Local Government Finance (England)

Gareth Thomas Excerpts

Wednesday 9th February 2022 Commons Chamber

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

Why does the Secretary of State think that the Conservative chair of the Local Government Association, James Jamieson, has criticised the settlement for not including sufficient funding to tackle the considerable additional pressures on local services, particularly with respect to vulnerable adults and children?

[Michael Gove]

I talked to James Jamieson this morning, as I do most weeks. One reason why he leads the LGA is that he is a brilliant Conservative council leader. If James were here, I think he would say he was not criticising but encouraging us, as any friend would, to do even better. It is striking that the welcome that the local government sector gave this year’s funding settlement was broader, deeper and more cordial than it has been for some years. Politics being politics, any sector will always, entirely understandably, want its champion to be someone who can ask for more.

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

This has been a really interesting debate. I want to pick up a few points made by hon. Members. In particular, my hon. Friend the Member for Sheffield South East (Mr Betts) gently—and rightly—chastised the Government for not offering a multi-year agreement for local government and asked what has happened to business rates reform. He and my right hon. Friend the Member for Knowsley (Sir George Howarth) rightly made afresh the point about the need for a fair funding review to focus genuinely on need and poverty if the Government’s levelling-up agenda is to have any substance.

If I may, I will also praise the hon. Member for Bromley and Chislehurst (Sir Robert Neill) and his point about fiscal and financial devolution for local government. Sadly, we remain one of the most centralised nations, certainly in Europe, in the way we approach local services. Like him, I would strongly support the Secretary of State’s taking up the challenge of negotiating with the Chancellor of the Exchequer for more fiscal devolution for local government. Nowhere is the argument for such fiscal and financial devolution more pertinent than in the scandalous treatment of Transport for London, with the Secretary of State for Transport demanding that the Mayor of London put up council tax to pay for concessionary fares for the elderly and the young—of which more anon, if I may. I also thought the hon. Member was right about special educational needs and the need to provide more dedicated funding, particularly to London authorities as virtually every London borough is facing huge additional pressures in that area.

Local councils are fundamental to the quality of the places where we live. They are not always universally loved, but they are essential for keeping our communities safe and our streets clean. They help create the environment in which we all want to live—for example, through the planning decisions they take—and they drive opportunities for young and old to access high-quality education, the arts, sports and leisure. Yet, tragically, they have been neglected for a decade under the Conservative party.

Too many in our communities up and down the country feel that they are not able to influence the future of the area in which they live, and that they have too little control over how their area looks, how it changes and the services they can access. If we are to help constituents shape the areas they live in and drive improvements in the services they depend on, then one—not the only one, but a crucial one—of the essential routes to doing that is to empower local councils. That means tackling the legacy of the active neglect of local councils which, I am afraid to say, has characterised the Treasury and much of the Department in recent years.

A number of bodies over recent years have published studies that paint an all-too-similar and familiar picture of declining support from central Government to local councils. Those funding cuts have made it easier for developers to do what they want where they want, and the 600-plus changes to planning law that Ministers have brought in have certainly helped in that regard. The funding cuts have made it harder to strengthen community-run services, and they have put pressure on councils to sell community assets and slowed down investment in crucial local services.

The National Audit Office has charted how the spending power of local councils, funded by central Government, has fallen in real terms by more than 50% in the last 10 years. Those cuts in funding have coincided with growing pressures on council-run services through bigger populations; the increasing numbers of the elderly, vulnerable adults and young people needing vital care and support; and, in London in particular, the rising number of homeless families. All of that has helped to squeeze the discretionary funding that councils have to spend on enforcement action against antisocial behaviour and rogue developments, as well as on street cleaning, services such as libraries, and supporting local charities, all of which have together impacted slowly but steadily on the quality of life in our towns and district centres.

Across London, since 2010, councils have seen a 25% reduction in funding, even though there are 1 million more Londoners. Harrow remains one of the lowest-funded councils both in London and nationally. We are fortunately well led by Councillor Graham Henson, we have strong officers and, certainly over the last four years, we have had very strong finance leads in Natasha Proctor and Councillor Adam Swersky. However, over the last 10 years, the main source of funding from central Government to Harrow—the revenue support grant—has reduced by 97% to just £1.6 million, a reduction of over £50 million for Harrow. There are other grants, but they are ringfenced to a large extent. To maintain balanced budgets, the council has had to find £150 million of savings as well as ways to raise new income, and has had to decide between making cuts to services or raising council tax. It has been able to make savings and efficiencies of some £98 million over that time, but it has had to reduce services and consistently to increase council tax in line with the Government’s expectations.

Despite all those steps, every year it remains a huge challenge to balance the council’s budget. Harrow has a good track record of financial management. It has strong collection rates and has not reported a revenue budget overspend for many years. It has not had to use its small reserves to prop up its budget. It is a remarkable tribute to officers and councillors in Harrow that they have such a good record of financial management, but of course in the past two years in particular they have done all that while managing the disproportionate impact of covid on the borough. Of course, the pandemic has affected every part of the UK. In Harrow there has been a significantly higher than average rate of infection compared with the rest of London, yet Harrow has received one of the lowest allocations of emergency funding of all London boroughs. In 2019-20, Harrow’s core spending power per head was estimated to be £170 lower than the London average and £75 lower than the England average. The fair funding review that has been promised needs to tackle that disparity.

Despite the considerable financial challenges the council has faced, it has succeeded in securing the future of vital community assets. The future of Harrow Arts Centre is now secure, investment in the Sir Roger Bannister athletics stadium has been achieved and the Harrow Museum has a new funding future. That is all positive and the council is trying to increase support to the victims of domestic violence and to young carers, as well as to improve street cleaning and to increase enforcement activity and investment in local parks. However, it is not able to increase support or invest at the level that it and local residents would want because of the financial challenges that I have set out.

Councils are far from universally popular, as I have said. They can seem too remote and their services can be frustrating to access, but in my experience in Harrow there are proud and committed staff in every part of the council who are determined to do what they can to make Harrow an even better place to live. Harrow councillors, those from my party and those in the opposition ranks, who challenge them, are remarkably dedicated given that most are paid very little and have to manage their responsibilities alongside other jobs. I want Harrow to be an even better place to live, and first of all that requires the Government to invest more in the ambitions of local people by supporting Harrow Council more than they have to date.

I also want to mention London and how the Mayor of London is being pressured into raising council tax to protect vital travel concessions for young people and the over-60s and to provide further funding for policing. Indeed, I understand that the Secretary of State for Transport personally told the Mayor that council tax had to go up. The pandemic has had the same devastating impact on the finances of TfL as it did on privatised rail companies, yet those failing privatised rail companies were bailed out straight away and without any strings attached.

Despite the Mayor’s doing the right thing to protect Londoners during the pandemic, the Transport Secretary is still refusing to fund TfL properly, offering only another sticking plaster deal. As I understand it, the Transport Secretary is refusing to meet the Mayor to discuss those issues.

[Chris Loder]

Does the hon. Gentleman agree that the Secretary of State for Transport and this Conservative Government have—I understand for the second time—given the Mayor a multibillion-pound settlement to help with the operation of TfL, which has been to the detriment of constituencies such as mine in West Dorset, where we are not able to get the transport, in favour of Transport for London?

[Gareth Thomas]

With all due respect to the hon. Gentleman, I do not think it will help the people of West Dorset or the rest of the UK in general if we leave London with a poor transport service. Just as I would like to see his community getting better support from the Secretary of State, I hope he might have the grace to recognise that Harrow and London in general also need to be properly supported as we come out of the pandemic.

[Mr Jones]

Is not the reason why Dorset has one of the highest levels of council tax that the Government who have been in power since 2010 have reduced the revenue support grant directly to that council and pushed it on to local Dorset taxpayers?

[Gareth Thomas]

My right hon. Friend makes an important point. I do not know whether the hon. Member for West Dorset (Chris Loder) has been challenging the Government in that regard—I think I heard a bit of gentle criticism, but perhaps he needs to make some more pointed remarks to the Secretary of State in private.

We are in the midst of a cost of living crisis, and Government Ministers are demanding further council tax rises to fund local councils, the police and transport for the elderly and the young in Harrow. That is yet another financial blow to hard-hit families. If, as my hon. Friend the Member for Wigan (Lisa Nandy) on the Front Bench rightly said at the outset, the Conservative party had not allowed so much money to be wasted on fraud, corruption and personal protective equipment that could not be used, there would be money to invest in more policing in local councils such as Dorset and, crucially, Harrow, and to invest in better services for local people in my borough and beyond.