Private Rented Sector

Debate between Clive Betts and Ian Mearns

Thursday 9th February 2023 Commons Chamber

[Mr Betts]

It is not my job to select Housing Ministers, unfortunately. Maybe one reform we could introduce in future is Select Committees choosing Ministers, but we are not there yet. In any organisation, if someone is there for only a few weeks or months, it is harder for them to do the job. I am pleased that the existing Housing Minister has been there longer than a few weeks now. Hopefully that brings some stability and we can get the Bill through shortly to implement the reforms.

[Ian Mearns (Gateshead) (Lab)]

I am sure the Committee Chairman will recognise that there is not one single housing market, even in the private rented sector. The markets are different in different parts of the country and even within different neighbourhoods. Sadly, in many parts of the north and north-east, the private rented sector has become housing of last resort for far too many people. We have many negligent, absentee and rogue landlords who employee deliberately negligent managing agents. Does my hon. Friend believe that any additional regulatory powers are required to remove rogue managing agents from the sector?

[Mr Betts]

We did not specifically look at that, but my hon. Friend makes a very good point. We made the following recommendation: the Government propose one housing ombudsman for landlords, and a separate housing ombudsman, or system of mediation, for agents, but why cannot we bring those together, and have just one private rented sector ombudsman, covering landlords and agents?

Exempt Accommodation

Debate between Clive Betts and Ian Mearns

Thursday 27th October 2022 Commons Chamber

[Mr Betts]

My hon. Friend is absolutely right to identify a particular group of people who need support and proper accommodation, and who can easily be exploited. There are many groups in that situation, which is why we should not simply shut down accommodation; we need to make sure that sufficient supported accommodation of an appropriate standard to meet particular needs is provided for a whole range of different groups, including people with acquired brain injury. We will certainly feed that back, as he has suggested.

[Ian Mearns (Gateshead) (Lab)]

I thank the Select Committee Chair for using this device to throw an important spotlight on the issue. Unfortunately, it is not new—we have been aware of it for some time—but it is important to have a spotlight shone on it. My hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe) referred to properties being bought, established and put to this use to launder often significant amounts of money. People then get a quasi-legitimate revenue stream to pay them back, but that is paid for directly out of the public purse through housing benefit from the Department for Work and Pensions. Surely it is not beyond the wit of Ministers in that Department to make sure that when significant amounts of money are paid out for housing benefit in particular properties, those properties are fit for purpose and managed appropriately. It should not be difficult for the Government to organise something as simple as that.

[Mr Betts]

It should not be. Currently, all that providers have to do to get the higher level of housing benefit, which is almost uncontrolled, is to provide support “beyond the minimal level”—nobody knows what that means; it does not mean very much. Some authorities have tried to challenge the housing benefit requests that have been made, but the problem is that all providers have to do is to show that the rent is reasonable—they are issuing freedom of information requests to find out the amounts of rent being charged for other properties in the area—and that there is no alternative accommodation, which there often is not, for reasons that I have explained. People are allowed to write a virtually blank cheque. That needs to be closed down, because the money can be put to better use than being siphoned off for profiteering, as it is currently.

Funding for Local Authorities

Debate between Clive Betts and Ian Mearns

Thursday 10th October 2013 Commons Chamber

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

First, I congratulate my hon. Friend the Member for Corby (Andy Sawford) on his new responsibilities as a shadow local government Minister, which are well deserved. I am sure he will do just as well at holding the Government to account as his predecessor, my hon. Friend the Member for Warrington North (Helen Jones), whom I congratulate on her achievements in the job and wish success in her new job.

The Local Government Association, whose figures I believe are accurate—it is a cross-party, Conservative-led group—states that in the course of this Parliament, Government funding to local government will be cut by 43% in real terms, which is more than twice the level of cuts experienced across government as a whole. Why is that? I hope the Minister will respond to that question.

Do Ministers somehow feel that the services that people receive from libraries, sports centres, environmental health, parks and street cleaning are less important than anything else? I suggest that they are not. Do they believe that local government is somehow less efficient and therefore has more ability to make cuts without damaging services? I do not think there is any evidence of that—indeed, the evidence has shown the opposite over the years. Local government has generally been more efficient and more effective in bringing about efficiency savings. Or, in the phrase that my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) used, is it simply about the Government contracting out the responsibility for making the cuts to somebody else, namely local councils? I suspect that that is probably the reality. Why have local services been picked out for larger cuts than anything else?

My second point is about the distribution of the cuts. We can argue about that, and everyone will have their own view, but it seems slightly unreasonable that Sheffield, despite all the demand for local services from local people and all its problems and challenges, should have received cuts of about £200 per head of population, whereas down in Windsor the cuts are £40 per head of population—five times less. I know the Minister will say that it is because cities such as Sheffield get more in grant, so they have more grant to cut. However, why have they had more grant than elsewhere in the past? We can argue about fine amounts, but essentially it is because they have more problems, more challenges and less resources than areas such as Windsor. That is true of many northern cities, which are the ones that we expect to be the powerhouse for growth and for rebalancing our economy. They are receiving the largest percentage cuts.

We can add in the cuts to the fire service, and there are also the new proposals that will redistribute health money away from cities such as Sheffield, because there will be less recognition of need in the formulas. Cuts in different services in the same areas will multiply the effects.

It is not just Labour authorities such as Sheffield that are saying that the cuts cannot be sustainable but the Local Government Association and Sir Merrick Cockell, who is a very reasonable man. He speaks well for local government as a whole on behalf of a Conservative-led, cross-party grouping that says the cuts are unsustainable. Those comments have been repeated by Conservative authority leaders such as the one in Kent, who says that there is no more capacity to keep on making cuts while keeping local government services sustainable.

The LGA states that, on top of the 43% cuts in this Parliament, there will be a gap of another £15 billion if the cuts continue to 2020, which local government simply will not be able to find. We know from its briefing—I have also had discussions with it about this—that based on the Government’s current forecast, there are 56 councils whose current levels of spend are 15% higher than their income is likely to be by 2015-16. There is a gap of 15p in the pound between their income forecasts and their current levels of spend, so some of those councils will get into serious financial difficulties. They are not councils of any one party persuasion, and they are not solely in metropolitan or rural areas—they are councils across the piece.

We know that the Department for Communities and Local Government monitors that matter, and we hope it is talking to the LGA about it, because it is a serious problem. The graph of doom has been mentioned, and whereas three or four years ago it was a bad idea that might happen at some stage, it is now a serious prospect.

My hon. Friend the Member for Penistone and Stocksbridge mentioned the situation in Barnsley, and I will obviously talk about Sheffield. There will have been £182 million of cuts between the beginning of this Parliament and 2013-14—the council has had to make those reductions. On top of that, we know that in 2014-15 and 2015-16, a further gap of £80 million will have to be bridged. If we take the projections forward to 2018-19—the Chancellor has indicated clearly his intention that there will be no rowing back from further cuts—there will be another £26 million on top. That money cannot be found without cutting into statutory services, because there is no leeway at all on discretionary services.

The figures that Sheffield council has produced for its current spending show that 38% of the budget goes on care for adults and children. What is often forgotten, however, is the contractual commitments that councils cannot get out of. The whole waste collection and disposal service in Sheffield is contracted to Veolia. Modifications can be made at the margins—there is already an alternate weekly bin collection—but long-term commitments in the incinerator and waste disposal contract cannot be altered. Any change made in such contracts has a financial penalty attached to it.

There is also the new private finance initiative scheme in Sheffield. It is absolutely great—the roads in Sheffield are being repaired, and we are delighted with what is being done. I congratulate the Government on supporting the scheme, which the previous Government drew up, and the council on implementing it. However, that PFI commitment is for the next 25 years and cannot be changed. There are also repayments on borrowing for schools and so on, which cannot be ducked out of. Such contractual commitments and debt repayments make up 46% of the budget, so that leaves 16%.

I have given the figures for the further reductions that are in the pipeline through to 2018-19. By then, the 16% discretionary funding that remains after statutory services, contractual commitments and debt repayments have been taken into account will have gone. There will be nothing left. It is not about which libraries will be closed, because no libraries will remain open. That is a serious situation in Sheffield, which is mirrored in other parts of the country. It is not about one authority somehow failing, it is a potential failure of local government as a whole, not through its own fault but simply because it will not have the necessary resources from central Government and will not be able to raise the money itself. It is a serious situation.

[Ian Mearns]

My hon. Friend is making an excellent speech and highlighting the drastic situation facing many councils, particularly in the north and north-east. I am afraid that when I talk to colleagues on the Government Benches, they often seem completely oblivious to the plight of councils such as my own in Gateshead, or those in Northumberland, Durham, Newcastle or Middlesbrough. Local authorities in the whole north-east region are facing average cuts of about £296 a dwelling in the next two years.

[Mr Betts]

My hon. Friend is absolutely right, but I would add that it is not just Labour councils in the north, with all their problems, that will face that situation. A number of smaller councils in the south and south-west will face almost a meltdown situation in the next few years if the same policy is continued.

--- Later in debate ---

[Mr Betts]

Of course I understand that and any council would want to try to minimise increases in council tax. However, let us also make clear that cost of living increases can come from a local library closure because people have to buy books instead of borrowing them for free, or from the closure of a leisure centre when a family has to book into a private club that involves a lot of extra cost. Cost of living increases can come in other ways, including through cuts in public services.

I also argue strongly that it is nonsense to have local government’s main tax based on a valuation carried out in 1991, and it is ridiculous that 20 years on we have not had a revaluation. The previous Government, this Government, and the previous Conservative Government all bottled out—it is all too difficult. In the end, we have a completely unrealistic situation. No one understands the system any more, which is an attack on democracy and accountability.

My hon. Friend the Member for Corby (Andy Sawford) in his new role will probably not want to comment on this point, but if we are to reform council tax and make it fairer, the relationship between the value of properties and the amount people pay should be reformed. Those in very expensive, large houses should pay more, but why bother with a mansion tax? All we have to do is increase the higher council tax bands, and ensure that the money that comes in goes to local government and does not get siphoned off by the Treasury for other purposes. That is why I am against the mansion tax—I put that on the record to ensure that I have been critical of what both Governments have done.

[Ian Mearns]

We have an eight-band system, but it is ridiculous to have a national mean of band D when in a borough such as Gateshead around 65% of all properties are in band A. People in that area in modest properties and on low incomes end up paying much more of their personal income as a proportion of local taxation. That is ridiculous and unfair.

[Mr Betts]

There is a case for review on whether band A should be also split, and there is a good argument for that to make the whole system fairer.

We must also look for other sources of funding for local government. I welcome the report by Mr Travers that the Mayor of London has initiated, which is a good contribution to a debate on how local government should be financed. I am not saying I agree with all the recommendations—the report is about London in isolation, although I am interested that the core cities are starting to engage in the argument, which raises questions about the rest of the country—but it is good that the Mayor has stimulated that debate. He has invited me and other Members to meet him to discuss that issue, and the Communities and Local Government Committee may initiate an inquiry into the matter. At least, however, the issue of how we can get more independent sources of funding for local councils has been raised.

Why not look at income tax again? I remember the Liberal Democrats when they were a radical party putting forward new ideas, not just agreeing with the Conservative party about things. They used to promote local income tax. I disagreed with them then because they wanted to replace council tax. I suggest—there was a report on local finance by the Select Committee in the previous Parliament—that we have local income tax as well, and make the local authorities responsible for a bigger percentage of the money they raise.

The Communities and Local Government Committee recently went to Sweden where people’s income tax demands include an amount for central Government, an amount for the county, and an amount for the municipality. The amount paid to the municipality is greater, because the services it provides cost more and are more important to local people. That is how Sweden operates. I know that the Political and Constitutional Reform Committee has looked at designating a certain percentage of income tax for local councils. That is a step forward, but why can councils not vary things? If councils want to vary services and local people want better services and to pay for them, why can there not be differences in different parts of the country? That is a challenge and a debate to be had. There is no one solution at this stage, but at least let us start to think radically about a way forward. We cannot simply go back to the idea that it will all come from central Government and council tax.

We also need to reform capital finances—for heaven’s sake, the cap on the housing revenue account is nonsense. Everyone who has looked at the issue can see that prudential borrowing rules apply to every other aspect of local government finance in the capital, apart from housing. Let local government be free to build the homes that people need, and let Treasury control move back from local government borrowing. The prudential rules exist and can be audited, and local authorities can be held to account.

Let us also hope for Government support for the LGA’s idea of a municipal bond agency, so we can return to a situation in which people can invest in their communities through bonds, with a good rate of return, so they can see where the money is going to improve services locally. There are lots of good ideas. We rightly focus on the impact of the cuts, but we should also look at how we deal with the situation in future.

The cuts the Government are inflicting on local government are unfair. There are not only cuts on local government, but on local services that people greatly value. Those cuts should not be that much greater than the cuts in the rest of government. The distribution of those reductions is unfair. At the same time, we must recognise the current situation and that we have a challenge for the future. How do we address it and make local government more financially independent? How can we give local government greater means to raise resources for their local services? If we can meet that challenge, it will be good not merely for local government and local councils, but for local communities, democracy and accountability. That is well worth debating.