Local Government Finance Bill

Alex Cunningham Excerpts

Tuesday 10th January 2012 Commons Chamber

[Alex Cunningham (Stockton North) (Lab)]

With about 186,000 people and two MPs, the Stockton borough is one of the smallest unitary authorities in the country. It is also one of the best—it was recently council of the year, and for several years in a row, it has been in the top six authorities for its management of resources.

For all its small size and success in managing resources, some 500 council jobs have gone since the coalition Government came to power. Still more will doubtless go as the attack on local government and the services it provides continues with this Bill. The lost jobs are adding hugely to increasing unemployment in an area where the jobless rate is already much higher than at any time under the Thatcher and Major Governments when areas such as Teesside and the wider north-east England economy were left on their knees.

Now we have a grand statement from the Government: “Transparency, economic growth, flexibility, making communities masters of their own economic destinies”—all this is promised by the Local Government Finance Bill. These are fancy words that we know, and the Government must know, are an attempt simply to be upbeat in the face of a dire and failing economic policy that is in danger of driving our country back into recession. The jobs lost in my borough are reflected many times over across the country, and the charging white horse of the reform of business rates will not matter a jot—well, not for the worst hit areas in the economy. The reverse will be the case.

What Government Members fail to acknowledge is that local authorities cannot all be equally alluring to business—however hard they try. Business taxation revenue varies hugely from place to place. In 2010-11, Westminster collected 33 times more than my neighbouring borough of Middlesbrough. The changes will widen the gap between authorities capable of promoting growth—mainly in the south—and those where growth is slow or non-existent.

Far from there being, to quote the exact words of the Secretary of State,

“no motivation for councils to support local firms or create new jobs”,

local authorities have embarked on economic development in their area for countless years on the basis that this will attract jobs and so benefit their area. It is the right thing for local authorities to do.

I have been disgusted this evening by the denigration of local authorities, their members and their officers. That the Secretary of State could make such an insulting statement shows how little he understands, despite his long service in local government, the way in which it works. The idea that there could be some overnight entrepreneurial revolution is sheer fantasy.

I am particularly shocked that Ministers should believe that the 10% cut in council tax benefit will somehow magically reduce the number of people who need it. In fact, it will be squeezed at precisely the point at which there is the most need for help among low-income households. Pensioners and vulnerable households may be protected from the cuts, but that means that the whole of the 10% saving that local authorities must make will fall on the unprotected group that consists mainly of the working poor.

[Jim Shannon]

Will not the 10% reduction also mean more poverty and homelessness? How will that affect the hon. Gentleman’s community?

[Alex Cunningham]

I have no doubt that communities such as mine, and perhaps the hon. Gentleman’s, will be affected. I believe that we will see more poverty as people try to cope with much lower incomes.

In many instances, the gains that the Government suggest will be made by the working poor as a result of the £1,000 increase in the personal allowance for income tax will be wiped out by the reduction in council tax benefit. The theoretical 10% reduction will equate to a loss of £1.7 million for the Stockton authority area, £1.2 million of it in my constituency. Given the exclusion of pensioners from the change, those affected are likely to be hit by a 20% reduction, which will contribute to a further increase in poverty. The Government’s proposals merely transfer one of the national costs of rising unemployment to councils and local taxpayers, creating a serious risk that every resident will face further cuts in services that are already under threat.

I do not often find myself sharing many opinions with Government Members, but I simply could not disagree with the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), when he said:

“Those in greatest need ultimately bear the burden of paying off the debt”.—[Official Report, 10 June 2010; Vol. 511, c. 450.]

As it is, the Bill tees up the poorest to bear the greatest burden. It neuters local authorities other than those in the most affluent areas, preventing their development, and it will lead to further job losses throughout the country, with no consolation for the nation as a whole. I will oppose the Bill tonight.