Local Government Funding: Rural Areas

Geoffrey Clifton-Brown Excerpts

Monday 11th January 2016 Commons Chamber

[Graham Stuart]

It is, and where will the pressure fall? It will fall either on services, as it already does, or on the only thing that the council has left, which is council tax.

One of the aspects of this settlement—perhaps the most notable aspect—is the turnaround in the approach to council tax. The rural resident, who is already much more highly taxed, will experience compounded council tax increases. If council tax goes up by 4% in April 2016, and then by 4% a year in 2017, 2018, 2019 and 2020, that will mean five years of compounded 4% increases before the 2020 general election. I suggest to Ministers that they may wish to think long and carefully before presenting that result to the electorate in 2020, while suggesting to rural England that it should support us again.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

It is not necessarily the election in 2020 that we need to worry about, but the county elections in 2017. During the last Parliament, we managed to perform the really good trick of reducing waste in local government while often holding council tax at zero. However, it is not possible to go on making 30% cuts, which is what Gloucestershire will experience this year, and expect to do the same thing. Inevitably, council tax will rise.

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[Drew Hendry]

Funding for Scotland has been drastically reduced over the past few years. We recognise the fact that we need more medical professionals, and that is why a comprehensive support package for training is in place in Scotland.

The Scottish Government have also committed to working with local authorities to develop stronger and more productive relationships between central and local government in order to develop real benefits for the people of Scotland. The Scottish budget for 2016-17 for local government has taken place against a backdrop of the toughest public expenditure conditions we have faced. This is the austerity of choice not of necessity, and it has been rejected wholesale by the people of Scotland. Between 2015-16 and 2019-20, Scotland’s total budget will be reduced by 4.3% in real terms. Scotland’s total discretionary budget will be cut by £1.2 billion in real terms, or 4.2%, and funding for day-to-day public services —the fiscal resource—will be cut by almost 6% in real terms, or £1.5 billion.

Between 2009-10 and 2014-15, Scotland’s budget has fallen by around 11% in real terms, with capital expenditure falling by around 34%. This means that our budget has been cut by a staggering £3.5 billion in real terms since 2009-10. As a result of the autumn statement, the Scottish Government’s revenue budget will be cut by 5.7% in real terms over the next four years. However, Scottish local government finance settlements have been maintained on a like-for-like basis for the period from 2012 to 2016, with extra money for new responsibilities. This has resulted in a total settlement of £10.8 billion in 2014-15 and more in 2015-16, allowing rural local authorities and others to perform their duties.

Additional funding has been made available for health and social care, local authority school budgets and support to ensure that the council tax freeze is maintained for its ninth consecutive year. I have to say I agree that once we let the genie out of the bottle and increase council tax year on year, that is exactly what will continue to happen: it will increase year on year. The sum of £70 million is included in the settlement to continue the council tax freeze for a ninth consecutive year, which in turn continues to fully fund local authorities for the moneys that would have been collected by raising the council tax.

While I am on the subject of the freeze on council tax, it should be remembered that before the Scottish National party came to power and agreed the freeze with the councils, this most regressive of taxes had been going up every single year. That was hitting the poorest households and pensioners the hardest. During the 2007 election campaign, I knocked on the door of a constituent in Fort Augustus who was in tears at the thought of yet another pressure on her household purse because of the threat of an increase in council tax.

This measure has now saved the average family some £1,500 at a time when they find themselves most under pressure. Those advocating a return to increasing council tax should remember that that would be likely to result in a return to the yearly default of ever-higher council taxes, with services remaining under pressure due to the UK Government’s austerity obsession. This tax is applied not only to those who can afford a little bit more but to those who cannot withstand yet another squeeze on their ability to put food on the table or to heat their homes.

The net revenue reduction for local authorities next year will be £320 million. That amounts to a reduction of 2% of the total expenditure of local authorities. It is a challenging settlement. However, that does not take account of the additional allocation announced by the Deputy First Minister of £250 million for social care.

[Geoffrey Clifton-Brown]

The hon. Gentleman mentions a reduction in local government revenue support grant of just 2%. I do not know whether he was in the Chamber when I intervened on my hon. Friend the Member for Beverley and Holderness (Graham Stuart) in his excellent speech to tell him that my local authority of Gloucestershire was likely to face a reduction of 30% this year. Does that not wholly demonstrate what a generous settlement Scotland has had?

[Drew Hendry]

It wholly demonstrates the fact that the Scottish Government prioritise local authorities to ensure that they have the ability to deliver the services that they need. I have listened carefully to the complaints being made in the Chamber, and I absolutely agree that some of the cuts being faced by English local authorities are devastating. That is why I am proud that the Scottish Government are prioritising these measures.

The net revenue reduction will be £320 million, but that does not take account of the additional allocation of £250 million for social care. Previously, it has been the sole responsibility of local authorities to fund social care. The national health service will now share that responsibility and will next year invest another £250 million in those services.

The funding settlement also needs to be seen in the context of further funding for local authority school budgets. The budget sets aside funds to ensure that we are progressing the work to close the attainment gap. The £33 million that will be invested next year is part of a bigger programme of £100 million that is being invested over and above local authority school budgets to prioritise improvement in attainment.

Let us compare the situation of Scottish local government with that of English local government. The funding for English local government has gone down by 27% over the past two years while Scottish local government has essentially had a flat cash settlement from the Scottish Government for a number of years. So we are starting from a much higher baseline figure for the provision of local authority services. This underlines the SNP’s commitment to supporting local government.

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[Simon Hoare]

My hon. Friend is right. His comments have the extra weight of his being Chairman of the Environment, Food and Rural Affairs Committee.

The Minister should be clear that this settlement will create some jobs as local government sheds yet more staff and services are cut. I expect to see job advertisements for local government commissioners appearing in lots of publications, because a number of chief executives and leaders will be seeking, in effect, to hand the keys back to the Department, saying, “Look, pal, we have tried our best. We have done what we think we can. We can make no further cuts, hand on heart, without thinking that our electorate and our residents will be unduly hurt.”

[Geoffrey Clifton-Brown]

As my hon. Friend said, many of our rural councils have done exactly what the Government have asked. In Gloucestershire, four district councils now share back-office services. We share a chief executive. We have a common Gloucestershire-wide rubbish policy. We share business rates and second home bonuses. We have become super-efficient, yet we are one of the hardest hit local authorities, and we now have very little left to cut.

[Simon Hoare]

My hon. Friend is right. He amplifies a golden thread that has run through the debate.

I have two further points that I urge the Government seriously to reconsider. The Care Act 2014 implementation grant has hitherto always been free-standing of the RSG—a little bit of icing on the cake. The proposed settlement rolls it into the RSG, and that seems rather unfair. I am happy to stand corrected by the Minister, but it is certainly the collective view across local government in my county that, in essence, the strategy that the Department is setting out has a counter-Conservative mindset whereby every single year council tax will have to increase by below whatever the capping figure is prevailing at the time, so arguably 1.99% today, and that the ring-fenced and extremely welcome—we are grateful to the Chancellor—2% hypothecation for social care will have to be year on year. I urge the Minister to unravel the knitting that the Department has done in meshing the grant with the RSG.

On the implied and presumed increase in council tax, the insult is compounded still more by the situation, as we understand it, on business rates. We cheered my right hon. Friend the Chancellor to the rafters in Manchester just a few short months ago when he gave ground on the localisation of business rates, which local government had been campaigning on for many a long year. I hope that the Minister will be able to clarify this, but our understanding is that while we will be allowed to set it and will continue to collect it, the centre will determine how much of it we retain and top-slice or cream off that which it believes we do not need in order to underpin and subsidise other, less efficient, authorities. That is, in itself, an insult, but when we add the factored-in, year-on-year increase in council tax of at least 3.99%, things start to get very tricky.

As my late and noble Friend Baroness Thatcher would have said to those three points, taking off her glasses with a sweep, I too have to say to the Minister, “No, no, no.” The increase of the rural services delivery grant to £65 million is welcome but way south of the £130 million that the network believes is required. It might just about make a fig leaf for a dormouse but will not add up to anywhere near what is required to service rural local government.

I have some questions for the Minister, for whom I have personal liking and huge respect. I do not envy him his position as he sits like Daniel in the lions’ den with the lions not having been fed for many a long month. The questions boil down to this: where is the equity in this proposal?