Funding for Local Authorities

Grahame Morris Excerpts

Thursday 10th October 2013 Commons Chamber

[Grahame M. Morris (Easington) (Lab)]

I congratulate the hon. Member for Tiverton and Honiton (Neil Parish) on securing the debate and on gaining the support of Members across the House, and I thank the Backbench Business Committee for allocating the time.

I will make some general points, but I would also like to make specific points regarding my region, the north-east, and my local authority, Durham county council. It is tempting to characterise the debate in terms of urban against rural and north against south—I can see the hon. Member for Tiverton and Honiton is smiling. We are not allowed to refer to pictographs, but when we analyse the figures produced by the Local Government Association and the Association of North East Councils, it is clear that it is not simply a rural versus urban issue—and particularly not a north-south issue—because many of the affected regions are in the south-west. Many inner city London boroughs are badly affected, as are our great northern cities.

I shall make some general points to begin with and then get down to some of the specifics about my own area. The Minister on the Front Bench is responsible for the fire authorities so I thought it would be remiss—given that we met representatives of our fire authorities this week and found that they were extremely concerned about the implications of the settlement—not to mention that issue. The scale of cuts that the fire authorities are going to have to make will amount to taking out an entire brigade from the north-east region. I am not suggesting that that would happen, but taking out the whole of the County Durham and Darlington brigade would be the consequence if the cuts fell on a single brigade in our region. The level of cuts is unprecedented. My fear is that austerity is failing, not just our region but Britain. Nowhere is that more apparent than in the evidence of cuts to local government funding.

My local authority has made written representations to the Minister, and I hope he will consider very seriously the points it has made. Indeed, after the comprehensive spending review of 2010, local authorities faced significant spending cuts in the emergency budget. We knew, and warned at the time, that these would inevitably impact on services, jobs and growth. Various figures have been quoted, but my local authority, which is Durham county council, has needed to make savings of £123 million during the course of this Parliament. That has resulted in nearly 2,000 job losses—approximately 20% of the work force—and it has certainly hit front-line services and vital support for the local community.

Along with all local authorities, mine understood that local government would be expected to contribute to reducing the national deficit, but, as a number of Members have pointed out, the consequences of this level of cuts have been astounding. Local authorities certainly did not expect to be targeted for disproportionate cuts when the Government were unable to address the problems that had to be faced in any other way.

I am worried because the Government have missed a number of economic targets that they set for themselves and because the very slow recovery we have seen—probably the slowest for over 100 years—is being exacerbated by the scale of the cuts in local authorities, particularly when it comes to discretionary expenditure. There is no money left for economic development. I see some Government Members shaking their heads, but I am afraid that that is certainly the case for Durham county council. As a large unitary council, it had a successful track record of working in partnership with both public and private sector organisations to deliver major infrastructure projects and to make a contribution towards jobs and growth. Its capacity to do so, however, has been completely taken away by the scale of the cuts.

When the Chancellor of the Exchequer told us that he intended to eliminate the deficit by 2015, he promised in the 2010 comprehensive spending review statement that there would be “fairness”. He said:

“Fairness also means that, across the entire deficit reduction plan, those with the broadest shoulders will bear the greatest burden”.—[Official Report, 20 October 2010; Vol. 516, c. 951.]

Frankly, those strike me as quite nice words, but it was a hollow promise. We now know that the Government will miss their deficit reduction plan, and it seems that the most deprived areas and the most vulnerable people are having to pay most for the Government’s extra years of austerity. Clearly, disproportionate cuts are being imposed on hard-pressed local authorities, particularly in regions such as mine. Durham county council now faces cuts amounting to more than 40% of its budget. It no longer needs to find savings of £123 million; it is now expected to find savings of more than £222 million by 2017. The austerity and spending cuts will extend into the next Parliament.

According to a report by the Association of North East Councils, the north-east region faces a “disproportionately high share” of the £5.5 billion cuts in council budgets that will be made between now and 2016. That means an average cut of £296 per household in the north-east, compared with a national average of about £233 per household. As was pointed out by my hon. Friend the Member for Sheffield South East (Mr Betts), the Local Government Association has forecast that, during the period of the current Parliament, local government’s core funding will fall by 43%. That confirms that councils are being hit harder than other parts of the public sector.

Some councils, especially those in parts of the south, have been relatively unaffected by the cuts, and are able to continue as they were before. However, the Government must listen to local authorities—particularly in areas that face challenges and are experiencing high levels of deprivation—which, along with their parliamentary representatives, are warning that such large cuts are unsustainable, and pose the risk that councils will be unable to provide statutory services.

While funding is being cut, demand for services continues to rise. More than 60% of Durham county council’s expenditure goes towards children and adults services, and the proportion is set to increase in the years to come. That is not because the council is being profligate, but because of demographic changes, an ageing population, and the fact that my area formerly had a tradition of heavy industry such as coal mining, shipbuilding and steelworks. The Government need to recognise that the legacy of that heavy industry continues to push up demand for adult social care for the elderly and disabled. Safeguarding Children is also experiencing greater demand: the number of complex cases requiring co-ordinated interventions by a number of services is increasing significantly.

[Ian Mearns]

My hon. Friend is entirely right. The levels of demand for children’s services, especially in complex cases and those involving a high level of need, has been growing exponentially in some parts of the north-east. In my borough of Gateshead, the number of youngsters taken into care has increased by nearly 50% in the last four years. It may be said that that is disgraceful, but if social services departments leave such children in situ with their families, the consequences are often tragic. Those increased demands need to be taken into account.

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[Grahame M. Morris]

That is certainly true.

I am not arguing that certain services should be protected while others should be subjected to cuts, but the structure of the settlement has had a particular impact on services such as libraries and transport, especially school transport. Some Members have said that there is general public satisfaction with the improvements in services, but school transport has been a huge problem for me. Many people in my surgeries have complained about having to contribute to the cost of a service that used to be provided by the local authority.

There are issues around culture, planning and economic development. Vital services that the public rely on are going to have to be cut still further to accommodate great cuts as spending falls. I am very worried that when the Minister and Government Members in general analyse the costs of this, they do so in the manner of accountants, knowing the cost of everything, but not understanding the value of some of these things. The real cost of these cuts is not just to the bottom line of local government budgets, but to services and support that the most vulnerable in society rely upon. That cost is also felt in the impact on jobs and growth, which will stifle employment opportunities in our communities and exacerbate the existing north-south divide in terms of health, education and economic development. [Interruption.]

In order for local authorities to continue their vital work, the Government must stop this relentless attack on local government. The communities that are hardest hit by the economic downturn are now being expected to shoulder the burden and pay for the failures of the coalition Government’s deficit reduction plan. [Interruption.]

There are a number of key messages that I want to leave with the Minister. There are some particular things he could do, such as address issues to do with the new homes bonus and top-slicing. I urge him to reconsider his current approach and to bring forward proposals that would support all councils to protect the most vulnerable in society no matter where in the country they may be.

[Several hon. Members]

rose—

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[The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)]

First, I join the Chairman of the Select Committee in congratulating the hon. Member for Corby (Andy Sawford) on his new role. I look forward to working with him and debating with him across the Chamber. I welcome the hon. Member for West Ham (Lyn Brown) to her new role as well.

I was somewhat surprised and a little disappointed that in the speech that the hon. Member for Corby has just made in his new role, he did not get round to outlining where the £52 billion of cuts that his party would make were likely to fall. If I understood him correctly, he said that the funding formula was unfair. I wonder whether he will at some stage explain to the House why, in 13 years, his party did nothing about that and, indeed, made it worse. In his comments about how councils are currently funded and how the spending patterns worked, he did not note the fact that his own council, Corby, despite having the highest spending power per head in Northamptonshire, had an increase of about 4.4% this year, so proving that the formula is fair wherever one is.

I shall try to restrict my comments—

[Grahame M. Morris]

rose—

[Brandon Lewis]

Let me make a start before I take interventions, depending on time. I shall try to restrict my comments to the topic on which the majority of Members have spoken today, which is rural funding, although I note and will comment to some extent on comments from Members across the Floor on local government funding generally. We also moved into NHS funding and Department for Education funding, but I will not take up Members’ time by going too far into that.

I congratulate my hon. Friend the Member for Tiverton and Honiton (Neil Parish) and thank him for bringing this important debate to the House, giving everybody a chance to comment and giving me the opportunity to listen. I have met him and the team from the rural sparsity group on a number of occasions and will be happy to do so again. No doubt we will meet again over the next few months as we get towards the funding settlement. I note that he would like an extra £30 million. I also note the realism in his comment about the chances of the Government finding another £30 million when we are still trying to clear up the debt, the deficit and the mess left by the previous Government.

[Grahame M. Morris]

rose—

[Brandon Lewis]

I will take an intervention in a little while, if I have time.

We heard a number of interventions during the speech by my hon. Friend the Member for Tiverton and Honiton. My hon. Friend the Member for High Peak (Andrew Bingham) mentioned what small councils could do. It is worth stressing—I am happy to put this on the record again—that there are small district councils across the country, and not just in rural areas, running budgets of roughly £10 million or even less. They must look at their situations very closely and consider whether their current format, with their own chief executives, management and silo services, is sustainable. They should consider partnering with other authorities, as around 40 authorities do already, and having shared chief executives and management.

The partnerships between High Peak borough council and Staffordshire Moorlands district council is a fantastic example. My hon. Friend the Member for Bury St Edmunds (Mr Ruffley) talked about Mid-Suffolk district council, and I must say that Suffolk, as a county generally, offers a really good exemplar of the work that can be done. Suffolk Coastal and Waveney district councils are coming together with a shared chief executive. Babergh and Mid-Suffolk district councils and St Edmundsbury borough council and Forest Heath district council are all showing how to come together to make real savings.

The chief executive of a council deal such as Staffordshire Moorlands and High Peak would explain that those kinds of savings can amount to 18% or 20%. When they are running a budget of around £10 million, that is a substantial saving. I argue that small local authorities should be doing that not only because of financial pressure, but because the money could be spent on front-line services, rather than on administration and management.

Several Members mentioned school bus services. I agree that councils should be working very hard to protect front-line services that are important to rural and urban communities. In my constituency of Great Yarmouth, the Labour-led county council has looked at cutting rural bus services, which would mean children having to walk up to 3 miles to get to school, and on major roads with no pathways. That is absolutely unacceptable. It should be looking at the plans that were in place under the previous Conservative administration in order to find the savings it needs and bring in the revenue it needs without slashing those important services. Councils should look at that carefully.

The hon. Member for Penistone and Stocksbridge (Angela Smith) carefully outlined the situation with regard to funding, but we must remember that in the past year councils increased their reserves to £19 billion, the highest level on record. It is important that we also look at options. This Government are not just talking about that; with community budgets we are delivering a transformation in the way services are provided across the public sector, which independent reports show could save this country around £20 billion. Across the country there are community budget pilots, of all political colours, doing some phenomenal work, and that has now been rolled out to a further nine areas.

My hon. Friend the Member for Newton Abbot (Anne Marie Morris) touched on some of the issues relating to education, transport and buses, which I have already outlined. The Chair of the Communities and Local Government Select Committee, the hon. Member for Sheffield South East (Mr Betts), raised some issues about funding and mentioned the 56 councils. I have touched on some of the things that they could be looking at. I am not entirely surprised, although I am still disappointed, that he seems to be making the case for more taxes on people who I think want the cost of living to go down. That is why it is important that we freeze council tax and do not encourage more taxes locally.