Local Authority Funding

Debate between Chi Onwurah and Nicholas Brown

Tuesday 3rd December 2013 Westminster Hall

[Chi Onwurah]

My hon. Friend makes an excellent point, as always, and he is absolutely right. I have lost count of the number of occasions that I have heard Ministers announce funding for my local authority—I will give the example of the new homes bonus in a minute—that is actually a cut in funding more generally. If the autumn statement on Thursday is used to announce any further support for business rates or for local authorities, I am sure that the Chancellor will set out transparently exactly where the funding will come from. If he does not, I am sure that parliamentary questions will follow.

I could consider the approach to be an error, mistake or one-off, but several holdbacks have had a similar effect, and the new homes bonus is one of the most important. Money is top-sliced from the revenue budget—everyone’s budget—but then finds it way predominantly to the wealthier parts of the country. I always thought that a bonus was something extra on top of a payment.

[Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)]

As well as.

[Chi Onwurah]

Exactly. I thought that that was inherent in the term. Ministers in this Government, however, fund their bonuses not only from existing money, but from existing money that some might argue is not theirs.

The new homes bonus increases cumulatively for six years and is estimated to peak at some £2 billion. The increases are funded by deducting the increase from the revenue support grant, so it favours authorities in wealthier parts of the country, owing to their higher house prices and relatively low reduction in needs-based funding. Although Newcastle loses £5.3 million through top-slicing to fund the new homes bonus, it is given back only £2.2 million. The Minister gets to put out a press release saying that he is generously rewarding the council with £2.2 million, but nobody notices the reality that Newcastle has actually lost out by £3 million. Wiltshire, for example, will have seen a net gain of over £4 million. At the same time, my surgeries and mailbox are testament to the fact that the lack of affordable housing is a critical issue for my constituents.

The new homes bonus is unfair and does not work, which has been confirmed by the National Audit Office and the Public Accounts Committee. Does the Minister intend to press ahead with it? Newcastle city council and the Association of North East Councils have called for it to be frozen at 2013-14 levels. What is the Minister’s view? It would allow him to return some of the planned holdbacks to core funding and to relieve some of the pressures that Newcastle and other councils are facing.

Economic Development (North-East)

Debate between Chi Onwurah and Nicholas Brown

Tuesday 15th February 2011 Commons Chamber

[Mr Brown]

My hon. Friend is absolutely right. One of the great things about economic development in our region is that it has proceeded with consensus, with buy-in right across the region sector by sector, including the public, private and voluntary sectors. We have understood the need to stick together, to talk to each other and to speak coherently on the issues. The fact that we did so is one of the great successes of our region.

Through the single approach that we took, we were able to avoid the poverty of ambition and the attendant dangers of parochialism. Working relationships across agencies and between the private and public sector were good, and there was a general feeling in the region that we were getting somewhere.

On Teesside, the issues relating to Corus and the process industry have features in common. The way forward has to be private sector-led. The private sector needs dialogue with national Government through the regional development agency. It is not reasonable to ask local government, even neighbouring local authorities acting in concert, to deal with issues of this scale. The same is true for the economic development potential of the underused industrial sites at the east end of the Tees valley.

In our region, there was general enthusiasm for the carbon reduction strategy, and for applying our traditional industrial and manufacturing skills to the challenges of combating climate change. There is excitement about the development of the electric car at Nissan. The region is also host to other electric vehicle manufacturers. The Clipper offshore wind factory at the Walker technology park is the only such factory in the UK so far. The potential for the development of printable electronics at Thorn, the innovative photovoltaic products of Romag glass, and the strong case made by Rio Tinto at BIyth and the mutually compatible bid from Tees Valley to be part of a carbon capture and storage pilot, all show how deep and widespread the region’s enthusiasm for this approach goes. We are, as the hon. Member for Hexham (Guy Opperman) pointed out recently to the House, host to the United Kingdom’s green pub of the year, the outstanding Battlestead’s hotel at Wark.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

There is great enthusiasm not only for green pubs but, as my right hon. Friend said, for the new technologies in the region. Does he agree that as well as being great in the private sector, that enthusiasm needs to be matched by the public sector so that the supply chains and the skills that the new technologies need are provided?

[Mr Brown]

I strongly agree with all that. In my discussions with individual public sector agencies, as well as with private sector companies, that enthusiasm was matched right across the piece. People understand the importance of it and see the opportunities for the economy of our region. One of my misgivings about the Government’s approach is that the public sector’s ability to respond is financially constrained.

The policy approach that we adopted meant that our region had the fastest growth rates of any English region right up until the banking crisis. The Pricewaterhouse study of One North East found that, over a five-year period, the agency had directly created more than 24,000 jobs, helped to create over 1,000 new businesses, helped a further 1,700 companies improve their business performance, helped more than 6,000 people into employment, and assisted more than 98,000 people to gain new skills. In particular One North East’s work in the area of business competitiveness and development, which covers activities such as overseas investment and enterprise support, realised an overall return of £8 for every £1 spent.