Local Government Finance

Andrew Gwynne Excerpts

Tuesday 5th February 2019 Commons Chamber

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

We expected better from this Secretary of State and wanted to see better from this Government. I thank our dedicated council staff and our local councillors of all political persuasions and none, because, frankly, over the past nine years they have all been hung out to dry by successive Secretaries of State.

This is an Alice “Through the Looking-Glass” settlement. Ministers present a cut as an increase, but back in the real world, what we saw in the provisional settlement, which was reaffirmed last week in the Secretary of State’s written statement to the House, is that there is no new money, no new ideas and no recognition of the dire situation facing councils. Between Christmas and last week the Secretary of State had the chance to change tack, but he has just confirmed to the House that the settlement is identical to the provisional settlement that failed so miserably before Christmas.

Local government is at the heart of our local communities. It looks after the most vulnerable in society and makes our local green spaces cleaner and safer, but under this Conservative Government we have seen unprecedented levels of cuts to our local councils. The fact is simple: between 2010 and 2020, local government in England will have lost more than 60p in every £1 that the Government provide to our communities for services.

[Ms Karen Buck (Westminster North) (Lab)]

We just had a debate on the police settlement grant. Does my hon. Friend agree that local authorities are at the forefront of prevention work, so it is particularly tragic that my local authority, Westminster, has removed all funding from youth services, after-school services and holiday schemes and, like authorities all over the country, lost at least a third of early-intervention funding?

[Andrew Gwynne]

My hon. Friend is absolutely right. The fact is that councils are the lynchpin of the provision of proper, cohesive, joined-up services with other agencies, whether housing associations, the police, leisure services or youth services. It is crucial that our councils and councillors are given the resources they need so that we do not cost-shunt from one area of the public sector on to the others. It is self-defeating to cut youth services, early intervention and police budgets at the same time, because we end up in the situation my hon. Friend describes.

[Mr Jim Cunningham]

I thank my hon. Friend for giving way. I was rather surprised that the Secretary of State did not give way to me; he is usually quite generous, so I am disappointed.

More importantly, it is vital to the people of Coventry that we represent them. Their budgets—if I can put it that way—through the city council have been cut by well over 50%. That has affected libraries, children’s services, care in the community—I could give a litany. It has been a general attack on public services, whether we talk about local authorities, the health service or other services. It is vital that we know the breakdown of the £1 billion pounds that the Secretary of State just announced—I noticed that he tried to avoid that. My hon. Friend is right that central Government are shifting expenditure on to the local council tax payer, rather than facing up to their own responsibilities.

[Andrew Gwynne]

My hon. Friend, who is a doughty champion of the people of the city of Coventry, is absolutely right. What we have seen today from this Secretary of State is smoke and mirrors. He can talk about a spending power increase across local government, but that is predicated on every English local authority increasing council tax by the maximum level possible—an eye-watering, inflation-busting increase. We know that not every local authority can raise sufficient money by council tax alone, which is the reason behind the revenue support grant. A 50% cut to the revenue support grant of my hon. Friend’s city of Coventry is a big cut by monetary standards. Coventry’s council tax base does not allow the city council to raise anything like enough money to plug that gap.

[Kevin Hollinrake]

The hon. Gentleman talks about the revenue support grant. How can it be right that a person in London gets £437 per year allocated to them from the central Government grant, a person in a metropolitan borough £319, and a person in a county £153? How can that be fair or right?

[Andrew Gwynne]

I will answer that: a third of the services are more expensive to deliver in urban areas. That is the fact. It is in the Government’s own report that was commissioned for the then Department for Communities and Local Government. Some Tories do not get the reality of this, but I imagine that those who represent urban areas probably—silently—do. The fact is that revenue support grant is there because Governments of all political persuasions recognise that not every area is the same. The baseline is not the same. In some urban areas, the council tax base is low.

[Kevin Hollinrake]

Will the hon. Gentleman give way?

[Andrew Gwynne]

No, I am answering the hon. Gentleman, if he will do me the courtesy of listening.

Every local area has a different council tax base. I hazard a guess—I do not have the facts in front of me —that a 1% increase in council tax for Tameside Council, which I partly represent, will raise significantly less than a 1% increase in his area’s council tax, but the needs of Tameside are as great, if not greater, than some of the needs of his constituents.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

rose—

[Andrew Gwynne]

I will give way later if the hon. Gentleman will allow me.

According to the Local Government Association, the change in the revenue support grant has left local services today to face a huge funding gap of £3.2 billion. This is the Tory-led Local Government Association, so I hope that Tweedledum and Tweedledee sitting opposite will listen to this. It includes a £1.5 billion gap in adult social care funding, a £1.1 billion gap in children’s services, a £113 million gap in tackling homelessness and a £531 million gap in public health. By 2025, the gap facing local councils will rise to £7.8 billion, which is something that should shame us all.

[Mike Hill (Hartlepool) (Lab)]

My hon. Friend is making a very powerful speech. On the issue of child poverty, we have high debt rates and nine food banks in Hartlepool. How can my local authority cope with a £6 million funding shortfall and 40% departmental cuts right across the patch?

[Andrew Gwynne]

My hon. Friend is absolutely right. This is what Government Members really need to get about some of the authorities that we represent—although, to be fair, a number of Conservative Members represent authorities with very similar deprivation statistics to those represented by my hon. Friends.

The fact is that if we want to tackle health inequalities, narrow the gap between the richest and the poorest, and actually do the things that the Conservative Prime Minister said were her main aim and ambition on the first day that she took office, we have to ensure that local authorities have the resources they need.

[Ian Mearns (Gateshead) (Lab)]

When the Conservatives were in government in the early ’90s and they had to consign the community charge to the dustbin of history, they brought in the council tax and everyone breathed a sigh of relief. The trouble with the council tax is that it depends on there being a median band D council tax raising power in every part of the country. Just under 70% of the properties in my area are in band A; we cannot raise the revenue locally, so by taking away our revenue support grant, the Government are really crippling councils like mine in Gateshead.

[Andrew Gwynne]

My hon. Friend is absolutely right. Scandalously, council tax now equates to 7% of the income of a low-income family, compared with just 1% for a higher income family. That is unfair. Some people say that we can merely reform the council tax by adding extra bands to the end. Let me tell my hon. Friend—I imagine his area is very similar to mine—that we can add as many extra bands on the end as we like, but it will not raise a single penny more for my council because we do not have houses that would fall into those bands.

[Daniel Kawczynski]

The hon. Gentleman has spoken a great deal about pressures on urban areas, but in my constituency in rural Shropshire there are additional costs involved in providing services across a very large, remote, rural area, and we have a lot more senior citizens than the national average. Is he saying that, under a future Labour Government, there will be more money for urban areas rather than rural ones?

[Andrew Gwynne]

I am afraid that the hon. Gentleman has fallen into the trap that has been set by his own Ministers. We should not be talking about urban versus rural, or cities versus towns and villages. What is important is not how we cut an ever-diminishing cake differently, which is the approach of Ministers; we need to grow the cake. Politics is a question of priorities and Labour has set out very clearly how we would put more money into local public services, meaning more money for the hon. Gentleman’s council as well as more money for mine.

[Ruth George (High Peak) (Lab)]

I thank my hon. Friend for making the excellent point that this is not a dichotomy between rural areas, such as that which I represent, and urban areas. We cannot be robbing one area to give to another. The fact that this Government have cut and cut and cut means that costs are increasing in counties such as my county of Derbyshire. Local authorities have overspends on adult care purchased services and on children’s services because they have been cutting social services and early help. That is why councils are struggling all over the country.

[Andrew Gwynne]

My hon. Friend is absolutely right, and she is also right that it should not be about urban versus rural, but that is what the Government have made the situation with their approach to local government finance over the last nine years—this perverse reverse redistribution. The facts speak for themselves, and they should shame each and every one of us in this House.

We have seen a shift away from spending based on need and deprivation. The Secretary of State can shake his head, but nine out of the 10 areas seeing the biggest cuts to spending power per household, in pounds sterling, are all Labour controlled. Between 2010 and 2019, Hackney has seen a spending power cut of £1,406 per household, Newham a cut of £1,302 per household, Tower Hamlets a cut of £1,264 per household, and Knowsley a cut of £1,057.06 per household. It is worth noting that Knowsley is the second most deprived area in the country and has received the fourth biggest cut of any council. Nine of the 10 most deprived councils in the country have seen cuts of almost three times the national average. Blackpool, the most deprived area in England, has seen a spending power cut of £680 per household. Then there is Knowsley, followed by Hull, with a cut of £710; Liverpool, with a cut of £924; and Manchester, the fifth most deprived area, with a cut of £902 per household.

[Mr Dhesi]

My hon. Friend is making a most powerful argument. Local authorities like Slough are currently housing 79,000 homeless families in temporary accommodation, including more than 120,000 children. Last year, there was the largest annual increase in children in care since 2010, and councils are now starting 500 child protection investigations every day. Does he not agree that that is a diabolical situation resulting from these harsh ideological cuts?

[Andrew Gwynne]

My hon. Friend is absolutely right. I pay tribute to his council for all the hard work that it is doing in very difficult circumstances. Cuts do have consequences, and cuts that are outside the control of the local authority are now presenting themselves as spending problems for town and county halls across England. That is why we are so angry about what this Government are doing.

[Kevin Hollinrake]

rose—

--- Later in debate ---

[Andrew Gwynne]

I will give way in a little while.

I have talked about the shift of resources out of some of the most deprived communities in England. Yet contrast that with the councils that have seen the smallest cuts in cash terms—or in some cases, increases—over the nine years of Tory austerity. Seven out of the 10 areas seeing the smallest cuts to spending power per household are Conservative-controlled councils. That is very clearly what is going on here. Let me give the Secretary of State and his MPs the facts. The Isles of Scilly have seen a £337 per household increase in spending power, Wokingham a £40 per household increase, Horsham a £16 per household increase, Surrey—the council of the Chancellor—a £13.12 increase, Hart a £9 increase, Uttlesford an £8 increase, Stratford-upon-Avon a £7 increase, and Tonbridge and Malling a £4 increase. It is only when we get to places like Maidstone that we start to see spending power cuts over the past nine years —of just £6.78 per household.

Of the councils that are getting increases, not one of them is a Labour council. It is an unfair funding system peddled by a Secretary of State and Government who are recklessly gambling with our communities.

[Mr Dennis Skinner (Bolsover) (Lab)]

It is even worse than that. This ever diminishing cake has now been subject to the Prime Minister—not the Secretary of State, the Prime Minister—offering bribes to people who are going to—[Interruption.] This is part of the system, and it can affect any area—

--- Later in debate ---

[Mr Deputy Speaker]

I am explaining that that is not the case.

[Andrew Gwynne]

My hon. Friend makes a powerful point. Communities that need help and assistance after nine years of Tory austerity should not be offered help and assistance in return for getting the withdrawal agreement through this place; they should get it because it is the right thing to do for those communities. He is right to turn down such offers, as he has done.

If the statistics that I have mentioned were not bad enough, at a time when the Government should be reinvesting in our most deprived communities, helping them and lifting people out of poverty, they propose to cut even further. What we see in this perverse reverse redistribution is another cut to the revenue support grant of £1.3 billion, taking money away from the poorest communities in England. Yes, the Government have announced £1 billion of additional spending in the Budget, and they re-announced it in the provisional settlement and today. But the reality is that the way they propose to distribute that additional money, which does not offset the loss of revenue support grant in absolute terms anyway, is unfair.

For example, the Government are changing the way that the pothole money they announced is to be allocated. Tories who represent urban constituencies should be worried about that, because the Government are moving away from the type, width and usage of a road and merely using a simplified formula based on length of road. That is great for a constituency with lots of country lanes that are used by one tractor a day and 16,000 sheep, but try telling the people who live on potholed dual carriageways in urban areas that they are losing funding by the fiddle and sleight of hand that Ministers are adopting.

Children’s services are the biggest single cost pressure facing our local councils. That was one reason why Northamptonshire County Council—it gives me no pleasure to say that it is a Tory council—was the first council to declare bankruptcy not once but twice in the same year. Not only has that caused misery for families and children, but councils have had to squeeze the place-based services that people think they pay their council tax towards to be able to look after children. That is the right thing for councils to do, but the Secretary of State has to understand that £84 million divided by five divided by 20 councils will not resolve the problems facing children’s services in England. Adult social care has a massive £1.5 billion funding gap next year. Where is the Green Paper? It has been delayed and delayed. That can has been kicked so far down the road that it is probably on the country lane with 16,000 sheep.

In closing—[Hon. Members: “Hear, hear!”] Those on the Government Benches can cheer as much as they like, but they are cheering cuts to the poorest communities. I suspect that many Conservative Members have now forgotten why they came into politics. The Prime Minister was right when she entered Downing Street—it should be about narrowing health inequalities. It should be about caring for those who cannot care for themselves. It should be about dignity in old age and looking after our children. I want, and we on the Opposition side of the House want, to improve the lives of people in every part of the country. We have not forgotten how important it is to deliver for local communities when and where they need it most.

Not a day goes by but people claim that politicians are all alike, that we are all the same and that there is no difference between the lot of us. They need to look at this debate today, and by doing so they will see that there is a difference between the Secretary of State’s party and ours. Our party—the Labour party—would never hit the most vulnerable like this, and we have a record to prove it. Politicians are not all the same. Some of us remember why and how we got into politics in the first place. A Labour Government will stand up for local communities. After all, Labour councils are leading the way in standing up for the local services that people rely on. A Labour Government will share power with local areas. We need to make sure that they have a Government who will rebuild this country for the many, and not the few.

[Several hon. Members rose—]