Local Government Funding: Merseyside

George Howarth Excerpts

Tuesday 30th October 2018 Westminster Hall

[Mr George Howarth (Knowsley) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I, too, congratulate my hon. Friend the Member for Garston and Halewood (Maria Eagle) on the typically thorough way in which she introduced this important subject. I will confine my remarks to the effects of the cuts in grant to Knowsley specifically, but before I do, I echo what my hon. Friend the Member for Liverpool, West Derby (Stephen Twigg) and other hon. Friends have said about the impact of cuts on policing and on fire and rescue services.

As my hon. Friend the Member for Garston and Halewood indicated, Knowsley Council is the council in the country hardest hit by funding cuts, which amount to £100 million less to spend on vital local services. To bring that down to a human scale, that equates to a cut of £485 in grant support for every person in the borough, compared with a national figure of £188. To bring that down to an even more human scale, Windsor and Maidenhead Council has had a £49 cut in grant per head and Wokingham Borough Council has had a £43 cut in grant per head. I began to wonder whether something in the grant formula was weighted towards local authorities that begin with the letter w, but if that had been the case, it would have applied to the Wirral too. As my hon. Friend the Member for Wallasey (Ms Eagle) eloquently described, however, it does not.

Knowsley Council has told me that its biggest challenges are funding children’s social care, which my hon. Friends have mentioned; the need for a permanent funding solution for adult care; and the impact of moving the cost of funding services provision on to council tax payers. Funding social care is not just a problem for Knowsley. In the north-west as a whole, the number of looked-after children has increased by 12% since 2003. In Knowsley, the additional pressures on the budget for children’s social care are expected to exceed £3 million as a result of a combination of increased costs for all placements, even higher increased costs for specialised placements and the scarcity of suitable residential placements.

The Government’s response, however, has been wholly inadequate and falls well short of providing the funding and certainty needed to keep up with growing demands. The Minister will say that there was an announcement in the Budget yesterday. We have not seen how that will be distributed, and we do not know what it will mean for any given local authority, but if the total sum mentioned is distributed evenly, it will hardly make a dent in the difficulties that areas such as Knowsley are experiencing.

Some additional funding for adult social care has been announced in the past few years, but it does not reflect the resources needed to offer adequate and sustainable services and, moreover, it was a one-off. In March 2017, £9 million of additional resources was announced from the better care fund to help to fund increasing demand and rising costs. So far, however, the Government have not confirmed whether that support will continue beyond 2019-20. Can the Minister commit to continuing that funding? If he cannot, the council’s budget will inevitably mean that services suffer still further. Moving the cost of service provision on to local council tax payers is, frankly, nothing short of disgraceful. The move away from a grant distribution formula that provided a weighted recognition of the needs of an area is entirely regressive in how poorer, more deprived areas such as Knowsley end up as the biggest losers. How can that be fair?

The Government argue that need should be replaced by a funding system that rewards councils based on the level of economic growth and prosperity. Knowsley has some important and successful local companies such as QVC in my constituency and Jaguar Land Rover in the constituency of my hon. Friend the Member for Garston and Halewood, but their success and that of other companies locally, though important and welcome, can have only a limited impact on the revenue generated for Knowsley Council and falls short of the area’s needs.

We have already seen the effect on services. Anything that is not a statutory requirement has inevitably had to bear the brunt of the cuts. As we have seen elsewhere, we are at the point at which local councils cannot meet even those statutory requirements. As need is increasingly sidelined, that trend will sadly continue. The grim conclusion has to be that unless the Government acknowledge the need for a fair funding system that properly reflects local need and deprivation, areas such as Knowsley face a bleak future in which the consequences of the Government’s austerity programme are visited on the communities least able to bear them.

--- Later in debate ---

[Rishi Sunak]

I totally reject the suggestion of hiding. It would be ridiculous to look at any local authority’s financial resources without considering the various ways in which such an authority funds itself. I am delighted that the hon. Lady is focused on keeping council tax low. Indeed, the Government have ensured that council tax today is lower in real terms, across the country, than it was in 2010. We have heard various suggestions from Labour Members about doubling council tax, which is something I assume the hon. Lady, being on the side of hard-working taxpayers like us, would reject.

The idea that the funding formulas do not take account of deprivation or the differing ability of areas to raise council tax is totally erroneous. For example, when the adult social care precept was introduced, it was understood that different areas would raise different amounts from it, which is why in the incremental billions of pounds that the Government have injected into the social care system directly through the better care fund there is an equalising measure to take that into account. That is exactly why, today, the most deprived authorities have a core spending power per household—taking into account all those things, council tax included—that is 23% higher than that of richer authorities. Indeed, that is why areas with larger council tax bases provide more of their area’s resources from council tax; Merseyside provides less than half of the amount those areas do, because the council tax base in Liverpool is that much lower. It is totally wrong to suggest that that is not taken into account.

I think it was alleged that I, or the Government, had removed deprivation from funding formulas. I can categorically say that I have not removed it from any funding formula. We are in a root and branch review of how local government is funded. We are in the midst of various consultations and I would be delighted to have hon. Members’ suggestions.

[Mr Howarth]

If that is the case, will the Minister explain why Knowsley, which is one of the most socially deprived parts of the UK, has had a £100 million cut in its grant? His figures just do not add up.

[Rishi Sunak]

I can tell the right hon. Gentleman that Knowsley’s core spending power per household is about 20-something per cent. higher than the average for a similar metropolitan authority, which takes into account exactly his point. He talked about the fair funding review and, as I said, that is exactly where all the issues will be considered, ensuring that deprivation or, indeed, multiple other factors, are taken into account in the new funding formula.

--- Later in debate ---

[Rishi Sunak]

I will make some progress.

The second vision I outlined, which is undeniably one of the most crucial roles for local government, is to continue to help the most vulnerable in our society. It is local authorities, as we have heard, that support the elderly, the disabled and our children in need, and we owe an enormous debt of gratitude to councils for their incredible work. I am delighted that the Government back local authorities to carry out those vital duties. Last year, the Budget provided an additional £2 billion for social care. Earlier this year, another £240 million was announced for social care winter funding, and in the Budget yesterday the Chancellor announced that a further £650 million will be provided for care services next year.

In contrast to what we have heard, the flexibility to use the funding for things such as children’s services is something that local authorities have specifically asked for. They will have the flexibility in each local area to use the funding for different care services, rather than its use being dictated by central Government. I would have thought that all Members appreciated their local areas having such flexibility to make the best use of the money, in the way they see fit.

I am pleased to say that that increased investment and better working between the NHS and local government is paying dividends on the ground. We have seen social care free up 949 beds a day since the peak two years ago—a 39% reduction in social care delayed transfers of care. In Merseyside, progress has been seen particularly in St Helens, and I commend the local authority on reducing such transfers by 72% since the February 2017 peak.

I have mentioned the troubled families programme, which is making amazing strides to support our society’s most vulnerable families. When I visited the Clubmoor children’s centre in Liverpool, it was a privilege to talk to several of the families participating and to see the life-changing work at first hand. I am proud to say that the Government have invested £1 billion in the programme over this spending cycle, with 130,000 families nationally achieving significant and sustained progress against the goals they have been set. In almost 17,000 of the families, one or more of the adults has moved into work, and the families I spoke to told me that that was central to their ambitions.

Across Merseyside, 10,000 families are being helped with more than £20 million of funding, and I pay tribute to Liverpool City Council in particular for doing a very good job, working with early help assessments. We heard from the hon. Member for Halton (Derek Twigg) about the importance of early intervention. Referrals to children’s services in Liverpool were down 3% in the most recent year—

[Mr Howarth]

On a point of order Mr Hollobone. I want to place it on record that, had he been here, my hon. Friend the Member for Halton (Derek Twigg) would have made a significant contribution, but he is, in fact, not here.

[Mr Philip Hollobone (in the Chair)]

Thank you for that point of clarification. It will be on the record.