Local Government Finance

Debate between Andy Sawford and Graham Stuart

Tuesday 10th February 2015 Commons Chamber

[Andy Sawford (Corby) (Lab/Co-op)]

The debate has illustrated just how clueless the Government are about the impact of the cuts imposed on local government. As we have heard, the Government have been criticised by the National Audit Office and the Public Accounts Committee for not understanding the real impact of the cuts. What is worse is that they are deliberately trying to hide how the cuts have been distributed unfairly.

We have heard how the areas of the country with highest need have received cuts up to 16 times greater than those with the lowest levels of need. Places such as Elmbridge, Waverley and Epsom and Ewell have had a funding increase at a time when local government’s grant overall has been reduced by 40%. We have heard from Members such as my hon. Friend the Member for Derby North (Chris Williamson) about their authorities facing cuts of up to £50 million. The figure is even more in larger authorities such as Birmingham. In those areas, times are extremely tough and I echo the remarks made by my right hon. Friend the Member for Leeds Central (Hilary Benn) in paying tribute to the great work of councils of all parties up and down the country. In particular, I acknowledge the great work of Labour councils who, on the whole, have faced much larger cuts.

The National Audit Office found that the Government will have reduced funding to local authorities by 37% in real terms over this Parliament. The Local Government Association says that it is a 40% reduction and the Government tell us that it is a 1.7% reduction. Nobody, but nobody, believes their figure. Even if we attempted to massage the figures by including council tax and other ring-fenced funding, as we have heard, the LGA says that that would mean an 8.5% reduction. Within that, there is double counting.

My hon. Friend the Member for Sheffield South East (Mr Betts), speaking from his experience as Chair of the Select Committee on Communities and Local Government, forensically took apart the Government’s claims, highlighting the double counting and the money sitting on the NHS books that DCLG Ministers claim is available for councils. The hon. Member for Southport (John Pugh) called it sophistry. In a damning turn of phrase for a coalition MP, he said that sophistry to disguise the cuts would be cowardly, but to deny them is dishonest and dangerous. That is what is happening.

Will the Minister commit to publishing the cumulative impact of funding reductions on individual councils? The National Audit Office has requested that, and I have tabled written questions to that effect, although I received a very disappointing response today telling me that the information will not be made available. As the hon. Member for Southport quite rightly said, that is an attempt to disguise what is really happening, because those figures would expose the deep unfairness of the cuts.

My right hon. Friend the Member for Leeds Central referred to the comments of the Public Accounts Committee, the Audit Commission and the Joseph Rowntree Foundation, which has stated:

“Cuts in spending power and budgeted spend are systematically greater in more deprived local authorities than in more affluent ones”.

My hon. Friend the Member for Blackpool South (Mr Marsden), who represents the sixth most deprived area in the country, talked about the cost pressures in his area, with the rising demands on children’s services, the growing elderly population, the challenge of implementing £90 million of cuts and the loss of 759 council workers. We do not denigrate those people as town hall bureaucrats in the way coalition Ministers do; they were providing a valuable public service in their communities. My hon. Friend talked about the thinning of the very fabric that has kept that community together. I recognise those remarks, as I am sure do hon. Members on both sides of the House.

We have heard today that by 2017 the city of Liverpool, the most deprived local authority in the country, will have lost over half its Government grant compared with 2010. In fact, my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) told us that the latest estimate is 58%. That, in her words, is “devastating”. The council has taken measures to become more efficient, to generate new revenue streams and to reduce and use reserves as effectively as possible while maintaining a reasonable level of reserves, but it is also having to make cuts that are damaging people’s lives. The truth is that no councillor wants to talk about that. Her great city mayor, Joe Anderson, and the councillors serving the city do not want to talk about the incredibly difficult decisions they are having to make, because they are doing their very best to keep the show on the road. However, as my hon. Friend said, older people in her city are being deprived of care despite their growing needs. She said that at the start of this Parliament 15,000 people were receiving care and help, but now the figure is 9,000, so there is a real unmet need. That is the human cost of the cuts. That is the real tragedy.

My hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) talked passionately, as she always does, about the great city she represents. It is a diverse and young city that trains 40,000 graduates a year. She talked of her vision for the city and all the opportunities to exploit its great strengths in sectors such as life sciences, and she talked honestly about the challenges it faces, but by 2018 the council will have lost two thirds of its discretionary spend. That is a very real threat to the city’s ability to make the most of the opportunities it has.

[Mr Graham Stuart]

Will the hon. Gentleman give way?

[Andy Sawford]

The hon. Gentleman has virtually made two speeches, given his 20 interventions, so I am sure that he will understand if I reply to the points that have been made rather than giving way.

My hon. Friend the Member for Birmingham, Edgbaston said—I paraphrase—that it would be to the Government’s lasting shame if they do not do what they can to create the conditions in which Birmingham can succeed. It is our intention to create the conditions in which all our great cities, and all our great counties and metropolitan unitary areas of our country, can succeed. We want a devolution deal that will give opportunities to all areas of our country.

My hon. Friend the Member for Birmingham, Northfield (Richard Burden) talked about a particular issue in his constituency: school crossing patrols. I congratulate him on his campaign. I will not run down his campaign in the way that we heard the Secretary of State disappointingly has done. My hon. Friend has found a positive way forward to try to keep children in his constituency safe, and he should be congratulated on that, as should Birmingham city council.

My hon. Friend the Member for Hammersmith (Mr Slaughter) told us that in just nine months the council has set up a hospital unit to defend hospital services, saved Sulivan primary school, invested in affordable housing, funded police officers, backed the voluntary sector, cut the proposed Tory rent rise, taken action on food poverty, saved the local theatre and backed cycling—I have to say that it could soon be my favourite council, second only to Corby borough council. My hon. Friend made a powerful case for the great things that Labour councils are doing against a background of higher cuts than in Conservative and coalition areas across the country.

Having claimed that those with the broadest shoulders should bear the greatest burden, why have Ministers done the very opposite in local government? Since 1948 local government has been funded largely through a grant according to need, a principle that existed through successive Labour and Tory Governments. The idea behind it is very simple: not all areas of the country are the same; they have different needs; and it is good for our economy and our society to give the people of every area a fair chance of a good life. Decent local services provide the basis of that, so that whether a looked-after child is growing up in Newham, Newcastle or Northamptonshire, their needs will be met. The Government have argued that the old way of doing that, which strove for fairness, lacked incentives.

The Labour Government introduced the local authority business growth incentive scheme. The next Labour Government will let combined authority areas keep 100% of business rate growth. Incentives have a role to play, but it was wrong to freeze the grant at 2013 levels and engineer a complete shift away from redistribution. The ability of areas to take up the incentives and to replace lost grant with income from them varies enormously. We know that for all sorts of reasons, in the short term, from one year to the next, the chances of generating growth in some areas is much greater than in others. To compound the unfairness, the incentives being funded are from top-slicing the grant—a further raid on the resources of councils with the greatest needs. So when the Minister replies, will he say why he thinks it is right that the spending power of Wokingham will soon overtake that of Newcastle and Leeds, which have much greater needs?

On current trends, revenue support grant will disappear entirely by 2019-20. There is a real question about the future viability of local authority services, including statutory services. We can already see the impact of the cuts—for example, the impact of the cuts to social care on the national health service. A Labour Government will end the bias against areas with the greatest needs by ensuring that the funding we have is distributed more fairly. That means a settlement that works for all authorities in all areas of the country. That will include the new homes bonus, which was criticised by hon. Members, including the hon. Member for Newton Abbot (Anne Marie Morris). It takes money away from the most disadvantaged communities and gives it to areas where new homes would have been built anyway. That is the point. The new homes bonus is top-sliced from one year to the next. It is no basis for planning ahead.

We say to every area that a fair long-term approach will be best for every local council. That is why we are committed to longer-term funding settlements and multi-year budgets, so that local authorities can plan ahead, push ahead with reform and shift from high-cost ways of doing things towards investment in preventing problems, rather than paying for them later. There has to be a better way forward than taking a huge amount of resources from the poorest areas of our country.

At the same time, we will devolve significant powers and resources to all areas of our country—not just small-time agreements with a small number of cities, but large-scale devolution across our country. We will introduce a new model of decision making and new local accountability structures, like the local public accounts committee. Labour will put devolution at the very heart of the next Labour Government, with a new English regional cabinet committee.

Today we affirm our commitment that a Labour Government will move quickly towards fair funding. We reject the deeply unfair funding changes that this Government have imposed on local councils. Taking most from the areas with the greatest need is wrong and we will vote against the motion.

Local Government Finance

Debate between Andy Sawford and Graham Stuart

Wednesday 12th February 2014 Commons Chamber

[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.

NHS Funding

Debate between Andy Sawford and Graham Stuart

Wednesday 12th December 2012 Commons Chamber

[Andy Sawford]

Will the hon. Gentleman accept, though, in the interests of being transparent with the public, last week’s letter from Andrew Dilnot, the chair of the UK Statistics Authority?

[Mr Graham Stuart]

Move on.

[Andy Sawford]

The letter stated unequivocally that

“we would conclude that expenditure on the NHS in real terms was lower in 2011-12 than it was in 2009-10.”

Until both Government parties acknowledge that truth, which independent experts have told us about, they will not have any credibility in health debates.