Local Government Finance

Diana Johnson Excerpts

Wednesday 7th February 2018 Commons Chamber

[Sajid Javid]

As usual, the hon. Gentleman stands at the Dispatch Box and raises his voice, acting like a child again. He has nothing whatsoever to say on the substance of the issue.

Councils have a crucial role to play in helping to deliver the homes that our country desperately needs. However, we all know that we cannot achieve that without having the right infrastructure in place: the schools, GP surgeries, transport links and other essentials. The private sector can go only some way in delivering that infrastructure. It is clear that we must raise our game to match our ambitions, which is why last July we set up the housing infrastructure fund to support local authorities to provide infrastructure and build more homes. In the end, we received a staggering 430 bids, worth almost £14 billion, to deliver 1.5 million homes, demonstrating the incredible ambition that is out there to tackle the housing crisis—an ambition that we are keen to get behind and back fully. Hence our move to more than double the housing infrastructure fund in the autumn Budget, dedicating an additional £2.7 billion to it, bringing the total funding to £5 billion.

Last week I was delighted to announce the first funding allocation: £866 million for 133 successful projects, involving 110 councils, that will help unlock up to 200,000 homes. Those projects promise to deliver a strong pipeline of homes at pace and scale, and represent another important step towards meeting one of the defining challenges of our time.

I will now turn to another major challenge: social care. I am under no illusions about the pressures that councils face in addressing one of the biggest challenges we face as a country, which is why we have put billions of pounds of extra funding into the sector over the past 12 months. I can today announce a further £150 million for an adult social care support grant in 2018-19. This will be allocated according to relative needs and will help councils to build on their work and support sustainable local care. It comes on top of the additional £2 billion for adult social care over the next three years announced at the spring Budget. With the freedom to raise more money more quickly through the use of the social care precept, which I announced this time last year, we have given councils access to £9.4 billion more dedicated funding for adult social care over three years.

[Diana Johnson (Kingston upon Hull North) (Lab)]

The problem with putting up council tax in order to pay for social care is that some of the most disadvantaged areas have a very low council tax base. In Hull, for example, what we can raise through that increase in the precept is very small compared with the needs we have. Are we not moving back to the days when the poor were keeping the poorest, about which George Lansbury protested in Poplar nearly 100 years ago, by putting the onus back on local authorities in very disadvantaged areas?

[Sajid Javid]

The hon. Lady suggests that the only way councils can access funds to provide social care is through council tax, which is absolutely not the case, as she knows. It is an important way to raise some of the funding, but an increasing amount is coming from central resources. For example, the £2 billion that was allocated in the spring Budget takes into account the ability of local authorities, including the hon. Lady’s, to raise money locally. It is right that we have that balanced approach, but I know that there is more to do on adult social care, and that funding alone will not help to fix the challenges. This long-term challenge requires a long-term systemic change. The publication of a Green Paper this summer on future challenges in adult social care will help set us on a path to secure that.

Finally, we are responding to calls for more flexibility over setting council tax. Local authorities will be able to increase their core council tax requirement by an additional 1% without a local referendum, bringing the core principle in line with inflation. This will enable them to raise revenue and meet growing demand for their services while keeping taxes low. Having done away with Whitehall capping, we have enshrined these checks and balances into the system. Under the Localism Act 2011, local government can increase council tax as it wishes, but excessive rises need to be approved by local residents in a referendum.

In addition, directly elected Mayors will decide the required level of precept by agreement with their combined authorities, and it will be easier for police and crime commissioners to meet local demand pressure under measures that I have agreed with the Home Secretary. They will allow for a £12 council tax flexibility for police services, raising an additional £130 million next year. We will, however, defer the setting of referendum principles for town and parish councils for three years, and we will keep that under review. In all, I want to see the sector doing everything possible to limit council tax increases and show restraint. I am keen to ensure that these freedoms are not abused, and I am sure voters are too.

My Department’s name recently changed to the Ministry of Housing, Communities and Local Government. That underlines our focus on fixing our broken housing market and getting Britain building, but I remain absolutely committed to the community and local government elements of our work. They are the foundations on which everything else stands. It is not enough to build more homes; we need to build better and stronger communities. Councils acting truly as local government and not local administration will help us to achieve that.