Local Government Funding: North-East

Anna Turley Excerpts

Tuesday 1st March 2016 Westminster Hall

[Jenny Chapman]

I completely agree. I am aware that while we are meeting here, the High Speed Rail (London – West Midlands) Bill Committee is also meeting. If the Minister takes one thing away from this debate, I would like him to take this point about buses. The number of people in the north-east who rely on bus services far outweighs those who need a train to commute to work. Their services are being decimated. Councils are no longer in a position to financially subsidise bus routes. The bus companies are under no obligation to provide the services that we so desperately need and communities are being cut off. That is already happening—it has already happened to areas of my borough.

[Anna Turley (Redcar) (Lab/Co-op)]

I appreciate my hon. Friend raising the issue of buses. Support for bus services is a critical issue in my area. When I go out talking to people, I find older people having to get taxis to hospital or to doctor’s appointments. I find people on the minimum wage having to get taxis to work because they are isolated and cut off. That is in rural areas—yes, those of us on this side of the House have them in our constituencies too.

[Jenny Chapman]

Although my hon. Friend was being a little tongue in cheek at the end, she makes a very good point. In the debate in the Chamber, we heard many Government Members telling us, “There is rural deprivation, too, don’t you know?” Actually, in the north-east we have many rural areas. I have them just outside my constituency. The county of Durham is predominantly rural. Government Members were being insulting and patronising when they tried to explain to us that they had deprivation in their parts of the country too. The difference between our rural areas and the ones they were talking about is that ours tend to vote Labour.

Let me turn to the dry numbers and their impact—I will be talking about Darlington; other colleagues will talk about their constituencies. The reduction in Government funding in real terms between 2010 and 2020 will be £44 million, in the context of a net budget of £87 million. The provision of statutory services costs £87.5 million. The council has been able to fund £2.5 million of discretionary services a year for the next four years by using all its available revenue balances. Balances that have been wisely saved are now being used to protect front-line services, and what happens after that? That is what I would like to know.

What do the numbers mean in the real world? Darlington is a historic market town. It was the birthplace of the railways. We have got good schools, affordable housing, good rail transport links and a fierce sense of identity. We are proud of where we live. We are innovators. We have developed everything from steam locomotives to story sacks for pre-school kids. We survived the worst of the ’80s Tory Government through a diverse economic base, but these new challenges are not like anything we have previously had to endure.

Darlingtonians are a frugal lot. We like our council tax low and we like our council to make the money stretch as far as possible. Darlington was among the first authorities to share back-office services with another authority. We innovate. The joint project with Stockton cut costs by a third—equal to £15 million over 10 years. Darlington also provides services to other councils, such as Richmondshire, and to academies across the north. The council is soon to provide information and communications technology to Northumberland County Council. It is not just sitting back and waiting for the Government to supply. It is a good, innovative, lean authority. Darlington has only two libraries, and they are both to go. Cockerton will shut entirely, and the historic Crown Street library, which was a gift to the town from the Pease family, will be moved into the town’s only sports centre, the Dolphin Centre. No one knows what will become of the library building. The Dolphin Centre is about to get increasingly busy, as all our children’s centres are to be moved in there as well. It is children who are likely to bear the brunt of the unjust funding decisions.

Charities across the north-east are warning that local government funding cuts are “hacking away”—their words—at services specifically aimed at children. Funding for early-help services in the north-east is expected to be cut by 73%. How short-sighted and stupid can you get? The “Losing in the long run” report, published by Action for Children, the National Children’s Bureau and the Children’s Society, says that children and families will be left without the early support that often stops their problems spiralling out of control.

The services I am talking about include children’s centres, teenage pregnancy support, short breaks for disabled children, information and advice for young people, and family support. Those services, although vital, are not statutory. I find myself hoping that someone will apply for a judicial review to determine exactly what a service for young people and children, or even a library service, should look like. What does the law say a library service really is? Otherwise we will continue to see provision eroded until it resembles the barest skeleton of something that could be described as a service. We are seeing reductions in provision precisely when need is rapidly rising. The Government say they accept the need for early intervention, but they cannot do anything else when the evidence is so strong.

Darlington is also being forced to offer its covered market for sale. I am working with traders to try to find a solution, but that is by no means certain of success. Support for the voluntary sector is going as grants are removed, which means threats to services that are heavily in demand, such as those for older people. My citizens advice bureau is losing out, and the tiny amounts of support for arts and welfare organisations are going. The excellent Gay Advice Darlington will lose, and local charities are fishing in an ever-diminishing pond for donations and grants.

I am working hard to help. I do not want to give the Minister the impression that I am simply standing here wanting somebody else to fix all our problems. I know colleagues will be working hard in their constituencies to assist too. Out of this necessity—who knows?—there might come the invention needed to create new and better, stronger organisations that are less dependent on the council for help. That might be true for some—I am confident that for some it will be—but overall the picture is bleak. Our street cleaning, parks maintenance and grass verge cutting are all provided to the barest minimum standards. My beautiful town is having its heart ripped out, Minister, and the pain is being felt in homes across the borough and the entire region.

To undermine the very organisations capable and responsible for providing such work by gratuitously removing support from authorities with the highest need for it is shameful. The real insult to the people of the north has come in the form of the hideously blatant, politically motivated divvying up of the £300 million emergency funding, which went predominantly to Tory areas. The Secretary of State for Communities and Local Government offered a ray of hope to local authorities. He told them they would have to make more cuts between now and 2020, on top of those already imposed, but he did at least promise to provide £300 million over the next two years, so that they had a bit more time to make changes.

There is money for Greater London boroughs such as Bromley, which received £4.2 million of transitional support, and some county councils also do all right—Buckinghamshire receives £9.2 million and Oxfordshire gets £9 million—but there is nothing for Darlington, or for Durham, Newcastle, Sunderland, Gateshead, North Tyneside and South Tyneside. Northumberland will receive £600,000 extra, as well as £4.2 million from the rural grant.

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[Mr Iain Wright (Hartlepool) (Lab)]

It is a pleasure to serve under your chairmanship again, Sir David. I congratulate my hon. Friend the Member for Darlington (Jenny Chapman) on securing this crucial debate.

My hon. Friend is right to say that the provision of good local services can make or break communities. Everybody benefits from good local provision, and many people rely heavily on having access to council services. They can be a civilising force for good: keeping the streets clean, providing a pleasant and safe local environment, helping to spread knowledge and culture through the provision of libraries and arts services, and keeping the vulnerable safe through high-quality and caring adult and children’s services. In my area of the north-east, where economic activity and prosperity are perhaps not as advanced as in other areas, the provision of good local services is needed more than ever. Such provision requires adequate funding for local authorities, but it is fair to say that in this debate and elsewhere the Labour party has demonstrated conclusively that good, adequate funding for local services in the north-east simply is not happening.

Areas of deprivation have suffered more cuts to council funding than more prosperous areas. Inner-London boroughs, metropolitan areas and, yes, councils in the north-east have seen disproportionately harsh cuts. In the last Parliament, Hartlepool Borough Council’s grant was reduced by 40%. In the 2010 index of multiple deprivation, Hartlepool is the 24th most deprived local authority out of 354 areas in Britain. That is an improvement from the IMDs of 2007 and 2004, in which my borough was, respectively, the 23rd and 14th most deprived local authority, but we still have enormous challenges in Hartlepool, as we do elsewhere in the north-east.

Given the austerity programme since 2010 and the severe knocks to the local economy brought on by crises in the oil and gas and steel industries—we had an important debate on the steel industry in the Chamber last night; the Minister responsible for the northern powerhouse could not be bothered to turn up to that either—further deprivation in my borough and elsewhere is inevitable. I see it every day in desperate correspondence from my constituents.

[Anna Turley]

Will my hon. Friend give way?

[Mr Wright]

Yes, but before I do, I pay tribute to my hon. Friend for the work she has done for the steel industry. Her area, like mine, has suffered enormous rises in unemployment. In Hartlepool, unemployment is two and a half times the national average; I dread to think what it is in Redcar.

[Anna Turley]

I appreciate my hon. Friend’s tribute to our area’s fight. Does he share my dismay that although it is nice of the Government to give us £50 million towards retraining and reskilling, that will not even come close to covering the £90 million our local authorities have lost over 10 years? The local authorities would have been in a far stronger position to react to a crisis had the Government not stripped them to the bone.

[Mr Wright]

My hon. Friend is absolutely right about services having been stripped to the bone: there is nothing left to cut. Local authorities can really only consider what they can manage to do and the minimum amount required of them in respect of statutory services.

Along with other local authorities, Hartlepool had a tough deal in the last Parliament, but it is going to get tougher in this one. Hartlepool Borough Council was established when unitary authority status was granted 20 years ago. The coming financial year is set to be the most difficult that the borough has ever faced, with a budget that is £8.274 million less than last year, representing a year-on-year reduction of 19.6%. That reflects the combined impact of a further £4.474 million cut in Government revenue support grant, which is a year-on-year reduction of 19.7%, and the permanent reduction in the rateable value of the nuclear power station—the Minister has heard me discuss this before—which reduces business rates income by £3.8 million year on year, in perpetuity, equating to a reduction of 19.4%. Over the lifetime of this Parliament, to the year 2019-20, Hartlepool faces a combined settlement funding assessment cut of 27%. Every single local authority in the north-east will experience cuts, from 35% in Northumberland to 25% in Sunderland. By the end of this Parliament, Hartlepool, and local authorities in the north-east in general, will have experienced nine consecutive years of funding cuts. That is unprecedented.

My hon. Friend the Member for Darlington mentioned further pressures on health and education, where we have challenges in our region. Will the Minister comment on public health funding budgets, to which further cuts will be made over the next four years? Additional cuts will be phased in at 2% in 2016-17, 2.5% in 2017-18, and 2.6% in 2018-19 and 2019-20. On top of that, from 2017-18 the Government will cut £600 million from the national education services grant, which equates to a cut of 74% over the lifetime of this Parliament. That will have enormous effects on how local authorities can help education provision in the north-east.

From 2017-18, the national schools funding formula will also affect the council’s revenue budget—perhaps not directly, but it will have a negative impact on Hartlepool’s schools and reduce the public funding available in my borough. That will mean that the local authority will have to step up to the plate and try to provide further help, which it cannot provide because it does not have the available resources.

[Mr Wright]

My hon. Friend and constituency neighbour makes an important point about something that I was going to come to. The 100% retention of business rates does not help the north-east and will not help the finances of local authorities in the region. Whereas Westminster City Council, for example, could pave its streets with gold, we in the north-east will suffer enormously as a result of the 100% retention of business rates.

The switching off of the nuclear power station in my constituency for reasons of health and safety, which was quite right, means that my local authority is incredibly vulnerable to the loss of business rates. Given the make-up and structure of the north-east economy, large manufacturing businesses could end up putting local authority finance under further pressure as a result of the lack of help. Nowhere has that been exemplified more than in the closure of the SSI steelworks in Redcar.

[Anna Turley]

Redcar and Cleveland Borough Council has lost £10 million of business rates a year. On top of the impact of the cuts on services, we have lost a huge amount of business rates. If that is how the Government see the future, it is going to be deeply unfair for areas such as ours.

[Mr Wright]

My hon. Friend is right. Will the Minister respond by telling us how that will be addressed? In theory, the 100% retention of business rates is a good policy, but in practice it will further devastate local authority funding in the north-east. What sort of redistributions or transitionary arrangements will be put in place for areas such as Hartlepool or Redcar to prevent that from happening?

I want the Minister to answer directly one key point. In the previous Parliament, the coalition Government had a policy of council tax freezes. Hartlepool was the only authority in the Tees valley that implemented a frozen council tax regime for five years. Can the Minister confirm that, as a result of Government policy, that is now at an end? Is it now the Government’s formal position to ensure that council tax will go up by 1.9%? With the social care precept adding another 2%, that will mean that, starting from April, council tax payers in Hartlepool and elsewhere will face a rise of 3.9%, which they cannot afford to pay. Is the Government’s policy producing that?

In conclusion, my area has faced devastating cuts to local authority services in the past few years, but we ain’t seen nothing yet given what is going to happen during this Parliament. We are going to see the vulnerable become ever more vulnerable and our potential going unfulfilled and unrealised as a direct result of the gerrymandering in the Government’s policy on council tax funding and allocation. It is a disgrace and the Government should think again to make sure that our areas can thrive.

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[Anna Turley (Redcar) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Sir David. I pay tribute to my hon. Friend the Member for Darlington (Jenny Chapman). She made a passionate and eloquent speech in the Chamber during the previous debate on this subject, but I think she has excelled herself. I am grateful for the opportunity to have this debate today.

I was going to set out some of the context and background regarding the north-east but, due the fact that colleagues have done so far more eloquently than I, as well as the time limit, I will not. There are so many great things about the north-east, but I am fed up of having to stand up and wave bleeding stumps and plead about our poverty. People in the north-east have too much dignity and too much going for them for us to do that. The Government have put us in a situation where we have to explain things to them, but they do not understand the challenges we face.

Public services in the north-east should have faced far less substantial cuts than other areas of the country to enable us to tackle the disparities that colleagues have set out, but that is not what we have seen. Instead, the north-east has experienced disproportionately high cuts to local authority budgets. As my hon. Friend the Member for North Durham (Mr Jones) described, the impact is most keenly felt in non-statutory services such as young services provision. Redcar and Cleveland has levels of drug and alcohol problems that are higher than the national average and it has double the rate of self-harm. We need preventive services for older people, support for those with disabilities and special educational needs, smoking cessation programmes, enterprise support teams and transport subsidies. All those services are vital in supporting people to live healthy, active lives or to get into work or education.

One of the great things in the region is the strength of our community and voluntary sector, which delves deep into the most deprived communities and gets to the parts that the state so often cannot reach. However, cuts to council budgets have meant that their grants have been slashed—so much for the big society. More vital services are being cut to the bone in the areas of greatest need.

It was clear from the debate on the financial settlement that the Government are not interested in any form of redistributive approach to local government finance that sees money go to where it is most needed. They are not interested in the principle that historically disadvantaged areas need support or at least a level playing field or the principle to which they paid lip service in 2010 that the broadest shoulders should bear the heaviest burden. They are quite content to have a settlement that has seen the 10 most deprived areas facing cuts 18 times higher than the 10 least deprived. They are quite content to be totally shameless by acknowledging that transition money was basically a bung to Tory areas where MPs were threatening revolt—we heard that from the Government’s own MPs during the debate.

Some Government MPs were not quite so honest and tried to claim that some kind of formula lay behind the unfair and unequal distribution of funding, and some that it was because their areas had an ageing or rural population. Let me tell the House about age in the north-east: 17.1% of the north-east’s population is over 65 years old, compared with 16% in the rest of England, so we have a higher proportion of ageing people. The north-east is also well above the national average of people accessing social care: 29% more people access home care services, 41% more access day care and 100% more access short-term residential care. This is heartless, shameless, pork barrel politics, which does a disservice to the Government and this place.

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[Mr Marcus Jones]

The average spending power per dwelling for the 10% most deprived authorities is about 23% more than for the 10% least deprived authorities in this coming year. Opposition Members have mentioned several times an assertion about the transitional grant. The grant was based firmly on the local government finance settlement, the consultation we undertook and the responses from the consultation. There were a significant number of responses and a call for some sort of transitional grant to support those areas that had lost the most central Government grant compared with the amount expected based on the old redistribution formula.

[Anna Turley]

The Minister has been generous with his time, but what does he say to his own MPs who stood up in the Chamber and admitted that they got the money because they threatened to revolt?

[Mr Marcus Jones]

There are MPs from my party who represent very wealthy areas and others who represent less well-off areas. I say to the hon. Member for North Durham (Mr Jones) that not all of our Members are from Surrey; my party would not have been able to win a general election based on a cohort of MPs from Surrey. MPs in my party come from a wide swathe of the country. The transitional grant was based not on where MPs come from but purely on the response to the local government settlement. It is intended purely to mitigate the most significant changes in funding for the authorities that had the greatest proportion of loss from the revenue support grant.