Local Government Funding

Debate between Liz Kendall and Catherine McKinnell

Wednesday 3rd February 2016 Westminster Hall

[Liz Kendall (Leicester West) (Lab)]

I beg to move,

That the House has considered changes to the level of local government funding.

It is a pleasure to serve under your chairmanship, Mr Davies. I want to start by paying tribute to councils across the country that are doing amazing work in very difficult circumstances to get better results for their citizens and better value for taxpayers’ money. I am a long-standing champion of reforming public services, and over the last 12 months I have seen countless examples of innovative councils rethinking what they are doing by joining up local services, shifting the focus towards preventing problems in the first place and giving local people more say and control. But welcoming and supporting the excellent work that many local authorities are doing must not obscure the brutal reality that councils now face.

My own council has suffered grant cuts of 37% in real terms since 2010 and has had to make £100 million of annual savings. Over the next four years, Leicester City Council will have to find an additional £55 million of savings.

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

I thank my hon. Friend for securing this very important debate. In the light of the Prime Minister’s recent letter to Oxfordshire County Council, does she share my concern that the significance of the problem seemed to take him by surprise?

[Liz Kendall]

I indeed find it ironic at best that the Prime Minister is writing to complain to his own council about the cuts his Government are forcing it to make. Many councils, including mine, are considering making very difficult changes in future. Even if they do that, as my council is trying to, and use up virtually all their current reserves, they will not be able to fill the gap, and the impact on vital local services will be severe. This picture is being repeated up and down the country.

If the Minister does not believe me or thinks I am biased because I am a Labour MP, he should listen to the Conservative chair of the Local Government Association, Lord Porter. After the spending review, he said:

“Even if councils stopped filling in potholes, maintaining parks, closed all children’s centres, libraries, museums, leisure centres and turned off every street light they will not have saved enough money to plug the financial black hole they face by 2020.

These local services which people cherish will have to be drastically scaled back or lost altogether as councils are increasingly forced to do more with less and protect life and death services, such as caring for the elderly and protecting children, already buckling under growing demand…Local government has led the way at finding innovative ways to save money but after five years of doing so the majority of savings have already made.”

He finished by saying:

“Tragically, the Government looks set to miss a once in a generation opportunity to transform the way money is spent across the public sector and protect the services that bind communities together, improve people's quality of life and protect the most vulnerable.”

I agree.

--- Later in debate ---

[Liz Kendall]

I thank my hon. Friend for his intervention. He is absolutely right, and I will say more about that in a moment. In Southwark Council, like mine, there is no way that the social care precept will fill the gap.

[Catherine McKinnell]

My hon. Friend is being generous in taking interventions and is making a brilliant speech. Does she share my concern not only about the funding shortfall, but about the gross unfairness of the 2% council tax precept? Areas such as Newcastle, with the greatest social care needs, also contain the people who are least able to pay that additional sum of money. Once again, the Government are hitting the most vulnerable the hardest.

[Liz Kendall]

My hon. Friend is absolutely right. Even with the social care precept, the King’s Fund says that the gap in the funding required for social care will be about £3.5 billion by the end of the Parliament once the costs of increasing the national minimum wage in the social care sector are taken into account. And as my hon. Friend says, the social care precept could actually end up disadvantaging deprived areas and further widening inequalities, because the councils with the greatest need for publicly funded social care tend to have the lowest tax bases.

Leicester City Council and, indeed, Southwark Council will be able to raise only about £6.50 per head of population from the 2% social care precept, whereas Richmond upon Thames will be able to raise almost £15 per head. How can that be fair when Leicester, Southwark and other councils like that have a greater need for publicly funded adult social care than better-off parts of the country? In total, Leicester faces increased costs for adult social care of £21 million by 2020, but according to the Institute for Fiscal Studies, which has modelled this—I would be happy to give this information to all hon. Members—the council will be able to raise only about £7.5 million. That is only one third of what is needed. Where will the extra money for vulnerable elderly and disabled people come from?