Local Government Finance (England)

Anna Turley Excerpts

Wednesday 10th February 2016 Commons Chamber

[Robert Neill (Bromley and Chislehurst) (Con)]

This is a particularly important local government finance settlement debate. In the past, we have tended to have debates where we are essentially rolling forward, year on year, much of the same. The difference this year—and it is very much to the credit of the Secretary of State—is that the settlement is genuinely transformational, as it moves away from what was essentially a flawed system. That is why this is so important.

There were two flaws in the system. First, it did nothing to take account of efficiency. The efficient authority gained nothing; everything was predicated on demonstrating—in certain parameters in the formula—need. It almost entrenched dependency, which drove out innovation and initiative. Now the Government have put in place a raft of measures that enable local authorities to say not “How much do we need?”, but “How do we change our own circumstances? How do we grow our rate base?”

The work that has been done through the Localism Act 2011, the power of general competence and the ability of local authorities such as Bromley to enter into commercial partnerships as landowners and investors with their business community has all changed the landscape. The ability to go for genuine growth, but in sensible terms, changes things. It is sad that we have seen such an old-fashioned and almost demeaning approach to local government from Labour. That is the first and most important point I wish to make.

The second important point is that the new approach moves away from an idea that central Government must sort out local government’s problems all the time. We are putting powers back into the hands of local authorities and doing so with a measure of fairness. The important thing is that there has been a transition. Because it was transformational, it was necessary to ease that move from a dependency culture to a self-sufficiency culture. That is utterly to the good. Now we need to make sure that as we go forward, we get the proper baselines right.

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

Will the hon. Gentleman give way?

[Robert Neill]

I will give way once.

--- Later in debate ---

[Anna Turley]

In Redcar and Cleveland we have lost 3,000 jobs at the steelworks, which is the equivalent of £10 million per year in business rates. In London that would be the equivalent of 176,000 jobs going overnight. Does the hon. Gentleman not recognise that there are differences that mean that councils have to respond in different ways to their economic circumstances?

[Robert Neill]

Yes, of course. That is precisely why the Government set up the local enterprise partnerships, and why under the previous regime we set up the arrangements for top-ups and tariffs, which I hope we can simplify in future.

The simplistic idea that we cannot be, to some degree, masters of our own destiny is wrong. In particular, what seems to me utterly wrong is that a local authority such as Bromley, which has historically had the lowest unit costs per head in London, was treated on a formulaic basis in exactly the same way as local authorities that had never bothered to keep their unit costs down and which were never, therefore, driven by efficiency in the same way as we were. Once, when I commented that there was no reward for efficiency in the formula, I was told by a civil servant, “Well, Minister, surely efficiency is its own reward.” He did not grasp the concept. I am glad to say now that Ministers and officials in the Department for Communities and Local Government do grasp the concept, which should be fundamental to the way we go forward.

I welcome what has been done for Bromley, but more importantly, I ask the Secretary of State to ensure that we take forward those basic principles to the next degree so that when we get to the calculation of the needs element, I hope we will remember that there are more than simply the old-fashioned demographic trends in what constitutes needs. As has been observed, the way that needs were calculated in the past, for example, took a simplistic weighting of density as equating with deprivation. That was not the case at all. The way that both inner London and outer London have changed demonstrates that clearly.

--- Later in debate ---

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

As everyone in the House will be aware, the liquidation of Sahaviriya Steel Industries and the closure of Redcar steelworks last September led to more than 3,000 immediate job losses. The local authority, Redcar and Cleveland Borough Council, serves a population of 135,000 people. Those job losses would be the equivalent in Greater London of the overnight loss of 176,000 jobs—imagine the headline on the front of the Evening Standard. That is what my local area is dealing with.

Imagine now, on top of that, the loss to the council of £10 million in business rates from SSI, plus the loss to council tax income as a result of people being out of work, as well as the knock-on demand for services from those out of work and the money lost more broadly to the local economy.

Add to that the fact that less than £5 per head is spent on transport in our region, compared with £2,600 per head in London. Add to that the fact that unemployment was already more than double the national average, and that was before the steelworks closed. Add to that the fact that our demographics show we have a higher than average proportion of elderly people and we have desperately deprived rural areas in Cleveland, which many Government Members have not taken into account in the debate. Add to that the fact that a third of men and half of women are on less than a living wage. Add to that the fact that the Tees valley has the second highest number of wards anywhere in the country in the index of multiple deprivation. That is what we are dealing with.

Our local authority of Redcar and Cleveland has lost £56.4 million in funding since the Prime Minister came to office—more than the funding package we got to retrain SSI workers. That is what we have lost, and now the Government intend to take a further £7.5 million from us—a total loss of £89 million over 10 years. That is not sustainable.

We are trying to get back on our feet. We are trying to recover. Why are the Government holding us back? This is a heinous settlement from a shameless, arrogant and downright cruel Government, and I urge them to think again.