Local Authority Financial Sustainability: NAO Report

Dan Carden Excerpts

Tuesday 20th March 2018 Westminster Hall

[Dan Carden (Liverpool, Walton) (Lab)]

I am delighted to serve under your chairmanship, Mr Evans. I congratulate my hon. Friend the Member for Weaver Vale (Mike Amesbury) on securing this important debate. It is a shame that we will not even hear a Tory Back-Bencher heckle, never mind make a speech or an intervention, because not one has turned up to speak on behalf of their local councillors in this important debate.

As others have identified, the National Audit Office report raises grave concerns about the sustainability of local authority finances. Even more worryingly, this Government show no sign of changing direction, regardless of the consequences. The spring statement showed that there is no plan to abandon the austerity project, meaning that services delivered by local councils will be put under even more pressure. This Government have presided over the slowest recovery since at least the 1920s. Austerity has not tackled the deficit; it has passed it on to public services and plunged them into crisis, from the NHS to schools, to councils even going bust.

The Tory cuts to local government are deeply unfair, hitting the most deprived councils with the greatest need the very hardest. Since 2010, Liverpool’s funding has been cut by a staggering 64%, or some £444 million, and council services have lost 3,000 staff. Those cuts have stripped our communities bare and left our services stretched to the limit. One of the biggest financial pressures on our councils nationally is adult social care. More than 400,000 people can no longer access social care, which faces a £2.5 billion funding gap by 2020. The other main growing pressure on council budgets is children’s services. The number of children taken into care is at its highest since 1985, yet, according to the National Children’s Bureau, more than one in three carers are warning that cuts have left them with insufficient resources to support those children.

Liverpool City Council has rightly shielded those services as much as possible from the full force of Government cuts, but that means that funding for other vital services is being squeezed, from housing to road maintenance to refuse collection. Cuts combine and converge to create increased hardship, risk of homelessness and pressure on other services. Liverpool City Council’s impact analysis shows that the biggest impact is on disabled people, women, families with children, younger people and social sector tenants aged between 40 and 59.

The council has set aside £50 million to protect the most vulnerable, including £11 million to tackle homelessness, which has more than doubled under this Government; £3.3 million for discretionary housing payments for those affected by botched welfare reform and hardship—70% of which are because of the bedroom tax alone—and £3.1 million for crisis payments to help with the cost of food, fuel, clothing and furniture. I could go on.

It is right that local authorities step in when the Government fail the most fundamental maxim: that a society is judged by how it treats its most vulnerable. However, those resources should be going on early intervention programmes, youth centres, community centres, libraries—facilities that give people the means to realise their creative capacities and live full and independent lives. Instead, local authorities, alongside a network of food banks and community and volunteer groups, are forced to act like a sticking plaster over the worst effects of Tory austerity.

Of course, the impact cannot be explained by figures alone. The stories of ruined lives that I hear at my advice surgeries and deal with through my office every day collectively amount to a national tragedy. Current trends of growing overspends and dwindling reserves are unsustainable, and the Local Government Association has raised concerns that there remains no clarity on how local government will be funded after the four-year funding deal runs out in March 2020.

We know that all this is down to political choices, not economic necessity. The Conservative Government chose to give tax handouts to the super rich, corporations and bankers, and it was paid for by the rest of us. In the autumn statement, they chose to hand almost £5 billion to the biggest banks by cutting the bank levy—money that could have been used to fund our children’s services. A recent report by the Equality Trust found that, in the UK, the 1,000 richest people now have more wealth than the poorest 40% of households put together, their wealth having increased by a staggering £82.5 billion last year. Meanwhile, UK workers have not had a pay rise for 10 years and continue to suffer real-terms pay cuts.

It was never about tightening our belts. We were never all in it together. It is time to call austerity what it is—and it ends the day the Labour party takes office.

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[Andrew Gwynne]

I absolutely agree. The Tory-controlled Local Government Association and Tory-controlled County Councils Network speak with one voice in the local government family, which is that local government is on its knees, our public services are struggling and local government cannot carry on if the cuts continue over the coming years. We know what is happening because it is happening today. Tory-controlled Surrey County Council, in one of the richest parts of the country, is complaining that it does not have enough money. If Surrey County Council has not got enough money, what hope have the Liverpools, the Tamesides and the Hulls of this world?

[Dan Carden]

I am delighted my hon. Friend has made that point. We are trying to argue that this matter is not economic, but political. When Liverpool has 60% of its properties in band A, what hope have we got of raising council tax to pay for all our services?

[Andrew Gwynne]

My hon. Friend makes a very important point. One of the two local authorities that I represent, Tameside Metropolitan Borough Council in Greater Manchester, has a £16 million social care funding gap this year. A 1% increase on the council tax brings in about £700,000. The Tamesides of this world will never be able to fill the gap in the cuts from central Government, so the point my hon. Friend makes is absolutely crucial. The authorities that we represent are grant-dependent for a reason, because no amount of business rates retention and increases in local taxation through the council tax within the referendum framework will ever make up the difference between the cuts that have been made centrally.

--- Later in debate ---

[Dan Carden]

Does the Minister agree with us that, actually, a fair funding formula is about the requirements of the citizens who live in the area, and that that has to be the responsibility of not just local government, but national Government? I invite the Minister to come to Liverpool to see what would be the consequences of any business rates changes before they take place.

[Mrs Wheeler]

I thank the hon. Gentleman for that kind invitation; I am sure that eventually that will happen. Thanks to the business rates retention scheme, local authorities have had approximately an additional £1.3 billion of funding to support local services in 2017-18. That is over and above their core settlement funding.

Investment is important, but it is also vital that local government continues its work to deliver better value for money. Local government has a strong track record on efficiency, setting an example to other parts of the public sector. My right hon. Friend the Secretary of State and the Under-Secretary of State, my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak), who is responsible for local government, are keen to continue to work with the sector to increase transparency and share best practice and to harness the power of digital to transform services.

I am glad that we have had this chance to discuss the National Audit Office report. It is good that the NAO has recognised the positive work of the Department in getting to grips with the challenges across local government. I believe that the Government have shown that we are alive to the challenges that the sector faces and have a coherent plan for reform.

I thank the hon. Member for Weaver Vale for calling a debate on this important issue. I look forward to working closely with many colleagues over the coming months and discussing some of the challenges and opportunities facing the local government sector, and I look forward to hearing the hon. Member for Weaver Vale winding up the debate now.