Funding for Local Authorities

Angela Smith Excerpts

Thursday 10th October 2013 Commons Chamber

[Angela Smith (Penistone and Stocksbridge) (Lab)]

I will preface my comments by referring to the speech made by the hon. Member for Tiverton and Honiton (Neil Parish). For reasons I will outline, I do not believe that the real debate should be about rural versus urban areas. I believe that it should be about the fact that local government is being asked to bear the austerity cuts being applied by the coalition Government. That is the real issue.

I wish to put on the record my congratulations to Councillor Steven Houghton, leader of Barnsley council, on recently being raised to Knight Bachelor for services to local government, a well-deserved honour. Steve Houghton has got to be one of the best leaders we have in local government. He has done a great deal to develop local government in this country, including designing the future jobs fund, which has now been abandoned.

Like many other right hon. and hon. Members, I was a local councillor before entering Parliament. I was a member of my local council for nine years and was very proud to be a councillor and a cabinet member for education. I now represent the constituency of Penistone and Stocksbridge, which straddles two metropolitan local authorities, Barnsley council and Sheffield city council. It is an incredibly diverse constituency. A large part of it is rural. Indeed, it contains much of the north-eastern aspect of the peak district national park—it does not get any more rural than a national park—within its boundaries. But other parts of the constituency would best be described as semi-rural, suburban and urban.

In other words, the constituency spreads from the fringes of urban Barnsley and urban Sheffield right out into the valleys of the peak district. In the rural western part of the constituency, one finds all the usual issues: the needs of local farmers and other typical problems, such as lack of access to high-speed internet or a decent bus service, and there are all the other issues relating to affordable housing, employment and access to work.

However, other parts of my constituency, such as the old pit villages of High Green and Dodworth face challenges common to former coalfield areas, as the disappearance of what was essentially a key economic activity rooted in villages has left a huge vacuum in employment and, in High Green, severe social problems. Then there are the urban areas in Sheffield, which carry with them all the seemingly intractable problems we have seen emerge since the deindustrialisation of the 1980s.

[Helen Goodman (Bishop Auckland) (Lab)]

My constituency is similarly dispersed. Does my hon. Friend agree that the cost of services in rural areas is far higher, and was not she, like me, appalled to hear Tory Councillor Nick Worth of Lincolnshire county council defending the closure of more than half the libraries in Lincolnshire?

[Angela Smith]

I completely agree. The closure of libraries really worries me. We face similar levels of closure in Sheffield. We are not applauding or welcoming those closures; we are having to deal with the terrible impact that we know they will have in our area. But we know that the reasons for those closures lie with the lack of funding from central Government.

I have sketched my constituency not because I want to wax lyrical about the area I represent, but because I want to establish a key point that is all too often overlooked when we consider what I call provincial England, meaning England outside London. For too long the debate has been unhelpful, sitting on a platform that polarises the arguments. For too long the argument has been about rural areas versus urban areas, as though the two are literally miles apart. Nothing could be further from the truth, as my constituency exemplifies. As I have already said, I represent deeply rural areas located firmly within a metropolitan borough. I represent rural areas that in the past have supported engineering and coal, railways and ceramics as well as the vital agriculture industry.

My plea to the Chamber today is this: let us start having a more rational and pragmatic debate about the role of local government, let us stop dividing our country up into areas of interest, and let us start representing properly the interests of all the people of England. Let us not have a debate in which we say, “My rural area isn’t getting enough from the Government, so let’s cut the funding for the metropolitan boroughs.” Let us properly recognise that most parts of England, including the metropolitan boroughs, are more complicated than appears to be the case when we just look at a title such as “Sheffield city council.”

[Mr Jim Cunningham]

Whether or not we are talking about local government in rural or urban areas, the fact remains that central Government are weakening local government, because one of their proposals, the new homes bonus, takes discretion away from local authorities and puts it in the hands of local enterprise partnerships, and who are they accountable to?

[Angela Smith]

I accept my hon. Friend’s point. Affordable homes are a key issue in all areas, both rural and urban. It is important that local authorities have the key role in determining, politically, the best way of delivering those new homes—at the city region level in the case of my constituency—across a borough such as Barnsley, which has a lot of green-belt land. In fact, most people will be surprised to hear that the majority of land in Barnsley is green belt.

[Daniel Kawczynski]

The hon. Lady seems to be implying that it is inherently wrong to voice concerns about differences in funding between rural and metropolitan areas, but I represent a totally rural constituency that receives less than half the funding for education services than certain parts of inner-city areas, so the hon. Lady cannot blame us for trying to raise those concerns.

[Angela Smith]

I do not blame anybody for raising concerns about their own constituencies, particularly with regard to education, but that is not the key point in relation to funding for local government services. Metropolitan areas have significant rural aspects. In fact, Rotherham, Doncaster and Barnsley between them are 70% rural. The way in which the hon. Gentleman expresses his argument is not helpful in delivering more resources for his area. I repeat that the key issue is the central Government cuts to local government funding. The difference between provincial England and the capital is another issue that has been completely overlooked.

[Ian Mearns]

Before coming to this place I had the privilege and pleasure of being a local authority councillor in Gateshead for 27 years. Like my hon. Friend’s borough, Gateshead is very diverse: it has a concentrated urban core and a big rural hinterland. Councillors who represented the urban core and those who represented the leafy shire had these types of discussions, but we would never have swapped our social problems, because the differences were stark.

[Angela Smith]

My hon. Friend hits on a key point. That is why I mentioned the old pit villages in my constituency which even now carry the deep scars that were left behind, not just on the landscape but on the lives of the people who were, in effect, abandoned following the wave of closures in the late 1980s and early ’90s. People underestimate how difficult it is for an authority such as Barnsley to rebuild an economy that was built almost entirely in villages. It is not easy to rebuild that type of economic infrastructure once it has disappeared.

Local government provides many of the public goods that our constituents consume, whether they live in rural, suburban or urban areas. These include emptying bins, educating our children and picking up the pieces of shattered lives when things go wrong. Local government is the backbone of our civil society. There is no doubt, however, that it is approaching a crisis that is not of its own making, but that has been made in the offices of No. 10 and the Secretary of State for Communities and Local Government.

We have all seen the infamous graph of doom, which shows that councils will eventually run out of resources to run anything except the most basic of services. For my two councils that catastrophe will occur in 2018, when all discretionary spending will disappear and major cuts will have to be made to adult social care and other core functions. Councils up and down the country are being asked to do more and more, but with less and less resource.

In addition, it is clear that this Government decided early on to contract out many of their austerity measures for delivery to local councils across the country. The average cut to departmental budgets has been about 7% in real terms according to the special interest group of municipal authorities, but local authorities have seen their share of funding fall by 27% over the same period, with only benefits and welfare being cut more, which, of course, has in itself had a direct impact on demand for local authorities.

To compound matters for the core cities, while the average loss of Government support in England will be £240 per household in the years 2013-14 and 2015-16, the core cities will see a reduction of £352 per household. On the issue of rural and urban areas, metropolitan areas are bearing a large part of the local government reductions—much more than has been acknowledged so far in this debate—which is not at all helpful in terms of delivering for the rural areas in those metropolitan boroughs. That is on top of the already unequal cuts that core city authorities have experienced since 2010, which have seen them lose a third of their grants from central Government.

If that was not bad enough, these cuts have not been the end of it for many local authorities. The hidden cuts, including those major cuts to grants, are not so obvious to many of our constituents. For example, a £400 million cut occurred when council tax support was transferred to local authorities, and the cut to the early intervention grant removed £430 million at a stroke from local authorities. These cuts are now on a scale never seen before and they are having a chilling effect on local services.

Contrary to the belief of the Secretary of State, local government has not been a place of excess. In fact, it has been recognised for many years as the most efficient branch of government, and that makes it even more likely that cuts to its funding will have to come out of the services it provides.

[Rory Stewart (Penrith and The Border) (Con)]

Will the hon. Lady give way?

[Angela Smith]

No, because I have already taken up a fair amount of time due to interventions.

By the end of this financial year Sheffield will have made savings amounting to £182 million—about a third of its discretionary budget. As many will know, that is because the only part of the budget that councils can actually manipulate is relatively small. In the case of Sheffield, it is about 16% of the overall budget, meaning any savings have to be focused on that relatively small proportion of the available resource. That has had a huge impact on leisure, the arts and environmental and street scene functions. Indeed, the impact is being felt across the country, hence the campaigns springing up against library closures everywhere. In Sheffield it has led to the closing of Don Valley stadium, the removing of funding for leisure centres—the only two leisure centres in my constituency have both closed—as well as a significant reduction in library services and a move to fortnightly bin collections. The story is the same in Barnsley, with the £35 million removed from its budget leading to library and leisure centre closures and cut backs in grants to voluntary organisations and other vital services.

Our local authorities are becoming shadows of what they once were. Local people in my two boroughs are increasingly being asked to travel further to access services such as libraries and leisure centres at a time when funding for local bus services is also being cut by central Government. If this situation continues, how far will people have to travel, paying increasingly expensive bus fares, to get to the services they need?

As has been said, on 1 April the Government introduced the new business rate retention scheme, which fundamentally changed the way in which local authorities receive their resources. Although these changes to the new settlement funding assessment make it difficult to make a comparison between previous and future years, the end result for Sheffield and Barnsley seems to be the same—another round of cuts, with Barnsley having £40 million less to spend up to 2015 and Sheffield facing a further shortfall of £80 million up to 2015, rising to £106 million by 2018. To put those figures in perspective, £80 million equates to Sheffield’s current total spend on libraries, environmental heath, trading standards, refuse collection, crematoriums, street lighting, youth services and services to people with mental health issues.

The new settlement funding assessment, along with the retention of business rates, means that from now on the only way my two local authorities and many others can realistically grow their revenues is through growing the business rate income. Indeed, that is the exact intention of the Government’s thinking. That is great for Westminster, because companies are falling over themselves to locate there, but not so great for Barnsley, given the difficulties it faces. That does not mean that Barnsley does not want to compete or attract new business, or that progress has not been made, but it is hard. The borough, along with its neighbour, Sheffield, still has a long way to go. That is hardly surprising, given the deindustrialisation that it suffered in the ’80s. Even if businesses can be attracted, the work that is required to fill the economic gap left by the contraction of traditional industries is immense. To fill Sheffield’s £38 million funding gap for next year, the equivalent of two new Meadowhall retail centres would have to be built. That is a tall order to say the least.

I started my comments by saying that local government is important. It is also true that more and more people will require the services that it provides. Those who rely most on local authorities are the elderly, the young and the vulnerable. The possibility that councils will run out of money for all but the most basic of services is fast becoming a reality. As I said earlier, Sheffield will run out of money for all functions other than children’s and adults’ services, and will have to start cutting even those key functions, by 2018. Every day, I hear stories of vulnerable people being isolated more and more as councils pull out of the services that they used to provide. I fear the sort of society that we are becoming as councils stop providing the support that they have provided until now.

If the Government continue down the already well-trodden path of exporting their austerity measures to local authorities, many parts of the country will see local services cease. It is the most vulnerable, the elderly and future generations who will bear the brunt. It does not matter whether those people live in rural areas in Devon, Sheffield or Barnsley, or in metropolitan or urban areas—they will suffer.

[Anne Marie Morris (Newton Abbot) (Con)]

Clearly, we are in tough times. It is therefore absolutely right that we endeavour to get more for less. The Government have been very prudent in doing two things: managing budgets and costs, and pushing down much of the decision making to a local level. I am particularly fond of the localism agenda.

However, I represent a very rural constituency in Devon and I share the concern of my hon. Friend the Member for Tiverton and Honiton (Neil Parish), who secured this debate, that there is a divide in how funding has been allocated. It is to the credit of the Government that they have recognised that divide. As my hon. Friend said, the challenge is in getting the Government to “get on with it”. It is clearly inappropriate that urban authorities have 50% more to spend than more rural authorities. There is a big job to do.

The cuts to local authority funding have been criticised by Opposition Members. I do not know how many of them were listening to BBC Radio 4 two days ago, but it cited an ICM poll showing that there was a good deal of satisfaction with local government services. The areas that were of concern were social care and potholes, which have a particular impact in rural areas and areas with elderly populations.

[Angela Smith]

I am sorry to intervene on the hon. Lady when I have just spoken, but people in my area cannot exhibit any satisfaction with their leisure centres because they have both been closed and they no longer have any.

[Anne Marie Morris]

No survey is perfect, but I do not believe that this one is any less representative than any other. I think that the findings are good.