fill that gap with business rates?

[Mr Jones]

I will give one topical example. Redcar has just lost one of its major sources of local business rates, so how will that be replaced? Westminster City Council and other areas would be able to do it, but without resource reallocation of business rates, areas such as Redcar will not be helped. That has added to what we have seen over the past five years of this Government and the movement of resources from poorer areas to wealthier ones.

Scotland Bill

Debate between Lord Beamish and Andrew Gwynne

Monday 15th June 2015 Commons Chamber

[Mr Jones]

What the hon. Lady has said is not unusual. It is part of the blame culture. Apparently, if things do not happen in Scotland, it is because wicked Westminster—meaning parliamentarians, among others—is somehow preventing them from happening. At the time of the independence referendum, the SNP stood on its platform arguing that Scotland could be a separate, independent nation in 18 months. What has changed?

Amendment 89 is rather mealy-mouthed. As I have said, the Scottish Government will draw down the powers when they want them. There will be what the hon. Member for Dundee East described as a transitional period, and we all know what that means. It means a period during which the Scottish Government could draw down powers that would enable them to make changes in Scotland, while retaining elements such as the Barnett formula. Well, I am sorry, but that will not happen—and the hon. Member for Dundee East, and the rest of the SNP, will blame big bad Westminster because it has prevented them, or the Scottish people, from being given those powers. The proposal from the hon. Member for Gainsborough is very simple. It means full fiscal autonomy along with all its consequences, rather than a “drip, drip, drip” process over a period during which the rest of the United Kingdom would be expected to fill any gap resulting from the Bill.

[Andrew Gwynne]

I suspect that my hon. Friend is right in his analysis of where amendment 89 would lead us. To be fair to the hon. Member for Dundee East (Stewart Hosie), he was very candid about the transitional arrangements that he envisaged, which would involve the Westminster Government, the Scottish Government and, perhaps, others sitting around a table with the aim of agreeing on a framework for the drawing down of partial powers. But would we not expect the framework to be specified in the Bill, so that people in all four parts of the United Kingdom could be certain about what those transitional arrangements would be?

[Mr Jones]

I entirely agree. If we are to give the Scottish Government more powers over entire areas of taxation, including the raising of money that they will actually spend, we cannot do that twice. They cannot have the ability to raise revenue and, in addition, a top-up power allowing them to make some of the difficult decisions that they will have to make. The hon. Member for Dundee East seems to think that, overnight, Scotland will be turned into some beautiful paradise on a par with Switzerland—[Hon. Members: “Hear, hear.”] I must say that, in terms of beauty, it already is.

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[Andrew Gwynne]

My hon. Friend is making an important point. We must focus on the nature of the transitional arrangements that would lead to full fiscal autonomy, and I am none the wiser about what the SNP is proposing. Is it proposing a proportionate change in the Barnett formula, aligned with the amount of tax that they will draw down in their move to full fiscal autonomy?

[Mr Jones]

I agree with my hon. Friend that the position is not clear, but I think that the SNP wants to move to full fiscal autonomy while retaining the majority of Barnett, and I am afraid that that is not going to happen. Of course, when a United Kingdom Government say no to it, we will hear what we usually hear from the Scottish nationalists: wicked Westminster is preventing Scotland from getting what it needs. That is the nub of the problem. That, I think, is why the SNP has retreated from its 18-month target for full independence, and now wants a fudge that will get them through the next few years.

The real issue, for me, is this. I support the people of Scotland in their wish for more devolution, but I do not support a system that is not good for individual members of the Scottish public, and is also unfair on my constituents and others.

My hon. Friend the Member for Nottingham North raised the broader issue of whether we need to have a debate about devolution in this country. I think that we do. I do not take his dewy-eyed approach; I think that there are times when, in any type of organisation, responsibility must stop at a certain level. If we did not take that approach, we would be devolving power to something like a French commune, and creating a system of street-level decision-making. However, it could be argued that in a country such as ours, which has a very centralised system, there is a need for a movement towards the devolution of powers.

What we saw in the north-east in 2005 was a clear decision by the people that they did not want another tier of government when they rejected the regional assembly approach, and I have to say I think most places do not want more politicians. The Chancellor’s proposal is to devolve certain things to the north-east of England only if it has an elected mayor whose jurisdiction stretches from Berwick all the way down to the Tees. Again, that is looking at the structure of things, rather than asking people. The Conservative party machine in the north-east has gone into overdrive this weekend with Mr Jeremy Middleton, a failed Conservative parliamentary candidate who cannot get elected anywhere in the north-east under the Conservative banner, now leading 60 business leaders saying the north-east’s elected councillors and others need to sit up and listen to the Chancellor and get on with having an elected mayor for that huge region. Well, I am sorry but we in the region need to have a debate about how we devolve those powers and I gently say to business, “Do not be used by someone like Mr Jeremy Middleton who clearly has a political agenda of his own. Get involved and work with local councillors and others to determine and support the future.” [Interruption.] There is a cynical side to the Government’s approach to the devolution debate, which is—[Interruption.]

--- Later in debate ---

[Mr Jones]

I would not want to insult my hon. Friend the Member for Nottingham North in that way.

There is a cynical side to the Government’s approach to devolution and it goes like this: “You devolve powers because you devolve responsibilities, but you don’t devolve the funds to actually undertake them.” The Government want to contract Whitehall but they are not going to devolve the money to the English regions; they are going to devolve the responsibilities and then say to the various local bodies concerned that they are responsible for the failure to deliver at the local level.

[Andrew Gwynne]

We are here today primarily to debate the Scotland Bill, which we support, but my hon. Friend is right to point out that it has far-reaching consequences for every part of the UK, including his constituency and, indeed, mine as the Government are proposing quite extensive devolution powers to Greater Manchester. Is that not precisely why we need to have a proper debate within the framework of the constitutional convention to decide what the English answer to the English question is, as well as deciding what this place is going to do on the UK-wide question?

[Mr Jones]

I agree, and we need to get away from the cynical approach of this Government who talk about devolution and about devolving decision making but with no funds attached to that.

--- Later in debate ---

[Mr Jones]

I am not sure what the point of that intervention was. I am talking about an amendment proposed by the hon. Lady’s party, and I think it is deficient. The onus is on the hon. Gentleman who moved it to explain to the Committee what its reference to the United Kingdom’s constitution actually means. He clearly does not have a clue what that means, and the danger is that there could be a challenge and that would lead to lots of work for lawyers—and as Members know from me of old in this place, I am not one for feeding lawyers.

This Bill is a major move forward.

[Andrew Gwynne]

Will my hon. Friend give way?

[Mr Jones]

No, as I am about to finish.

My hon. Friend made the point about the rest of the United Kingdom and there is a need for that convention. If we do not get that, we will have this patchwork quilt of so-called devolution which will not be in the interests not only of all of our constituents but of the UK as a whole.

Scotland Bill

Debate between Lord Beamish and Andrew Gwynne

Monday 8th June 2015 Commons Chamber

[Mr Jones]

No, I will carry on.

The important point is that we need a system that is not only fair to the people of Scotland but, as the hon. Member for Warrington South (David Mowat) said, fair to the people of the United Kingdom. We cannot have the devolution in Scotland that the Bill proposes without it affecting my constituents in North Durham and the constituents of many other Members.

Devolution raises many practical issues. One example is air passenger duty. Newcastle airport is a great example of the local council, five local authorities and the private sector working together to ensure for the region a vibrant airport with international links. It employs 3,500 people directly, with a further 8,000 people employed in the region.

[Andrew Gwynne]

My hon. Friend’s point about Newcastle airport could be made equally about Manchester airport and many other airports in the north of England. Is this not precisely why we need to have a UK-wide look at the devolution settlement? We need to ensure that parts of England, particularly those in the north which are closest to Scotland, are not adversely affected by devolution?

[Mr Jones]

We do. I am not holding out a great deal of hope, however, because the Government seem to think that somehow, with this power being devolved to Scotland, competition will ensue. I do not think that is going to work. I agree with my hon. Friend totally, but it goes beyond that issue. On landfill tax, a commendable initiative—the zero waste strategy, which has been much trumpeted in Scotland—aims for 70% of waste to be recycled by 2025. That is a very good policy; indeed, it is the only progressive policy I can think of that the SNP has introduced.

Local Government Finance (England)

Debate between Lord Beamish and Andrew Gwynne

Wednesday 13th February 2013 Commons Chamber

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

I should inform the House that my wife is a member of Tameside metropolitan borough council, one of the two local authorities in my constituency.

The Minister’s opening remarks beggar belief. Either he is completely out of touch or he does not understand, or does not want to understand, the impact that this settlement is having on local authorities such as Tameside, Stockport and many others represented by hon. Members. As was pointed out by my right hon. Friend the Member for Leeds Central (Hilary Benn), it is extremely unfair. That was expressed to me loudly and clearly at a budget briefing seminar that was arranged for my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) and me by Tameside council last Friday. To say that the budget seminar was thoroughly depressing would be a massive understatement.

The starting point is that the comprehensive spending review for 2011-12 to 2014-15 has outlined real-terms reductions of about 28% in central Government funds for public services. However, Tameside will experience an overall cash cut equating to a reduction in funding of 43%. That is massive in any terms.

[Mr Kevan Jones]

Also, does my hon. Friend agree that no matter how many pot plants councils get rid of—indeed, even if they were to cut all chief officers’ salaries—no organisation could absorb such a cut without there being an impact on front-line services?

[Andrew Gwynne]

My hon. Friend is absolutely right. Tameside council is an excellent, four-star local authority. It has been highlighted as having some of the best financial procedures of any local authority. It is well managed, and it has met the Gershon savings put in place by the Labour Government with commendation and improved services at the same time. These new cuts are too far and too deep for an authority such as Tameside, however.

Using the Government’s own notional spending power methodology, Tameside’s funding cut will be 1.7% in 2013-14 and 4.9% in 2014-15, amounting to 6.4% over the two years, which is higher than the England average of 5.5% for that period. Those calculations exclude specific grants, of course, such as capital grants, grants for funding education and ring-fenced grants. However, this analysis does not reflect reality for a number of reasons. First, the starting point is taken as the adjusted start-up funding position used in the calculations for the 2013-14 grant, not the actual amounts received in 2012-13. Secondly, the cost of the council tax support scheme is included in both the council tax requirement figures and the start-up funding level, which distorts the reported position.

As was mentioned earlier, further analysis has shown the reduction in spending power, and as I mentioned in an intervention on my right hon. Friend the Member for Leeds Central, it is telling that no council in any region outside the south, with the exception of Cheshire East, has a reduction in spending power of between zero and £50 per person.

[Andrew Gwynne]

There we have it! That highlights just how much Government Members do not get it. I am not here to speak for Manchester. I am a Tameside and Stockport MP, and the reduction in spending per head of population in Tameside is £160.98, yet Tameside is the 56th most deprived area in the country with real social needs. That is why this reduction is so unfair, and the hon. Lady just does not get it.

The savings requirements are £26.5 million for 2013-14, £13 million for 2014-15, £31.94 million for 2015-16 and £46.685 million for 2016-17, amounting to a total of £118.125 million over the next four years. That is just wrong—it is not fair in any sense of the word.

Let me briefly run through the kind of savings—cuts—that Tameside’s council is having to make. On adult services, the council is having to: redesign day services for adults; reduce home care packages; streamline care pathways; reduce voluntary sector grants by 20%; withdraw financial support from luncheon clubs; reduce employment services; outsource further homemaker services to the independent sector; and cut health and well-being services. We are talking about £3.485 million of cuts in 2013-14 and £1.388 million of cuts the year after.

On neighbourhood services, the council is putting in place: new operation structures for district assemblies—that means reducing grounds maintenance, and making cuts to parks, street scene and litter removal functions; an amalgamated parks and countryside service; efficiencies in third sector funding; a new, single, risk-based highways function—that means filling in pot holes; and more savings from the libraries review.

[Mr Kevan Jones]

Does my hon. Friend agree that his local council not only faces pressure on employment and other things, but has about 25% more looked-after children than Cheshire East council?

[Andrew Gwynne]

My hon. Friend makes an important point, which brings me on to what is happening to children’s services. Next year, cuts to children’s services in Tameside will be £4.636 million and the year after the figure will be £6.509 million. This just is not right; the services being cut are for some of the most vulnerable people, both young and elderly, in our society.

Let me briefly mention the issue of reserves, because it has been raised before. My hon. Friend the Member for Sheffield South East (Mr Betts) rightly says that most of the reserves are tied up for schools and capital schemes in any case. By 2015, Tameside’s council will have £12 million in reserves. That is not enough to deal with the equal pay claims, because they continue to be major areas of risk for the council, not least in view of the judgment made against Birmingham city council in its case.

Stockport faces the same situation; Stockport metropolitan borough council is losing £96.59 per person over these four years. Stockport’s council is much more affluent than Tameside’s, but this settlement is still unfair to it and worse than the settlement anticipated by its Liberal Democrat council. Come the end of this week, that council, too, will be looking at huge cuts to park services, to libraries and to support for children. This is just not fair. It is not fair on places such as Greater Manchester, it is not fair on most of the north of England and it shows that this Government just do not get it.

Local Government Finance Bill

Debate between Lord Beamish and Andrew Gwynne

Tuesday 24th January 2012 Commons Chamber

[Andrew Gwynne]

My hon. Friend makes a good point about uncertainty. If a local authority’s income mid-year falls below what is in the budget plans, that causes all sorts of problems. That happened just the other year, with the in-year cuts. Local authorities had prepared a budget on an assumed amount for that year and ended up with substantially less funding.

[Mr Jones]

They did. If local authorities have to lay people off mid-year and sever contracts, that costs local government more. In County Durham, when we had those in-year cuts, it cost the council more money to sever contracts than it would have cost to allow them to fulfil them. No money was saved, but things were made very difficult for local councils, not only to plan their budgets but to manage services.

--- Later in debate ---

[Mr Kevan Jones]

I think that this Secretary of State will be very creative. He will no doubt put out a press release saying that he is giving money to local councils and various initiatives, without telling them that it is their own money. The difference is that he will now have control over how the money is spent, rather than the local councils.

My hon. Friend the Member for Warrington North asked on what basis money will be redistributed. The Government’s track record shows that they do not recognise need as an element in the redistribution of capital. We need only look at last year’s local government settlement to see that.

As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, the baseline will be set for the next 10 years, so councils will not only lose out in the first year but will continue to lose out over the next 10 years. County Durham’s revenue spending power for 2011-12 is £498.2 million, which is a reduction of £35.9 million or 6.73% of its budget. It will see a further reduction of £10.94 million in its spending over 2011-12 and 2012-13, which is a further loss of 4.5%. That will be used as the baseline. This will continue, as my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, for ever more.

Which councils did the Government reward in the settlement? They rewarded southern councils with far lower demands on local government services than councils such as Durham county council. I do not think that that was done by accident.

[Andrew Gwynne]

My hon. Friend is making an interesting point. I commend to him a study that produced a heat map showing the areas that face the largest cuts in local government funding. If that is superimposed on to a map showing the most deprived areas and the areas of greatest need according to socio-economic data, the two maps marry up quite well.

[Mr Jones]

My hon. Friend makes a good point. One of the very deprived local authorities that the Government were determined to help last year was Wokingham in Berkshire, which saw its budget increase by 0.2%, meaning that every person there has had an additional 30p spent on them.

We must take need into account. There are services that County Durham and northern cities need. For example, County Durham has a growing population of elderly people, who are high users of services. Added to that, we have the Government’s reduction of the public sector and deficit reduction strategy, which are affecting the economic viability of regions such as the north-east of England. More individuals will therefore use local councils’ services. More people will certainly become eligible for council tax benefit as unemployment rises. Need has to be an important element in redistributing this money.

We are leaving it up to the Secretary of State to decide how the money will be distributed. In the last debate, the Minister failed to define “significant”. He used the word on several occasions and was pressed by Members on both sides of the Committee to define what it meant, but he could not come up with an answer. We are again being asked in the Bill to trust the Secretary of State. It will not come as a great surprise to hon. Members that I do not trust the Secretary of State. He is a very political individual who is clear in his philosophy: he will help people who support the Conservative party at the expense of northern councils. He does not care whether those councils thrive or not.

Although need is not part of the assessment, let us look at some of the figures. In County Durham, 31% of people live in the 20% most deprived areas of the UK, and 22,805 children, or 21.8% of children, live in households that are defined as living in poverty. In Wokingham, it is just 7% of children. Between January 2011 and January 2012, unemployment in the north-east rose by 19%. It now stands at nearly 12% across the region. As I said earlier, as unemployment rises, the demand on local government services increases, just when the ability for councils such as Durham county council to raise finance is being constricted.

--- Later in debate ---

[Mr Jones]

I do. In regions such as that represented by my right hon. Friend, there will be regional disparities between councils. We are told that this Bill is about giving local government the powers to grow business rates, for example, but it will lead to an increased cycle of deprivation in those constituencies and make it harder for councils to attract businesses and grow their council tax base.

[Andrew Gwynne]

Is the situation not worse than that, because the plans do not just lock in the funding from one period of time? Instead, on top of those real cuts in local government finance we will also have a huge increase in demand for statutory services in those areas of deprivation.

[Mr Jones]

Exactly. Hidden in the Bill is the localisation of council tax benefit, which the Minister does not like to talk about and which comes with a 10% cut. As unemployment is rising in the north-east under this Government, more people will qualify for that benefit. Where will the money come from if it is locked into this system? The only other option for local government would be to increase the domestic rates, but there is an inbuilt problem in doing so. For example, in the north-east, 50% of properties are in band A, so the amount that can be generated is limited. In Surrey, only 2% of houses are in band A, so it is easier for some of the wealthier areas to generate that cash if they wish to do so. An increase of 1% in council tax in Durham, for example, gives a lot less in the long-run than the same increase would in Surrey.

--- Later in debate ---

[Mr Jones]

That is right. This issue is highly political. All credit to the Secretary of State—he knows exactly what he is doing. As my hon. Friend the Member for Warrington North (Helen Jones) has said from the Front Bench, the measure will end up pushing on to local councils some of the tough decisions on spending that will have to be taken. There are two ways of dealing with this—increasing local rates or cutting services—but that will be happening at a time when demand for local government services in deprived areas such as some of those my hon. Friend the Member for St Helens North (Mr Watts) represents is going up. One has only to look at some of the statistics we have heard on Second Reading and in our debates in Committee. Demand for adult services and other services in County Durham, south Tyneside and Liverpool, for example, will be a lot higher than in Surrey and the south-east.

I do not know what the Government have to fear from the reset being on a five-yearly or three-yearly basis. They think they can lock that unfairness into the system, and it is clear that when local people realise that not only are their services going to be cut but they face council tax increases as well, the Secretary of State will say, “Oh, well, it’s your profligate local council that’s doing this.” But in fact, the problem is the system of local government finance being introduced that will directly cause that. We need to keep repeating that point. It is quite clear that the Local Government Association and even some Conservative councils are working on the basis that what the Secretary of State says is not always true. For example, he can offer money for the freeze in council tax, but only for three years. If people take that, they have to realise that there is no guarantee about what they will get just before the next general election.

The measures build in unfairness and we need to make sure that the Minister explains why the period will be 10 years. That figure seems to have been plucked out of thin air—there is no justification for it and local governments do not support it—so what is the rationale behind it? The Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill) said earlier that there could be in-year adjustments for councils that fall on hard times in terms of their business rate income going down, and that is mentioned in the Bill, but we have not seen exactly how that will be distributed. There is no guarantee that a council faced with large redundancies and the closure of a big provider of local business rate will get any benefit at all, because it will be down to the Secretary of State’s determination. On present form, it seems quite clear what the Secretary of State will be doing—looking after Conservative councils.

[Andrew Gwynne]

We spoke earlier about the need for local government to have certainty and the fact that the Bill does not provide adequate certainty for local government, particularly for council treasurers, in planning their budgets. Is it not ironic that although the 10-year reset provides a degree of certainty, the certainty for councils such as Tameside and Durham is that we will have pretty poor settlements for the whole decade?

[Mr Jones]

Indeed. I know that the Secretary of State will say, “We are giving you these local responsibilities”, but how are authorities going to plug the gap? It will be either by cutting services even more or by increasing domestic rates.

Another point on which we need clarification is the “exceptional circumstances” mentioned in the Bill. I should like to know what “exceptional circumstances” are. In what circumstances would the Secretary of State look at a reset during the 10-year period?

Local government needs certainty, and not just in providing services. For example, three-year budgets allowed councils to take decisions that led to efficiencies. If councils are not sure how much money there will be each year, that uncertainty will prevent them from making strategic decisions, savings and investments. That flexibility will be lost. The argument is that this is a localism Bill giving local councils a say, but as we have explained clearly, it actually gives more powers to the Secretary of State and Ministers to decide the future of local government. I should like to know from the Minister why 10 years was chosen for the reset.

Earlier, there were some comments about revaluation. When the Secretary of State was in opposition he argued vigorously against the revaluation of domestic rates. It is time to look at domestic rates, because in all our constituencies we see disparities between different properties. The revaluation process was rushed, which led to a record number of appeals. The Bill will give rise to a situation where the inequality set in domestic rates in the 1990s will be set in the business rate assessment too.

Local Government Finance Bill

Debate between Lord Beamish and Andrew Gwynne

Wednesday 18th January 2012 Commons Chamber

[Mr Jones]

I do not know when the hon. Gentleman left local government, but we introduced three-year budgeting, which helped local councils. I agree that under the old system, when I was a councillor in the days when the Tories were last in government, the biggest problem for councils was having to guess what their annual budget would be. I am not sure whether three-year budgets were introduced by my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), who is in his place, but they gave councils some certainty. The Bill will add more uncertainty. Councils will be asked to second-guess what the system will be, and we will have no opportunity to scrutinise it before it becomes law.

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

It is precisely that uncertainty that is unsettling a number of local authorities, including Tameside metropolitan borough council in my constituency. Had we had the opportunity to scrutinise properly the impact of the Government’s changes on various local authorities as part of the process of deliberating on the Bill, we would have been able to assess the winners and losers across the country. Despite the picture that Ministers paint that everybody is a winner and nobody is a loser, the reality is quite the contrary. Over the coming years, as the new mechanism operates, the gap between authorities that win and those that lose will widen. I believe that areas such as mine, and no doubt my hon. Friend’s, will be the losers.

[Mr Jones]

I agree, and that uncertainty will be a problem not just because councils will not know what the rebate is going to be. It is quite clear that Durham is not going to gain from the new system, and it was interesting to hear the Secretary of State and the Minister say last week that the area would be a net gainer. However, the Secretary of State failed to tell the House—he is very good at that—that he was referring to the last five years’ figures, for some of which time the economy of County Durham was growing. Now, under the coalition Government, it is—

--- Later in debate ---

[Mr Jones]

Indeed. Now, we see that the latest unemployment figure is nearly 7.8% for my constituency and nearly 12% for the north-east in general, and businesses are closing. Is the hon. Member for Tamworth (Christopher Pincher) saying that those businesses are somehow going to grow over the next few years as a result of this measure? In fact, councils will lack certainty about how much they will get. The local authority is one of the biggest employers in County Durham, but there has been a reduction in the numbers of people. I think the policy is that by cutting back in local government and public services, all these new jobs will rush forward from the private sector, but today’s figures show that 67,000 people have left the public service in the last quarter, while only 5,000 jobs have been created in the private sector.

As I said on Second Reading about my constituents in the north-east, the Bill will actually help the affluent south. Clearly, it is a damn sight easier to attract business to the likes of Westminster and other economic hotspots in the south-east of England than to parts of County Durham. That is no criticism of the work that local councils do to attract jobs—for instance, with the council’s full support, the area has succeeded in attracting Hitachi trains to Newton Aycliffe in County Durham. I know of the tremendous work that my hon. Friend the Member for Sedgefield (Phil Wilson) did on that campaign.

The Bill is being rushed through with undue haste. We are expecting councils and local people to walk blindly into the future. The parties in government sometimes try to portray this as a simplified system, but it is not; it will be a centralised and bureaucratic system. We cannot allow a situation to develop in which local people or local government do not know how much money they will get or how the system will work in practice.

[Andrew Gwynne]

Is not one merit of pausing, delaying and taking stock of the changes that it would allow us to get the baseline starting point absolutely right for each local authority, which is crucial, and is it not the case that using the 2012-13 formula grant model, including the damping, to determine the baseline will, for local authorities such as mine in Tameside, lock in the funding losses arising from the damping exercise and the disproportionate reduction in funding from the 2011-12 and 2012-13 settlements?

[Mr Jones]

Yes. That would have come out had we had proper pre-legislative scrutiny in Committee. It is the same for County Durham. Under the funding settlement introduced last year by the Conservatives and Liberal Democrats, County Durham lost about £10 million. That will be in the system for ever more now because of the measures in the Bill. Surprisingly, Wokingham council, Surrey council and many others gained from the system. That injustice will be written into the Bill for ever.

--- Later in debate ---

[Mr Kevan Jones]

Again, that is part of the contradiction in the Government’s thinking and policy. As we have seen, LEPs are toothless tigers. They are not going to produce much growth or investment, as I know from the ones in the north-east. Certain people in the business community are becoming increasingly cynical and feel that LEPs are just going to be talking shops, rather than organisations that will do things to regenerate areas or attract growth.

Amendment 19 refers to “need” and, as my hon. Friend the Member for Warrington North (Helen Jones) said, it sets out the important issues that we need to take into consideration. I know from my north-east constituency that unemployment is a very important issue to take into account. The level of unemployment stands at 11.7% in the north-east of England, which is 3.5% above the national average. As my hon. Friend said, unemployment means that additional services are required and it puts further strains on local councils, which is why it is important to take it into account.

This debate is also about where we start from, which is why it is important to take the council tax base level into account. In the north-east, 50% of properties are in the lowest band, band A, whereas the corresponding figure for Surrey is just 2%, with 75% of properties there being in band D and above. It is very difficult for councils in the north-east to raise extra finance outside the business rate, so we are not starting on a level playing field. Mention has been made of South Tyneside, where 66% of properties are in band A, and that must be compared with the figure for Kensington and Chelsea of less than 2%.

[Andrew Gwynne]

My hon. Friend is making a superb point about the ability of local authorities to raise income from council tax. Is not a major issue for local authorities such as his and mine the fact that the formula grant for 2013-14 will lock in those very real cuts that such local authorities will have had to face from 2011-12 onwards?

[Mr Jones]

I am grateful to my hon. Friend for mentioning that, because I was about to discuss the baseline, as it has been set at 2011-12 levels. Durham county council had a grant reduction last year of some £10.9 million, which represents about a 4% loss, and that is now going to be set in stone for the next 10 years. Let us compare that with the situation in Wokingham, in Berkshire, whose authority actually had an increase in its grant of 0.2% and each person living there got an extra 30p in grant.

As I said on Second Reading, it is quite clear—I take my hat off to the Conservatives and do not know why the Liberal Democrats are turning a blind eye to this—that the Conservatives are looking after their own. They used to accuse the Labour party of doing so, but the Secretary of State makes no bones about the fact that he will help the people who voted for him. Does he give a stuff about the north-east and other places? No, I do not think he does.

It is important that we consider need because, as I said and as my hon. Friend the Member for Warrington North said earlier, with unemployment, a more elderly population and deprivation, people use council services more in such areas. Some 31% of the people living in County Durham, for example, live in the top 20% of the most deprived areas in Britain and 21.8% of children in the county live in homes that are classed as in poverty. In Wokingham, that figure is under 7%. The demand for local services in Durham is obviously a lot higher. Likewise, eight people go for every job in County Durham. A good example is looked-after children: in Wokingham, there are 22 per 10,000 children whereas in Middlesbrough, in the north-east, there are 104 per 10,000.

It is not just about the numbers but about the types of services. Elderly care and services for looked-after children are very expensive to provide. There is no cheap way of looking after elderly people or vulnerable children in care, so that puts added pressure on those councils. That must be taken into account in any assessment, as otherwise we will do exactly what my hon. Friend said that we would. We will start from the premise that this Government like to put out, which is that irrespective of where a local government organisation is in this country, there is a level playing field. There is not. Any system must take need into account and that is why amendment 19 is important and why I do not understand the Government's not being in favour of it.

Another issue that we heard about on Second Reading and that we have heard about again tonight is the idea that by retaining a certain percentage of the business rate councils will be able to incentivise and develop business. That might well be the case in some areas, but councils must cater for other factors, one of which is location. My hon. Friend mentioned Consett. Consett has actually done very well in attracting businesses, but it is a damn sight harder attracting jobs there than it is in parts of the south-east and London.

--- Later in debate ---

[Mr Jones]

A bit far, perhaps. The Government know exactly what they are doing. As I said on Second Reading, their strategy is quite clear: they want to give freedoms to local councils, push decision making down as far as possible and then, when they have cut grants, as they will with council tax benefit and others, they will say to local people, “Well, it’s your local council that has to decide how and where the cuts come.” The Government will stand back and say, “We’re sorry, but it’s nothing to do with us.” That is the clever side of it. Part of their strategy is about making sure that they save money and cut it out of the system but that local councils, rather than themselves, get the blame for implementing the cuts.

[Andrew Gwynne]

Does my hon. Friend agree that an unforeseen consequence of the Bill could be that local authorities become overly dependent on one type of economic development—the type they can generate the most from in business rates? In an area such as mine, that would mean an overdependence on retail.

[Mr Jones]

My hon. Friend makes a very good point. In terms of economic development, local authorities might go for what will generate income rather than what will create the right mixture. Although retail shopping and warehousing produce business rates, they do not produce large numbers of local jobs, but there might be a growth in those types of business in some areas.

We should not be fooled into believing that the Government do not know what they are doing, because they do know. They are passing legislation down to local government and making sure that those in central Government do not get the blame. We need to be saying that these cuts have been implemented because of the Government—including the Liberal Democrats. It amazes me that Liberal Democrats in Durham can complain about the closure of leisure services or a leisure centre while stepping back and saying, “It’s nothing to do with us,” even though their representatives on the Front Bench in government and others are going through the Lobby to vote for such measures, as they will tonight. Without amendment 19, and without some assessment of need in the Bill, I have little faith that the Government will not do what they have a track record of doing: rewarding the areas that vote for them.

Finance Bill

Debate between Lord Beamish and Andrew Gwynne

Tuesday 28th June 2011 Commons Chamber

[Mr Kevan Jones]

New clause 5 would allow married couples to transfer their personal income tax allowances between each other, along the lines of what was said by the Prime Minister and the Secretary of State for Work and Pensions during the election campaign about recognising marriage in the tax system. The new clause is not exactly what the Conservatives were proposing at the general election, and I shall deal with the differences in a while. The important point, which has not been clearly articulated by the hon. Member for Gainsborough (Mr Leigh), is that this policy arose from a 2005 report by a Conservative think-tank, the Centre for Social Justice, on the breakdown of the family. Its main argument was that marriage is the important point in keeping families together, tackling poverty and dealing with all the other arguments that he has covered. It also supported the introduction of an incentive in the tax system to encourage people to marry, and I shall return to that in a moment. I am not sure that most people who get married are thinking about the tax system before they decide to do so.

[Andrew Gwynne]

My hon. Friend makes a reasonable point and one that we were discussing on the Back Benches earlier. I am married and all three of my children attended my and Allison’s wedding in 2003. We did not need a tax allowance in order to get married—that is the important factor here that is being missed.

[Mr Jones]

I am sure that the hon. Member for Gainsborough will be shocked at the fact that my hon. Friend’s children actually attended his wedding. I did not realise that my hon. Friend was such a progressive individual, but he makes a perfectly good point.

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[Mr Jones]

They are mediaeval in some cases, as my hon. Friend mentions.

[Andrew Gwynne]

The Deputy Prime Minister did not just say that this proposal was Edwardian. I believe that he went on to say that it was also patronising drivel.

[Mr Jones]

That is a bit rich coming from the Liberal Democrats, because most of the things that they come out with are patronising drivel. However, they were clearly not happy about this policy, so in the scramble to get the red boxes and cars they had to reach some type of compromise. Thus, the coalition agreement simply states that there will be a provision whereby the Liberal Democrats can abstain at some point in the future when this policy is introduced.

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[Mr Jones]

I think that report has been discredited, but I can look at the north-east of England and my constituency and consider the changes in employment that happened under the previous Labour Government as well as the life chances we gave to individuals, the new hospitals we provided and the investment we made in things such as Sure Start centres. Although I accept that such changes will not have benefits straight away, they will have real benefits over the lifetimes of those individuals. The Government that the hon. Gentleman supports is taking away such provision and says that the state is not important in one respect while, in this case, they want the state to engineer people’s private lives socially. I find that a completely contradictory stance, but, again, the hon. Gentleman is a Conservative and is therefore allowed to be contradictory.

[Andrew Gwynne]

My hon. Friend is being generous in giving way and he is making the point that the state can be family friendly through its policies without having to give away a tax break to people based on their marital status. The previous Labour Government made great changes by giving life chances to young families, in particular, without having to manufacture the tax system in such a way.

[Mr Jones]

My hon. Friend makes a good point. A little later, I shall discuss what our Government did to recognise the fact that if we are to address the issues raised by the hon. Member for Gainsborough about child poverty, the tax system and marriage are not necessarily the way to do it. The way to do it is to ensure that the money goes to the families and children who are affected. That is why the child tax credits and other such provisions were vital in raising people out of poverty. Earlier, my hon. Friend the Member for Alyn and Deeside (Mark Tami) mentioned the minimum wage, which lifted a lot of very poor individuals out of poverty who were getting a pittance. I remember seeing as a trade union official an advertisement in the jobcentre in Newcastle that read, “Night guard, bring your own dog, £1.35 an hour.” That is a thing of the past. I hope that it will remain so, but I do not know, as we hear from Conservative Back Benchers that they might want to change the minimum wage in some way.

Finance (No. 3) Bill

Debate between Lord Beamish and Andrew Gwynne

Tuesday 3rd May 2011 Commons Chamber

[Mr Jones]

No—not yet.

Those bonuses do not reflect the behaviour of bankers who have been responsible in their lending.

[Andrew Gwynne]

My hon. Friend makes an excellent point. Does he understand the dismay of those from small and medium-sized companies in Denton and Reddish who come to see me? They would not mind their banks being a bit more generous in their lending now and then. They cannot even get a decent proposal through their local banks for funding to expand their businesses. These are not risks; they are sound business proposals that would generate jobs in my constituency. No doubt the same happens in my hon. Friend’s constituency, too.

[Mr Jones]

My hon. Friend makes a good point. Those examples can be seen up and down the country.

Given the amounts of money that some of the directors of Barclays are being paid, they could lend money to those small businesses themselves. The two highest-paid managers, Jerry del Missier and Rich Ricci—great name!— were handed more than £40 million each after share deals awarded over the previous five years. Bob Diamond, the chief executive, took the helm in January this year and, in that period of remorse, has received £27 million, including £6.5 million in bonuses for 2010 and £2.525 million awarded in shares, which could be paid out in the future. The share deal for the past five years paid out £40 million, and the one for 2007 paid out £5 million.

We know about those amounts because of the Government’s great deal under Project Merlin to force banks to expose what their directors are being paid. If that was supposed to act as a threat to them, they seem to be ignoring us and doing it all anyway. They seem to have very tough hides, because rather than being remorseful for the mess that they got us into, they are still taking the money.

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[Andrew Gwynne]

Why does my hon. Friend think that those on the Government Front Bench are so apprehensive about having a review of their own banking levy? Does he suspect, as I do, that the findings could show that it was not working?

[Mr Jones]

Yes, possibly. The Government are getting used to performing U-turns on a daily basis: and after Thursday, the reinvigorated Liberal Democrats might be able to force a change and get the levy increased.

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[Mr Jones]

I am, but that is part of the scrutiny process, and so is this. If the hon. Gentleman is so interested in the banking levy and the effects of the Bill on his constituents, why does he not speak? At one point he was alone on the Liberal Democrat Benches. The Government Benches have been fairly deserted this evening: the poop deck of the Mary Celeste may have had more life in it. Members who support the proposal in the Bill should at least turn up to argue in favour of it. No doubt we will be receiving “Focus” leaflets from the Liberal Democrats—although after Thursday they may be called something different—describing how tough they have been in regulating the banking system, but it is clear that they have not.

The hon. Gentleman has until late tonight, and tomorrow, in which to contribute to the debate so that he can reproduce his contribution in his “Focus” leaflets ad nauseam, which I know the Liberal Democrats love doing. People will be able to learn about how he stood up for them against the bankers rather than just listening to the hollow words and rhetoric of the Prime Minister and the Deputy Prime Minister in the run-up to the general election. The beauty of being in government is that politicians can actually do things. I know it has come as a big shock to many Liberal Democrats that they are in a position of responsibility whereby they can actually affect the lives of ordinary people. [Interruption.] Yes, responsibility without influence, as my hon. Friend the Member for Gateshead (Ian Mearns) says from a sedentary position. As the Liberal Democrats are in government, they can follow through and make sure that the Bill deals with the people who were responsible for getting us into this mess three years ago. They also have an opportunity to tackle the excessive profits. I do not know what the average salary is in Bradford, but I am sure that £1 million is a lot of money to the people there. I know that in 1914, prior to the first world war, Bradford won the competition for being the place where the most Silver Ghosts were sold, because it was a rich mill town back then; I learned that from the predecessor of the hon. Member for Bradford East when I was working for him in a by-election many years ago. I doubt whether many Rolls-Royces are sold in Bradford nowadays, however, and the hon. Gentleman’s constituents can only dream of some of the bonuses he is supporting this afternoon.

[Andrew Gwynne]

Will not such a review serve to make it clear that many of the commitments made by the Liberal Democrats in opposition have not been implemented—and, indeed, have not even made it off the drawing board to become Government policy?

[Mr Jones]

Yes. I do not particularly like giving opportunities to Liberal Democrats, but it would give them an opportunity to show that they have the teeth that the Liberal Democrat Cabinet Ministers claim they have got in this coalition, because they would be able to say to the Conservative part of the coalition that they want change—that they want, for example, to increase the levy or to make sure that the huge bonuses being paid are taxed in a different way, or to bring in regulation. Let us be honest about this, however: most Liberal Democrat Ministers have not got sharp teeth—unless they have been to the dentist in the last few weeks. In the next few days we will see the beginning of the demise of the Liberal Democrats, and, as it were, the extraction of their teeth. It will certainly be interesting to see how sharp their teeth are after Thursday.

The current Government’s bank levy should take the same amount as the Labour Government’s bank bonus measure raised, which was £3.5 billion.

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[Mr Jones]

I am becoming concerned. The hon. Lady’s blood pressure does not seem stable tonight. She seems to be turning red and getting rather excited in tonight’s debate, which I am not sure is good for her health. Why did she argue for and push through an increase in VAT when she and her Prime Minister stood on a manifesto saying that they would not put VAT up? That is not being honest with the British people. What she has to explain to hard-working families in my constituency, North Durham, and in Putney is why she reneged on that promise.

There has been much talk in recent weeks about trust in politicians, and a lot of nonsense talked by the yes to AV campaign about whether MPs are hard working and trustworthy. When the Prime Minister and the hon. Lady say clearly that they will not increase VAT, and then that is the first thing she does, I understand why my constituents and hers are rather cynical about certain promises.

In the Budget the Chancellor used the gimmick of cutting the price of petrol by 1p. We will shortly debate how he will pay for it. It has had disastrous consequences for the economies of parts of Scotland and north-east England. He also increased VAT by 3p. He took it off with one hand and put in on with the other. Paying for that will have consequences for oil exploration in the North sea not only in the next year or so, but for a generation.

[Andrew Gwynne]

Does my hon. Friend recall that the Chancellor of the Exchequer, soon after the Budget, took a very dim view of those retailers who did not pass on the 1p decrease in fuel duty, and does he agree that the purpose of having such a review is to see whether the Government’s policy was ultimately a success or a failure?

[Mr Jones]

That is a very good suggestion. That is one of the issues that could be included in the review. Do the Government honestly think that they can con my constituents and others and that a 1p reduction in petrol duty will really be a vote clincher for them? Late last Friday I was in the excellent Sainsbury’s in Pity Me in Durham, and I noted that customers who spent £70 on their groceries could get 5p a litre off their fuel. It is a deal offered by other supermarkets—I do not want to favour Sainsbury’s. Are those on the Treasury Bench really convinced that constituents will be conned by the 1p reduction, when the cost is being increased by 3p, and if they can get 5p a litre off when they spend more on extra groceries?

My hon. Friend the Member for Ilford South (Mike Gapes) made a good point, which I accept, about the differences in fuel prices in different parts of the country. I think that there is a case for part of the review looking at why fuel is priced differently across the country. I hasten to add that at the weekend, when I was in Worksop in Bassetlaw visiting my father, I went to a Sainsbury’s—it happened to be the supermarket there—and noticed that diesel was £1.38, although down here in London and in parts of Durham it is £1.42. Clearly the constituents of my hon. Friend the Member for Bassetlaw (John Mann) are getting a good deal from the Sainsbury’s in Worksop. These are the issues that could be looked at in a review.

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[Mr Kevan Jones]

My hon. Friend makes a very good point, and her point about investment will increasingly be thought of when making such decisions.

That brings us to the question of what the decision-making process was when coming up with this tax. We have already had the ludicrous situation whereby even a Minister who practically used to work for a gas company did not recognise the difference between gas and oil prices. In my experience as a Minister dealing with Treasury officials, I always thought that they knew what they were talking about, so I am surprised that the Treasury allowed this measure to get through, because everyone knows the difference between the prices of the two.

We have already seen the effects of that this week, with the possibility that Centrica might turn off investment in Morecambe bay, and I am sure that the Minister will be off the company’s Christmas card list next year unless she does something radical to change what has been proposed. That decision will not only mothball a gas field that would have provided this country with gas for years to come, but write it off.

What will we do instead? We will import gas, which does not make sense economically or for energy security, especially when we look at where the large concentrations of gas are in the world—the former Soviet Union, parts of the middle east and, lo and behold, north Africa. Any idiot can work out that even Morecambe bay, and possibly Blackpool on a rowdy Saturday night, is more peaceful than north Africa or parts of the former Soviet Union, so it is important that we take seriously the comments of companies such as Centrica, which have invested over many years and not just in oil and gas fields but, as my hon. Friend the Member for Blaydon said, in new technologies.

It is a dirty industry, but it is also a leader in new technologies, such as robotics and drilling, and, owing to the difficulty of extracting oil and gas from parts of the North sea, we have been able to develop new techniques that are now used throughout the world. That is why many UK companies are leaders not only in this country, but throughout the world.

It has also become increasingly clear that the tax rate will have a real effect on the economy of north-east England. I accept that hon. Members who represent Scottish constituencies feel passionately about the issue, but the measure will have a dramatic effect in the north-east, too. The Conservative part of the coalition tells us that we in the north-east should grow the private sector, but the oil and gas industry is a very vibrant part of the private sector. Indeed, my hon. Friend has already mentioned the sub-sea sector, which supports 10,000 jobs and 380 firms in the north-east.

[Andrew Gwynne]

Like my hon. Friend, I feel passionately about those jobs in those cutting-edge industries. Is not the issue to protect jobs today and invest in future jobs in the north-east and the north-west, including in things such as apprenticeships?

[Mr Kevan Jones]

It is, and the north-east has been able to take advantage of the change in, for example, the River Tyne, which was heavily dependent on shipbuilding. Now we have facilities such as the Walker technology park, and the city council was far-sighted when it developed an offshore park for the North sea oil industry.