Local Government Finance (England)

Dan Rogerson Excerpts

Wednesday 13th February 2013 Commons Chamber

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

Clearly these are difficult times. As my right hon. Friend the Member for Leeds Central (Hilary Benn) said from the Front Bench, there will have to be reductions in local government spending. Our task today is to examine whether the cuts that have been made are fair and reasonable.

Let us look at what the Local Government Association has said. It calculates that, over the four-year period of the comprehensive spending review, local council spending power will be reduced in real terms by a third. That is a significant reduction—indeed, a massive reduction. We are not just talking about local council spending; we are talking about the services that the money is spent on and the effect of the withdrawal of those services on our local communities. The Minister talked about hard-working council tax payers, and, of course, council tax payers are, by and large, hard working; but not once did he refer to hard-working recipients of council services. People will now lose those services, which in many cases they rely on. It seems as though the Government are saying to our country and the public at large that libraries, parks, environmental health and adult social care are, in some way, second-rate services that we should have less regard for, because they are prepared to make cuts of a third to those services, but cuts of only 20% across the board to other Government services. What they are really saying is that those local services, which our communities value so much, are worth less and should be esteemed less than other things the Government do.

I have to say that a little bit of me has started to wonder whether it is more comfortable for Ministers to see councils and councillors as something of a human shield—people they can hide behind or to whom they can say, “You’re the people to blame in your local council chambers.” They are the people the public can get at for making the cuts that are affecting them. There is someone between Ministers and the impact on local communities of the cuts they are making to council services. The councillors can always be blamed, and I am very concerned that it is easier for Ministers to make cuts in this area.

Councils have always been very good. Under the Labour Government, when we used to have increases in council funding each year, councils were always required to make 2% efficiency savings a year. It is interesting that in the latest MORI poll two thirds of the public said that they had not yet noticed any impact from council cuts on their lives. That will change, but it shows how good councils have been so far in absorbing the savings and achieving the efficiencies that have been requested of them. But people will be affected and, frankly, the Secretary of State’s 50 ways to save the world will not save our local service.

The Minister talked about the pennies being important. Of course saving pennies is important. When I went to a meeting at Sheffield council the other day I did not get tea or coffee and biscuits. They were not provided. When I do my surgery at Crystal Peaks library on Saturday morning, there is a private coffee shop in the foyer which the council has rented out. Those are the sorts of things that are being done. Sheffield has a brilliant record of collecting council tax—a 99% collection rate—although that is likely to change with the changes to council tax benefits, when it will have to try to get £2, £3 or £4 from people who cannot afford it. We have saved more than £2 million a year through going to an alternate-week bin collection, and I have not had a single member of the public write to me with a discarded chicken masala in hand saying, “Our human rights have been breached by this terrible change.” It has gone very smoothly, and recycling is now rising as a result.

Over a four-year period, Sheffield council will have to save £230 million. That is a reduction in spending power of £200 a head, but other councils—such as Windsor and Maidenhead, and Richmond upon Thames—have to make savings of less than £40 a head. That is five times more in Sheffield than other authorities. The Minister will say that Sheffield gets more grant, and because it has had more grant, there is more grant to cut. But Sheffield, like other cities, has had more grant because it has fewer resources and more need than other areas. Ministers are taking grant from areas that have traditionally had more grant, but those are the poorest, most deprived communities where the cuts are hitting hardest. That is simple reality.

[Dan Rogerson (North Cornwall) (LD)]

The hon. Gentleman is right to say that deprivation is a key part of the formula. It always has been and it always should be. But, as I understand it, a density factor was added to the formula by the previous Government for which there is no justification, as it is cheaper to provide services in areas that are more densely populated. That is the sort of issue that we need to resolve in coming years.

[Mr Betts]

There are lots of factors that have been put into the formula in the past. We can all make arguments about the details. For example, it is more expensive to provide services in Sheffield because of its topography. We have hills, so construction costs, such as for the tram, go up. But on the index of deprivation, the most deprived areas will get the biggest cuts. There is no argument about that—if there were, Ministers would be jumping up to the Dispatch Box to deny it.

The Secretary of State says, “It is all right, councils have got reserves. There is no need for cuts.” That is not true. Yes, Sheffield has around £150 million of reserves, but more than £25 million of it is held for schools, and it cannot spend that; £25 million is in the housing account, ring-fenced and dedicated; some £50 million is to be allocated for capital projects; and then there is the money that has to be used to match-fund a PFI scheme that the Government have just approved—I give credit to them for taking forward that Labour scheme. That leaves around £11 million of reserves, and it would be folly for the council to put that money into services next year and leave itself with no reserves. So the council is being prudent and appropriate, as are most councils, in how it deals with that issue.

--- Later in debate ---

[Dan Rogerson (North Cornwall) (LD)]

I am very grateful to you, Mr Speaker, for calling me to speak in this debate. I had hoped to be called in the debate that was held a couple of days ago on the specific issue of rural funding, so many of my remarks will concentrate on that issue and how it affects places such as Cornwall.

It is a pleasure, in a sense, to follow the hon. Member for Denton and Reddish (Andrew Gwynne), who made a passionate plea on behalf of his constituents, as we would expect from any MP. However, I get frustrated with hearing time and again how deprivation is in urban areas; how all the indices, which have been around for some time, to pick up on the real deprivation in urban areas are the only justification for spending; and how we should be looking at this formula and the settlement, and tilting it even more towards urban areas. Those areas have, in fact, historically done much better than areas such as mine.

Cornwall is not what some people might think it to be; it is not a leafy playground full of people wandering around with huge amounts of cash in their back pocket. In reality, it is one of the most deprived parts of the country. Wages are lower than they are in most parts of the country. Even after the accession countries joined the European Union, we are still receiving structural funds to try to help our economy get out of the state it is in. The objective 1 programme existed in many other parts of the country, such as south Yorkshire, but its successor, the convergence programme, is still delivering in Cornwall. After what the Prime Minister told us on Monday, it looks as though it will continue.

Cornwall needs support and investment, but the formula is stacked against it. We often discuss sparsity, on which the hon. Member for Beverley and Holderness (Mr Stuart) has done a great deal of work. The hon. Member for Workington (Sir Tony Cunningham), the hon. Gentleman and I have worked with many other Members on both sides of the House to raise the issue with Ministers.

The funding formula is a very involved beast, but sparsity is one of the factors that has not been fairly reflected over the years. To the Minister’s credit, he has listened to us, and the Under-Secretary of State for Communities and Local Government, my right hon. Friend the Member for Bath (Mr Foster), has also looked at the issue. I hope we can make progress.

The issue is compounded by similar formulae in other areas of public spending. We are rightly looking for ways for local government and health to come together to share costs and investment in services, whether social care or health, but those formulae also clobber areas such as Cornwall. Even when the formula shows underfunding, we have the wonderful damping process, so we never get to where we should be.

I understand the reason for damping. Everybody understands that if an area is shown to be overfunded for whatever reason—population changes, for example—compared with some point previously, and another area is underfunded, we need a period of transition to get things right. What seems to have happened over the years, under the previous Government and before, is that the process never achieves what we set out to do; damping is at such a high level that we do not move in the right direction to resolve the problem.

Cornwall has done what it can to be more efficient. We adopted the unitary local government model, which was painful because there was a lot of cultural and structural change to get seven local authorities down to one, and there were job losses too, but if we had not been through that process we would have been far worse off. We have good local town and parish councils that are taking on responsibility for some services that the county council provided—the things that visitors to Cornwall expect, such as public toilets—but without much revenue.

Council tax has historically been higher in rural areas, while there is also an additional element levied by local councils. In areas such as mine, we have low wages, historically high council tax in some parts—

[Mr Speaker]

Order. I appreciate that the hon. Gentleman is happy to be speaking, but a number of Members have withdrawn from the debate, so I am putting the limit up again. The hon. Gentleman has a couple more minutes if he wants them. He is not obliged to use them, but he can if he wants.

[Dan Rogerson]

I hope my contribution did not put off so many Members that they left the Chamber, Mr Speaker.

Local councils will face pressures too, so we need to look at the amount they add to council tax. There are particular pressures on rural areas, as the Government acknowledged in their consultation last summer, but although they looked as though they were moving in the right direction we have yet to see the fruits of that labour.

[Mr Graham Stuart]

I congratulate my hon. Friend on his work representing rural areas. Does he agree that starting from next year’s settlement we must see an unwind of the rural penalty whereby 50% more per head goes to urban areas? We must see that figure reduced to no more than 40% by 2020. It can be done without major impact on other areas, and it will bring justice and fairer outcomes for people in rural areas who have suffered too much, too long.

[Dan Rogerson]

The hon. Gentleman is absolutely right. There is a penalty—a disadvantage—for people who benefit from living in a rural area, and the gap should gradually be narrowed. We are not saying that it should be entirely eroded. Members from urban constituencies have made the case for their areas of need, but the gap has widened. If the direction of travel is right, we will be much happier.

On public spending, public sector jobs in national Government are another way of making sure that the public sector pound is reaching all parts of the country. In rural areas, the number of jobs in the Government sector has gone down, because Her Majesty’s Revenue and Customs, for example, has got rid of smaller tax offices and jobs have been combined in city areas. It should not go unnoticed that there is a concentration of public spending in urban areas, and that it is leaving rural areas.

[Andrew Percy]

What is incredible about this debate is the lack of understanding among Opposition Members of rural areas. I represent the most deprived part of the rural East Riding, which is as deprived as much of Hull, with a life expectancy of 73. However, local pupils and elderly people receive much less in care and services than they would in areas such as Hull or Doncaster, which are as deprived as Goole.

[Dan Rogerson]

The hon. Gentleman is right. We need to make sure that we get the formula right so that it captures all those factors.

Another factor that is particularly acute for health, but also for social care and the provision of other services, is the ageing demographic. There is an inward migration of older people and an outward migration of younger people, who go to live in urban areas. What particularly dismayed us was the idea that the large element of damping would be frozen for a number of years. The best message that I have taken away from today is that that is not set in stone, and that we will have an opportunity to review it. I can assure the Minister that rural Members will continue to campaign for a fairer settlement for rural areas in years to come, and we look forward to hearing just what can be done to put this injustice right.