Local Government Finance (England)

Debate between Graham P Jones and Hilary Benn

Wednesday 13th February 2013 Commons Chamber

[Hilary Benn]

My hon. Friend is absolutely right to point that out. I cannot say that I am surprised, given that the central point I am attempting to make is that the way in which the cuts have been allocated is fundamentally unfair.

If the Minister and Secretary of State do not accept that, then what about the Audit Commission? Last November, it produced a report called “Tough times 2012: councils’ financial health in challenging times”, which said:

“Councils in the most deprived areas have seen substantially greater reductions in government funding as a share of revenue expenditure than councils in less deprived areas.”

It could not be stated more clearly. That probably explains why the Secretary of State is so keen to get rid of the Audit Commission: how inconvenient that such an organisation dares to speak truth unto power.

The Secretary of State came up with the measure of spending power in 2010. Ministers now publish figures on spending power per dwelling but not on spending power per head of population. This is perhaps unsurprising given what the figures show. Taking into account this settlement, in 2014-15 the 10 most deprived local authorities in England will lose six times more spending power per head of population than the 10 least deprived local authorities, compared with 2010-11. No wonder Ministers did not want to present to the House figures based on population. The councils that will suffer the biggest cut in spending power over the two years are Liverpool, Hackney, Newham, Manchester, Knowsley, Blackpool, Tower Hamlets, Middlesbrough, Birmingham and Kingston upon Hull.

[Graham Jones]

Sat right in the middle of that list are the district councils of Burnley and Hyndburn, which are taking cuts of the same size but have a budget that is a fraction of those unitary authorities. The scale of the cuts is horrendous in those councils.

[Hilary Benn]

My hon. Friend is right. He anticipates what I am about to say, because how can that list be fair?

The Prime Minister says that we are all in this together, though less frequently these days because he gets laughed at when he attempts to do so. However, in this settlement, his local authority, West Oxfordshire, which is one of the least deprived in the country, ranking 316th out of 325 in the indices of multiple deprivation, is getting an increase in spending power of 3.1%, whereas some of the most deprived areas, such as Hastings, which we heard about earlier, and Burnley, which are respectively 19th and 11th out of 325 in the indices of multiple deprivation, are facing the maximum cut in their spending power, on the Government’s own measure, of minus 8.8%. How is that fair?

--- Later in debate ---

[Hilary Benn]

We had a debate on Monday. Different areas have different needs and I acknowledge the particular challenges that local authorities serving rural areas face. The Government’s job is to balance all those things and come up with something that can be seen as fair.

[Graham Jones]

My right hon. Friend mentioned the small district councils of Burnley and Hyndburn, which are taking huge cuts that are almost the size of those in metropolitan areas such as Liverpool. The 8.8% figure he mentioned includes the efficiency grant, which is a two-year payment. After those two years, it is removed and they are facing a cliff edge that is far beyond 8.8%.

[Hilary Benn]

My hon. Friend makes the point about the circumstances his local authorities face extremely forcefully.

What does all this mean for the future financial sustainability of local government? The National Audit Office recently published a report that makes it clear that cuts to councils budgets are having a direct impact on front-line services, even though the former housing Minister went before the Select Committee, I think in 2010, and said that there should not need to be any cuts in front-line services. The Chair of the Public Accounts Committee, my right hon. Friend the Member for Barking (Margaret Hodge) was very direct in her response. She said of the findings from the National Audit Office on local authorities:

“I am alarmed to hear that 12% are now at risk of being unable to balance their books in the future, according to local auditors, with potentially disastrous consequences.”

It is worth reflecting on those words: more than one in ten councils are now at risk of being unable to balance their books in the future—that is what the NAO says. The Secretary of State may say that the graph of doom is scaremongering on the part of the LGA. Will he also say that this is scaremongering on the part of the NAO? If he does not say that, what is the Government’s answer to the picture unveiled by the NAO?