Newcastle upon Tyne City Council

Debate between Catherine McKinnell and Louise Ellman

Tuesday 8th January 2013 Commons Chamber

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

Does my hon. Friend agree that the Government’s withdrawal of funding is undermining local communities in Liverpool as well as Newcastle?

[Catherine McKinnell]

It is obviously for my hon. Friend to speak on behalf of the people of Liverpool, but I have no doubt that the cuts are impacting on all of the core cities and I will make the economic point about that later in my speech.

Baroness Eaton, who was until recently the Conservative chair of the Local Government Association, described the Secretary of State’s understanding of the effect of local government cuts as

“detached from the reality councils are dealing with”.

I could not agree more. Meanwhile, Sir Merrick Cockell has called the cuts “unsustainable” and the Tory leader of Kent says that his county “can’t cope” with further reductions and is “running on empty”.

When deliberating on what I would raise in this debate —unfortunately time is short and it has been difficult to cut down my speech—I decided to think about what the Minister would say in response. That is fairly predictable, so I will use this opportunity to respond now to what I believe he will say.

I am sure that the Minister will claim, like the Secretary of State before him, that the average reduction in council spending power across the country has been only 1.7% and, indeed, that Newcastle has fared pretty well, because its spending power has fallen by only 1.5% in cash terms as a result of the recent funding settlement. I say to him that that is disingenuous at best and seriously misleading at worst.

The headline figure, which applies to only the first year of the settlement—2013-14—has in fact already been shown to be inaccurate and substantially understated, with the Department for Communities and Local Government double-counting the council tax support grant and council tax income for both 2012-13 and 2013-14. Other errors include the cut in the early intervention grant being significantly understated. Newcastle city council believes a more realistic estimate of the cut to be 3.2%, which is more than double the published figure, or a 4.9% cut in grant funding. I therefore ask the Minister to make a commitment this evening to ensure that statements made about the level of spending power cuts are formally corrected.

The 1.7% headline figure also completely masks the far greater cuts that will take place in year 2 of the settlement. Newcastle faces a 6.8% drop in spending power by 2014-15, compared with a 5.5% average fall in England and only 1.6% in Surrey.

The Minister will no doubt try to persuade me that the cuts being experienced by Newcastle are fair and not disproportionate when compared with other parts of the country, but the facts show clearly that over the next three years the cuts will be much higher in northern areas and a few inner-London boroughs. According to DCLG’s own figures, the cut in Newcastle’s spending power between 2012-13 and 2014-15 will be £218 per person, compared with a national average of £134 and a cut of only £27 per head in Wokingham.

I refer to Wokingham because, in returning to my predictions, I assume that the Minister intends to make the time-honoured comparison between Newcastle’s situation and that of the Berkshire town. He will inform us that Newcastle still has a spending power per household that is more than £700 greater than that in Wokingham. Nobody doubts that that is the case and let me be clear: I have nothing against Wokingham. I use that example because it is the one that Ministers always bring up whenever challenged on their approach to spending cuts.

I thought it might be helpful to clarify for the Minister precisely why Newcastle receives a higher grant than Wokingham—it is because our needs are higher. Newcastle has four times more children in care, greater homelessness needs, higher council tax support needs and fewer people who are able to self-fund their own elderly care. Compared with Wokingham, Newcastle receives four times as much funding for the statutory concessionary fares scheme, yet it faces costs that are nine times higher due to the sheer number of poorer pensioners who use bus services.