Local Government Funding

Faisal Rashid Excerpts

Wednesday 27th March 2019 Westminster Hall

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate my hon. Friend the Member for Colne Valley (Thelma Walker) on her speech and on securing the debate.

Many of the services that are closest to the people we represent and that many people value and appreciate are delivered by local councils. Many of them, such as collecting refuse, recycling, street cleansing, operating street lighting and keeping street drains clear, are easily identifiable council services but, as we know and as my hon. Friend highlighted, councils do much more. They provide education, social and youth services, libraries, community centres, leisure centres, allotments, play areas, car parks, local tourism and business support. They also facilitate a huge amount of partnership working by acting as the conduit for joint working between police, health, the third sector and others. Many local authorities also still provide housing services and even those that no longer have housing stock still provide limited private sector housing support and are responsible for taking the lead on tackling homelessness.

I spent the 20 years before I was elected to this place in 2015 as a councillor and cabinet member. I was first elected in 1995. My first experience as a councillor was marred by the huge financial pressures that local authorities were under. I was full of hope at first that I would play a part in making a positive difference to the community that had just elected me. Is not that why we are all elected? However, the council I was elected to was subjected to massive cuts in my first two years as a councillor. Our annual budget was cut by £30 million over two years. That happened from 1995 to 1997, in the dying days of the Thatcher-Major Tory Government.

From 1997, things changed dramatically and for the 13 years under a Labour Government the council’s funding increased year on year. There were modest increases in the early years but more significant increases followed—in one year reaching almost 10%. Those were years when local authorities thrived. I recall one year when I was the youth champion for the authority and was able to argue for and obtain an additional £150,000 for youth services in the following year. There are many other examples when funding was available to support local services.

[Faisal Rashid (Warrington South) (Lab)]

Local councils provide vital services to our constituents, whether on fly-tipping, homelessness, adult social care or children’s services. Any funding cut is a direct attack on our constituents. Does my hon. Friend agree?

[Gerald Jones]

I certainly agree, because cuts dilute local authorities’ ability to act on behalf of the people they represent.

Local authorities have been at the forefront of strategic partnership working in relation to developing and prioritising projects to secure and utilise European funding and co-ordinating the securing of match funding so that residents get maximum benefit for the investment. That, sadly, will be hugely diminished as we leave the European Union. Despite a promise from the Government they have yet to confirm the mechanics of how the shared prosperity fund will work, which leaves communities to wonder whether the commitment from Conservatives on the leave side who promised that our country would be no worse off was no more than a sop to gain support.

Financial support for local councils started to change in 2010. Since then our local councils and public services have been starved of investment. In Wales, local government is devolved to the Welsh Government and the block grant for the Welsh Government is now some £4 billion less than it was in 2010. In the early years of austerity, the Welsh Government protected councils in Wales from the harsh policies of the Tory-Lib Dem coalition. I remember speaking to local government colleagues in England at the time and hearing the horror stories about how council services were starved of investment. As the years have passed and austerity has continued to bite hard, the ability of Welsh Government to protect local councils has been diminished. Although in Wales the responsibility for local councils lies with the Welsh Government, I am in absolutely no doubt that the cause of the pain being felt by councils and public services in Wales lies with the harsh austerity policies of this Tory Government.

In the most recent budget round, Merthyr Tydfil County Borough Council and Caerphilly County Borough Council, which cover my constituency, were again forced to cut millions of pounds from their annual budget and they have also been forced, along with many authorities across the UK, to increase the council tax by more than 5%, which has been the maximum upper limit in recent years. Some councils are even starting to use reserves to plug the revenue gap, which is a dangerous precedent. Reserves are often earmarked for specific commitments while the much lower free reserves are there for emergencies and one-off expenditure. As we know, once they are used to plug the gap in revenue funding, greater problems are created for future years.

We have heard in recent debates in the House that cuts to policing have had a big impact in many communities where crime and antisocial behaviour have increased. However, that is exacerbated by the fact that, owing to cuts to council services, there are fewer youth workers, education welfare officers and social workers, and generally less funding for work with the police and partners to manage antisocial behaviour and reduce crime. Local councils play a huge part in crime reduction and in reducing low-level nuisance and antisocial behaviour. We should not underestimate the importance of their role.

In conclusion, in the early years of austerity some local councils and public bodies were able to find efficiencies to make their budgets stretch. People were expected to do more with less money and fewer people, which put remaining staff under increasing pressure. However, after nine years of painful austerity there are no more efficiencies to find. The low-hanging fruit has all been picked long ago. As I said in questions on the spring statement a few weeks ago, all that is left to cut is jobs and frontline services.

I make a plea to the Minister today to recognise the pain that austerity has caused and the fact that local councils are not able to withstand any more cuts. The Government need to show compassion. The services that we are discussing are those closest to the people. We know from press reports that Tory-led councils are also experiencing financial pressures. People are feeling the pain across the country, so please will the Minister give us some hope that austerity really has ended?

--- Later in debate ---

[Yasmin Qureshi]

I thank my hon. Friend for that intervention.

We are all aware of the fact that post-industrial towns and cities in the north of England such as Bolton have been hit hardest by the deep cuts to local government spending. The idea that the Government sometimes project—that austerity hits everyone equally—is nonsense. The cuts are nothing less than politically motivated. The heaviest have been in the most deprived regions that are often thought of as economically left behind. That is compounded by the fact that those areas have the highest levels of poverty and a lower capacity to mitigate cuts through local taxation or asset sales.

My local council, Bolton, has lost about £l billion in spending power since austerity began in 2010. That has impacted on social care, with adult and child services taking the biggest hit, despite being the areas with the highest demand. As many hon. Members have said, we have an ageing population and therefore the impact on the social care budget is getting bigger. More and more children are being taken into care, meaning that the amount of money required is increasing.

Colleagues have mentioned the pressures on local authorities. For example, over the past three years, Bolton Council’s adult services department had to find more than £10 million of savings, including £8.8 million from children’s services. My local authority had to raise council tax, specifically to pay for social care. That led to its critics saying, “Oh, the council is raising taxes”, but nobody spoke about the fact that it had no choice. With funding cuts of 50%, what was it to do other than raise local taxation to fill that gap? The Institute for Fiscal Studies has estimated that between 2010 and 2020 local government will have had its direct funding cut by 79%. Let that sink in: 79%!

[Faisal Rashid]

While the Prime Minister was announcing the end of austerity last October, more than 5,000 councillors signed the “Breaking Point” petition to call on the Government to cancel their planned cuts for the new year and immediately to invest £2 billion in children and adult services. Does—

[Mrs Anne Main (in the Chair)]

Order. Interventions must be brief. That was a mini-speech, and the hon. Gentleman has been here for only half the debate. I want to give the hon. Member for Bolton South East (Yasmin Qureshi) time to continue with her speech. I am sure she has the gist of what he had to say.

--- Later in debate ---

[Mr Sweeney]

I thank my hon. Friend for making that pertinent point, which goes to the heart of the issue of local government—structural decay over decades. Once, we had great, autonomous and highly vigorous municipal authorities. Look at Glasgow, which used to run its own gas and electricity provision, tramways, railway system and subway system. The Glasgow Corporation was a huge enterprise, and it has been slowly but surely torn apart over the past 50 years by creeping centralisation. That has happened at a regional level, and it is now happening with the dismantling of Scottish regional councils and regional authorities and their centralisation into Holyrood.

An inadvertent and regrettable effect of devolution over the past 20 years has, in essence, been to displace the municipal power of Glasgow and the west of Scotland, and to suck it into the east and into Edinburgh. We should guard against that in the constitutional reform of city regions across the United Kingdom. We need to consider what effect such devolution might have on the margins and the periphery of that power base. I would like that to be corrected in Scotland as we look forward to the next two decades of devolution.

[Faisal Rashid]

I will be brief this time, Mrs Main. Because of funding cuts, councils across the country are being forced to sell their assets in order to fund the revenue budget. Does my hon. Friend agree that that is not the way to fund services?