Local Government Funding: Merseyside

Angela Eagle Excerpts

Tuesday 30th October 2018 Westminster Hall

[Maria Eagle]

My hon. Friend will know the figures for Coventry very well. He set some out, and they sound similar to some of the figures we have seen on Merseyside. Any application for Coventry to join Merseyside will of course be considered by the appropriate authorities, if my hon. Friend wants to take that back to Coventry.

Nationally, £7 billion has been cut from social care budgets, so the £650 million announced by the Chancellor yesterday—to much fanfare—will make little impact on the size of the problem created by the Governments he has been a member of since 2010. I saw today that that figure will cover not only adult social care but children’s, and it also apparently includes money for NHS winter pressures next year, so perhaps that figure is not quite all it was cracked up to be in the Budget statement. However, even if it were, it would not be enough to deal with many of the problems created by the cuts to Liverpool’s social care that have had to be made in the last eight years and are still ongoing.

What about reserves? Tory Ministers frequently answer questions about the scale of the cuts faced by suggesting that authorities should spend their reserves; we often hear that cry. Liverpool has spent £146 million of its reserves to support social care spending, even at the reduced levels it now provides. Its reserves are down to £17 million, so I hope that the Minister was not planning to tell me that Liverpool City Council should spend its reserves. It is clear that that is not a long-term solution. In fact, it is not a solution that will work for much longer at all. Indeed, the NAO says that one in 10 authorities nationally will have nothing left in three years’ time if they continue to use their reserves to pay for social care, as Liverpool has done. Even if those remaining reserves were spent only on social care and nothing else, local authority reserves would be completely used up by 2022.

What about new money? The Mayor of the city of Liverpool, Joe Anderson, has adopted—quite entrepreneurially, I think—an invest to earn strategy, for which he has been criticised but which has yielded so far an extra £13 million a year in new revenue. His original idea was to use that money to support growth in the local economy. However, because of the extent of the cuts in Government funding and the damage they have done—the dire impact that they have had on some of the poorest and most vulnerable members of society in Liverpool—he has had to use the money to support services that would otherwise have been cut even further. For example, all our Sure Start centres have been kept open, even though some of the services they provide have gone. However, the tide of extra need being caused by ongoing cuts in Government support and social security benefits is likely to overwhelm the extra funding that the Mayor has brought in via invest to earn, and to do so soon. In that regard, the roll-out of universal credit will mean 55,000 people in the city being transferred on to it.

[Ms Angela Eagle (Wallasey) (Lab)]

Does my hon. Friend recognise the experience in Wirral with the roll-out of universal credit? That has led to a need for 30 extra tonnes of food and created a 32% increase in the use of food banks because of the hardship that it has caused.

[Maria Eagle]

My hon. Friend, perhaps unsurprisingly, has anticipated my next point—we tend to be on the same wavelength. The Trussell Trust says that in areas where universal credit has been rolled out, it sees a disproportionate increase—my hon. Friend reports a big increase in Wirral—in food bank referrals, as opposed to a lower increase in other areas. The Chancellor is putting some money back in for universal credit, to ameliorate the cuts made by George Osborne in Department for Work and Pensions budgets, but that will not prevent millions of poor and vulnerable people from losing money. They will just lose a little less—and that is without the administrative chaos and design features of this benefit that cause poverty and destitution in Liverpool. Only the Liverpool citizens support scheme, the mayoral hardship fund and the discretionary housing payments, on which the Mayor spends more than central Government provide in moneys, stand between many families and destitution.

The Mayor of Liverpool, Joe Anderson, has repeatedly invited Ministers to Liverpool to inspect the books and tell him just what else he is supposed to try in order to deal with the funding crisis that austerity has created, but not one has taken up the challenge. Indeed, he even sent train tickets to Eric Pickles, when he was Secretary of State, to facilitate a visit, but he did not use them. Perhaps this Minister can take up the offer to inspect the books and see what else he can suggest that Liverpool City Council do; we would be most happy to welcome him. If not, perhaps he could indicate that the Mayor of Liverpool’s suggestion of a royal commission on the funding formula will be seriously considered. After all, with things going as they are, soon there will be no consideration of levels of deprivation or need in any of the ways that funding is allocated to local authorities, nor will any account be taken of the ability of the people of a local area to pay for all that is needed themselves; there will be no elements of redistribution. That is a recipe for entrenching disadvantage and ending social solidarity.

According to the Local Government Association, 168 councils will soon receive no revenue support grant at all and will rely only on business rates and council tax for their income. That disadvantages Liverpool again, because the council tax mix and base is so low. For example, Liverpool has more people than Bristol, but raises £38 million less in council tax, because almost 60% of Liverpool properties are in band A, compared with an average of 24% across the country, and 90% are in bands A to C, compared with 66% nationally. In addition, almost 36% of council tax payers are eligible for a discount because of their circumstances, whereas the national average is 16%. However, Government funding takes no account of these issues. That makes a big difference. If Liverpool was at the national average for these things, that would have meant an additional £97.7 million in council tax available to be collected every year. As it is, Liverpool can raise only £167 million in council tax. Similarly, less is raised in business rates in Liverpool than in many other places, because of the density and mix of local businesses.

Forcing the people of the city to rely, for meeting higher levels of local need, on weaker business rate and council tax yields is not a fair way to fund local services. I therefore finish by asking the Minister to have the courage that his predecessors lacked and visit Liverpool to inspect our books and make some suggestions as to what else, if anything, can be done. I also ask him to address the question of establishing a royal commission on local Government funding to ensure that the Government of which he is a member do not entrench existing deprivation and remove elements of redistribution that have in the past ensured social solidarity and improved life chances, and equality between different areas of the country. We need that now more than ever.

--- Later in debate ---

[Ms Angela Eagle (Wallasey) (Lab)]

Thank you for calling me to speak, Mr Hollobone. I would like to add to the congratulations to my sister, my hon. Friend the Member for Garston and Halewood (Maria Eagle), on securing this debate at such an important time. As she has pointed out, local authorities in general have seen a cut of nearly 50% to their budgets, but local authorities in Merseyside have suffered even greater cuts.

My local authority, Wirral, has suffered a 53% cut in real terms since 2010, which is above average. That means that it has lost well over half its 2010 budget, which is £635 less in resource every household in Wirral. Wirral’s local authority is expected to continue to cut £130 million more between now and 2021, despite the Chancellor and his jocular toilet jokes in the Budget yesterday.

How do these cuts affect my constituents? Behind all the cuts and the many service reductions we have been forced to experience in the past few years are people who are often very vulnerable, not being looked after or being left to fend for themselves when circumstances make it impossible for them to survive independently. The social safety net has been deliberately destroyed by this Government in pursuit of their ideological obsessions with a smaller state. Not only do they pursue those obsessions and hit the poorest hardest, but when we have debates such as this they smirk and laugh, and do not believe the tales that we bring to the House about the real results their cuts have had. The Minister looks to me to be doing the same again today.

We have seen an increase in food bank use, homelessness and destitution, as well as anxiety and insecurity, which has led to increases in mental health breakdowns. A lot of these cuts are actually false economies. In Wirral, the adult social care budget has been cut by over a quarter since 2010, but because of our low council tax base the capacity to raise tax locally is severely constrained. A council tax increase of nearly 6% this year raised only £8 million, half of which is ring-fenced for social care, but because Wirral has an above average number of older people, that increase does not even cover the extra demand being generated by our ageing local population. It is not acceptable for the national Government to wash their hands of the different levels of demand for social care in different areas and leave council tax payers to pick up the bill when council tax bases vary so dramatically—my hon. Friend the Member for Garston and Halewood said of Liverpool’s case—between different areas, because of different property prices.

In my constituency, over 11,000 people are providing unpaid care to their loved ones, many for 50 hours a week with little and diminishing help. We have seen real-terms cuts in spending on youth services. When Labour was in government, spending on youth services doubled, but since 2010 it has gone down by 7% nationally. Spending on young people’s services, such as counselling and youth centres, has fallen by over half. Some 1,000 Sure Start centres have closed and many preventive, proactive services have been wiped out. In Wirral, that has led to a huge increase in the number of children taken into care, which is up from 650 two years ago to 810 this year.

These cuts are a false economy, because as less is spent on preventive work, more has to be spent on much more profound and costly interventions later. How is it moral to wait until a young life is ruined, rather than spend less to prevent it from happening in the first place?

In Wallasey, 20 out of 26 schools face budget cuts. With nearly £3 million cut between 2015 and 2020, per-pupil funding has fallen by 8%. Since 2010, 50% of the Merseyside fire authority’s grant been taken away. Instead of having 42 fire engines, we now have 22, with only 14 available for immediate response. The number of firefighters has reduced by nearly 40% from 927 to a mere 580. After years of decline, fire deaths have increased by 10%. The Merseyside police budget cuts have led to the loss of over 1,000 officers and crime is rising. As the recent Home Affairs Committee report demonstrated, the police are becoming less and less able to cope. As crime rises, we see the number of arrests and charges falling.

Once more, the emergency services are so stretched that they can barely cope with emergencies, and they certainly cannot do preventive work, so lives are put at risk as public sector workers face relentless pressure, being expected to do more for less. This is not my definition of fairness and it is not my definition of the end of austerity. It is an ongoing, rolling scandal, which is placed at the door of this Government.

--- Later in debate ---

[Rishi Sunak]

I can tell the right hon. Gentleman that Knowsley’s core spending power per household is about 20-something per cent. higher than the average for a similar metropolitan authority, which takes into account exactly his point. He talked about the fair funding review and, as I said, that is exactly where all the issues will be considered, ensuring that deprivation or, indeed, multiple other factors, are taken into account in the new funding formula.

[Ms Angela Eagle]

Will the Minister give way?

[Rishi Sunak]

No. I will try to make some progress.

When it comes to that point, I am convinced and confident that those factors are taken into account. Indeed, as we restructure the fair funding formula, they will continue to be taken into account fairly and accurately.

Beyond Government grants, driving economic growth locally is the only sustainable way to ensure that we can raise the money we need to fund our services, and business rates retention is one such opportunity. I am delighted, and I am sure hon. Members here will join me in recognising, that Merseyside is in the fortunate position of being a 100% business rates retention area, which means that the local councils keep all the growth they generate from those rates. That is not something that is enjoyed by every local authority—[Interruption.]