Clive Betts
Main Page: Clive Betts (Labour - Sheffield South East)(7 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Clive Betts (Sheffield South East) (Lab)
I recognise what the Secretary of State says: the better care fund will be tailored to help authorities that raise less under the precept. However, the fund does not really kick in until the following financial year. Why have the Government not done anything to help councils with a lesser ability to raise the precept in the next financial year, 2017-18?
Sajid Javid
The hon. Gentleman may not be aware that although the better care fund picks up over time, it has already kicked in. I think it represents £105 million this year, and it rises next year and in the following years. However, he makes an important point; I listen carefully to what he says, especially given that he is Chair of the Select Committee that oversees my Department. I hope he will agree that as the better care fund comes in and builds up, it will start to make a bigger difference.
Sajid Javid
I would be very happy to visit that McMullen pub with my hon. Friend. He highlights the importance of pubs—not just McMullen pubs, but more generally—and it is important for the House to note, as we have done so often, that pubs are more than just businesses. They play a very important part in our local communities, which is why I would be happy to come along and learn more from my hon. Friend and the pub itself.
Mr Betts
I have some sympathy with the Secretary of State’s points about revaluation. I accept that it is fiscally neutral and that it reflects the change in property prices, but perhaps the Government did not help themselves by delaying it for two years. He has referred to the difference between business rates for high street premises and those for out-of-town shopping centres. Is he therefore considering a more fundamental review of the whole basis on which valuations are made, to try to better reflect the proper cost to businesses on the high street and in out-of-town centres?
Mr Thomas
My hon. Friend has taken a number of opportunities of late to champion his local authority in the difficulties that it faces—not only for now, but in the long term. The situation he describes in Coventry is mirrored up and down the country. It is time that Ministers grasped the seriousness of the situation.
The LGA has made clear that the continued underfunding of social care is making it impossible for many local authorities to fulfil their legal duties under the Care Act 2014, leaving open the prospect of a whole series of costly court challenges. It is true that some money, £240 million, has been switched from the new homes bonus to fund social care, but when serious analysts suggest that £1.3 billion is needed urgently now to stabilise the social care system and that the funding gap for social care is expected to reach £2.6 billion by 2020, it is difficult to find anyone, even in the Government’s own party, who thinks Ministers are on track to sort the social care challenges that our country faces.
Mr Betts
Is it not disappointing that attempts are now being made to blame local authorities for problems in social care funding that are clearly of central Government’s making? When Simon Stevens came to the Communities and Local Government Committee, he made it absolutely clear that there would be a funding problem for social care in this country—even if every local authority performed at the level of the best.
Mr Thomas
My hon. Friend makes a very good point. The default position for Conservative Members, whenever an issue is raised about the funding gap for social care and a number of other services, is to blame local authorities. The evidence of Simon Stevens and others rightly rebuts that point.
Mr Clive Betts (Sheffield South East) (Lab)
The obvious point is that there is no change from the provisional settlement. We are talking about the same figures as the Government presented to us a few weeks ago. It is difficult to imagine that nothing any local council has said in that time has been relevant to its financial circumstances to the extent that Ministers feel the need to respond in some way. That is the case: no change whatever to the initial proposals.
The settlement therefore represents a continuation of the cuts that began in 2010. I welcome, as I have previously, the four-year spending settlements being given to councils. The settlements are a helpful step forward that local government has also welcomed in general. This is a cash-flat settlement over a four-year period, which therefore means a continuation of cuts because cash buys less over a four-year period not merely because of inflationary pressures, but because of the additional pressures on services from the growing number of elderly people and the extra pressures of the Care Act 2014 and the Children and Families Act 2014. Local authorities are having to absorb all those pressures within the cash-flat settlement.
The Comptroller and Auditor General, Amyas Morse, has figures showing that the spending power of local authorities, in real terms, reduced by 25% between 2010 and 2016. He has also said that there will be a further 6% reduction up to 2020. Amyas Morse says that the cuts are continuing.
Furthermore, it is very clear that local government has received bigger cuts over a longer period than any other service provided by Government—far bigger than any service provided by any other central Government Department. The reality of the situation is that no other Department has had cuts on this scale, and that cannot be challenged because those are the facts.
The Local Government Association has said that, by 2020, at the end of the spending review period, there will be a gap of £5.8 billion. That is the LGA’s figure, and I know that some people will say, “Well they would say that, wouldn’t they? They want extra money.” Those people might be right, but there may be demands on service provision that cannot be met by the agreed funding settlement.
All I ask of the Secretary of State and the Minister is that they please think carefully when the time comes to make decisions about the scheme for 100% business rate retention and about allocating the extra £11 billion to £13 billion. The Local Government Association is clearly saying that the first call on those resources should be the existing services that cannot be funded with local government’s existing money. That is a fundamental point.
I hear what Conservative Members are saying about getting the needs assessment right. One of my Select Committee colleagues, the hon. Member for Thirsk and Malton (Kevin Hollinrake), is nodding in agreement. The Committee is considering the needs assessment, and we have commissioned work on that, too, but it is no good getting the needs assessment right on the allocation of resources to individual authorities if, at the beginning of the process, we get it wrong on the overall needs of local government as a whole. That is why we need to take particular account of that demand.
My local authority in Sheffield faces challenges next year. It is saying to me that there will be another £23 million cut in revenue support grant; that it will need to make £40 million of savings to meet inflation and the extra demands that it, like any other council, has to deal with, particularly those relating to social care; and that all that will mean reductions in the standard of service provision across the board. It will try to protect social care, but that means less money for other services, such as parks and open spaces, on which the Select Committee has just published a report that shows the stresses and strains on those services.
Social care has rightly been given a lot of attention. Along with the Chairs of the Health Committee and the Public Accounts Committee, I wrote to the Prime Minister to ask for an all-party review of long-term social care funding needs. That still needs to be done; we have to reach a new settlement because the existing system clearly does not work. We have to make the best of it for the time being, but we need to reach a general agreement on something more substantial for the longer term that will stand the test of time, so that review still needs to be done.
Let us look at the immediate situation. The LGA is saying that there will be a £2.6 billion deficit in social care funding by the end of this financial settlement in 2020, and that £1.3 billion of that is here and now. Despite the Government’s proposal to increase the precept by 3%, and the cut in the new homes bonus to allow for extra social care grant, the LGA is still saying there will be a £1.3 billion deficit next year. The Select Committee is currently conducting an inquiry into social care. We will be producing reports in due course, so it would be wrong of me to prejudge the outcome, but I can say that we have had evidence from the King’s Fund, the Nuffield Trust and the Institute for Fiscal Studies, and all gave similar figures about the current funding gap. They may disagree by a few hundred thousand pounds, but essentially they all say there is currently a gap in the money local authorities have available for the provision of adult social care.
Kevin Hollinrake
The Chair of the Select Committee spoke earlier about a long-term solution for adult social care. He and I went to Germany to look at the care system there, and we were both impressed by how it had achieved cross-party consensus on a future solution for adult social care. Would he advocate our looking at this on a long-term, cross-party basis?
Mr Betts
Absolutely. The system in Germany may not be one that we could immediately transfer over here, but the people there said to us that 20 years ago they sat down and dealt with this on a cross-party basis and got cross-party agreement. They are now having to put up their contribution rates, but they are doing so with cross-party agreement and with general public support because they have in place a system that is standing the test of time. That is an example of how to do it. Even if we end up coming up with a slightly different solution, we should at least look at the method they used to reach that agreement so that we can put in place a system that stands the test of time. The hon. Gentleman is absolutely right on that.
The Government have given local authorities the right to increase the precept by 3% in the next financial year, and I welcome the fact that most have chosen to do that. There are problems with council tax—it is not the most progressive of taxes and we could make some reforms to improve it—but in the end, local authorities, faced with the prospect of not having enough money to pay for their elderly people, have explained to their council tax payers why an increase is necessary, and have then taken the difficult decision to do it. That is absolutely right, and they should be congratulated on that.
Nevertheless, the £543 million that the LGA estimates is going to be raised by the precept will just about cover the cost of the increase to the minimum wage, or the national living wage, as the Government call it. In other words, the money has gone straight out the door in extra pay. It is absolutely right that it goes to low-paid workers who in most cases do a superb job—they are under great stress and strain to deliver that care, so it is absolutely right that they get more pay—but the reality is that the money raised by the precept is not even going to sustain the current level of social care, given the extra demands.
Let me just mention the cut in the new homes bonus. Although I live in Sheffield, which is a unitary authority, I do reflect on the issues facing two-tier authorities. County councils, for example, are getting extra social care grant, but the money is coming from the budgets of the district councils and the cut in the new homes bonus. The new homes bonus was not officially part of the four-year settlement, but for the smaller district councils, which had factored it into their future plans, it came as a considerable financial shock to the system to have a whole element of it removed, and it was a very difficult thing to address at short notice. I have a lot of sympathy for councillors and their officials in those small district councils who are struggling as a result of this change, as it creates the very uncertainty that the Government were trying to remove with the creation of a four-year settlement, and that is something on which we should all reflect.
Let me reflect on one or two comments that have been made by Amyas Morse, the Comptroller and Auditor General. I do not know whether Members have read his article in which he talks about social care, cuts in funding, and the NHS. He refers to a lack of “joined-up thinking”. He talks about central Government making decisions. It might be appropriate for me to read the words that he uses. He says that it is easy to allocate savings
“to be made by those operating outside a department’s boundary or with a different mandate, without necessarily understanding their effect.”
In other words, Government Departments are allocating savings for someone else to make without understanding their impact. It sounds horribly true when it is put like that. He talks about central Government being slow to adjust, often acting only when serious failure occurs.
It is a very interesting article, because Morse talks about local councils initially responding to those cuts with efficiency savings—I know that Government Members have called for more efficiency savings from local councils. Morse then goes on to say that that is okay at the beginning, but, over time, while councils could initially respond with “more for less”, we have now got to the point where it is “less for less.” He says that
“during this progressive reduction in funding, I have not seen any evidence-based effort to reconcile funding to local needs. In my view, the policy objectives for local government and the local government statutory duties have not been properly weighted against potential efficiency savings.”
He goes on to say that although local authorities have tried to protect social care, there has, nevertheless, been a 7% reduction in real terms, and that
“Besides the direct effect on care service users, this reduction has a deleterious effect on the NHS... Costs are effectively being shunted from one part of the connected system to another.”
He is blaming not local councils for that but central Government for having got it so badly wrong. He also says—Government Members may not be always willing to accept this—that areas with the greatest needs have lost the most. That comes from an independent review from the Comptroller and Auditor General.
The Comptroller and Auditor General goes on to say:
“Central savings may have been secured, but significant damage has been done.”
Again, that is from a senior official looking at the public accounts of this country. It is a damning indictment of what has happened with regards to cuts to social care—I am talking about the impact on users and the knock-on consequences and damage to the NHS, including bed-blocking, which is a horrible term that I do not like. Basically, this is about elderly people who need to come out of their bed in hospital and receive care in the community not getting that care because it simply is not available. There are also individuals who could, with earlier prevention, have avoided going into hospital in the first place, but that earlier prevention is not there either.
Finally, all my sympathy goes to the Secretary of State on the issue of business rates. The revaluation is simply about re-allocating the total payment to different businesses. It reflects the changes in the prosperity of different parts of the United Kingdom since the last revaluation seven years ago: businesses in more prosperous areas with greater growth will find that their rates go up, while others will find that their rates go down. I understand the point that has been made: this is not a way of raising extra money but of reflecting the different changes in prosperity in different parts of the United Kingdom over the past few years.
I welcome what the Secretary of State has said about looking again at how the money raised is balanced between, say, a shop in the high street and a business on an out-of-town retail park, or between a retail business that sells directly to the public and an online business that probably has far lower rates. It will be interesting to see what the Government propose.
Although I disagree with many items in the funding settlement, I say to the Secretary of State that if the Select Committee can help to look at the issue of how business rates reform could take place to reflect more properly who should be paying what in the system, we will be more than happy to work with him.