Local Government Funding: Birmingham

Andrew Percy Excerpts

Tuesday 13th December 2016 Westminster Hall

[The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Percy)]

I begin with an apology on behalf of the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Nuneaton (Mr Jones), who is unable to be here to respond to the debate because of a personal issue. It is a pleasure to serve under your chairmanship, Ms Dorries, and to respond to a Westminster Hall debate for the first time as a Minister. I congratulate the hon. Member for Birmingham, Selly Oak (Steve McCabe) on securing this debate and for the passionate way he presented the issues facing Birmingham, as did, indeed, other Members who took part in the debate.

We should remind ourselves of the context in which local government operates. Many of the decisions that have been taken by Birmingham City Council have been taken locally and independently of central Government, although that is not to pretend that the Government have not had a role to play through challenging funding settlements, about which we have been quite honest over the years. We have been absolutely clear that, as councils account for a quarter of public spending, they, too, need to play their part in deficit reduction. No Member present went into the most recent general election offering more money for local government—that was accepted across the various parties.

We have tried to provide local authorities with a fair and sustainable financial settlement. Fundamentally, we have provided councils with a financial settlement that is broadly flat in cash terms, moving from £44.5 billion in 2015-16 to £44.3 billion in 2019-20. Over the course of this Parliament, council core spending will see a decrease of just 0.4% in cash terms. As a result, councils will have almost £200 billion to spend on local services. Birmingham’s average core spending power per dwelling will remain significantly higher than that for many other metropolitan authorities. We must remember that £1,983 per dwelling compares with £1,767 for other local authorities, and is higher than in Manchester and Leeds, which have had to manage similar issues.

Like many other Members, the hon. Member for Birmingham, Selly Oak raised the issue of social care, which is undoubtedly a massive challenge for the country given the changing demographics. The hon. Member for Birmingham, Hall Green (Mr Godsiff) asked whether I personally care about local government. I spent 10 years as a local councillor when some of the difficult decisions we are now facing started to be made. Over that period, which was not when we were in government but under a different Government, we saw councils start to change their intervention criteria substantially due to rising pressures. This is not an issue that has developed overnight. We have to be honest that it is a massive challenge for the country to deal with.

The hon. Member for Birmingham, Selly Oak, along with others, mentioned NHS funding. It is at a record level, although I do not for a moment pretend that that will necessarily deal with all the issues relating to the demographic shift—the increasing pressures, the increasing number of people going through the system, the cost of treatment, the number of people living with long-term conditions, and all the rest of it—that is putting huge pressure on the social care and health system. I do not for a moment want to pretend that the issues we are discussing are solely related to local government funding, or that they have developed overnight.

The Government are providing Birmingham with £77 million of new support for social care by 2019-20. Over the four-year period, assuming the social care precept is taken up, the figure will be £149 million, but of course I must put that in the context of changing demography and increasing demand. Many other countries in the west are trying to deal with the same issues. We have also delivered to Birmingham, and local government generally, guaranteed budgets to councils for 2016-17 and for every year of the Parliament. Birmingham is among the 97% of councils to have signed up to that. We are looking to have 100% retention of business rates by the end of the Parliament.

The hon. Member for Birmingham, Selly Oak mentioned the independent improvement panel. We have to put many of the decisions that are currently being taken in Birmingham in the context of a failure to deliver on the budgets that we passed and outlined. I welcomed the contribution of colleagues who said that they understood some of the challenges to have resulted from budgetary issues and management in Birmingham. The hon. Gentleman asked whether the Government had met the independent improvement panel. As it happens, I met one of its members yesterday, as Councillor Nick Forbes, the Labour leader of Newcastle City Council, was taking part in the independent financial review. As this is not my policy area, I have not met the other members of the panel, but I assure the hon. Gentleman that DCLG officials are meeting them regularly, and the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Nuneaton, has done so on several occasions as well.

[Steve McCabe]

I do not want to interrupt the Minister, and I appreciate that this is not his specific policy area, but when Ministers or departmental officials have met the improvement panel, have they heard the panel tell them that it is worried about the level of resources available in Birmingham?

[Andrew Percy]

The hon. Gentleman will understand that I have not been in the meetings so I cannot comment on their content. Needless to say, because I was meeting Councillor Forbes yesterday to discuss another matter, I had a brief conversation with him about the issues in Birmingham, but I cannot comment beyond that.

I could list lots of the other investment the Government are putting into Birmingham through local growth deals, which are having a significant impact and transforming people’s lives, but I want to respond to as much of the debate as possible rather than discuss overall investment in the region. The hon. Member for Birmingham, Yardley (Jess Phillips) made a powerful case about transition funding, which was also mentioned by other Members. Birmingham did not get transition funding for the simple reason that it had benefited from the 2015-16 change. The shire counties were the authorities hardest-hit by that change, so the transition funding was naturally focused on them.

The hon. Lady also mentioned school funding. I represent the third-worst—sometimes worst—funded education authority. If she wants to come to Goole in my community, she will also see very high levels of deprivation and huge challenges, but ones that we have to address with many hundreds—

[Jess Phillips]

Do your schools have 33 kids in their classes?

[Andrew Percy]

Yes, some of them do. We have funding differences of many hundreds of pounds below the national average, let alone our neighbouring authorities. Nobody owns one particular community. I grew up in one of the poorest cities in the country and attended one of the worst comprehensive schools, and for many years I taught in some of the toughest schools in the country, let alone in the city. I understand the challenges as well as the hon. Lady, as do others on the Government Benches. Some of her comments were a little divisive, trying to set Tory-run shires against Labour-run metropolitan areas. There are huge challenges in many areas. Deprivation and poverty do not necessarily respect local government boundaries.

A couple of points were made about homelessness, which is of course a massive challenge. I cannot comment on the specifics of the funding decisions that have been made in Birmingham, but the Government do take the issue seriously, which is why we have supported the Homelessness Reduction Bill introduced by my hon. Friend the Member for Harrow East (Bob Blackman). Homelessness is at half its 2003 peak. Birmingham has received nearly £1.1 million in homelessness prevention funding for 2016-17, and we are investing £500 million in seeking to tackle homelessness.

In the short time remaining, I say to Members who represent Birmingham that the Government see solving the issues there as a partnership. It is important that the decisions that need to be taken on financial management in Birmingham are taken. As I have said, other local authorities and metropolitan boroughs have, with less spending power per dwelling, dealt with the very challenging settlements for local government. We want to assist Birmingham in doing the same. We have to wait for the independent financial review, which should conclude in the middle of January, to report so that we can consider matters further.

We are determined to try to get Birmingham, like many of the metropolitan councils, into a position where the budgets that are set are realistic, so that people know what services are being delivered. Plenty of other local authorities, many with much lower funding per dwelling, are not reducing services in the way described today. Key to that is having a budget that is viable and realistic, which is what we hope will come out of this process.

Question put and agreed to.

Resolved,

That this House has considered local government funding for Birmingham.