Local Government Finance

Andrew Gwynne Excerpts

Wednesday 7th February 2018 Commons Chamber

[Sajid Javid]

My remarks a moment ago were about not the transitional grant but the problem of the negative RSG. I will come on to other grants in a moment.

We have responded to concerns about proposed changes to the new homes bonus. By the end of 2018-19, we will have paid out £7 billion under the scheme to reward the building of some 1.4 million homes, including £947.5 million for the year 2018-19. When we consulted last year on proposals to link NHB payments to the number of successful planning appeals, it was clear that the sector wanted continuity and certainty. That is what we have delivered, with no new changes to the NHB this year and the baseline being maintained at 0.4%. Furthermore, as we set out in our housing White Paper, we are enabling local authorities to increase planning fees by 20% where they commit to investing the extra income in their planning services. That should provide a welcome boost to local planning authorities and address concerns about under-resourcing.

The final settlement includes small adjustments to top-ups and tariffs for authorities based on corrected Valuation Office Agency data. I know that my opposite number—that is, the opposite number I have today, the hon. Member for Denton and Reddish (Andrew Gwynne)—has been trying to make some mischief on this point, so let me spell it out very clearly for him. [Interruption.] Well, he raised a point of order on this issue yesterday. I think it is worth spelling it out clearly, because perhaps he has not understood what we have said.

The provisional settlement was based on the VOA’s official statistics, the best published data available at the time. Just ahead of the provisional settlement, officials were notified of an error in the VOA data. Ministers were not told about this until 16 January, as officials did not know what, if any, changes might have to be made to the tariffs and top-ups for individual authorities. The hon. Gentleman will know that the moment corrected statistics were published by the VOA, revised figures were provided to local authorities to enable them to finalise their budgets. He should also know that part of the reason for the publication of a provisional settlement—the clue is in the name—is to test the numbers and to make adjustments. I respectfully suggest to the hon. Gentleman that he spend more time dealing with the substance of today’s settlement and a little less on childish antics.

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

I am grateful to the Secretary of State for clarifying the position. Of course, the point is this: who runs the Department? The Secretary of State has some responsibility. If his departmental officials knew that the data were incorrect, was it not incumbent on him, as Secretary of State, to have known that and made it clear to the House when he presented the provisional settlement that the data were likely to be changed? The fact is that he came to the House on 19 December and gave incorrect information when answering right hon. and hon. Members’ questions. It is shameful.

[Sajid Javid]

As usual, the hon. Gentleman stands at the Dispatch Box and raises his voice, acting like a child again. He has nothing whatsoever to say on the substance of the issue.

Councils have a crucial role to play in helping to deliver the homes that our country desperately needs. However, we all know that we cannot achieve that without having the right infrastructure in place: the schools, GP surgeries, transport links and other essentials. The private sector can go only some way in delivering that infrastructure. It is clear that we must raise our game to match our ambitions, which is why last July we set up the housing infrastructure fund to support local authorities to provide infrastructure and build more homes. In the end, we received a staggering 430 bids, worth almost £14 billion, to deliver 1.5 million homes, demonstrating the incredible ambition that is out there to tackle the housing crisis—an ambition that we are keen to get behind and back fully. Hence our move to more than double the housing infrastructure fund in the autumn Budget, dedicating an additional £2.7 billion to it, bringing the total funding to £5 billion.

Last week I was delighted to announce the first funding allocation: £866 million for 133 successful projects, involving 110 councils, that will help unlock up to 200,000 homes. Those projects promise to deliver a strong pipeline of homes at pace and scale, and represent another important step towards meeting one of the defining challenges of our time.

I will now turn to another major challenge: social care. I am under no illusions about the pressures that councils face in addressing one of the biggest challenges we face as a country, which is why we have put billions of pounds of extra funding into the sector over the past 12 months. I can today announce a further £150 million for an adult social care support grant in 2018-19. This will be allocated according to relative needs and will help councils to build on their work and support sustainable local care. It comes on top of the additional £2 billion for adult social care over the next three years announced at the spring Budget. With the freedom to raise more money more quickly through the use of the social care precept, which I announced this time last year, we have given councils access to £9.4 billion more dedicated funding for adult social care over three years.

--- Later in debate ---

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

I begin by thanking colleagues from all parts of the House who have contributed to this debate, including my hon. Friends the Members for Sheffield South East (Mr Betts), for Birmingham, Northfield (Richard Burden), for Nottingham North (Alex Norris), for Stoke-on-Trent Central (Gareth Snell), for North Durham (Mr Jones) and for Bolton South East (Yasmin Qureshi), and the hon. Members for Ludlow (Mr Dunne), for Shrewsbury and Atcham (Daniel Kawczynski), for Newton Abbot (Anne Marie Morris), for Wellingborough (Mr Bone), for Corby (Tom Pursglove), for North Dorset (Simon Hoare), for Bath (Wera Hobhouse), for Waveney (Peter Aldous), for Dover (Charlie Elphicke) and for Redditch (Rachel Maclean).

I pay tribute to everybody who serves in local government, both councillors and officers. Let me make a special mention of Denton West councillor Brenda Warrington who, a couple of weeks ago, became the first ever female leader of Tameside Metropolitan Borough Council, and a very fine leader she will be.

It is clear from the contributions from both sides of the House that there is massive concern not only about the growing crisis in funding local government, but worse, about this Government’s inaction in addressing it adequately. Only this week we have seen a council effectively declare itself bankrupt. The issuing of a section 114 notice in Northamptonshire, a Tory-controlled council, should send shivers down the spines of Ministers, because they know that this is a crisis caused in part by them and their actions. The warning signs at Northamptonshire had been obvious for some time, but only in this Government would the Secretary of State toddle along formally to open the council’s new £53 million headquarters that it is now being told it may have to sell off. Perhaps that was the fault of his officials, too.

Northamptonshire completely overshadowed the Secretary of State’s big announcement yesterday of an additional £150 million found from the magic money tree of the Ministry of Housing, Communities and Local Government. When local government budgets have been slashed by £5.8 billion since 2010, it seems that the Secretary of State cannot even shake that tree effectively. We all know from reports in the media and from Tory MPs’ tweets on Monday night that this is solely about trying to prevent a rebellion on his own Back Benches.

The £150 million extra going into social care this year is still a cut. The Secretary of State, with his banking background, might be able to kid his Back Benchers with this sop, but this year, additional Government spending on social care, even with this sum, is still facing a cut of £177 million. It is not the first time that this Government have tried this trick, because two years ago the transitional grant scheme provided an additional £300 million of funding, and what happened? Eighty per cent. of it went to Conservative-controlled councils, 70% of which were county councils. In contrast, metropolitan districts got only an additional 2% of additional funding, despite the fact that many of them were among the hardest hit. Places such as Nottingham, Knowsley and Liverpool received no additional money. When the Government talk about fair funding, they must mean funding for all councils, irrespective of their political persuasions and none, based on the services they need to provide to the communities they represent.

Let me provide Members with a few quotes:

“Councils in England face an overall funding gap that will exceed £5 billion by 2020.”

Then there is

“£1.3 billion…needed right now…to stabilise the…care provider market”,

and:

“Councils also face an unprecedented surge in demand for children’s services and homelessness support.”

Those are not my words; they are the words of Conservative peer and head of the LGA, Lord Porter. How out of touch can this Government be? How long can the Secretary of State bury his head in the sand, telling himself, “Yes, we’re making cuts, but they’re having no real impact on the ground”? He should speak to Tory councillors, because we know there is a real problem in local government when even Tory councillors are saying today what Labour councillors were saying five years ago.

I commend the work of all councillors in these difficult times. They need commending for doing all they can to support local services and local communities, despite this Government’s best efforts. This incompetent Secretary of State even thought he could come to the House of Commons in December and pass a provisional settlement off as fact, when he tells us today that his officials were to blame. He knew that it was riddled with errors. He can blame his officials today, but his letter to me, which he signed only two days ago, was far less definite. He said:

“My intention is always to provide local authorities with as much certainty as possible…We published the Provisional Local Government Finance Settlement before Christmas to give councils notice of the figures they should use to plan their budgets…At that time…we knew the overall scale of the error in the…published data….We therefore published the Provisional Settlement on 19 December on the basis of the…statistics.”

Those were his words, and it was his signature. The Secretary of State is either so incompetent that his officials do not bother to tell him about important details ahead of him making a statement to the House of Commons, or he does not read the letters that go out in his name, which is perhaps why he needs to place a corrected version of the letter in the Library.

I have written to the Prime Minister today to draw her attention to this sorry affair, because it has done incredible damage to the Secretary of State’s reputation and to the Department’s reputation in the local government sector. Councillors deserve better. Many councils are doing all they can to help people live independently in their communities and reduce demand on hospitals, but with unprecedented funding cuts since 2010 and social care services facing a £2.3 billion funding gap by 2020, that is becoming increasingly difficult.

It is not just adult social care. As Labour’s first health check report showed, demand for children’s services is also placing growing pressure on local authorities. Funding to support children and their families has been cut by 55% over the last seven years, and the result of those cuts has been appallingly clear. Cuts to early years intervention meant that a record number of children—some 72,000—were taken into care last year. The number of serious child protection cases has doubled in the last seven years, with 500 new cases launched each day. More than 170,000 children were subject to child protection plans in the last year, which is double the number seven years ago.

Many of us hoped that the Budget would contain the genuine new funding that our children’s services need, but the Secretary of State failed to get that put in place. We then hoped that yesterday’s announcement might offer some hope for children’s services—another let-down. When is the Secretary of State going to stand up to the Chancellor and demand the money that the sector so desperately needs? The financial crisis engulfing local government should be giving the Secretary of State sleepless nights. The Local Government Chronicle suggests that there are already at least 10 authorities preparing to follow Northamptonshire and issue section 114 notices, and the Municipal Journal reports that one in 10 council bosses fear that their local authority will not have enough funding to fulfil its statutory duties in 2018-19. Ministers cannot afford to stand by and wait for that to happen.

Today’s vote offers all Members on both sides of the House an opportunity to send a very clear message to the Government that things have to change, that vital public services should be properly funded, and that our communities deserve better than this botched and rushed settlement. I hope that all Members will join us in the Lobby to stand up for their communities, their public services and their councillors, and to get this Government to think again about their damaging approach to council funding for next year.