Local Government Finance Settlement

Lord Beecham Excerpts

Thursday 15th December 2016 Lords Chamber

[Lord Beecham (Lab)]

My Lords, the Government are qualifying themselves for nomination for the Nobel prize for complacency in how they are addressing the problems facing local authorities. Since 2010, when Salome, in the perhaps unlikely form of Eric Pickles, offered up local government as a prize to central government, which led to the largest share of cuts in any area of government expenditure going to local government, councils have struggled manfully to maintain services. I refer to my interest as a member of Newcastle City Council and a vice-president of the LGA. In Newcastle, we are heading, by 2020, for a £291 million a year cut from what was being provided in 2010. That is a remarkably high figure. It amounts to about £1,000 per head of the population per year. How are councils supposed to maintain services?

The Government’s complacency is reflected in the remarkable assertion that added certainty will provide “increased stability”—the stability of the graveyard for councils—and that,

“By 2020, we will see local councillors deciding how to fund local services using local money”.

But of course, there are inadequate amounts of public money. This will apparently be, “true localism in action”. It is more likely to be inaction in local government, because councils will not have the capacity to deliver the services that their people need.

The Government go on in this Statement, unilluminating as it is, to talk about how the,

“extra flexibility to raise funding … will add just £1 a month to the average council tax bill”.

Councils have not been able to increase council taxes beyond a very limited amount over recent years, so if it is being permitted now to raise council tax by this modest amount, why has that not been available beyond the 2% limit imposed on local authorities in previous years?

The Statement is worse than that in a way because it goes on to say that councils will be able,

“to support people who need care in their area”,

and show,

“how it improves adult social care services”.

It is not a question of improving adult social care services; it is a question of trying to maintain adult social care services against rising costs and, increasingly, rising demands for which no provision is being made.

It is remarkable that the new homes bonus is relied on to transfer one part of local government money to another area. That rather eliminates the whole point, one would have thought, of the new homes bonus, which was supposed to encourage housebuilding, which the Government may have noticed is desperately in need of increasing.

Local councils and, more importantly, their residents are facing an unprecedented decline in services. It is certainly true that some people are not aware of the damage being done because they do not have intimate family knowledge of it. That is why some of the polling suggests that people regard the service as okay. Unless people happen to know members of the family denied services—not able to use a library that used to exist—or do not have children in a school that is under great pressure, they do not get the true picture. The Government are clearly colluding in an attempt to conceal the true picture of what is happening in communities up and down the country.

I have one final point to make in relation to business rates, because this will apparently be the great answer. We do not know how the business rates system will work. We do not know how it will reflect the different yields that will occur in different parts of the country and what method of redistribution will be applied. We do not know, for that matter, how the appeals system will work against the new valuations, which have been controversial in various parts of the country and which may complicate the picture significantly. This finance settlement is unsatisfactory. It is entirely the responsibility of the Government to see that there is a fair distribution directed at meeting needs, and this Statement does nothing to do that.

[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Lord, Lord Beecham, for what was perhaps more a diatribe than a series of questions, but I will try to extract some points that were made in what seemed to me an excessively gloomy speech, although with the noble Lord’s characteristic lightness of touch.

First, it is worth pointing out that 97% of councils, across the political divide, have signed up to the four-year deal. The settlement that we have reached recognises that there has to be a balance of interests—of council tax payers and looking at the problems of the age, specifically the very serious problem of adult social care. The noble Lord said, incorrectly—I think I am quoting him correctly because I wrote it down—that no provision was being made for adult social care. That is patently not the case.

[Lord Beecham]

No.

[Lord Bourne of Aberystwyth]

I think that is what the noble Lord said. I wrote it down. In fairness, he then went on to cite the use of the £240 million funds, so perhaps a careful reading of what was said will indicate that one of us is wrong. However, I think he did say that no provision was being made for adult social care. We have allocated £240 million in the next financial year, from savings from the new homes bonus, which is specifically to address what I acknowledge is a serious issue. That, together with the precept and the ability to reprofile the increase in the precept of 3% and 3% then 0%, recognises £900 million additional spending in the next two years. That is a significant amount for what is, admittedly, a serious issue.

I will home in on an area that the noble Lord quite fairly raised in relation to the business rate retention. As noble Lords are probably aware, there will be legislation on this in the new year. It will be introduced into the Commons first and will come subsequently to your Lordships’ House, so there will be more detail about how that will operate well ahead of it coming to us.