Andy Sawford
Main Page: Andy Sawford (Labour (Co-op) - Corby)(10 years, 9 months ago)
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Andy Sawford (Corby) (Lab/Co-op)
Local government faces the biggest cuts of any part of the public sector. All around the country, councils are having to take incredibly tough decisions about the future of local services.
The Minister is like an abstract artist—the picture that he has painted today is clearly a departure from reality. Nobody believes his figures. He has claimed that the cuts are modest. He says that they can all be dealt with through efficiencies and that there will be no impact on front-line services. He should tell that to the elderly people who have had their home care withdrawn. He should tell it to the parents of children with special needs who cannot get the help that they need. He should tell it to the shift workers in my constituency who have to walk home at night in darkness because the streetlights are not on. He should tell it to the young people whose bus to school, college or work no longer runs. He should tell it to the Tory council leaders who were so appalled at the lack of understanding of the impact of the cuts among Ministers in his Department that they wrote to the Prime Minister to complain about the posturing. He should tell it to the council leaders in the poorest areas of our country who face the cruellest, deepest cuts of all.
The real picture is stark. The LGA says that over this Parliament, local government core funding will fall by 40% and councils will have to make £20 billion of savings. As hon. Members have pointed out, all councils face challenges, but the fundamentally unfair distribution of the cuts is particularly damaging to many communities. Even under the Government’s spending power measure, which is deliberately designed to mask the real impact, the 10 most deprived areas have had a cumulative cut that is 10 times more than the 10 least deprived areas.
The Prime Minister used to say, “We’re all in this together”, but his local authority and that of the Secretaries of State for Justice, for Health, for Education and for Defence, are getting an increase in spending power, while local authorities such as Hackney, Liverpool—as we have heard—and Manchester face the largest cuts. The coalition peer, Lord Shipley, said in the House of Lords last month that
“there is no doubt that the cuts have been steeper in the more deprived parts of the country.”—[Official Report, House of Lords, 9 January 2014; Vol. 750, c. 1700.]
John Hemming (Birmingham, Yardley) (LD)
If the Labour party wins the general election it proposes further cuts. What formula would it use to identify the equity or fairness of any distribution of cuts?
Andy Sawford
The Labour party has said that we accept the Government’s spending plans, but what we will not do is cut in such a fundamentally unfair way. I will come on to what the Labour Government will do.
Grahame M. Morris
Does my hon. Friend accept that the coalition Government are breaking the post-war consensus in which the revenue support grant was used to equalise resource allocation?
Andy Sawford
My hon. Friend makes an incredibly important point and I will come to it in a moment.
The widely respected Joseph Rowntree Foundation published research in November stating:
“Cuts in spending power and budgeted spend are systematically greater in more deprived local authorities than in more affluent ones”
We know that that unfairness is not an accident. The former local government Minister, the hon. Member for Bromley and Chislehurst (Robert Neill), who is in his place, told the House,
“Those in greatest need ultimately bear the burden of paying off the debt”—[Official Report, 10 June 2010; Vol. 511, c. 450.]
As my hon. Friend the Member for Easington (Grahame M. Morris) rightly says, since 1948 funding has been allocated to local authorities according to need. In December, the National Audit Office, in its report on council tax support, commented on the end of the formula grant system which it claims
“redistributed business rates according to a formula that determined each local authority’s grant by considering local authorities’ needs and ability to raise resources through council tax.”
That system was by no means perfect—hon. Members have pointed out some of its shortcomings—but it became complex because it strived for fairness. Any reform must keep that principle of fairness at its heart.
Andy Sawford
I will make progress on this point, and then I will take further interventions.
Will the Government tell the House what meaningful consultation there has been, and who gave them permission to remove a principle that has stood for 65 years—that councils should be funded according to need? The House of Commons Library states:
“Prior to 2013/14 local authorities received formula grant at the Local Government Finance Settlement. The formula used was based on a four block model which included its relative need. In the first year of the Business Rate Retention Scheme this link remained in the funding baselines, but the relationship between funding and need exists now only to the extent that they are present in the original baselines.”
As each year goes by, there will be further erosion of the relationship between funding and need. The Library clearly states that
“reductions are generally larger for more deprived areas and smaller amongst less deprived areas.”
Mr Graham Stuart
I am grateful to the shadow Minister for giving way; he is being most generous. I notice that he did not respond to the question from my hon. Friend the Member for Birmingham, Yardley (John Hemming) about where Labour would make cuts. On the issue of need, density was given four times the weighting of sparsity, even though there is no link between density of population and increased cost and delivery of services. How was that fair?
Andy Sawford
If the hon. Gentleman will be patient for a moment, I will, of course, come on to what Labour will do if it forms the next Government. On sparsity, I took part in the debate that he and others led last year, which I thought was excellent. I recognise many of the issues that he raised and there is a sparse rural authority in my constituency in East Northamptonshire. The formula should of course take account of rural sparsity, as well as urban deprivation. There is always a debate to be had about fairness within the system, but what is critical is that the part of local authority funding with fairness at its heart—notwithstanding the debate that will be had—is now being eroded, so the opportunity to ensure that funding is fair and according to need is being lost.
Paul Farrelly
To put the cuts in perspective, in Newcastle-under-Lyme in north Staffordshire, an area of great deprivation, we will now have lost half our Government grant. We face the prospect, in the near future, of losing 75% of grant. How can councils in those circumstances be viable and address local need satisfactorily?
Andy Sawford
My hon. Friend makes the point powerfully. The reduction in spending power of areas with higher needs and lower resources, and the increase in spending power in the wealthiest areas, will not just close the funding difference between such areas, but in time reverse it. That is already happening.
Andy Sawford
Of course I will give way to the Chair of the Select Committee on Communities and Local Government.
Mr Betts
My hon. Friend has made a very important point. I come back to the comments the Minister made in his appearance before the Select Committee on 27 January. I asked whether the principle of the grant settlement, which equalises differences in needs and differences in resources between authorities, had been effectively eroded. The Minister said yes, there had been a big shift away from the begging bowl structure of the past to an incentive-based structure for the future.
Andy Sawford
My hon. Friend makes the point powerfully, with all of his experience as Chair of the Select Committee.
Spending power in Leeds will be lower than Wokingham’s in 2014-15, and will fall every year despite higher service pressures. Spending power for my hon. Friend’s own authority of Sheffield and for Newcastle, which has also been mentioned, will broadly match Wokingham’s in 2015-16 and then fall below it in future years despite higher service pressures. The spending pressures that councils face are very different. Newcastle has 101 looked-after children per 10,000 people, whereas Wokingham has 24. Homelessness and supported housing costs are £145 per dwelling in Newcastle and £48 in Wokingham. Statutory concessionary travel costs are £85 per dwelling in Newcastle and £14 in Wokingham. Where is the fairness in a funding system that does not recognise such large differences in need?
The revenue support grant element, which recognises need, will shrink from £15.2 billion in 2013-14 to £9.3 billion by 2015-16. Modelling shows that it could be gone altogether by the end of the next Parliament. The Institute for Fiscal Studies, which the Government are fond of quoting, is clear in its analysis that the poorest areas are feeling the squeeze. Minority communities are particularly affected, too. Of the 30 areas in England with the highest black and minority ethnic populations, 29 face cuts above national average and eight face cuts of double the national average. The Department’s own impact assessment raises concerns about the effect of cuts on BME communities and about services to the very young, the elderly and the disabled. It says it is not possible to make a substantial assessment. I have to ask the Minister why not, given the scale of these cuts? Why has his Department not conducted a full impact assessment, as it was urged to do by the Public Accounts Committee?
Daniel Kawczynski
Under 13 years of the Labour Government we saw a huge increase in salaries for officers and chief executives in councils. I would like to have the hon. Gentleman’s views on how that can be controlled going forward, because it accounts for a great deal of money.
Andy Sawford
Chief officer pay is something that should, rightly, be determined locally. We would of course want local authorities to be responsible. I urge the hon. Gentleman to recognise, however, that some of the highest paid chief officers were in Conservative local authorities. We will not be taking any lectures on that point.
The Government seem to have introduced the term “spending power” to hide the true scale of the cuts. London Councils says that it is extremely concerned that the spending power calculation is misleading and incorrect. The Government say that spending power is the total amount of money available to a local authority but the LGA tells us that there is double counting, such as with health budgets that are also in the Department of Health’s figures. Rob Whiteman, the chief executive of the Chartered Institute of Public Finance and Accountancy says that
“these figures demonstrate…statement on the local government settlement this year was by any usual standards an…opaque announcement.”
The Minister says that the change to spending power is a shift in Government policy to reduce dependence. He uses that term about the begging bowl that, frankly, I find offensive. He says that this is about reducing dependence on central Government and freeing councils to encourage local growth. If that is true, we have to ask why it has taken so long for this Government to make a U-turn on business rates, which have risen by £2,000 since May 2010. Why will they not join this side of the House and go further by cutting rates for 1.5 million small and medium businesses? We agree, of course, that councils should not simply be a post-box for the Treasury, and schemes such as the local authority business growth incentive were introduced by the last Labour Government. We will look to reform any so-called incentivisation so that the system works fairly for all areas of the country and is alongside, rather than a replacement for, mechanisms for fair distribution of funding according to need.
Robert Neill (Bromley and Chislehurst) (Con)
First, I find it ironic that the hon. Gentleman should criticise any change to the business rates model that his party resisted for so many years. Secondly, he talks in terms of the four-block model, which is generally regarded as discredited now. Would he persist with it or not?
Andy Sawford
The consensus around recognising need in local authority areas existed for more than 65 years, until this Government broke it. We have been clear that we will look in the next Parliament to restore fairness in the formula, and of course we will look to ensure that the model in place recognises need.
Andy Sawford
Let me make a bit of progress. The Minister spoke for 38 minutes, and I know that many hon. Members wish to contribute.
It is to be welcomed that the Government are compensating local authorities for the cap on business rates, but I am told by SIGOMA that the compensation amounts appear to be less than the estimated reduction in total business rates. I hope that the Minister who responds to the debate will comment on that point. Holdbacks to fund the business rate safety net have also been top-sliced unfairly from councils. While Windsor and Maidenhead contribute to the £120 million holdback at a share of £2.27 per dwelling, Middlesbrough contributed £7.97 per dwelling. Why does the Minister think that is right?
I pay tribute to my colleagues, especially the hon. Member for Newcastle upon Tyne Central (Chi Onwurah), who led an important debate on this last year. There was a limited U-turn by the Government on holdbacks. But when the Minister replies today I hope that he can update the House on what recent assessment has been made on the business rate safety net.
Neil Parish (Tiverton and Honiton) (Con)
I see that the shadow Minister is carrying on the same creative accounting as the last Labour Government. They say that they will stick to the same budget as we will, but they will reduce business rates. I welcome that, but where will they get the money from? They will have to cut it from somewhere else.
Andy Sawford
The hon. Gentleman will have to do a bit better than that. The reduction in business rates is clearly costed by not going ahead with the cut in corporation tax for the largest businesses in the country. It is a clearly costed policy.
The new homes bonus is another top-slice from the formula grant, and the Government seem confused about its purpose. Their website describes it as:
“A grant paid by central government to local councils for increasing the number of homes and their use.”
But the Housing Minister told the House recently:
“I am afraid the new homes bonus is not about encouraging people to build homes.”—[Official Report, 25 November 2013; Vol. 571, c. 11.]
The National Audit Office report on the new homes bonus said it certainly is not about increasing the number of homes, stating:
“Overall we found little evidence that the Bonus has yet made significant changes to local authorities’ behaviour towards increasing housing supply…We found no association between individual local authorities’ planning application approval rates and the numbers of homes qualifying for the Bonus.”
As the new homes bonus is a top-slice without a purpose, I can understand why local authority leaders and members are frustrated by the fact that it compounds the problem of unfairness—because of course it comes from the grant.
London Councils has brought to my attention the Government’s recent decision to require London local government to transfer £70 million of its new homes bonus grant to the GLA. That is a centralising step by the Government in London. Those councils want to know why they are being treated differently from the rest of the country, and I hope that when the Minister responds later he will justify that.
Other changes are having an impact on councils. There is much concern about the localisation of welfare support. The funding has been passed from the Department for Work and Pensions to the Department for Communities and Local Government, and has already been cut in half in the process. There are no plans for any funding to be available after 2015. Do the Government recognise the impact that that will have on the ability of councils to help the most vulnerable people in our communities?
That leads me on to the Government’s new poll tax for the poorest people. The cuts to council tax support mean that many people on the lowest incomes will see their council tax bills jump. These people are carers, the disabled, single mums, war widows and veterans, and they will all have to pay more council tax and, in some cases, the bedroom tax, the impact of which my hon. Friend the Member for Wansbeck (Ian Lavery) powerfully denounced earlier. Today the Prime Minister has again chosen not to rule out another tax cut for millionaires, so we can see where the Government’s priorities lie.
When people face a cost of living crisis, it is right that local authorities do their best to keep council tax down. In recent weeks, the Secretary of State has briefed the press that he would reduce the council tax referendum trigger, but he seems to have been overruled at the last minute by the Home Secretary and the Deputy Prime Minister. The whole process has been a complete shambles. SIGOMA has said that the late announcement of the threshold was unacceptable. Councillor Caitlin Bisknell of Derbyshire county council contacted me on the day of the announcement to tell me that the council was in the middle of a meeting to set its budget for next year when it was informed by the Government of the referendum limit. While the Secretary of State has been posturing and dithering, councils have been trying to plan ahead. Local councils and communities are the ones who are left to pick up the pieces of the Government’s incompetence.
For all the talk of a council tax freeze, more than a third of local authorities put council tax up last year. According to a recent survey by The Daily Telegraph, more than half the local authorities preparing to increase council tax this year are Conservative councils, including Oxfordshire, the Prime Minister’s county council, which plans to raise its bill for a second year running.
Mr Burrowes
Will the shadow Minister make it clear whether Labour supports the council tax freeze? I am sure he will come on to what he would hope to do if he had the opportunity in government, which I very much hope he does not. I have been reading the Public Finance magazine, which says that he is actively considering plans for new council tax bands. May we have those details now?
Andy Sawford
We are looking at representations that have been made to us by local government as part of our review on how we ensure that the funding formula is fairer in the next Parliament and fair to all councils. The hon. Gentleman mentions the council tax freeze, but there is no freeze. Many councils around the country are planning to put their council tax up. More than half of them are Conservative councils. Who blazed that trail? Councils such as Labour Hackney, which has been freezing council tax for eight years, did so. The three biggest council tax rises during the Labour period in power were by Tory councils.
The Minister has told us that local authorities can deal with the cuts by making sensible savings and reducing waste. The Prime Minister has described local government as the most efficient part of the public sector. While councils have had to make bigger and earlier cuts than any other part of the public sector and make massive savings, the Secretary of State has lumbered taxpayers with a limo bill of close to £500,000, reportedly the biggest of any Whitehall Department. The biscuit bill is rocketing, and the Department has even been fined for running an unauthorised overdraft. The Minister should therefore not patronise councils with his suggestions for savings.
Labour Hackney council’s social care services are supporting people to stay in their own homes and out of formal care, which saves £2 million annually. Bolsover and North East Derbyshire councils have pooled staff and resources and are saving £1.5 million a year. Blackburn with Darwen council saved £2.2 million in one year using pioneering telecare technology. Oldham council is using a co-operative commissioning approach for its children’s centres. The process is producing savings of £220,000 and protecting those vital children’s centres.
Despite the great work to make savings and reconfigure services in the best possible way for communities in the circumstances, the truth is that many local authorities are being pushed to the brink, as hon. Members have pointed out. LGA figures show that there is a big financial black hole in local government finances, which is widening by £2.1 billion a year. It is expected to reach £15 billion by the end of 2020. That is fuelling growing concerns that local authorities lack the ability to continue to deliver front-line services.
The LGA’s Conservative leader, Sir Merrick Cockell told the Communities and Local Government Committee that 86 authorities are near the tipping point of failure. The Government simply do not know how they will respond when councils fall over. When the permanent secretary to the Department for Communities and Local Government was questioned by the Public Accounts Committee, he said that councils have a statutory duty to balance their books. He is relying on that statutory duty in the face of reality. I am sure finance officers will do their best to advise councils on how to balance the books, but they are not magicians. The Minister must tell us what plans the Government have for when an authority becomes no longer viable.
Hon. Members have asked about the next Labour Government’s plans. We will not be able to stop the cuts or turn back the clock, but we will put fairness at the heart of the relationship between central and local government, and at the heart of our approach to local government finance. It is simply wrong that the most deprived local authorities and the communities that can least afford it are being hit hardest. It is often the areas with the highest demand for services that have the least capacity to raise income through business rates or council tax.
It is crucial that we support councils to deliver economic growth in all areas of the country, and to do that we will extend the model of city deals throughout local government and devolve power over housing and planning and jobs and skills—for example, through co-commissioning of the Work programme. We would also take forward our Total Place programme, which, being far too limited in scope, has sadly stalled under this Government, despite its clear potential. Furthermore, the local government innovation taskforce set up by the Leader of the Opposition is developing an ambitious programme requiring central and local government to work together as we transfer much more power and responsibility to councils. In this way, while resources will be tight, councils will have a fair chance to find a way forward for their communities.
In conclusion, in the Chancellor’s spending review in May 2010, he said—[Interruption.] Hon. Members might want to listen—it is their policy, their announcement. The Chancellor said:
“The Government will…limit…the impact of reductions in spending on the most vulnerable in society, and on those regions heavily dependent on the public sector”
and that
“the Government will look closely at the effects of its decisions on different groups in society, especially the least well off, and on different regions.”
Sadly, on local government funding, that promise of fairness is not worth the paper it is written on. Far from being localists, the Government have shown themselves to be mean and meddling at every turn, and nowhere more so than in taking the most from the communities and the people in the greatest need.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
Local government is important to everyone. It is about improving people’s quality of life, developing potential, protecting the vulnerable and supporting communities. That is why the Government’s attacks on local services are so destructive. When the severest financial cuts are made on the poorest, that is grossly irresponsible. I listened with horror to what the Chairman of the Select Committee told us: the Government have now admitted that they are no longer concerned about protecting the vulnerable and are more interested in protecting the rich—that is outrageous.
It is completely unacceptable that Liverpool, which on the Government’s own figures is the most deprived local authority in the country, has suffered the deepest cuts yet again. Liverpool will suffer drastic cuts in spending power this year and it will suffer them again next year, with its funding slashed by another 5.4%—£32 million—which is the equivalent of £148 a household. By contrast, Surrey Heath is facing cuts of £73,000—a mere 0.1% cut. That is an indication of where the Government’s priorities lie. In real terms, Liverpool’s funding has been cut by 52% since 2010, and the figure is likely to reach 58% by 2016-17. As 76% of Liverpool’s finance for local services comes from central Government, in recognition of the city’s needs, the cut will be devastating.
I was appalled to hear the Minister state at the beginning of this debate that he regarded that support as a handout. I call it justice; it is about recognising need. He sees supporting deprived communities as giving a handout, which he is rapidly withdrawing. It is an absolute disgrace, and I am pleased that he has put that on the record in this debate today. The reality for Liverpool is that services such as nurseries, care for the under-fives, social care for the vulnerable, which includes 5,000 care packages, library, regeneration and youth services will all be at risk. Whatever spurious lines he tries to go down, the finger of blame will be pointed clearly at the Government who will be responsible.
I noted that the Minister attempted to divert this debate by talking about Liverpool’s reserves. Those reserves are held because they are legally required to be held, mainly on behalf of schools. Furthermore, despite the devastating blows to local services coming from this Government to the city of Liverpool, the council and its mayor are responsible people and they are determined to maintain the city’s finances in a prudent manner, and they will not deviate from that.
Andy Sawford
My hon. Friend makes an incredibly important point about Liverpool’s reserves, which we calculate are equivalent to one month’s operating costs for Liverpool council. That is a prudent level of reserves. Perhaps, it wants more reserves in order to have some sustainability given the context that she is powerfully describing.