Local Government Finance (England)

Gareth Thomas Excerpts

Monday 24th February 2020 Commons Chamber

[Robert Jenrick]

It will be, yes, and that is absolutely right. It is important that the new formula, when we bring it forward, takes account of sparsity, the cost of delivering public services in rural settings and the fact that there is deprivation to be found in shire counties, as there is in other parts of the country. I say that as a representative of the county of Nottinghamshire, with long-standing pockets of deprivation in former coalfield communities, all of which needs to be taken into consideration as we bring forward a better updated formula.

Another priority on which not just social care but so many other vital services rest is ensuring that councils have the stability that they need to plan ahead, and I believe that this settlement will help them to do that. It maintains all the grants from 2019-20 and increases core funding in line with inflation. Today, I am announcing a £40 million boost for the sector from the business rates levy account—extra funding that I know will be very welcome by the sector. I recognise that this is a one-year settlement, and I will be leading another push at the comprehensive spending review later this year to ensure that local services get the long-term funding that they need. This stability also gives authorities a platform from which to drive efficiencies and learn from the very best practice of councils across the country, and will act as a spur to improvement.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

One of the ways in which the Secretary of State could give multi-year, almost permanent, guarantees about levels of funding is through a much more ambitious programme of devolution. Is it not time for an English devolution Bill, so that all councils have the fiscal powers that they need to meet the needs of their communities?

[Robert Jenrick]

If the hon. Gentleman will give me a few minutes, I will come on to our ambitious plans for devolution. He will have seen in the Queen’s Speech that later this year we will bring forward a White Paper on English devolution, which we hope will build on the very good work done in recent years, including to establish Mayors across the country.

Today’s settlement is good news on many counts; it provides more money and more stability for councils, but above all, it is good news for local people. We are delivering the best settlement for a decade while keeping people’s council tax bills low. Under the Conservatives, council tax in England is 6% lower in real terms than in 2010. The average council tax bill increase in 2020-21 is projected to be below 4%. That compares to an average increase of 5.8% between 1997 and 2010. It was a Conservative-led Government who ultimately made sure that local people had the final say on their council tax bills, following years of tax rises under Labour.

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[Gareth Thomas (Harrow West) (Lab/Co-op)]

Coming from Harrow, where the local authority has seen its grant from the Government reduced by some 97% in eight years, it is pretty difficult for me to find much to cheer in the report. Harrow’s core spending power per head this financial year is estimated to be £170 lower than the London average and £75 lower than the average for the rest of England. In short, we are one of the lowest-funded boroughs in London and nationally.

Despite No. 10’s talk of levelling up, there do not yet appear to be any grounds for optimism that the Chancellor’s Budget or future spending reviews are likely to lift Harrow up to a level of spending power similar to our neighbours in Hillingdon, Hertfordshire and Barnet. To be fair to those neighbours and, indeed, to other councils throughout the rest of England, it is not as if any of them are hugely well funded either. Councils in England face an £8 billion funding gap by 2025. Inevitably, more and more councils are struggling to balance the books and more and more councils are using reserves to plug budget holes.

Tory Northamptonshire has become the poster boy for troubled councils everywhere. It is true that incompetence and an over-zealous approach to privatisation were two particular local factors that drove the bankruptcy there, but the reality is that all councils are having to divert money away from youth services, public health, parks and libraries to fund the most basic services, such as street cleaning, social care and homelessness, and even those services are stripped down to the bone. In the long term, that is not only a false economy but affects our constituents’ wellbeing and sense of contentment with life in modern Britain. It means that some of the most vulnerable—those who are desperately in need of care or skilled specialist support in schools—will not get the back-up that they need. In the 21st century, in one of the richest nations in the world, it is difficult to fathom why Ministers are so comfortable about that situation.

If we are really to give the towns and villages of England, and the counties and communities of our great country, the control and transformation of fortunes that so many are desperate to see, the revitalisation of local councils and devolution of more power more consistently, even to the least fashionable of our town halls, is a first essential step. That great slogan “Take back control”, which spoke to so many, did not for most, I suspect, mean taking back powers from Brussels merely to allow Whitehall and Downing Street to continue to lord it over the rest of the country even more.

In recent years, the pace of devolution in England has slowed. The term “northern powerhouse” was a wonderfully evocative turn of phrase, but the lack of funding that followed its invention rightly generated much scepticism. A new surge of energy, with real financial power being devolved to northern councils, seems overdue, even from my distant southern viewpoint. If that is what the Department’s White Paper is set to offer, that would seem to be some progress, but London and the London councils need the same and more, as steps towards a genuine transfer of direct power back to the people. We need a new settlement of powers to help London tackle its major challenges, such as growing inequality, ever-increasing poverty, the skills shortage, the climate and housing crises and even violent crime. All require the mayor, the Assembly and, crucially, local councils to have access to greater powers to create London-specific solutions to London’s problems.

London generates more wealth for Britain’s people and contains more of our citizens than any other part of the UK. Indeed, London generated a third of the UK’s total GDP in 2018, yet we still do not have full control over skills or even benefits budgets.

I do not question the need for Wales, Scotland and Northern Ireland to continue to benefit from the Barnett formula, but I do think that the people of Barnet, and indeed the whole of London, should have our own funding formula too. London is the most expensive place to live and work in the UK, yet our Mayor and Assembly do not have the power to legislate on such crucial issues here, whereas Scotland can do so through Holyrood. In any future constitutional settlement, the UK’s southern powerhouse—its capital city—should be given the same powers as our national friends in Holyrood, the Senedd and Stormont.

For example, why can London not have the same powers now as the Scottish Parliament? Clearly there is not the same national issue driving the debate about where power best lies, but I would argue that the size of our capital’s population and the scale of the challenges it faces demands similar treatment. Why not give London, through our Assembly and Mayor, the right to legislate on all housing and planning matters? Why not have the same income tax-varying powers that Scotland has? Why do Londoners have to beg Whitehall for action to tackle air pollution, when the Mayor and city hall should be given full control to put in place a joined-up strategy to tackle all the various triggers of the pollution challenge in London? Too many of the powers they need are still locked up tight in the great Departments of state just down the road from here.

Why can London not have more control over how our water and sewage services are delivered and what we pay for them? There are more people living in absolute poverty in London than anywhere else in the UK, yet London’s local politicians in the Assembly and in the form of the Mayor are not allowed to determine the London living wage. The right to greater devolution is one that all England deserves, but London is the southern powerhouse of our United Kingdom, and its continued success will be even more essential post Brexit.

I recognise that with Rory Stewart’s sleeping bag having more cut-through than Shaun Bailey at the moment, there will not be much immediate enthusiasm in No. 10 for shifting more power to city hall, but London’s success benefits the whole country. The home counties, in particular, benefit from London’s city state success. All those Tory shires benefit from Labour London, and vice versa. When London grows, so too does the rest of the country. The reverse is also true; when London’s problems inhibit our potential, in the end it is not just Londoners who suffer. It took more than 40 years to start building work on Crossrail. Given the demands on our public transport system, we cannot afford to waste another 40 years before work on Crossrail 2 gets underway.

Levelling up, city deals and the northern powerhouse are all indicators of the slow dance, in our own very British way, towards federalism. London has an essential role to play with the nations of the UK in recasting the Union for the 21st century. For too long our country has been seen as comprising England, Scotland, Northern Ireland and Wales. I have always thought that we needed to empower the towns and cities of England alongside Scotland, Northern Ireland, Wales, and London. There is growing recognition that, in order to secure the Union, the United Kingdom will have to reform and change. London cannot be ignored on that journey, and neither can the rest of England’s town and cities.

A better funding settlement than today’s shabby offering is long overdue, but a Government who want to defend the Union should also set out clearly and soon a package of legislative and fiscal devolution to turbo-charge the federal journey that our country needs to undertake.