Budget Resolutions and Economic Situation

Debate between Baroness Laing of Elderslie and Steve Reed

Thursday 17th March 2016 Commons Chamber

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. The hon. Lady has said enough.

[Mr Reed]

It is sad that the councillor has felt forced to say that, but he is absolutely right of course.

There is little evidence of devolution over how local services are funded as a result of the Budget. Yesterday, as the Institute for Fiscal Studies has now confirmed, the Chancellor tightened his fingers around the neck of local government funding. He has handed over limited powers to city regions and others but refused to link those powers to resources. I want to see the Government go much further on devolution—more local control over schools, housing, health and the Work programme—but we need real fiscal devolution as well. If the Government hand over services but then cut the funding centrally, all they are really doing is devolving the blame for cuts made in Downing Street.

Yesterday’s Budget graphically underscored that point. The Chancellor made much of his plans to allow 100% retention of business rates, which of course sounds good, but he will not be clear about which services they will have to pay for. At the same time, he is entirely scrapping the central Government grant, leaving councils far worse off and less able to fund the services that local people rely on. He will not explain, either, what mechanism, if any, will be in place to ensure that business rates retention does not just benefit areas that are already wealthy and penalise those that are not. There needs to be a fair funding mechanism in place that helps areas to expand their capacity for economic growth, otherwise they will be locked into a downward spiral, with no way out.

Of course, we should not be surprised that the Budget did not include anything about fair funding. Under this Government, the 10 poorest councils have suffered cuts 23 times bigger than the 10 richest. Last month, the Government voted to cut Croydon’s funding by another £44 million, but handed a £23 million windfall to far wealthier Surrey next door. Unfairness is the defining feature of this Government.

What these further cuts mean for the vast majority of communities in this country is the closure of libraries, museums, youth services and children’s centres. They will leave streets unswept and street lights turned off at night. They will mean home care taken away from frail older people, and disabled people left to struggle alone. They will mean a cut to early intervention in troubled families, and social workers will not be there to protect children from the impact of domestic violence. Services will not be there any more to protect children at risk of abuse. We are simply storing up problems for the future, while watching young lives get ripped apart.

This Chancellor has got so much wrong. He has had to downgrade growth forecasts that he made only four months ago. He missed his own deadline for paying down the deficit caused by the banking crash. He delayed the recovery by cutting big infrastructure projects early on in his tenure, and he is now struggling to make up for lost time. He has failed to tackle the economy’s desperately low levels of productivity. Now, the IFS has questioned his ability to meet yesterday’s forecasts without more cuts or tax rises to fill a £55 billion financial black hole. The IFS further says that the Budget will reduce wages, lower living standards and lead to further austerity.

Quite simply, this is a Chancellor who cannot be trusted, and who is himself unable to trust. He gets the big decisions wrong, and he is afraid to devolve decisions to others. Instead of reforming public services, this Government are laying them to waste. Instead of sharing the proceeds of growth more fairly, this Government are presiding over growing inequality. Instead of handing decision-making to local communities, this Government are centralising power in their own hands. Instead of shaping a fairer Britain, this Chancellor has thrown a financial bung to his wealthy mates and thrown the rest of the country to the dogs.

Local Government Finance (England)

Debate between Baroness Laing of Elderslie and Steve Reed

Wednesday 10th February 2016 Commons Chamber

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. The hon. Member for Croydon North (Mr Reed) has to answer, and then he can give way to the Secretary of State.

[Mr Reed]

My hon. Friend makes my point for me. The distribution of the money is desperately unfair.

--- Later in debate ---

[Mr Reed]

I have given way to the Secretary of State twice, and now I am going to continue.

I turn now to council tax. On Monday, the Secretary of State denied he had written to councils, telling them to put up council tax. Indeed, it was not the Secretary of State who wrote that; it was the Under-Secretary of State for Communities and Local Government, the hon. Member for Nuneaton (Mr Jones). [Interruption.]

[Madam Deputy Speaker]

Order. The House is making far too much noise. Both the hon. Gentleman and the Secretary of State have important things to say. Let them fight it out. Do not make so much noise.

[Mr Reed]

Barracking will not stop me saying what needs to be said.

I have a copy of the letter the Minister sent to councils with the provisional settlement. The spreadsheets it links to, which were sent to every town hall, include figures setting out the Government’s expectation that councils will put up council tax by 1.75% every year for four years and, on top of that, impose a further 2% rise to help plug the gap arising from the Government’s failure to fund social care properly. That is 3.75% a year more every year for four years. By 2020, it adds up to a council tax hike of well over 20%. That will cost the average band E council tax payer about £300 more a year. It is very hard indeed to square that massive Tory tax hike with the Tory manifesto pledge to keep council tax as low as possible. The Tories are breaking their promises—they are hiking council tax up.