Local Government Funding: North-East

Catherine McKinnell Excerpts

Tuesday 1st March 2016 Westminster Hall

[Jenny Chapman]

Well, my mum is from Kent but I know bugger all about it. [Laughter.]

I want to convey to the Minister that we are incredibly proud of our region. Everyone who lives in the north-east is proud of it. We have a strong industrial heritage and we have an exciting future ahead of us. We are hard workers. We have a beautiful landscape and a wonderful coastline. We have vibrant cities and world heritage sites. We are keen to see the region progress and grow as we know it can, but that needs the support of a Government who understand the north-east, and I do not think that that is what we have.

Alongside all those wonderful things in the north, we have some challenges. I want to say a few things about ageing, and I know that the Minister might also want to refer to it in his response. Life expectancy is lower for men and women in the north-east than anywhere else in the country. For boys born between 2012 and 2014, life expectancy at birth was highest in the south-east and lowest in the north-east. For girls, it is the same: life expectancy is the highest in London, where they will live until they are 84, and the lowest in the north-east, where they will live only until 81. Men in the north-east who get to 65 can expect to live to 78. My dad did not get to 65: he grew up in South Bank in Middlesbrough—somewhere the Minister’s boss knows well, I think—and he died at 48 from heart disease. Lifestyle absolutely was a factor. For women, life expectancy at 65 is highest in London—they will live another 22 years there—and lowest in the north-east, where they will live only another 20 years.

The strategic review of health inequalities in England post-2010—the Marmot review—concluded that health inequalities stem from avoidable inequalities of income, education and employment, and that they are not inevitable and can be reduced. I think that local authorities have a key role to play in that reduction.

Let me give some examples. According to IPPR North, transport spending in the north-east is £5 per head compared with £2,600 per head in London— 520 times less. There are 33 projects in the pipeline for London and the south-east compared with just three in the north-east. The Government need to look at how they evaluate projects and decide where to invest. Our transport infrastructure, including the quality of rolling stock, in the north-east is clearly not good enough compared with that in other parts of the country.

According to the latest Office for National Statistics report on unemployment by region, it is highest in the north-east at 8.7 %. The largest decrease in UK workforce jobs in the last three months of 2015 was in our region—we lost 26,000 jobs. According to the Department for Education’s “NEET Quarterly Brief”, the proportion of 16 to 24-year-olds not in education, employment or training is highest in the north-east, at 20.1%—that is 59,000 young people. According to the Joseph Rowntree Foundation, average wealth in property and assets is lowest in the north-east, where it is half that in the south-east, and financial wealth is four times greater in the south-east. Those are real issues of inequality and opportunity that we think that local authorities are well placed to assist in addressing.

According to the Department for Education, the north-east and the north-west jointly have the highest rate of looked-after children, at 82 per 100,000. The lowest rate is in outer London, the east and the south-east, so we bear the brunt of that burden too. According to the 2011 census, the day-to-day activities of 22% of people in the north-east are limited by a long-term health problem or disability, compared with 18% for England and Wales—remove Wales and the figure is probably even lower. The census also shows that 11% of people in the north-east provide unpaid care for someone with an illness or a disability—a figure that is higher than the national average—and that the north-east has the highest proportion of socially rented accommodation, at 15%.

The point I am trying to make is about need. The Government do not take sufficient account of the varying degrees of need across the country, and councils serving communities with the highest levels of need are not being supported.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

My hon. Friend is making a powerful speech and I congratulate her on securing an important debate. I would hate to pre-empt her, but while she is setting out clear examples of where the figures in the north-east are higher than in the rest of the country, I want to say that one of the most shocking things is this: the Government’s own figures show that councils’ spending power per household between 2010 and 2020 will fall by the highest amount in the north-east—by £465.51 per head, compared with £154.07 in the south-east. My hon. Friend is setting out the picture of why the north-east requires additional spending and those figures stand in stark contrast.

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[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.

[Catherine McKinnell]

My hon. Friend is making a powerful point. The Minister clearly said that that money was granted to Northumberland because of lobbying from his Northumberland MPs. Is she aware that Middlesbrough, Knowsley, Hull, Liverpool and Manchester, the five most deprived councils in the country, have received nothing under the grant, while Hart, Wokingham, Chiltern, Waverley and Elmbridge, the five least deprived, collectively received £5.3 million? The difference is stark.

[Jenny Chapman]

It is shameful.

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[Mrs Hodgson]

That says more about that Minister. His lobbying was obviously not as successful as that of his colleagues in Northumberland.

The Prime Minister is on the record saying, in an interview with Jeremy Paxman before the 2010 election, that the north-east and Northern Ireland are the two areas where his planned public sector cuts would have the greatest impact. True to his word, when he walked into Downing Street in 2010, propped up by the Liberal Democrats, he began implementing some of the deepest and most devastating cuts our region has ever seen. I would hazard that they are even worse than the cuts under Margaret Thatcher, which I never would have thought possible.

Here we are again: councils in some of the poorest parts of the country are having to cut services back to the bare bones. The fat went long ago. In most of our region, especially the coalfield communities, some of which I represent, there was for many years trepidation about what the Conservatives would do if they were ever in power again. It is with no surprise or pleasure that we gather here to point out that the Government have truly lived up to those dire expectations. After six years of belt-tightening, Opposition Members listened with disbelief as the Secretary of State for Communities and Local Government stood at the Dispatch Box last month and announced a local government settlement of £300 million of transitional funding, 85% of which will benefit Tory councils that have not faced anywhere near the funding cuts meted out to Labour councils. Labour councils are expected to tighten further and add a few notches to an already worn-out belt. If that were not already impossible, it certainly is now.

Not a penny of the funding that was announced is directed at the majority of councils in the north-east, where unemployment is the highest in the country at 8.1% and poverty remains a persistent issue. Some of the poorest communities in the country are paying for 36% of the Government’s austerity measures. Social care is a burgeoning issue for many of them, especially given that the people who use social care will bear 13% of the cuts.

Tomorrow, my local council, Sunderland, will pass its budget for the 2016-17 financial year. It must find £46 million of savings this year and a total of £110 million by the end of this Parliament, on top of the £207 million that it had to find during the last Parliament. That means that the council has a total of £290 million to spend by 2020, compared with the £607 million it had in 2010, before the Conservatives came to power in 2010. That is less than 50% of its pre-2010 budget. That is not trimming, belt-tightening or streamlining; it is an attack—a full-scale assault. So much for the rhetoric of a northern powerhouse. Northern poorhouse, more like.

Of the £290 million of spending power that Sunderland has left, £182 million is reserved for statutory adult social care and children’s services. The remaining £108 million will have to pay for all other services, including waste collection and disposal, libraries, museums, housing, business investment, and sport and leisure. Those wide-ranging services need proper investment to be suitable for public access, but with such a small budget for those services, it is obvious that the council will struggle to maintain the high standard that our local communities deserve and expect.

Significant cuts will also have to be found within the needs-based funding elements, including children’s services. An 8% per annum cut is expected in the early intervention budget on top of the 50% cut to early intervention services since 2010. Children’s services and early intervention are such important areas. If funded correctly, they can mitigate greater costs further down the line by preventing children from becoming adults with multiple issues. The Government’s policy is so short-sighted.

No doubt the Minister will talk about devolving the collection of local business rates. Labour supports that policy in principle, but in practice it will further ingrain unfairness into an already unfair system. He may also talk about the 2% increase in council tax to fund social care as a means for councils to bring in additional funding. For low-tax councils such as Sunderland, such measures will not bring in the funding they require to continue to provide the local services that we rely on. It is estimated that the 2% for social care will bring in only £1.5 million for Sunderland, but our local social care demands are approximately £3 million. Where does the Minister think the additional funding should be found? This is one of the greatest public policy crises that we face in this country. For Sunderland, the prognosis remains bleak for the near future. There is no respite or support on the horizon from the Government.

[Catherine McKinnell]

My hon. Friend is making a powerful speech about the ingrained inequalities, which the Government’s policies will deepen. Is she aware that Newcastle City Council estimates that the 2% council tax precept will raise £1.4 million a year, whereas it faces a spending shortfall of £15 million? It is a simple mathematical calculation, and it does not add up.

[Mrs Hodgson]

I often wonder whether the Government’s calculators and experts stop functioning when it comes to some of these numbers. They seem to have dyscalculia—numerical dyslexia—when working out the sums for the north-east, but they are not troubled by it when working out the sums for the rest of the country.