Graham Stuart
Main Page: Graham Stuart (Conservative - Beverley and Holderness)(11 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Brandon Lewis
I thank that hon. Gentleman for his question, which gives me a chance to explain again why this came about. Because of the state in which Labour had left local government finance, 20 authorities faced a massive cliff edge. We introduced a transition grant which, during the last two years, allowed those authorities some leeway and enabled them to get into a position that would allow them to move forward. Seven are still heavily affected, including the authority in the hon. Gentleman’s constituency, as I know from an Adjournment debate that took place not long ago.
The efficiency support grant involves a two-year programme. As I have said, in year one councils will potentially receive 25% more than they were expecting from the provisional grants. In that first year, they will work with the Department to increase their efficiency across the board by means of, for instance, shared management and shared services, so that at the end of the two-year period they will no longer need the grant. We made the position very clear to the councils, and they have been sent information describing the kind of work that they need to do in order to receive year two money as a result of the efficiencies that they are achieving in year one.
In December we said councils were facing an average cut of about 1.7%. We now know the impact of the public health grant, however, because that figure has dropped to just 1.3%. People would expect us to say the settlement is even-handed—[Interruption]—and the mumbling from the Opposition Benches confirms that, but a report produced by this House concurs with our view. It says:
“Excluding London, northern regions have larger start-up funding assessments and revenue spending power per dwelling than their southern counterparts”
and
“the more deprived areas generally receive higher per dwelling allocations than less deprived areas”.
The heat maps we are publishing today back up the fact that this settlement is fair for all.
Mr Graham Stuart (Beverley and Holderness) (Con)
It is hard to see the settlement as fair to all when there is a rural penalty, with 50% more per head going to support councils in urban areas than those in rural areas, where people on average earn less and have a higher council tax, and therefore have lower spending power. In the period up to 2020, we will need to move towards a more just settlement that genuinely reflects need, whether in the inner cities or rural areas.
Brandon Lewis
My hon. Friend makes his point as passionately as he and other colleagues did on Monday, and I know from the meetings I have had with him on this issue that he will continue to do so. I shall talk about rural funding shortly.
Hilary Benn (Leeds Central) (Lab)
I am sorry and surprised that the Secretary of State decided not to lead this debate. We know that there are many issues on which he is all too willing to express a view, and it would have been good to hear from him about the most important responsibility he has in the job that he holds—the funding of councils that help support the services on which all our communities rely.
That would have given us an opportunity to question the Secretary of State on why he told the Select Committee in December that the cuts to local government funding were “modest”, and that the Local Government Association’s fears for the future were “utterly ludicrous”. In effect, he told councils to stop complaining. I wonder whether he understands the anger and dismay that those comments have caused, or the great disservice he is doing himself by being in denial about what is happening in local government.
This is a time of rising pressures. In particular, as the Minister will know, the costs of looked-after children and social care are rising. The demands on local authorities are going up while income is going down significantly. That is why the much-debated “graph of doom” produced by the LGA does not, I think, cry wolf; it is what it says is its best assessment of where local government is heading if things continue as they are. If the Secretary of State does not like what I have to say, the LGA’s Conservative leader, the highly respected Sir Merrick Cockell, has called the cuts “unsustainable”, and the Tory leader of Kent county council says that his county cannot cope with further reductions and is “running on empty”.
Ministers know that local government is the most efficient part of the public sector, because that is what the Prime Minister said, albeit before the election, but they have decided to award councils for that efficiency by cutting more from them than from any other part of the public sector. A moment ago the Minister referred to “50 ways to save”, which is a combination of some things councils are doing already, some things that are pretty darn obvious and some things that are insulting. On value for money, will he explain why his colleague, the Secretary of State, decided, despite all these pressures, to take £250 million of public money in an attempt to persuade councils to change the way they collect bins, which resulted in only one council moving from alternating weekly collections back to weekly collections? Does he think that represents value for money when money is so tight?
As the Institute for Fiscal Studies confirmed last year, the total cuts to local government spending will outpace those in the public sector as a whole up to 2014-15. Since then, of course, a further cut of £445 million to local government for the year after next was announced in the autumn statement.
Mr Graham Stuart
The Labour party strongly makes the case for more expenditure on local government and opposes the reductions that the Government feel are necessary. When we look across the Labour party’s policy announcements, it appears that the only firm promise of cuts relates to the NHS, so will the right hon. Gentleman confirm that he plans to cut the NHS to make up the money to be spent on local councils?
Hilary Benn
The hon. Gentleman clearly has not been listening to what I have said since taking up this post. I have said in this Chamber before that, were a Labour Government now in office, of course there would be cuts to local government, but they would not go as far or as fast as the ones the Government are making and they would not, as I will point out, be allocated to local authorities in such a fundamentally unfair way.
The truth is that the Secretary of State continues to lose in his battles with the Treasury, assuming, of course, that he tried to fight for local government in the first place. The truth, even if Ministers refuse to admit it, is that local councils are now facing—this is why the word “modest” causes such anger—the largest cuts in their funding in the political lifetime of every single Member sitting in the Chamber.
Dan Rogerson
I hope my contribution did not put off so many Members that they left the Chamber, Mr Speaker.
Local councils will face pressures too, so we need to look at the amount they add to council tax. There are particular pressures on rural areas, as the Government acknowledged in their consultation last summer, but although they looked as though they were moving in the right direction we have yet to see the fruits of that labour.
Mr Graham Stuart
I congratulate my hon. Friend on his work representing rural areas. Does he agree that starting from next year’s settlement we must see an unwind of the rural penalty whereby 50% more per head goes to urban areas? We must see that figure reduced to no more than 40% by 2020. It can be done without major impact on other areas, and it will bring justice and fairer outcomes for people in rural areas who have suffered too much, too long.
Dan Rogerson
The hon. Gentleman is absolutely right. There is a penalty—a disadvantage—for people who benefit from living in a rural area, and the gap should gradually be narrowed. We are not saying that it should be entirely eroded. Members from urban constituencies have made the case for their areas of need, but the gap has widened. If the direction of travel is right, we will be much happier.
On public spending, public sector jobs in national Government are another way of making sure that the public sector pound is reaching all parts of the country. In rural areas, the number of jobs in the Government sector has gone down, because Her Majesty’s Revenue and Customs, for example, has got rid of smaller tax offices and jobs have been combined in city areas. It should not go unnoticed that there is a concentration of public spending in urban areas, and that it is leaving rural areas.
Mr Graham Stuart (Beverley and Holderness) (Con)
It is a pleasure to take part in this debate on the local government settlement for 2013-14. I start by paying tribute to the Minister, who has gone out of his way to make himself available to those of us who are concerned about the impact of the settlement and to listen to us. I appreciate the way in which Front Benchers have engaged with this.
I will speak mostly about funding for rural areas. The Rural Services Network, which brings together not only local government in rural areas but all sorts of health bodies and others, has analysed this year’s settlement and found that, at first look—I do not want to repeat too much of the debate we had on Monday night—the effect of damping in the eventual settlement is to increase the rural penalty, which already sits at 50%. Urban areas, as defined by the Government, get 50% more per head than rural areas.
Opposition Members should try telling the hon. Members for Workington (Sir Tony Cunningham), for Bishop Auckland (Helen Goodman) or for Copeland (Mr Reed) that rural areas are all leafy and wealthy. They should come to my constituency, visit Withernsea and the areas there and see whether everyone is wealthy. They are not. We need to ensure that allocations are fair, based on need.
Neil Parish (Tiverton and Honiton) (Con)
Does my hon. Friend agree that the rural penalty, which he is describing so eloquently, is getting worse, not better? Although we are absolutely delighted that Ministers are listening to us, I believe that we can mobilise the yeomanry in the countryside if we need to in order to make our point, because we want Ministers not only to listen, but to act.
Mr Stuart
I am grateful to my hon. Friend, who led the Back-Bench business debate on Monday. He is absolutely right. The test for the rural fair share campaign, which I chair with my hon. Friend the Member for North Cornwall (Dan Rogerson) and the hon. Member for Workington, is to have an urban-based Labour MP, moderate and reasonable—quite a number are—if not exactly getting out the bunting and cheering at the prospect, then recognising the strength of the argument in favour of fairness and meeting the needs in rural areas.
It is not some sort of grab. I think that it was perhaps too easy under the previous Government, with a Labour majority, to use deprivation and the cry from the big urban areas to keep skewing the funding more and more. It was both politically convenient and the deprivation provided a kind of moral veil. The position we are in now, with a rural penalty of 50%, is indefensible. If it is defensible, will someone please stand up and make the case?
Age is also a key driver of cost. In rural areas such as the one I represent, we have both an elderly population and a great number of people on low incomes. That combination needs to be addressed, as does the cost of service delivery, because it is more expensive to deliver many services, although not all, in the rural East Riding than it is to deliver them in north Hull. The last thing I want to do is talk down the residents of north Hull or of any other part of the country, urban or otherwise, but we need to have another look at need and ensure that we, preferably with a broad consensus across the House, can have a settlement that is fair to all, even at a time of reductions in public spending, as we are seeing now.
Andrew Percy
I agree with what my hon. Friend has just said. Will he confirm that what we have actually heard today from Opposition Members is that they do not understand the argument about deprived communities, such as mine in Goole and across north Lincolnshire? They are continuing to defend a system that works against the interests of people in rural communities such as mine.
Mr Stuart
My hon. Friend is right. The Opposition have made it absolutely clear that they wish to maintain the unfairness that impacts on the services provided to his constituents day in, day out. That is their message. Further to that, every single Opposition Member who says that they do not want this level of reduction in the overall amount spent on local government is calling for that money to come from cuts to the NHS. That is the truth. The Labour party has made it clear that it will not protect the NHS. It is only the Government who are committed to doing so and Labour Members, in every impassioned speech they make, are calling for reductions in spending on the NHS—real-terms cuts in health—so that councillors’ pensions can be protected alongside services.
Catherine McKinnell
I thank the hon. Gentleman for giving way. Some of the cuts that are being driven through in many of our cities will increase NHS costs because of the lack of support for vulnerable children and elderly people. The general lack of public services will ultimately be detrimental to people’s health.
Mr Stuart
I cannot help noticing that the hon. Lady absolutely refuses to rule out cutting the NHS, because that is her party’s policy. Most parties that go into opposition split—they start to divide. The unity of Labour in its commitment to cutting the NHS is, from the point of view of party loyalty, admirable. The hon. Lady, like other Opposition Members, has made it clear that the NHS can pay so that local government will not have to be asked to be more efficient and make savings.
Rural areas have long been poorly funded compared with urban areas, and they start from a significantly lower base. Talking about cash reductions in areas that receive much higher amounts of money does not give a fair and balanced picture. I agree that we should see the argument from all sides with regard not only to cash reductions, but to percentage cuts. The hon. Lady heard the Minister say that the percentage cut in Newcastle, which has a vastly greater budget than rural and deprived areas of the East Riding, is experiencing lower levels of reduction. To make out that it is the opposite and that this is an unparalleled assault on cities such as Newcastle misrepresents the settlement.
As I have said, the costs of delivery in sparsely populated areas are often higher than those in urban areas and, overall, rural residents earn less on average than people in urban areas. Labour Members have made out that everybody in an urban area is in the most terrible, deprived state, but most people in the cities are not and lots of people who live there earn more. They have higher average earnings than those in rural areas. Council tax in rural areas, where incomes are lower, is £75 a head higher. If we apply that across the household, we will see that the spending power in rural areas is lower. I sympathise with Labour Members on the closure of cultural centres in their areas, but my area does not have any because we do not have the money—the distribution is not fair.
Fair-minded people should recognise that reality. For too long, strident, sectarian interests have been allowed to dominate the debate. I call on Ministers to do more to understand the real costs of delivery across different service areas and make sure that we have a more informed debate than the political mud-slinging of those who represent urban areas as being entirely deprived. I do not want to be guilty of that in a rural sense.
The Department’s consultation in summer 2012 promised some improvement, but 75% of it was damped away. Since then, in meetings with the Minister, who, as I have said, has been most generous with his time, we have tried again and again—it is interesting to see Department officials present—to get the numbers so that we can all agree on them. I have brought along with me, especially for the Minister—I will hand it to him—the official governmental criteria of classification of councils, because Ministers have told me that they are not sure precisely how it works. Will the Minister who winds up the debate tell us what is happening to rural areas? I know this is not how money is allocated, but will the Department please do the assessment, if it has not done so already, of where the money is going to councils?
The official criteria of classification were agreed across Government in 2009. The document defines areas as rural-80, local authorities, rural-50, significant rural, major urban local authorities, large urban and other urban. Does it say that it is impossible to classify them? It does not—it is not true. It has been done by Government and the least that Ministers owe us is to tell us how those numbers work out across those particular designations.
Helen Jones (Warrington North) (Lab)
This has been a very interesting debate, with some thoughtful and well informed contributions from my hon. Friends, and even from Members on the other side of the House, especially the hon. Member for North Cornwall (Dan Rogerson). He made some sensible points about the needs of rural areas, and also managed to nip out to attend mass on Ash Wednesday.
I do not have time to go through all the contributions from my hon. Friends, but they have highlighted the unfair nature of this settlement, and how shambolic it has been. It arrived late, and different grants dribbled out at different times, making it very hard for local councils. The Government could not even get basic calculations right. They miscalculated spending power, because they double-counted. They came out with alternative notional amounts that would not only have meant some councils holding a referendum if they wanted to increase council tax by less than 2%, but some having to do so if they wanted to freeze it—and the Government lecture councils on efficiency.
There is no doubt that this is a very difficult settlement for local government. It is so difficult that even the Minister’s friends are starting to complain. Councillor Bob Banks from Wychavon council has said:
“The general thrust is that we’ve been given a lousy funding settlement by the Government which will affect us very badly.”
The Local Government Association, which is Conservative-controlled, estimates that the funding gap will be £16.5 billion by 2019. We have heard about the Secretary of State’s 50 ways to save, but even he cannot think that sacking the chief executive and putting a coffee shop in the library will raise £16.5 billion.
We heard from the Minister—I think someone described his statement as rather bombastic—who said that the settlement was fair. A settlement that ensures that the 10 most deprived authorities in the country are taking spending cuts six times higher than the 10 least deprived is not fair by anyone’s estimation, however much the Government try to use smoke and mirrors to cover it up. That is indeed what they have done. First, they changed the base—the 2012-13 funding base—by including in it cuts that do not start until the next financial year, including cuts to council tax support, to early intervention grants, and to grants for preventing homelessness. Then they added in the public health grant, but that is not only ring-fenced, it is a grant for new burdens on local authorities, so it cannot be used to calculate year-on-year changes.
The reason for those changes is very simple: they want to make it look as though the cuts in spending power are less than they are. But we know what they are. There is a 33% cut in funding for local authorities over the spending review cycle. For some authorities, of course, it is much worse. The Secretary of State has taken to giving out spending power cuts per dwelling now, rather than per person, but even on the Government’s own figures the unfairness is clear. Over the next two years, Knowsley will lose £206 per dwelling, Surrey will lose £14, Camden will lose £200, Wokingham—our favourite council—will lose £43, Liverpool will lose £184, and Windsor and Maidenhead will lose £46. At least we can grant the Tories the merit of being consistent: they always take money from the poorest people, whether it be through a bedroom tax for the very poorest and a tax cut for millionaires or attacking the poorest local authorities in the country. We can rely on them to be consistent.
Perhaps it is not quite the same for the Liberal Democrats, whose leader said in the local elections last year:
“We stand for the whole country not just parts of it”.
Well, if he looks at the heat maps for where the cuts fall, I doubt whether he would say that in the north-east, in the north-west, in inner London boroughs or in our big cities—even in what he used to call “my city of Sheffield”. His city of Sheffield is taking a £50 million cut on top of the £140 million it has already taken. Of course, it will not affect him, because he does not live there.
Then we have the smoke and mirrors applying to the rest of the grant. We have heard about the new homes bonus. In fact, the money for that bonus is taken out of the formula funding by a straight percentage cut, but its distribution is related to council tax bands, which means that local authorities with a higher tax base gain more than those with a lower tax base. That is why Newcastle will lose £6.4 million and get back £3 million; and why Knowsley gets only 15p for every pound it is top-sliced. “To them that hath shall be given” seems to be the mantra of this Government. That is why in this settlement, the relative needs block has been cut by over £500 million. It is because this Government are not interested in funding for need.
The same is true if we look at the early intervention grant. Money in the settlement has been top-sliced supposedly to account for nursery places in schools for two-year-olds. In the autumn statement of 2011, however, the Chancellor promised that that would be new money. It is not new money; it is money taken from some of the most deprived children in the most deprived areas of this country. By the end of next year, the funding gap will be £488 million—and it will go on rising. I do not know how any Liberal Democrat who has trumpeted the need for support for the poorest children can possibly vote for such a settlement.
Let us look at the other part of the settlement—the localisation of business rates. The Government have determined local councils’ allocation based on a two-year average, but their own consultation recommended a five-year average. The reason is very simple: it was to reflect appeals over a full cycle. Now under great pressure, they have put money back in for appeals, but it is nowhere near the costs that local councils will face. What will happen when the appeals come in? Councils will have no choice but to cut services yet again to fund backdated appeals.
The Government have, of course, come up with a figure by which they expect business rates to grow. No one knows quite how they have reached that figure. I think that they have probably plucked it out of the air. The Office for Budget Responsibility has been wrong in every estimate it has made of business rate income since it was set up. It has always overestimated it. So, local authorities are then told to grow their business rates. They must bring in more jobs and businesses, but they are facing a flatlining economy and a double-dip recession. The Government have no plan for growth, yet they lecture local authorities on promoting it. It is like King Herod lecturing people on child care. What is more, they make it more difficult for the poorest economies because of the amount of money they are taking out of them.
Let us consider the reductions in council tax benefit funding. Birmingham alone will lose at least £10 million. Newham will lose £3 million, and Gateshead £2.9 million. Only a fraction of that will be returned in transition grants. Then there are the benefit cuts. Liverpool will lose £7.3 million per annum in bedroom tax alone, and Knowsley will lose £3.4 million. Newcastle estimates that the incomes of 27,000 families will be cut as a result of the Government’s tax and benefit changes. That money would otherwise be spent in local shops and businesses, funding the local economy. The Government take money away from the local economies that are struggling most, and then lecture authorities on how to grow those economies.
Helen Jones
I am sorry, but I must end my speech in a minute.
Nothing could better illustrate the doublethink that prevails in the Department, and that is why we will vote against this settlement tonight. It is unfair. It takes money that they need from the local economies that are struggling most. It does not help them to grow, because it is economically illiterate, divisive and ill-conceived. I urge my hon. Friends to join me in voting against it.
Mr Foster
My point is that the shadow Secretary of State failed to mention that 390,000 households have two or more spare bedrooms, while 278,000 households are overcrowded. However, I will give him some credit for getting up to date in one area. Last September, he came out in support of Manchester council spending nearly half a million pounds on a single Alicia Keys concert, so he is at least ahead of the Secretary of State in that he knows who Alicia Keys is, and I give him credit for that.
The Government have already done much to help local councils by giving them increased freedoms to help them meet the needs of council tax payers. In Monday’s debate, the hon. Member for Derby North (Chris Williamson) said that
“Labour’s policy is to give a fair deal, a new deal, for local government and to allow local government on the ground to determine the shape of local government, rather than it being imposed from the top.”—[Official Report, 11 February 2013; Vol. 558, c. 676.]
That certainly was not the policy of the Labour party when it was in power. Central Government’s stranglehold over local government got ever tighter then, but perhaps he is right and Labour has seen the error of its centralising ways. While the Opposition debate a new approach, we are delivering a new approach. We have already provided greater borrowing flexibilities, a general power of competence, the removal of numerous ring fences, and increased flexibilities in the decision-making process.
Mr Graham Stuart
Will the Minister please give us an answer to the questions on rural funding?
Mr Foster
I am happy to do so, and I congratulate my hon. Friend on his lobbying campaign. The Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis) has given a clear answer to him, to my hon. Friends the Members for North Devon (Sir Nick Harvey) and for North Cornwall (Dan Rogerson), and to others: we are a listening Government, the Under-Secretary’s door is open and he will continue to listen.
The key change that has occurred in this budget which has almost totally been ignored is the one to allow local councils to retain a key proportion of business rate, giving them the real opportunity, for the first time, that if they work with the local business community to help get growth in that community, they will get a real-terms reward. This is a fair settlement and it is a settlement about opportunity. We are talking about opportunity through the new homes bonus, through the business rate retention scheme and now through our new challenge fund. We believe that the majority of local councils are up to the challenge, and those who take on that challenge will have our full support.
Question put.