Local Government Funding

Alex Cunningham Excerpts

Wednesday 27th March 2019 Westminster Hall

[Thelma Walker]

It is a pity that we do not have better representation on the Conservative Benches.

I was talking about Labour’s vision for how things can be. We will properly fund public health services, establish a new national target to narrow health inequalities, and prioritise the health and wellbeing of every child, which is very dear to my heart. We will give councils £1.5 billion extra for general council services, too. Although that additional funding is important, we have made a commitment to place local government at the heart of our work, giving local councillors a direct voice in central decision making through our local government commission.

To fix our broken political system, where people are left feeling disconnected and disillusioned by politics, we need to put local people and communities at the heart of decision making. Showing local people that Whitehall works for them is the first step in addressing this problem. I want this to be what local government does and is seen to be doing by the public: building inclusive and cohesive communities, providing accessible care for all who need it, and supporting vulnerable people to promote their life chances.

I applied for the debate to request that the Government rethink the approach to local government funding and make urgent changes to address the crisis facing our councils.

[Alex Cunningham (Stockton North) (Lab)]

As you pointed out, Mrs Main, there is an absence of people on the Government Benches this afternoon, apart from the Minister. Does my hon. Friend agree that that might be because there has been a shift of funding from Labour high-need authorities to Tory authorities with less need?

[Thelma Walker]

Absolutely; I completely agree with my hon. Friend. It speaks for itself that we do not have representation on the Government Benches.

I hope the Minister is able to take note of the contributions made in today’s debate and take meaningful action, instead of recycling tired lines. I will conclude with a quote from Nye Bevan:

“Discontent arises from a knowledge of the possible, as contrasted with the actual.”

We know that it does not have to be like this. The public want to see change, and Labour is prepared to deliver it.

--- Later in debate ---

[Alex Cunningham (Stockton North) (Lab)]

I congratulate my hon. Friend the Member for Colne Valley (Thelma Walker) on securing this debate. In a former life, I was a local councillor and cabinet member so, believe me, I know at first hand about local authorities’ opportunities and challenges, which she outlined.

Stockton Council has been ambitious and forward-thinking, and has delivered projects that some said were not possible. It partnered with Hilton and built a hotel in the town, which will complement the reopening of the 2,500-seat Globe theatre, just a short walk away, next year. Our high street won the rising star at the Great British High Street awards in 2016, which is a testament to the effort put in by councillors and staff to make our corner of the world a better place to live. The area has been a beacon for Ministers, a Select Committee and countless others, who came to see those successes for themselves.

My council has been required to deliver savings of about £45 million by the end of this financial year. Like other authorities, it faces an unprecedented growth in demand, particularly in children’s social care services. The total spend for all children’s social care services rose from £23 million in 2010-11 to £38 million—nearly double—in 2018-19, despite the reductions in grant funding. I have been told that that is the greatest cost pressure facing local authorities around the country.

Another key problem that has been highlighted to me is the inability of some councils to think ahead due to the uncertainty of local government funding. The spending review is supposed to sort that out, and we have the fair funding review, but sadly I do not feel terribly optimistic about it. Local authorities will retain a greater proportion of business rates, but there is a severe lack of clarity or agreement about how that will work. Large tower blocks in Westminster or Chelsea will raise millions of pounds for their respective councils, but local authorities such as Stockton can expect very little in comparison.

Austerity affects not just the funding that local councils get—the lack of jobs and prospects that go hand in hand with it put additional pressure on families. There is a desperate need for more public health funding to address the inequalities in our society. It is estimated that there are still 19,000 smokers in my Stockton North constituency. Smoking costs my area £37.4 million every year. Some 31% of households with a smoker are below the poverty line. If those people were to give up smoking, 1,991 households would be lifted out of poverty, including 1,342 children. However, public health budgets are being diminished, rather than increased so that we can develop programmes to help people quit, and address obesity, drug misuse and dangerous choices. That is Government failure. It is the result of a reckless Government slashing the vital support services that people depend on and systematically reducing job opportunities not just through austerity but through business and industry uncertainty caused by the threat of a no-deal Brexit.

Ministers love to trumpet the rise in employment and fall in unemployment across the country, but that is not happening in areas such as mine. Unemployment has risen month on month in my area for some considerable time, and local authorities have limited, if any, resources to sort it out. There has been a devolution deal of some Government budgets to the Tees Mayor and the combined authority, but despite the plethora of news releases and ministerial statements about Tees Valley, few new jobs are being created in reality. The Minister must take full responsibility and tell us what the Government will do—he is too busy looking at his phone. The Government are too busy to tell us what people are doing for constituencies such as mine.

I agree with organisations including Action for Children, Barnardo’s, the National Children’s Bureau and the Children’s Society that the spending review must provide additional funding for children and young people’s services, and address the estimated £3 billion funding gap that local authorities face by 2025. I agree that there must be a clear link between the likely need and the funding available in each local area. There cannot be a postcode lottery benefiting councils that are aligned with the Government of the day. The children and service users who are in desperate need of social care should and must come first. Importantly, early intervention is key to ensuring that the demand on services does not get out of hand. We must prevent family breakdown, not just deal with it when it happens, as that costs more money and can severely damage people’s lives and future relationships.

This is about political choices and priorities. We simply cannot afford not to spend money. We cannot scrimp and save on children’s social care and family support services until there is nothing left but the skeleton.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)]

It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate the hon. Member for Colne Valley (Thelma Walker) on securing this debate. I join her in paying tribute to all those working in local government up and down the country, including her husband, for the terrific work they do to make our communities better places to live.

It may surprise hon. Members to hear that I agree with much of what has been said. First, the sheer range of things we have heard illustrates the importance of what local government does and the impact on all our residents’ and constituents’ lives. I also agree that local government has been dealing with a very difficult financial climate these past few years, for reasons we do not need to rehash in the short time we have. This Government took the right decision—the moral decision—to get our public finances back in order, and local government has played a very important role in making that happen. It deserves enormous credit for the way it has done that—for finding better, cheaper ways to do things while maintaining high resident satisfaction—but I appreciate that that journey is closer to its end than its beginning.

One thing we may disagree on, though, is the talk of cuts. We heard a lot about cuts and a lot of selective quoting of statistics. The simple truth is that the resources available to local government to spend on core services will be £1 billion higher this financial year than last financial year. That represents almost a 3% rise in the cash available to local authorities up and down the country.

[Alex Cunningham]

The Minister says there will be £1 billion more to spend this financial year, but how many billions have been cut since 2010?

[Rishi Sunak]

I acknowledged right at the beginning of my speech the difficult financial climate that local government has suffered over the last few years. I am not trying to pretend it has not—I acknowledge that. The point is that the Government are absolutely listening and responding. A billion pounds more is almost a 3% rise in funding. That is more than the economy is growing by, and it is more than inflation.

[Sir Christopher Chope in the Chair]

--- Later in debate ---

[Rishi Sunak]

I am conscious of time, so I will make progress. If those peers do not act, then we will act unilaterally. The Government are addressing the point.

I agree with the hon. Member for York Central that high streets are important. That was also mentioned by the hon. Member for Stockton North, who talked about his high street, which I know as it is near my constituency. This Government understand the importance of high streets in creating living, breathing communities. That is why a £675 million high streets transformation fund was announced at the last Budget for all local authorities. I encourage Members to talk to their local authorities and bid for the fund. It is there to fund transformational projects that revitalise high streets and comes on top of the Treasury business rate reductions. The Government are agreeing with and backing local authorities to ensure that high streets remain the beating, vibrant hearts of communities. We are in agreement and there is financial support, through tax reductions and this fund, to support high streets. However, shopping habits are changing and retailers, high streets and planning authorities have to adapt. Business rates are only one part of the answer.

The last thing to touch on is building strong communities. We have talked about high streets and other points. Ultimately, local authorities are making people more proud of the places where they live, partly by building houses that people want to call home, whether through the new home bonus or through the lifting of the housing revenue account borrowing cap. Again, the Government are responding to what local government has asked for and delivering it for them.

[Alex Cunningham]

The Minister is talking about devolution and the responsibility of others. The Mayor of Tees Valley has just spent up to £90 million on a loss-making airport. Does the Minister agree that that money would have been better invested in transport infrastructure that encourages investment and creates real jobs? The airport has not created any new jobs or new flights.

[Rishi Sunak]

I think the Mayor of the Tees Valley, Ben Houchen, is doing a fantastic job of ensuring that the voice of Tees Valley is heard in this place. There has been considerable investment in developing the steelworks, the development zone and tax reliefs, which has been widely welcomed. I know that because my constituents are excited to see the rebirth of Durham Tees Valley airport. I know the airport well and I am delighted that it will now have a bright future under the stewardship of the Conservative Mayor of the Tees Valley.

We heard from the hon. Members for Poplar and Limehouse (Jim Fitzpatrick), for Bolton South East (Yasmin Qureshi) and for York Central about Government funding formulas. There is lots to say about that, but the question was raised about why homelessness is not included in the formula. The simple reason is that the amount of homelessness funding that goes through the local government finance settlement is a very small percentage of the total amount—from memory it is only £175 million. The remainder of the homelessness funding, which is several hundred million pounds, has a dedicated formula specific to it. Obviously, if that changed and a future decision was taken to roll that homelessness money into the overall local government settlement, it would demand a formula of its own. I am happy to give that reassurance.

Deprivation is in the formula and in all the areas where it makes a significant difference. Deprivation has little to do with the cost of maintaining a road or a flood defence, for example, and therefore it is not factored into those areas. Of course, it is factored into all the areas that we heard about, including adult social care and children’s social care. In answer to the hon. Member for York Central, we are working in conjunction with all those Departments to develop formulas that they are happy with.

In conclusion, we believe in local government. As we look forward to the spending review, I and the Department will be making a strong case that local government is funded properly, to do all the things it does today, as well as those it will do tomorrow. Beyond money, we will ensure local government has the power, the flexibilities and the devolution that we heard about from the hon. Member for Barnsley Central (Dan Jarvis). Indeed, the Government are supporting that devolution with a considerable amount of money. That is the future for local government that central Government are backing. I will continue to listen to local government, learn from it and push its case in this Government.