Baroness Keeley
Main Page: Baroness Keeley (Labour - Life peer)Local Government Finance (England)
Baroness Keeley Excerpts(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Andrew Gwynne (Denton and Reddish) (Lab)
Will the Secretary of State give way?
Greg Clark
I will not give way.
More elderly people living in our communities is a good thing—they are our parents and grandparents, and it is an advance that they are living longer than anyone thought possible—but we need to pay for their care needs. It is no reflection on the efficiency of a council if care costs increase because the number of older people is increasing in their communities.
Greg Clark
I will not give way.
A 2% precept is the equivalent of an annual £23 increase in the average bill for a band D property. That money can be used only for social care, and council tax bills are required to be transparent about the purpose for which the money is raised.
By the end of this Parliament, local government will retain all the business rates it raises. It is a huge transformation from a world in which, just three years ago, every penny that councils collected from local businesses had to be handed over straight to the Treasury. That meant that councils were dependent on the central Government grant. At the start of the last Parliament, nearly 80% of council expenditure was in the form of a grant from central Government. By 2020, all local government spending will be raised by local government. Councils and local people will reap the benefits of reviving economic growth, just as central Government and the country will benefit from the rising prosperity that the Government’s policies are fostering. With services financed locally, councils are even more accountable to their electorates, rather than to Ministers in Whitehall. Even as a Minister in Whitehall, I say that this is how it should be.
Greg Clark
The hon. Gentleman and the hon. Lady should be patient. I have given way to their hon. Friend, and I am going to make some progress.
That point was made repeatedly during the consultation by councils from all across the country and under the leadership of all political parties. That is why I will conduct a fundamental review of the needs-based formula to govern the change to 100% business rates retention, which I have described. It is not only the changing needs of different areas that need to be recognised, but the differing costs of providing services to residents depending on the area a council serves. As my hon. Friend the Member for Tiverton and Honiton (Neil Parish) was saying, the rural services delivery grant, which recognises the extra costs encountered by rural authorities in delivering services, is bringing £15.5 million into such councils this year. This settlement increases the grant more than fivefold to £80.5 million, which will ensure that there is no deterioration in Government funding for rural areas, when compared with urban areas, for the year of this statutory settlement.
Greg Clark
I am going to make some progress, but I will give way to the Chairman of the Communities and Local Government Committee in a few moments.
Another important provision of the settlement is the continuation of the new homes bonus. It had not been guaranteed that the existing scheme would continue through the spending review period. I believe that the bonus has been a valuable source of funding for councils and a spur to much-needed house building, so I am very happy that the scheme will continue, subject to the changes on which I am consulting.
The settlement provides flexibility for councils with a record of keeping costs low by permitting a de minimis £5 a year council tax increase without requiring the cost of a referendum. We will consult on plans to permit well-run planning departments to increase their fees by, at most, the rate of inflation, as long as such income is used to decrease the existing cross-subsidy of the planning function by other council tax payers. Importantly, the settlement makes it clear that as revenue support grant declines, no council will have to make a contribution to other councils in either 2017-18 or 2018-19—something that was considered to be unfair in the provisional settlement by certain respondents.
Let me say a few words about the reductions in revenue support grant over the spending review period. As I have said, we are moving from one world to another; from a world in which the Government grant accounted for nearly 80% of local government expenditure in 2010 to one in which, by 2020, only 5% of local government spending power will come from the revenue support grant. In the same period, with the implementation of 100% business rates retention, the proportion of council spending power from local sources—council tax and business rates—will grow.
The reason for the change is not just financial. A council that is almost entirely dependent on central Government will, consciously or unconsciously, end up looking to central Government to be told what to do. Of course, since time immemorial, Governments have attached strings to the money they give out. My excellent predecessor, my right hon. Friend the Member for Brentwood and Ongar (Sir Eric Pickles), abolished 4,700 targets, measures and indicators to which every council in the country had to subjugate itself to obtain revenue to provide services for its residents.
That is no way for the proud towns, cities, counties and districts of this country to be governed. Places, many with a history as long and distinctive as our country itself, should not be reduced to complying meekly with Whitehall’s presumptuous demands. That is why a shift to funding from the people and businesses that councils exist to represent and serve, rather than all eyes being fixed on London, is so vital.
Our councils have been the strongest campaigners for this long overdue change, but in the consultation period that followed the statement on the provisional settlement, councils and colleagues made the compelling case that the transition to this new world needs to be sensibly managed and that the first two years of the settlement would pose particular challenges.
Mr Steve Reed (Croydon North) (Lab)
I will do my best to keep my remarks brief.
It is always a pleasure to listen to the Secretary of State’s engaging manner, but it is not so pleasant listening to what he has to say. He repeated his claims to have protected funding for councils over the next four years, but there can be no one left who believes that anymore—judging from what we have heard over recent weeks, not even his own MPs believe it. That is no wonder, because the settlement funding assessment takes away £1 in every £3 given to councils for funding core services, and that is on top of cuts in excess of 40%—indeed, in many councils, in excess of 50%—that have already been imposed.
Barbara Keeley
I tried to intervene on the Secretary of State and he would not take my intervention, but I cannot leave what he said about social care because it is just wrong. There is no injection of cash into social care; there is only a maximum of £400 million this year. That funding is uncertain, risky and back-loaded, and the LGA has asked him if he will inject £700 million over the next two years because it is so concerned. There was not even funding for its own policy of national living wage increases, so let us not hear such things about social care.
Mr Reed
My hon. Friend is absolutely right, and I will pick up on those points later in my contribution. Returning to the settlement funding assessment, because increases elsewhere do not plug the gap that those cuts create, it will result in cuts to front-line services, including cuts to youth services, fixing potholes, cleaning the streets, emptying the bins, looking after parks, keeping the street lights on at night, Sure Start centres, libraries, museums and rural bus services. The Secretary of State has not protected any of those; he has sharpened the knife.
Mr Clive Betts (Sheffield South East) (Lab)
I want to try to be fair and even-handed in these matters, and I shall focus on the positive elements first. We ought to welcome the four-year settlement on offer, as it is something that local government has for some time been asking for. It is a helpful step forward, providing greater certainty for the future. We are not quite sure yet what efficiency plans local councils will need to draw up to achieve it, but it seems a good starting point.
I welcome the money for social care, too. It is reasonable, but I have some questions about how it is going to work. I have had an exchange of correspondence with the Secretary of State and with the Local Government Association. The LGA clearly says that it asked for more money than it has got on transformational spending and it states that this was not recognised.
I do not object to the fact—indeed, I welcome it—that local councils will be able to raise more money through council tax. It is right in principle for more local services to be paid for by local taxes. As a localist, I firmly believe in that.
Let me clarify the questions that still need addressing. First, the better care fund that is part of the package is very much back-end loaded in the spending settlement, but there are pressures at the front end, too. The Secretary of State claimed in his statement that the issue of the 2% council tax increase raising more money in richer areas would be addressed through the distribution of the better care fund. Will he put some clear information in the Library to explain how that is going to be done?
Barbara Keeley
My hon. Friend has raised a key issue. For two years, there will be hardly anything from the better care fund. There will a maximum of only £400 million this year from the 2% precept, nothing from the better care fund, and only £105 million from the fund next year. The funding gap is increasing by £700 million, and the Local Government Association’s Councillor Izzi Seccombe has asked for that sum to be released.
Mr Betts
That was the next point that I was going to make. The Government should consider how the better care fund money could be distributed in a way that would help more poor authorities, but it would also be helpful—I know that the LGA has mentioned this—if more of that money could be provided until at least 2017-18, if not into the next financial year. I hope that the Secretary of State will consider that, because current back-end loading is a real problem.
The LGA has drawn my attention to the fact that the council tax base—which relates to the number of properties from which council tax will be raised—is assumed to rise by 7.8%. Will the Government explain precisely how they have made that calculation? It seems a very big increase indeed.
What account have the Government taken of the ability of clinical commissioning groups to help local authorities with their social care spending? In my own authority of Sheffield, the CCG has said that it faces a substantial reduction in its funding against the anticipated level for next year, but this year it is providing the council with £9 million of transfer funding to help it with its added social care provision. If that money is removed, any element from the better care fund or increased council tax will not be a substitute. I think that that is an issue for cross-departmental work.
The settlement will clearly result in cuts. The Secretary of State will argue that they will be less severe than those made in the last Parliament, but, of course, they are in addition to those that have already been made. In the last Parliament, when most of the larger percentage cuts were made in the metropolitan areas, which had the greatest needs and the greatest problems, we never once heard mention of a transitional arrangement to provide extra help for those councils. It has only come about now because the Government have developed a core spending power which includes council tax, and the richer councils happen to be more able to raise council tax. As they have suffered a bigger reduction in revenue support grant as a result of the initial spending announcement, a transitional funding arrangement has suddenly and magically been put in place for them.
Steve Double (St Austell and Newquay) (Con)
Like many other hon. Members, I cut my teeth in politics in local government: I was elected to Cornwall Council in 2009. It is partly because of that that I simply do not recognise the rhetoric that we continually hear from Labour Members that this Government are somehow seeking to undermine, dismantle or even destroy local government. That rhetoric just does not stand up to scrutiny, because this Government are delivering the changes that local government has been asking for over many years.
At the heart of this matter is devolution. We are devolving real powers to cities and regions up and down the country. We are seeing this in Cornwall, where we are delivering an historic devolution deal. Cornwall is the first rural area to get a devolution deal. The people of Cornwall have been asking for such a deal for many years, and it is this Government who are delivering it. So Labour’s suggestion that we do not believe in local government just does not stand up to scrutiny. Why would we give more powers to local government if we did not believe in it and trust it to deliver its services?
Barbara Keeley
I do not think that anybody on the Opposition Benches is saying that. It is surprising, however, to find that in devolved Greater Manchester, only one council, Trafford, is benefiting from the transitional funds—
Barbara Keeley
Indeed; Tory Trafford. I was a councillor in Trafford, by the way, and I have to tell the Secretary of State that the council leader is not called Stephen Anstee; he is called Sean Anstee. The right hon. Gentleman has referred to him twice this week as Stephen—
Barbara Keeley
My point is that picking out one local authority among the 10 and giving it such largesse hardly helps the devolution plans.
Jim McMahon
I absolutely agree. The better care fund had a mechanism for putting money at the frontline to make savings further down the line, but it was completely inadequate for the needs that were there.
The Chartered Institute of Public Finance and Accountancy has placed on record its view that some councils could well fall over. The challenge, of course, will not come from one lone council failing to set a budget; it will come in the courts. As entitlement to basic services such as children’s services, education and social care are taken away, somebody will test that entitlement in court. When the judgment is that their entitlement has unlawfully been taken away, that will send a shockwave through the system that central Government are not fully ready for. At that point, the system may well fall over.
The truth is that the Government do not want to be honest about the true cost of cuts. Most people will accept that adult social care is one of the biggest challenges facing local government and society more generally. Our older population grew by 11.4% between 2010 and 2014, while core funding was being taken away. Age UK estimates that more than 1 million people have unmet care demands. What is the Government’s response? It is lacklustre, weak and pathetic; it simply does not address the social care crisis in this country today.
Barbara Keeley
My hon. Friend is perfectly right to quote those figures from Age UK for unmet care demands, but the need to meet those demands falls on unpaid family carers. The Government passed the Health and Social Care Act 2012, which gave carers rights, but there is no funding for that. That is what legislation will have to address.
Jim McMahon
I thank my hon. Friend. We can talk about figures, and this is a debate about the settlement, so we are likely to do that, but we need to think about the human cost too. Down the line, what will these things mean for individuals, families and our communities? Oldham’s £200 million of cuts leaves a gross budget of £188 million. More than half the town’s money has been taken away by the Government.
If the answer to providing adult social care is a 2% levy on council tax, let us follow that through to see what it means. For Oldham Council, a 2% increase in council tax, as directed by Government, would generate £1.5 million, because of course the town has a low council tax base to begin with. However, the increase—just—in the living wage impacts on social care contracts, and so, not even taking into account an older population or increased demand, there is a £2.7 million increase in wage bills. With £1.5 million generated in council tax and £2.7 million in increased wage bills through the Government’s living wage, the numbers do not add up. This does not even allow us to stand still; we are going backwards.
I am sure that the hon. Member for St Austell and Newquay (Steve Double) is very pleased with a cash bonanza to buy his vote today, but some of us were not so fortunate. We had a raw settlement and a raw deal from this Government, because on top of the £200 million in cuts, we cannot ignore the rural relief grant. So it is cash after cash after cash for rural areas, not taking into account a single bit of need. It has already been pointed out that 85% of this funding is being given to Tory shires, but let me go closer to home and look at Greater Manchester.
Trafford has some rural areas, but let us look at them: Bowdon, Alderley Edge and Hale—“Footballers’ Wives” territory. This is the most affluent borough in Greater Manchester. It has the highest council tax, the highest business rate base, and the healthiest budget as a result of this Government’s policies—but that is not all. Because of the way that you have protected your side, you have something in common with Trafford—Baroness Williams of Trafford, the Local Government Minister and former Trafford Council leader, who lives in Trafford. Is a “friends and family” discount being offered? What do we need to do, Greg? Do you want to come and live in Oldham? If that helps our financial situation, then we will—
Andrew Gwynne (Denton and Reddish) (Lab)
It is pleasure to contribute to this debate. First, I wish to pay tribute to all local councillors, of all political parties and none, for the work that they do in the world of local government, making sure that local services are provided to the people we represent in Parliament. They do an incredible job in difficult circumstances. I say that having been a councillor on Tameside Metropolitan Borough Council for 12 years. My wife has been a Tameside councillor for 16 years, and I know the very difficult decisions she and her colleagues are having to make at the moment.
My constituency is served by two borough councils. They are very different in their socioeconomic and demographic, and political make-ups, but both are having to deal with tough—although different—spending decisions. Stockport contains the two Reddish wards in my constituency. Tameside would love to have Stockport’s settlement and its council tax base. Nevertheless, the cuts are biting hard in Stockport and I wish to make a few comments on behalf of the borough council. It says it is:
“Surprised at extent to which council tax growth is assumed in the government’s figures which…fail to acknowledge the spending pressures arising from government induced changes (e.g national living wage, NI increases and apprenticeship levy).”
It would be good if the Minister could respond to some of those points. Although Stockport Council welcomes
“certain aspects of the settlement, insofar as it is not as bad as it might have been”
it is
“under no illusions as to the scale of the financial challenges that face the Council”.
It says that it will have to
“take full advantage of the newly granted flexibility to increase council tax.”
I wish to make the point again that Tameside’s council has a £16 million social care deficit this year. It is now restricted to providing just critical and substantial care, which is statutory. That means the council still has to find the money to close that £16 million gap. Given that social care amounts to 60% of the council’s overall budget yet it serves only 4% of the residents of the borough, that money has to be found from the services everybody else takes for granted. I do not wish to repeat many of the points made by my hon. Friend the Member for Darlington (Jenny Chapman), but Tameside’s council is in a pretty similar position, in that its grounds maintenance, parks, road repairs and street cleaning are what is being literally—
Barbara Keeley
Today, I have been downstairs to meet people from the Malnutrition Task Force, which is doing some brilliant work in Salford. We have more than 2,000 cases of malnutrition—we are talking about people over 65 here. This sort of thing is developing now. Cynical comments are made by Conservative Members about the real concern Labour Members have. We used not to need a malnutrition taskforce, and 193 out of 2,000 cases of malnourished older people were found in Salford. I know that Tameside has now launched a food bank to deal with this issue.
Andrew Gwynne
My hon. Friend is absolutely right about that. Of course these cuts to local government budgets must also be set alongside the £200 million in-year reduction to the public health budget, which of course local government controls—it is a point she makes very well.
In areas such as Darlington and Tameside, local residents are not going to receive the basic services they expect to receive because the social care gap has to be filled by the general fund. I am glad the Secretary of State is back in his place, because he keeps telling Tameside Members to speak to the leader of Trafford Council. I tell him that Tameside would love to have Trafford Council’s council tax base. Band D properties in Trafford bring in £84.9 million of income to Trafford, whereas the same band in Tameside brings in £74.3 million. That is because Trafford has many more band D properties, and it also has many more in bands E, F and G. That is the real unfairness.
In my closing few seconds, I will touch briefly on the better care fund, which is of course backloaded. We need that money today, because the crisis in social care is here, it is now and it is literally killing the council financially. I say to the Secretary of State that it is all very well giving money through the better care fund, but the council is losing a similar amount from the new homes bonus. We need a fairer settlement for the metropolitan areas, and a needs-based assessment, because Tameside and Stockport are being clobbered.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
I thank hon. Members for this passionate debate, which it is my pleasure to close. These are important times for local government. The devolution of power and resources from Whitehall is gathering momentum. Public services need to find innovative ways to save money and support services for local people.
I take the opportunity to thank local government for its hard work and dedication across the country over the past five years. More savings need to be made as we finish the job of eliminating the largest deficit in our post-war history. The finance settlement that we have discussed today will help councils to continue their excellent work. We have consulted carefully, and I am grateful to hon. Members—particularly Government Members—for bringing their constituents’ views to us during the consultation.
I want to cover some of the points that hon. Members have raised. The opening salvo from the hon. Member for Croydon North (Mr Reed) was nothing more than scaremongering and the politics of fear. There was certainly a lot of heat, but there was not much light. He showed no contrition whatsoever for the deficit that the previous Labour Government left behind, which we have had to deal with. He made no mention of the fact that, only months ago, the Labour party went into a general election saying that it would cut funding to local government. He might not know his Kent from his Surrey, but he is the former leader of Lambeth Council, so I think we should give him some credit for his knowledge of local government. I am sure he will be keen to know that Lambeth Council has supported the idea of transitional measures:
“Transitional measures are usually employed where a new distribution methodology is introduced to ensure significant shifts are not experienced one way or the other. The Council believes this is sensible on the basis that the control totals are adjusted such that those benefitting are not adversely affected.”
No council has been adversely affected as a consequence of our response to the provisional settlement, but the hon. Gentleman seemed to deny that. He gave Government Members a considerable lecture about council tax, which I found absolutely astounding. During the last five years, council tax has been reduced by 11%, on average. He did not mention the fact that while the Labour party was in government, council tax doubled.
My hon. Friend the Member for Isle of Wight (Mr Turner) made strong representations during the process on behalf of his constituents. I hope that he was reassured by the comments of my right hon. Friend the Secretary of State, who is certainly listening to the challenges faced by the island that my hon. Friend represents.
The Chair of the Communities and Local Government Committee, the hon. Member for Sheffield South East (Mr Betts), made a sensible contribution. He welcomed the move to localism and local funding for local services. He asked when details of the distribution of the better care fund would be made available. I reassure him that there will be a response to the consultation on the better care fund very soon, and we will be able to give further details.
My hon. Friend the Member for St Austell and Newquay (Steve Double) welcomed devolution, the transitional arrangements and the increase in the rural services delivery grant. My hon. Friend the Member for Bromley and Chislehurst (Robert Neill) used his considerable experience of local government and as a Minister to support the proposal. He made a sensible and excellent point about entrenching efficiency. That is absolutely achievable now that we are offering councils the ability to take a four-year budget if they so wish.
I want to mention the speech by the hon. Member for Oldham West and Royton (Jim McMahon), who is no longer in his place. He made some appalling comments about my noble Friend Baroness Williams. I can assure hon. Members that the transitional grant is based purely on supporting areas that have encountered the largest reduction in the revenue support grant. The approach he took towards my noble Friend Baroness Williams was very sad and not becoming of him.
Mr Jones
I will not give way, because I do not have the time.
My hon. Friend the Member for Beverley and Holderness (Graham Stuart) has been an effective advocate for rural areas, as he was again today. I am glad that he has welcomed the Government’s response to the consultation.
The hon. Member for Darlington (Jenny Chapman) made a very strong speech, but I was surprised because if she feels so strongly why did she not respond to the consultation? If she had done so or if she had looked at the figures closely, she would have seen that Darlington has actually benefited from the way in which the settlement has been prepared.