Provisional Local Government Finance Settlement

Baroness Pinnock Excerpts

Thursday 13th December 2018 Lords Chamber

[Baroness Pinnock (LD)]

My Lords, I remind the House of my interests as a vice-chair of the Local Government Association and a councillor in Kirklees. I thank the Minister for repeating the Statement on the local government settlement. I am not, however, able to thank him for its content.

The Statement includes the phrase:

“I am determined to ensure that they get the resources and support to rise to new opportunities and challenges … with no one left behind”.


Hmm. The National Audit Office report of March this year gave these stark figures of the cuts in local government spending: a 49.1% real-terms reduction in government funding, and a 28.6% real-terms reduction in local authorities’ spending power. Can the Minister say how a 0.4% increase above inflation, which fails to include considerable rises in demand—for example, for children’s services—is in line with providing the resources needed by local government? In a report this year by the New Policy Institute, researchers estimated that:

“97% of total cuts in spending in areas like adult social care, child social care and housing have fallen on the poorest 20% of councils. This is despite those areas also having a higher number of people in need”.


Will the Minister explain, in the light of this research, how no one is being left behind?

There is universal agreement that there is a crisis in social care funding. The Local Government Association estimates a £3.5 billion gap in funding for adult social care by 2025. Just how this huge gap will be filled is yet to be decided, as the Green Paper on the funding of social care that was first promised in 2017 has yet to be published. Meanwhile, adults are not getting the care they need. What is particularly galling is the Government’s announcement of £650 million, given that the vast majority of it is destined to support NHS budgets.

The Statement makes no reference to one of the largest financial pressures on councils’ budgets: the national pressure on education, health and care plans and statements. From 2014, there has been a 45% rise in the number of young people requiring an EHC plan. As an example, in my own authority of Kirklees, in 2014 there were 1,900 EHC plans or statements. Based on current trends, this is expected to rise to 3,300 by 2022—a 70% increase—while funding for these young people will rise by an estimated 12%.

I welcome business-rate support for town-centre retailers, but I have to point out that this is a sticking-plaster approach when a more radical reform of business rates is desperately needed.

I also welcome the additional allocation of £420 million for pothole repairs. The national estimate of what is needed is £9.3 billion. However, what is really needed is a significant increase in capital funding, as a government-funded grant, so that councils cannot just fill and pack but use funding more effectively by completely resurfacing crumbling roads.

On council tax rises, we no longer hear government Ministers standing up for the “hard-pressed council tax payer”. The reason is clear: the Government have adopted a policy of pushing the costs of local spending on to the council tax payer. In the past three years this will have resulted in a 14% rise, which is obviously well above both inflation and average income rises. Council tax is regressive. It is not linked to ability to pay so the consequence of these successive, well-above-inflation rises is that those least able to pay are seeing a rapidly rising tax demand coupled with rapidly decreasing local services. Perhaps the Minister will be able to assure me that the Government recognise that this is the case and that they once again want to help the hard-pressed council tax payer.

[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Lord, Lord Kennedy, and the noble Baroness, Lady Pinnock, for their contributions from the Front Benches. I shall deal with their contributions and, in so far as I miss anything or I am unable to answer, I will certainly write to them and place a copy in the Library.

I agree with the noble Lord, Lord Kennedy, about the challenging scenario—that is undoubtedly true—and I join him in the tribute that he paid to the local authority workers up and down the country. As he rightly said, they do a terrific job, as do the councils of all parties and no party. They are essential to the democracy and the system that we operate in the United Kingdom.

The noble Lord referred to deprivation. In the Statement that I repeated, I made the point that the surplus in the business rates levy account is going to councils based on need. It is a point worth making that it is explicit that it is based on need. We operate a system of equalisation and that is inherent to the system so, although it is a regressive system, a corrective mechanism applies, as I am sure noble Lords will in fairness note.

Both the noble Lord, Lord Kennedy, and the noble Baroness, Lady Pinnock, made notes about the importance of the council tax contribution, which I fully recognise and acknowledge, but they should recall that there is a referendum limit and that an excessive increase has to be put to the electorate. As far as I can recall, this has not happened recently but it is open to councils if they want to do so; the effect otherwise is to keep council tax levels down.

The noble Lord referred to statutory services. Local authorities provide them par excellence, but it is worth noting that they go beyond that. We all know from our own and local authorities up and down the country what a great job they do. He also referred to the need for help for the high street within the system. Again, I mentioned that a £1.5 billion package of support for the high street has been announced and is within the system. The noble Baroness acknowledged some of the help that is going there. I recognise that it is a challenge but it has been taken up by the Budget and within this Statement on the local government settlement for the next year. I appreciate that some of this has already been announced but it is a requirement that we do this so that councils up and down the country know expressly what they have got to finance services for the next year.

Both the noble Lord, Lord Kennedy, and the noble Baroness, Lady Pinnock, referred to the existing social care and NHS challenge and the £650 million that has been committed for the next year. It is a significant sum and, yes, some of it will go to the health service. The reason for that is that it is far more expensive to supply an NHS bed than a place in a social care residence. Therefore, it is desirable that we do that. That is why it is important that our social care review is not just about the financing but the modelling. It is important that we can see the interaction between the two. We all clearly understand it and it is not necessarily easy to deal with, but that is something with which we must grapple.

Although this point was not made expressly by either noble Lords, your Lordships should be aware that the business rate retention applies throughout London and thus in the noble Lord’s area. We have pilot schemes running at 75%, and in Kirklees—North and West Yorkshire has a pilot scheme operating as well. In North and West Yorkshire, if the pilot pool achieves the same level of growth in 2019-20 as happened last year, the area could expect to see an additional £83.2 million compared with the baseline funding level, of which £26.4 million would be as a result of the 75% pilot. It is worth acknowledging these additional factors.

Yes, there are challenges and there are areas where we wish we could do more, road repairs being one, but that is not a problem which has suddenly arisen. Successive Governments have struggled to keep up with the costs. However, in the round, this is a good settlement. It is a real-terms increase across the board, not just a cash increase, and there is much good news in the Statement.