Housing, Communities and Local Government: Departmental Spending

Clive Betts Excerpts

Thursday 9th July 2020 Commons Chamber

[Mr Clive Betts (Sheffield South East) (Lab)]

First, I will look at the covid crisis and how local government has responded to it. I think I speak for every Member of this House when I say that local councils, collectively across the piece, whatever their party, have responded magnificently. We do things virtually these days, so perhaps a virtual round of applause for local councils from Parliament would not go amiss.

What local councils have done is deliver social care; rehouse rough sleepers; work with the voluntary sector to help vulnerable people; administer the business grants scheme that the Government introduced; get the director of public health working at a local level on testing, tracking and tracing; and, of course, keep essential services, such as refuse collection, up and running for our constituents. They have done all that against the background of austerity. Local councils have had bigger cuts to their funding than any other part of the public sector in the past 10 years. The National Audit Office figures show an 80% cut in grants and an almost 30% cut in spending power over that 10-year period. Of course, the councils in the poorest areas have, by and large, had the largest cuts in grant, because they had the largest grants in the first place.

Despite that situation and despite the fact that they have had to try to prioritise social care spending for both adults and children, councils have kept services going. When we look at some of the cuts that they have had to make in other services, we see that it was nearly 50% on housing services, 50% on health and safety, and 20% in five years in real terms in public health grants. Those services—housing, health and safety and public health—are exactly the sorts of services that have been required to deliver in response to covid. None the less, they have stepped up to the mark and done extremely well.

What have the Government done in response? I think that we have had a change of language from Ministers, which is a bit concerning. On 16 March, the Secretary of State said that the Government would do whatever was necessary to support these efforts—very similar words to the ones that were used in relation to the health service.

[Lilian Greenwood (Nottingham South) (Lab)]

Will my hon. Friend give way?

[Mr Betts]

I will give way, but just once I think.

[Lilian Greenwood]

I will be very brief. Did my hon. Friend share my sense of déjà vu when councils were promised “whatever funding is needed”? Nottingham City spent £8 million on fire safety improvement post-Grenfell and it did not receive a single penny from central Government, despite exactly the same sort of comments being made at the time.

[Mr Betts]

That leads into another area. The Select Committee has just produced a report about cladding and other such issues. We have challenged the Government to produce funding through that report, so I am sure that we will take up that issue as well.

The change came when the Secretary of State appeared before the Select Committee. Suddenly, he was saying that they had asked councils to do things, but that they would be fully compensated for the things that they had been asked to do. Then there was a very general list. The Public Accounts Committee and the Select Committee, as well as the Local Government Association, have been trying to get more information on that. There is still a lack of clarity about precisely what will be funded. That is important, and quite different from the national health service, which seems to be given, rightly, “everything that it takes”—the commitment given to local councils.

We have had tranches of money—£2.16 billion then £500 million—given to councils to cover both extra costs and lost revenue, which is just as important for many councils as the extra costs they have incurred. However, the LGA is saying that by the end of June, according to the returns that went to the Ministry, the costs were £4.8 billion against the £3.7 billion received—a gap of £1 billion. The Government said they would give some help with lost income by compensating councils for 75% of the amount after the first 5% of losses, which is welcome, and somehow apportioning the lost revenue from council tax and business rates. There are two questions to ask about this. The Government have already included loss of income in the £3.7 billion compensation, so will the commitment to cover 75% be reduced? I see the Minister shaking his head; it would help if that was explained very clearly indeed.

[Matt Rodda (Reading East) (Lab)]

Will my hon. Friend give way on that point?

[Mr Betts]

Normally I would give way, but Madam Deputy Speaker is looking askance at me, so I think I had better move on.

The second question is can the Government not bring forward a bit sooner the apportionment of losses from council tax and business rates? Waiting until the spending review introduces an extra element of uncertainty.

I have another question about compensation for losses in the leisure sector. Many authorities—about 60, I think—of all political persuasions do not provide leisure services directly; instead, they provide them through arm’s length arrangements. Sheffield does it through Sheffield International Venues and has some magnificent facilities, including Sheffield Arena and Ponds Forge, which is an international-class swimming pool, and lots of community facilities. What we need is an assurance that income losses for councils in that situation will be treated the same as income losses for councils that provide the services directly. That is an important point for many councils up and down the country.

It still feels like local government is on a life support machine, waiting for the next bit of revenue to trickle down from the next ministerial statement, rather than having the certainty that they need to plan. Many councils are now looking at making cuts and emergency budgets and talking openly about section 114 notices. Yes, okay, the Ministry has said, “Come and see us before you issue a 114 notice,” but that is too late. We do not want councils to reach the point where they are thinking about a 114 and planning for it. We want them to have the certainty of getting funding so they are not driven into that position.

This is not just about funding for this year; it is about funding for next year as well. Many councils, including Sheffield Council, have reserves to see them through this year, but using them will just postpone the problem to next year. Also, many councils had plans for efficiency savings, which have been put on hold as managerial expertise is put into dealing with the current crisis. Efficiency measures that have had to be put to one side for the time being are another loss for councils that needs to be recognised properly.

Let us have more certainty that all the costs that local authorities incur in covid-related matters will be covered by the Government. Let us have another discussion with the LGA and consider whether it is fair that councils should have to stand even 25% of income losses. Let us have an assurance that arm’s length arrangements for leisure will be covered. Let us bring forward the commitment on council tax and business rates to before the spending review. Let us not get to the point of discussions about section 114 notices by providing certainty of funding.

Finally, there is the future. What local authorities need is a proper long-term sustainable financial settlement.

The covid crisis offers a watershed, a turning point, an opportunity to change things, but I want to put down five markers for the Government, drawing on the Select Committee’s report in 2019. First, we want at least a multi-year settlement, to give that certainty. The last four-year settlement was welcome. I understand why it has not been repeated in the current crisis, but it is certainly needed.

Secondly, we need a recognition that local authorities need a significant real-terms increase in their funding. The Local Government Association’s calculation of an £8 billion gap, even before covid came along, has to be recognised. Thirdly, if we really are to end austerity, it is not just about funding local councils so they do not have to make more cuts; it is about giving them the money to restore many of the essential services they have had to cut.

Fourthly, we have to devolve to councils the power not merely to spend but to raise resources in the first place. If we do that, however, we must recognise that some councils are less able to raise resources than others, so if we devolve more spending arrangements to councils, we will need a fall-back position—a central fund for councils to deal with the equalisation problem.

Finally, let us have a proper, cross-party, long-term funding agreement for social care. The two Select Committees proposed a solution with a social care premium three years ago. Let us reactivate that. Giving councils that direct source of funding for social care will also release funding for other essential services. I say to the Minister: think of MPs here today arguing for extra funding as allies in the battle with the Treasury to get the money that councils need to fight the covid crisis, but to fight it in a way that does not produce extra cuts to essential council services already devastated by 10 years of austerity.

[Madam Deputy Speaker (Dame Rosie Winterton)]

We will start with a time limit of four minutes.

--- Later in debate ---

[Mr Betts]

I thank the Minister for his comments, although I still think there are issues to be worked through. My hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), the Chair of the PAC, raised a point about clarity. We still need that clarity from the Government. I would still like it on the record, too, that the £3.7 billion will not be reduced by the commitment to cover 75% of income losses. That needs to be clear. [Interruption.] The Minister is nodding, which is very helpful.

Finally, I want to pick up on the shared prosperity fund. No area should get less than it gets now, but no area should get less than it would have got under the new arrangements that would have come into place if we had remained in the EU. That is a very important point for South Yorkshire, and I hope that the Minister will consider it.

Question deferred (Standing Order No. 54).