Local Government Finance
Debate between Andrew Gwynne and Jake Berry(4 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Jake Berry
Well, we are having fun.
As I was saying, the hon. Member for St Helens North approached me outside the Division Lobby, fizzing with excitement. He is embedded on his town board, and is putting aside political differences to work closely with this Government, challenging us on our towns fund and ensuring that he can deliver real benefits for his community.
It is only because this Government had the determination to deliver the will of the British people and we have now left the European Union that we can seize the opportunities that lie ahead. We will drive devolution, and level up our communities and nations, while at the same time beginning an era of new investment in public services. Back in 2010 we were forced to make some difficult decisions, but we had inherited the highest deficit in the nation’s history and an economy struggling to recover from the worst recession in 70 years. The public purse was overstretched, the overdraft limit had been reached and the credit card was maxed out. In truth, there was no money left and the economy was on the brink. It is exactly because we took those difficult decisions that we can now bring forward our ambitious plans and aims for local government finance for the months and years ahead. I am determined that local government will receive the resources it needs to support its communities, and continue to innovate and deliver cost-effective services for its residents. This year will see a spending review in which we will move forward with a longer-term settlement, providing the sector with the certainty and confidence it needs to properly plan for the future.
As the shadow Secretary of State mentioned, we also plan to review the formula used to distribute money between local authorities in order to ensure that we can use the resources in the most efficient and effective way. I will say more about that later. However, I briefly want to address why the Government brought forward a one-year funding settlement for local government. In advance of leaving the European Union, it was right that we sought rapidly and urgently to bring stability and certainty to our local government sector. This meant carrying out a one-year spending review at record pace, followed by a post-election local government finance settlement, which we published as soon as we could after the election. Building on that settlement, we now have a series of bold and ambitious plans for a local government finance settlement in the financial year 2020-21 that has been devised in close collaboration with colleagues across the local government sector.
Under these proposals, core spending power for local authorities in England will increase from £46.2 billion to £49.1 billion in 2020-21. This equates to a 6.3% increase in cash terms, or a 4.4% increase in real terms—the largest increase for a decade. The shadow Secretary of State spoke at some length about adult social care, and this Government are steadfast in our commitment to protecting the millions of people who rely upon those essential services. That is why we propose to inject an additional £1 billion of new funding into the social care grant, with £150 million used to equalise the distributional impact of the adult social care precept, and continue the £410 million of the previous year’s allocations. Overall, that means that local authorities will have access to £6 billion across adult and children’s social care next year. However, our commitment to boosting social care and investment spans much further than just that one-year settlement, which is why we pledged to maintain the £1 billion of new funding to the social care grant for the duration of this Parliament, enabling local authorities to continue with long-term planning and driving improvements in the essential core services.
It was deeply irresponsible for the shadow Secretary of State to scaremonger about the figures from the LGA. He knows that those figures are at best an estimate and that they are based on old formulas, including the old area cost adjustment, which we are changing. If we thought it worked, we would not be doing the fairer funding review, so he should think on before he scares some of the most vulnerable people in society with stories about cuts and figures that are not based on the true formula.
The shadow Secretary of State claims to be a great champion of local government, so I will give him the opportunity to intervene on me in a moment. I wonder whether he can recall what he was doing on the evening of 10 February 2016—would he like to intervene? He cannot remember. I can remember. I was in the Aye Lobby with my colleagues, voting for the social care precept, enabling local councils to prioritise social care. He was in the No Lobby, voting against more money going to councils to finance social care. That one measure alone has raised an estimated £7 billion for adult social care since it was introduced. Perhaps when he is lecturing Government Members about support for adult social care, he should recall what he was doing when local authorities and the vulnerable in society needed him; he was pursuing narrow, party political lines and voting against the social care precept.
Andrew Gwynne
If we are throwing accusations about, perhaps the Minister can tell me what the social care funding gap in Tameside Metropolitan Borough Council is this year, and how much the social care levy raises.
Jake Berry
I am not throwing accusations around. I suggest the hon. Gentleman checks Hansard because whatever the funding gap may be, it would have been much bigger if he and his colleagues had got their way. He voted against more funding for social care, and I suggest he remembers that when he is giving out the lectures.
In addition to helping councils address the complexity around the delivery of social care, I recognise that councils in rural communities face some unique challenges. The services they provide are often delivered over a long distance, to disparate communities. That is why we are proposing to continue the rural services delivery grant at £81 million—the highest ever to date. This funding will continue to support residents in rural counties— including Labour-controlled Cumbria, which is a beneficiary of it and which I am sure welcomes the funding, given the challenges it faces around rurality—and people who live far from local services so rely on them being delivered by their council.
We have consulted widely on negative revenue support grant, and have concluded that eliminating negative RSG through business rates income, at a cost of £152.9 million, is the right thing to do. This will deliver on the Government’s long-term commitment to the principle of sustainable growth incentives in the funding settlement.
The new homes bonus is a very important part of how we fund local councils. It rewards councils that do the right thing by building new houses to help tackle our housing crisis. We want to ensure that they continue to be incentivised, which is why we will provide £907 million of new homes bonus allocations this year.
Council tax for the average dwelling went up by 112% under the last Labour Government. That’s right—Labour doubled people’s local council tax. Of course, in Wales they have managed to triple it, but they only doubled it here in England. That is why this Government have made a commitment to give local residents the final say on excessive council tax increases. We are determined, in a way that no Labour Government ever were, to protect the interests of hard-working taxpayers while granting local authorities the flexibility they need to raise resources to meet their needs. For this reason, we propose to continue with the council tax referendum limits.
Jake Berry
If we double the council tax that is paid by local people, then I will start to take lectures from the hon. Gentleman about what we should do. He should remember his own record. He entered Parliament in 2005 and was here when all this was happening; perhaps he would like to recall that.
Taken as a whole, this protection will mean that we see the lowest average council tax rise since 2016, ensuring that taxpayers continue to receive the breadth and quality of services that they enjoy today without, as they had under former Labour Administrations, the imposition of crippling tax hikes and rocketing monthly bills.
As we look towards future settlements, the Government intend to conduct a full multi-year spending review. We are already putting more money in this year, but the spending review will give us the opportunity once again to look at pressures in the round and provide councils with the certainty they need. We have committed to a fundamental review of business rates. As part of that work, we will need to consider carefully the link between the review and retention by local councils. We will of course continue to discuss that and the future direction with our partners in local authorities.
Everyone in this House wants to refresh the way we allocate funding, so that it reflects the most up-to-date needs and resources of local areas. That is key work to achieve the agenda set out by the Prime Minister, because dealing with local government finance is part of levelling up our entire country. We have made good progress with the review of relative needs and resources—or the fair funding review, as it is known—and I want to take this opportunity to thank Members on both sides of the House, some of whom have made constructive contributions to the process. The direction of the review has been welcomed by many, including many in local government, but now we have to deliver a sustainable approach, and we look forward to continuing to work with the whole sector.
The review is a large and complex project. Expectations are high on all sides, which is why we are committed to sharing emerging results with local government as soon as possible. We plan to share significant elements for technical discussions in the coming weeks and months. That will include formulas in the review that represent a majority of local government spending. However, I should remind Members that needs formulas represent only a small aspect of the review. As the LGA pointed out, it is simply not possible to predict the overall outcome for individual local authorities or groups of authorities and therefore the extent to which funding may move between authorities. Of course, we will need to consider the review in the context of the outcome of the planned spending review. We look forward to working with colleagues and sharing those results with the sector and the House shortly. I also look forward to updating the House once we have finalised proposals for our new and exciting settlement for local government. Finally—