Gareth Thomas
Main Page: Gareth Thomas (Labour (Co-op) - Harrow West)(7 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
With social care in crisis, a huge number of businesses deeply worried about rising business rates bills and the council tax set to increase by 25% by 2020, this local government finance settlement may work for Ministers, but it will certainly not work for anyone else. While it is good to hear that there may be some help for the businesses most affected by the revaluation, the Prime Minister’s spokesperson briefed after today’s Prime Minister’s questions that there would be no more extra money available to help to fund this additional support to businesses. When the Minister winds up, will he confirm whether that is the case, because if it is, one group of businesses that were expecting help will be robbed to fund the relief for another group of businesses?
Many businesses will receive new bills next week, and council tax bills are almost ready to be sent out. This is the latest the settlement has been for decades, so one might have expected there to be a little better news in it compared with the original offering in December. There is no new money for local government to tackle the social care crisis, and nothing to help councils to tackle rising homelessness and the doubling of rough sleeping. It just passes the buck on to local councils, while local residents are left paying more in council tax, at the same time as public services deteriorate. No wonder this is being described as a “hugely disappointing” settlement. That is not my phrase, but the words of Lord Porter, chairman of the Local Government Association and Conservative leader of South Holland District Council.
Gloria De Piero (Ashfield) (Lab)
Nottinghamshire County Council has lost £200 million during the past seven years. Given that 40% of the budget goes to adult social care, is it any wonder that, day after day, all of us across the House are getting the most heartbreaking stories from our constituents who are simply not getting the care that their loved ones need?
Mr Thomas
My hon. Friend makes a very good point, which is why it is all the more worrying that Ministers want to abolish the revenue support grant totally under the Local Government Finance Bill.
Perhaps I should not be too harsh on the Secretary of State. After all, he has had a rough week. He was accused by the former Conservative party chairman of “spinning the numbers”, and I hear that there was concern among Conservative Members that the Secretary of State was being hung out to dry by colleagues, so it was good to hear the Prime Minister’s spokesperson confirm that No. 10 still had full confidence in him. In truth, in just eight short months, the Secretary of State has been found asleep at the wheel twice—with a social care crisis entirely of the Government’s own making, about which he was warned well in advance; and now a business rates crisis, which he must have known might create a problem for many businesses, given that his party delayed the revaluation by two years, yet the seriousness of which it has apparently taken him until now to grasp.
Anna Soubry (Broxtowe) (Con)
Does the hon. Gentleman agree that if county councils such as Nottinghamshire want to do better on social care, they can look at cutting their costs by going into a unitary authority? Conservative county councillors in Nottinghamshire agreed that that was a good idea, but Labour county councillors, no doubt thinking of their allowances, decided it was a bad idea.
Mr Thomas
I encourage the right hon. Lady, for whom I normally have a lot of respect, not to make such partisan and, I suspect, inaccurate points, but to look at a booklet published by the LGA Labour group that gives 100 examples of the way in which Labour councils have innovated during the past few years. She may want to encourage some Conservative councillors whom she knows to follow such examples.
The Secretary of State sent a letter to all his Conservative colleagues claiming that the concerns raised about business rates by businesses and hospitals were based, apparently, on a
“relentless campaign of distortions and half-truths”.
Leaving aside the question of whether it was right to release the figures just to Members of his own party, the irony is that, as was quickly exposed, the actual bills businesses will receive are likely to be 7% higher than the figures he produced. I gently suggest that the Secretary of State is in danger of getting a reputation for being sloppy in his use of figures.
Ministers have known about the business rates revaluation for a long time. Indeed, when announcing the delay, the right hon. Member for Brentwood and Ongar (Sir Eric Pickles) explained that it was to prevent “unexpected hikes” in business rates. Why did the current group of Ministers not think to analyse its consequences a little earlier? How can it possibly be fair that the overall business rates bill for Amazon, which has avoided paying much in corporation tax despite making huge profits, has gone down while family-run businesses that have existed on local high streets for decades face huge rises in their business rates bills? To accuse, as the Secretary of State effectively did, the Federation of Small Businesses, the CBI and the British Retail Consortium of “distortions and half-truths” in their campaigning is a disgrace. He should apologise to them.
James Heappey
While the hon. Gentleman is discussing the revaluation of business rates, will he welcome the Government’s measures in recent years to provide small business rates relief, and its indefinite extension, which has been so advantageous to many of the small businesses he claims the Government will have harmed?
Mr Thomas
I certainly welcome small business rates relief. We will have to wait and see whether Ministers will raid the pot that some businesses were hoping to benefit from, in terms of that rates relief, to fund support to other businesses that will see even bigger increases than they were expecting in their business rates bills.
John Redwood
The hon. Gentleman is making a case for more funding for social care and more rates relief. How much money does he have in mind and how should that be paid for?
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
The hon. Gentleman now seems very concerned about the burden of business rates on business. Why then, during the Local Government Finance Bill Committee, did he and his colleagues advocate allowing local authorities to increase the multiplier in an arbitrary fashion, thereby putting tax rates up for businesses?
Mr Thomas
I am glad the Minister got to his feet, because I was coming on to his performance yesterday in Committee. Given the deep and profound concerns about the business rates revaluation, it was a little surprising for the Secretary of State to send out his Minister to reject the idea that any change to business rates was necessary. His spokesperson was still being quoted yesterday as claiming that business concerns were just scaremongering.
In 2005, PricewaterhouseCoopers tracked the tax liabilities of Britain’s biggest companies and found that half of the total came from corporation tax, while just 11% came from business rates. Today, corporation tax has fallen to 19.7% of tax paid by the top 100 group of companies, while the figure for business rates is 21%. Moving away from taxing revenue and profits, and increasing the tax share on businesses more reliant on bricks and mortar is surely going in the wrong direction given the rise of the digital economy.
I welcome the Secretary of State’s decision to have a review of the support for small businesses hit hardest by the business rates revaluation. I look forward to him being able to instruct his Minister, and encourage his hon. Friends, to support the amendment we have tabled to the Local Government Finance Bill on Report, requiring a full review of business rates and their impact on local government finance before the Bill comes into effect.
Steve Double
I just wonder whether the hon. Gentleman is able to clarify something for me. He has consistently said that he supports the 100% retention of business rates for local councils. However, he seems to advocate lower business rates for businesses and more money for local councils, which does not seem to add up. Where will the money come from?
Mr Thomas
As we have gently suggested before in this Chamber, we simply do not think it is the right time to cut corporation tax for businesses like Amazon, Sports Direct or Britain’s biggest banks. It is important that we get business rates right, because from April 2019 local government will be increasingly reliant on that income stream to fund vital public services. Since the Conservative party came to power, funding from central Government has been cut by over 40% and they want to axe the revenue support grant completely. Councils will spend some £10 billion less on England’s local public services this year than they spent in 2010-11. Ministers have never denied the Local Government Association’s calculation that local authorities are facing a £5.8 billion gap by 2020 just to fund statutory services.
Today’s settlement represents a further cut in councils’ core spending power. Not a single extra penny of new money for local government has been found for the care of Britain’s oldest and most vulnerable citizens. Some £4.6 billion has been axed from social care budgets since 2010. More than 1 million English adults, people who have served our country and deserve to be treated properly and with dignity, are estimated to have unmet care needs, which is a remarkable, almost 50% increase since 2010. The crisis is having profound consequences for the NHS and forcing councils to axe funding for other vital local services to enable them to provide even the most basic service to the most vulnerable.
Last July, the Association of Directors of Adult Social Services warned of serious problems in social care, but the Secretary of State did not act. In October, the Care Quality Commission said that adult social care services were at a “tipping point”, but the Secretary of State dismissed it as an exaggeration. There were briefings that action would be forthcoming in the autumn statement, but that came and went. When the statement on local government finance came around in December, all we were presented with was money being moved from one council funding pot to another and permission to raise council tax quicker than before.
The social care precept raises vastly different sums of money in different areas and is completely unrelated to need. It shifts the burden of solving a national crisis on to hard-pressed local councils and local residents, including all those only just managing to make ends meet. Members from all parties have called on the Government to act. The Chairs of the Health, Communities and Local Government and Public Accounts Committees have called on Ministers to act, yet the crisis has just got worse. The Association of Directors of Adult Social Services and the head of the NHS have also called on Ministers to act, while Age UK says that the English social care system is facing complete collapse.
Huw Merriman
The hon. Gentleman is right to talk about the need for social care reform, although I believe that the Government are responding to that need, but would he like to take this opportunity to congratulate Conservative-run East Sussex County Council, which has put its budget alongside that of the local clinical commissioning group and is moving money out of hospitals, so that patients can come out of hospital or need not even go in at all? Is that not a good example of local reform delivering now?
Mr Thomas
I always support things that improve services to local people, but I say gently to the hon. Gentleman that I am surprised at his complacency and apparent belief that there is no social care crisis at all—that seemed to be the implication of his remarks. Many local authorities up and down the country are deeply worried about the social care situation. I suspect that if he spoke to councillors in East Sussex, he would find that they, too, are deeply worried.
Huw Merriman
I talk regularly to my councillors—I am here to represent them, as I am all my constituents—but I have an issue with the hon. Gentleman’s talk of a crisis. There are challenges in the system and a need for reform, but the talk of a crisis is scaremongering and sending out a signal that things cannot be fixed locally, whereas my county council is showing that, with hard work, imagination and application, they can be.
Mr Thomas
If the hon. Gentleman will not listen to me, perhaps he will listen to Izzi Seccombe, chair of the LGA’s health and wellbeing board and Conservative leader of Warwickshire Council. Earlier this week, she said:
“To continue, it is really looking like we are cutting into the bones of services that matter to people”.
According to the LGA’s analysis, 147 of England’s 151 social care authorities are considering or have had approved the introduction of the social care precept for next year, but it estimates that that will raise just over £540 million, which does not even cover the cost of the Government’s national living wage. It will not tackle either the growing crisis in services available to support the elderly or disabled or end the need for cuts to local services, including social care, such is the funding crisis.
Kevin Hollinrake (Thirsk and Malton) (Con)
The hon. Gentleman referred to the needs within different local authorities. Does he accept that some local authorities are under greater pressure than others? For example, 13 London boroughs were able to reduce or freeze council tax in 2016-17, while many others were not. Is he advocating a system based purely on cost drivers, need and the cost of delivery, rather than regression and the baked-in formulas of previous years?
Mr Thomas
The hon. Gentleman will remember that he and I had this discussion many times during our sittings on the Local Government Finance Bill. While the hon. Gentleman seeks to champion his constituency, which is a rural area, I gently suggest that he might like to talk to Ministers about why they intend to abolish the rural delivery services grant, which was specifically introduced to help provide additional funding to rural areas such as his.
Kevin Hollinrake
The hon. Gentleman knows very well that this is happening in a context of much more money coming into the system—an extra £12.5 billion into local government by 2020. That is the relevant context, rather than what he says about withdrawing funding from local authorities.
Mr Thomas
Given the scale of the funding crisis facing local government at the moment and the abolition of other funding streams such as the £3 billion going from the public health grant, I suggest that the hon. Gentleman should be a bit more of a champion for rural areas and try to defend his own area’s funding through the rural delivery services grant.
Dr Wollaston
I would like to put on record the fact that my constituency covers part of Torbay, which has both a national and an international reputation for integration of health and social care. Despite that, it is now under extraordinary pressure from a number of sources, and it is very important that Ministers are aware of the strain that social care is under.
Mr Jim Cunningham (Coventry South) (Lab)
My hon. Friend was right when he said that even if local authorities are allowed to raise this money, in the longer term, by 2021, it will not cover the costs, because there will be a deficit nationally of more than £2 billion. If we take Coventry and Warwickshire, by 2021, there will be deficit of £33 million. That shows the scope and scale of the problem.
Mr Thomas
My hon. Friend has taken a number of opportunities of late to champion his local authority in the difficulties that it faces—not only for now, but in the long term. The situation he describes in Coventry is mirrored up and down the country. It is time that Ministers grasped the seriousness of the situation.
The LGA has made clear that the continued underfunding of social care is making it impossible for many local authorities to fulfil their legal duties under the Care Act 2014, leaving open the prospect of a whole series of costly court challenges. It is true that some money, £240 million, has been switched from the new homes bonus to fund social care, but when serious analysts suggest that £1.3 billion is needed urgently now to stabilise the social care system and that the funding gap for social care is expected to reach £2.6 billion by 2020, it is difficult to find anyone, even in the Government’s own party, who thinks Ministers are on track to sort the social care challenges that our country faces.
Mr Betts
Is it not disappointing that attempts are now being made to blame local authorities for problems in social care funding that are clearly of central Government’s making? When Simon Stevens came to the Communities and Local Government Committee, he made it absolutely clear that there would be a funding problem for social care in this country—even if every local authority performed at the level of the best.
Mr Thomas
My hon. Friend makes a very good point. The default position for Conservative Members, whenever an issue is raised about the funding gap for social care and a number of other services, is to blame local authorities. The evidence of Simon Stevens and others rightly rebuts that point.
James Heappey
Conservative Members actually blame Labour Front Benchers for so shamelessly rigging the system in favour of Labour-controlled cities during their time in government. I am sure that the shadow Minister will therefore welcome the review announced today to make sure that the future funding formula for local government is much fairer to both urban and rural areas.
Mr Thomas
I admire the hon. Gentleman’s chutzpah, if nothing else. On the subject of mates’ rates, I shall deal with Surrey County Council in a moment.
Just last month, the Secretary of State once again told the House:
“In the last spending review, the Government allocated an additional £3.5 billion a year by 2020 to adult social care.”—[Official Report, 16 January 2017; Vol. 619, c. 664.]
That was based on £1.5 billion from the back-loaded better care fund and £2 billion from the social care precept, but when we look at those figures closely, we see that the £2 billion was simply rounded up from the Department’s estimate that £1.8 billion would be raised from the precept. The Government had casually added an extra £200 million. That assumption was based on every council’s raising the precept by the full amount, but we already know that not all councils will do so.
When we look even more closely at the detail, we see that it also builds in the assumption that an additional 1.45 million households will be paying council tax. Ministers seem to have disowned the ambition of the previous Housing Minister—the current Minister for Policing and the Fire Service—to build a million new homes by 2020, so I have no idea where the Government plucked that 1.45 million figure from. Perhaps the right hon. Member for Welwyn Hatfield (Grant Shapps) would be tempted to call this another case of “spinning the numbers”. The truth is that the additional funding that the Government claim to be putting into social care is far from guaranteed, and, in any event, unless they find genuinely new money, there will still be a very significant funding gap by 2020.
Now let us come to Surrey County Council and the sorry saga of the abandoned 15% council tax referendum. Shortly after the announcement, David Hodge, the council’s leader, revealed that he had already made cuts worth £450 million and explained that he would have to take an axe to services if the extra £60 million that the 15% council tax hike would have raised was not agreed.
One reason why Surrey’s announcement was so striking is that it has been able to increase spending on adult social care by over 34% since 2010-11, whereas some councils have had to decrease it by up to 32% in the same period. In fact, only two of the 152 social care-providing local authorities have been able to increase their spending on social care more than Surrey. If Surrey says that it cannot cope with demand for social care, which council can?
In the most deprived areas of the country, social care spending fell by £65 per person as councils were hit particularly hard by Government funding cuts, but rose by £28 per person in the least deprived areas. The social care precept will only further entrench that inequality. Blackpool, the most deprived unitary authority area in the country, faces a 31% reduction in spending power between 2011 and 2019, whereas Wokingham, the least deprived area, faces only a 4% fall in the same period.
Perhaps Ministers will finally take the opportunity today to enlighten us on what discussions took place between their Department and Surrey County Council, but from the outside it looks like policy making on the hoof: Ministers, embarrassed by one of their own, exposing the fallacy of their argument. They seem to have settled on opening up the business rates retention pilot scheme, but why was Surrey given special access, whereas other local authorities have not been told how they can apply until now?
John Redwood
It should be made clear that Wokingham starts £400 a head worse off than the very best-rewarded councils, which is why there has to be a differential rate.
Mr Jim Cunningham
Between 2010 and 2020, Coventry’s Government grants will have been cut by 50%. The Government are shifting responsibility for grants on to local authorities. Let me put it another way: Coventry will have lost £655 million, and in that respect it will be typical of local authorities throughout the country.
Mr Thomas
My hon. Friend has made a good point. That is all the more reason for continuing to hold the Government to account for their decision to axe revenue support grant in full under the Local Government Finance Bill.
What this settlement also does not address are the huge pressures that councils face as a result of rising homelessness and temporary accommodation costs, as well as rapidly increasing children’s social care costs. Rough-sleeping rates fell to historical lows under Labour; they have more than doubled since 2010. The number of social homes being built is at the lowest level on record. With more than 1 million people on social housing waiting lists, councils’ spending on housing families in temporary accommodation has gone up by 46%. Instead, Ministers are taking money away from councils through the new homes bonus. Ministers sing the praises of the new multi-year settlement as a way to give local government certainty, and then in their very first year make a late switch, leaving many councils with an unplanned gap in their budgets.
No area of England has been spared from cuts to services. The doors have shut on libraries, day centres and care homes. Bus services, leisure centres and youth centres have all closed or had their hours and range of services restricted. Women’s refuges have been axed, funding and contracts for local charities taken away. Advice services have gone. Investment in parks and street cleaning has been sharply reduced. All these services and others, treasured by local communities, or vital lifelines for vulnerable residents, have been cut.
This funding settlement will mean that the people of England are left with worse public services. It will deepen the divide between those parts of the country that are well-off and those that rank highest for deprivation. It is a settlement that will not remotely begin to tackle the social care crisis, and it will hit the pockets of those struggling to balance their budgets particularly hard. And it does not tackle the long-term problems facing councils from an increasing dependence on business rates. England deserves better, and that is why we will be voting against this report.