Local Government Finance

Gordon Marsden Excerpts

Tuesday 10th February 2015 Commons Chamber

[Mr Betts]

I will make a little progress and come back to the hon. Gentleman.

There are major issues. Why are local authorities singled out for bigger cuts? Within local government, why have the deprived communities had the largest cuts? Ministers could make a logical, rational argument. They could say that the authorities with the biggest grant might lose the most grant in cash terms. I might not agree with the argument, but I can see a logic to an argument that says because authorities have so much more money given to them historically, they are likely to lose more when cuts are made. Can Ministers sustain an argument that says authorities historically receiving the most grant, the most needy authorities, should therefore have the biggest percentage cuts? What is the logic for that? It is one thing to argue the biggest amount, in cash terms, should come from authorities with the most cash given to them, but why should they have the biggest percentage cuts? What is the logical argument for that? How can it possibly be right that over the period of this Parliament, between 2010-11 to 2015-16, Sheffield’s spending power—I will use the Minister’s own definitions —has fallen by £230.60 per head and Wokingham’s has fallen by £2.29 per head, only 1% of Sheffield’s fall? How can there be any rational, reasonable justification to explain that cut? How can there be?

[Mr Gordon Marsden (Blackpool South) (Lab)]

My hon. Friend is making a powerful and incisive point. Does he agree that this bears down particularly badly on those unitary authorities, such as my own in Blackpool, which have above-average needs in big spending areas such as education and social services, but find themselves subject to precisely the phenomenon he describes?

[Mr Betts]

Absolutely. As I say, Ministers can make an argument that those who have had the most grant might lose the most cash, but not that they should have bigger percentage cuts. They are the areas in greatest need. In two years’ time, we will have the ridiculous situation where Sheffield and most of the northern cities, such as Liverpool and Manchester, will have a lower spending power per head than Wokingham. Can anyone on the Government Benches justify that? It is simply not reasonable.

The hon. Member for Bromley and Chislehurst (Robert Neill), an ex-Minister, said he suspects a future Labour Government would find surreptitious ways to redistribute money back to Labour authorities. I think we can be open about this: this Government have not been surreptitious. They have done it blatantly. They have taken money away from the most needy and given it to the most privileged. That is what they have done, to the point where the spending power of Wokingham in two years’ time will be greater than the spending power of Sheffield on a per-head basis. Sorry, but that is just not reasonable and no one can justify it.

The impact is there for all to see. I went around my constituency last weekend and met people. We talk about the need to join up social care and the health service—of course we need to. Sheffield had a wonderful in-house care service provision called “Care for you”, which dealt with some of the most needy people who were in their own homes and required extensive support. Sheffield ended that service because it was cheaper to go to a private supplier that had lower overheads, mainly because it does not train as well and pays the minimum wage at best. I then met a constituent on Saturday whose elderly father’s carer missed four appointments. After 36 hours his father was found collapsed on his bedroom floor and, of course, was admitted to hospital. Why was he admitted? The care package had failed. Why had it failed? The authority was having to make cuts because of the budget cuts. That is the reality of how things are in local government at present. That is not a bad authority trying to do it on the cheap, but an authority trying to reduce spending, because of the massive cuts it is facing, by another £60 million next year. In the end, much of that will have to fall on social care, the biggest budget.

--- Later in debate ---

[Mr Gordon Marsden (Blackpool South) (Lab)]

Some of us might well wish the hon. Member for Beverley and Holderness (Mr Stuart) would hold his breath, but I would like to move on and talk about the impact of the cuts on my constituency. We should focus on the human issues—the lost council workers’ jobs, the lost opportunities for young people, the impact on street cleaning, and the impact on those who are hit by benefit sanctions or the bedroom tax—but we must also hold the Government to account for their totally inadequate formula and calculations that have informed this year’s cuts. They have disguised the completely unjust treatment of our most deprived areas and failed to take into account the pressures with which our most vulnerable areas already contend.

The Department for Communities and Local Government says that, on its minimalist spending power criteria, Blackpool’s funding has been cut by £114 per person, or 4.7%. According to those formulas, even that is two and half times the average cut in England. That is bad enough, but it does not reflect the real damage that is inflicted by cumulative cuts to a small unitary authority that has special factors in terms of demographics, transience and health, which have borne down further on it, not least when we include a large percentage of care and health issues.

The Government are imposing those damaging cuts when there is an ever-increasing pressure in Blackpool and an ever-rising bill to maintain services. The annual grant provided to Blackpool, the sixth most deprived council on the Government index of multiple deprivation, has fallen by about £50 million since 2010. That is about 35% of the 2010 budget.

Blackpool has also had to cope with rising demands in areas such as children’s services, whether because of increased numbers of referrals from high-profile child welfare investigations, or because of transience both from outside and within Blackpool as some families have to move several times because of poverty or family break-up. To meet those demands, the council has had to cut more than £90 million, which it would normally have spent on services, to balance the budget. The human price of that has been 759 council workers losing their jobs since 2010, with a further 200 to 300 facing that threat from this year’s settlement. Incidentally, all those council workers have already made significant sacrifices, this year taking five more days’ unpaid leave.

It is no wonder that the leader of Blackpool council, Councillor Simon Blackburn, has said that we are entering uncharted territory, and that my residents speak at packed meetings and healthwatch panels of the thinning of the fabric that has kept Blackpool a vibrant and cohesive town even when there were major realignments in tourism and visitor numbers.

The money is not shared out fairly between the regions, as the Government claim. The LGA was quick to point out that the Government’s supposed average of 1.8% cuts would be more like 8.8% in effect. Newcastle council estimates that Blackpool’s official cut of 4.7% is nearer 9%. The Chartered Institute of Public Finance and Accountancy says that Blackpool’s real loss of spending power has been 9.7%, double what the Government claim. It is the 11th worst-hit area of 383 in the country. No wonder CIPFA described the Government’s figures as disingenuous and as underplaying the size and scope of the cuts.

Why are there discrepancies? Pooling budgets between the NHS and the council can be a valuable way of improving local services, but the Government are wrong to use that to mask the full nature of local cuts. As has already been said, money that has been spent by the NHS and placed in pooled budgets should not be counted in local budget figures. That money is not available to plug the gaps in council services. That serves only to disguise the full stress that vital local services have been put under. When we add to that the vagaries of revenue raising from income from visitors on a year-by-year basis, as is the case in all seaside and coastal towns, and when we take into account the fact that in Blackpool, given our larger than average percentage of disabled and older people, which means that issues around morbidity as well as mortality are extremely challenging, there is something almost obscene about a sleight of hand that means the change from 2010-11 to 2015-16, when we include public health and the better care fund, is £260 per head compared with that of leafy Surrey, where there is an actual gain of £3.

We have also seen in Blackpool some perverse implications from the blunt mechanisms that determine the grant. Laudable local initiatives to replace high rise housing estates, which have struggled to provide residents with safe and secure housing, with new spread out family building have left us with the fifth lowest new homes bonus in the country. This blinkered focus on simply counting the numbers of dwellings disregards the quality of the houses. I shall not hold my breath, but perhaps the Minister can provide us with a coherent reason why Blackpool and other more deprived areas are so much harder hit than Tory shire areas.

The other issues that need to be considered are the specifics of how an authority such as Blackpool is affected. The early intervention grant has been almost entirely scrapped, with a 93% cut. There is almost a standstill because of the pressures on public health funding—this in a borough where alcohol and substance misuse problems are extremely significant. Payments for discretionary housing are down from £581,000 to £370,000, and housing benefit has been squeezed even further. The cuts are having a double whammy effect on the voluntary sector. First, they are putting more and more pressure on the voluntary sector to fill the gap. At the same time, the funding that the sector has historically received from local authorities like Blackpool has been drastically cut.

While we are on this issue, let us look at the deforming effect of the so-called reforms of welfare on budgets. The Secretary of State, on a visit to Blackpool last Friday, tried to pacify people and said that no one should be suffering, because there was a hardship fund. Well, they are suffering. My casework is full of people who are suffering. They are suffering because the voluntary sector and local authorities do not have the capacity to come to their aid. It is not surprising, therefore, that more than 12,500 respondents said no to the original local welfare provision findings from the Government, with only 17 in favour. The Government have been forced by this outcry to make last minute judgments.

I have said in this House many times that I am a firm believer in the ability of properly empowered local authorities. The Minister, in his speech, has underlined that point conclusively. As a former shadow skills and regional growth Minister, I believe that co-operation, collaboration and multi-agency agreements, and the devolution proposals that are now at the heart of Labour’s policy in this area, can secure transformative change. Real localism requires respect shared between all parties. The Government who fail to understand the practical pressures being faced by local councils, who disguise the full extent of the cuts being imposed on them, and who show political favouritism to some areas over others could never be part of the creation of a bold new locally led system. Ultimately, it is the people in communities such as Blackpool who have suffered.

We would welcome more powers to stop rogue payday lenders, to limit the number of gambling outlets in high streets, to stop our pubs being driven to the wall, and to control and provide public transport that is tailored to community needs and not simply to a cartel of operators. Blackpool is an enterprising council. We have shown that in the way in which we have used, in a very positive fashion, lottery funding for our visitor, illumination and heritage initiatives.

Ultimately, objections to the unsustainable withdrawal of local funding for core council services, which we have seen again in this settlement, are treated as inconvenient obstacles to the political decisions of the Government. That cannot be satisfactory; that cannot be the way forward; and that cannot be the mantra of the new Labour Government we all hope for in May.