Greg Clark
Main Page: Greg Clark (Conservative - Tunbridge Wells)Local Government Finance (England)
Greg Clark Excerpts(8 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
The Secretary of State for Communities and Local Government (Greg Clark)
I beg to move,
That the Report on Local Government Finance (England) 2016–17 (HC 789), which was laid before this House on 8 February, be approved.
Madam Deputy Speaker
With this we shall discuss the following motions:
That the Report on the Referendums Relating to Council Tax Increases (Principles) (England) 2016–17 (HC 790), which was laid before this House on 8 February, be approved.
That the Report on Referendums Relating to Council Tax Increases (Alternative Notional Amounts) (England) 2016–17 (HC 791), which was laid before this House on 8 February, be approved.
Greg Clark
I am pleased to open the debate on this year’s report on local government finance in England. I would like to start by thanking all colleagues in the House, and council leaders and officials, who contributed to the consultation after I made a provisional statement shortly before Christmas. Nearly 280 groups or individuals contributed to the consultation. All responses have been carefully considered, and sensible suggestions have been incorporated into the final settlement that is before the House today.
I have always been frank with local councils that they will need to continue to make savings. Local government accounts for nearly one quarter of public spending, so it is inevitable and appropriate that councils should play their part in helping to reduce the national deficit. Council tax payers are also national tax payers; they are the same people—our constituents—and everyone suffers if we run a permanent, untamed deficit.
Councils have accepted their part in this responsibility. During the last Parliament, all parts of local government delivered the savings that have helped to reduce the deficit by half. At the same time, satisfaction with the services provided by local councils has been maintained—a remarkable reflection on the professionalism and the resourcefulness of local government.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
Does the Secretary of State understand the frustration of my constituents at the settlement for Harrow Council? We have one of the lowest per capita settlements in London. The council is having to make £80 million of cuts over four years, leading among other things to the closure of the popular Bridge mental health day centre.
Greg Clark
What I would say to the hon. Gentleman is that London Councils welcomed many of the changes we have made in this settlement, including the provision of a four-year settlement. One of the concerns councils have had for many years is that, with annual funding, they were not able to plan ahead and reap some of the economies.
Paul Maynard (Blackpool North and Cleveleys) (Con)
Will the Secretary of State give way?
Greg Clark
The hon. Member for Harrow West (Mr Thomas) will also know that, in terms of the response to the provisional settlement, I have made extra resources available to Harrow, which I think has gone down well in his borough.
Paul Maynard
I thank my right hon. Friend not only for finding extra money for Lancashire, but for listening to me and not taking that money out of Blackpool’s budget. Blackpool is another urban area facing high levels of need. He has performed a balancing trick very adroitly.
Greg Clark
I am grateful for what my hon. Friend has said. Blackpool has important pressures that need to be met, and he has made representations, as indeed have his local authorities. It is true that some advised that some transitional relief should come at the expense of places such as Blackpool. However, I have been able to find a way for us to provide some relief for the years in which the reductions in grant are sharpest, without making the situation worse for places such as Blackpool, which have benefited from the settlement.
Robert Neill (Bromley and Chislehurst) (Con)
This is actually a very progressive and good settlement for the long-term future of local government, because it is genuinely devolutionist. In that context, does my right hon. Friend recognise and accept that it is important not only that he has given transitional relief, which helps outer London boroughs such as Bromley, but that London boroughs and other authorities help themselves by reducing their unit costs in the same way as, for example, Bromley, which has the lowest unit costs in outer London?
Greg Clark
My hon. Friend is absolutely right. I had the pleasure of spending some time with the cabinet of Bromley Council, which is one of the most efficient in London and shows the way for all London boroughs to deliver services that are very much valued by their residents, very cost-effectively.
Mr Gordon Marsden (Blackpool South) (Lab)
On 26 January, the leader of Blackpool Council wrote to the Secretary of State to remind him that we face cuts for 2016-17 of 4.9% compared with an England average of 2.8%. Despite that—and despite the Secretary of State’s welcome comments yesterday about looking at the way in which demographics in certain areas, particularly those with large numbers of older people, might be dealt with—under this formula Blackpool gets absolutely no transitional relief at all. Is there any logic or justice in that?
Greg Clark
Of course there is, because the transitional relief is for the authorities that had a sharper reduction in the grant than others. Blackpool benefited to the tune of £3 million from the improvement of the grant. My hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) was wise enough to recognise that, and to recognise the difference it will make to the people of Blackpool, and the hon. Gentleman should do likewise.
Mark Spencer (Sherwood) (Con)
One of the most progressive things that the Secretary of State has done is to give local councils a four-year settlement, so that they can now view what their settlements will be into the future and not live from day to day not knowing what their budget settlement would be in the next year.
Greg Clark
My hon. Friend is right. This is one of the key requests that local government has made of central Government for many years, and it has constantly fallen on deaf ears. Councils right across the country, with all different kinds of party political control, have welcomed the fact that they will have the chance to look ahead and plan for the future.
Several hon. Members rose—
Greg Clark
Let me make a bit of progress, and then I will of course give way to more colleagues.
As the Institute for Fiscal Studies pointed out, over the course of this Parliament the required savings that, as I made clear, councils will need to continue to make will be less than those required in the previous Parliament. The Institute for Fiscal Studies reports that the required savings of
“around 7% in real terms over the next four years...is a substantially slower pace of cuts than councils had to deliver between 2009-10 and 2015-16, when councils’ spending power was cut on average by 25% in real terms.”
John Howell (Henley) (Con)
Will my right hon. Friend confirm that within this process councils are still required to do things in a fundamentally different way, such as setting up trading joint ventures, as one county council told me it had done on Monday, or looking at Uber-type services for buses?
Greg Clark
Yes, councils should take the opportunities to be innovative. My hon. Friend and I served on the Committee on the Bill that became the Localism Act 2011, which introduced a general power of competence for local councils precisely so that they could take decisions in the interests of their residents and contribute effectively.
Several hon. Members rose—
Greg Clark
I will give way to the hon. Member for Liverpool, Riverside (Mrs Ellman), and then to—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Before the Secretary of State gives way—he has been perfectly polite and courteous in giving way a great many times—let me point out that this is a short debate. Twenty-four people have indicated to me that they would like to make speeches, and they intend to sit here all afternoon awaiting their turn to do so. Many people are making interventions, which the Secretary of State is dealing with most courteously. They are taking part in the debate, and they must be aware that they are taking up the time of other people who will be waiting to speak later on. If you make an intervention in this debate, you must remain for most of the debate and certainly be here for the wind-ups.
Greg Clark
Thank you very much, Madam Deputy Speaker. Given those numbers, I will be brief in taking interventions, but I will take the point from the hon. Member for Liverpool, Riverside.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
I thank the Secretary of State. Does he recognise the problems of Liverpool, which faces a 9% cut in funding next year, coming on top of a 58% cut since 2010?
Greg Clark
I have been very clear that all councils need to continue to make savings. As I think the hon. Lady will know, the way in which we have conducted the settlements has been fair across the country, as the Institute for Fiscal Studies pointed out. In fact, a council that she knows very well that is close to her area, Sefton Council, said in its response to the consultation:
“The announcement that core spending power will be reduced by only 0.5% between 2015/16 and 2019/20 in cash terms and 6.7% in real terms, is better than we had expected last summer.”
That is from her neighbouring council.
Neil Parish
I welcome a review of the fair share for rural areas. The rural fair share campaign, which has been running for many years, is about making sure that funds keep coming across to help us deal with not only our elderly populations, but the things such as small schools and rubbish collections that cost so much more to provide in rural areas. We need a fair deal. I look forward to the Secretary of State’s keeping up his good work, but we want to see delivery.
Greg Clark
My hon. Friend is absolutely right, and we could add to those services school transport, which is particularly costly in rural areas. That is why the underlying formula should catch up with what has happened in many communities. That is overdue.
I will highlight four features of this year’s settlement. First, for decades councils have had to set annual budgets without knowing what resources they can expect 12 months hence. That prevents them from planning long term, and it promotes inefficiency. Because plans and contracts have to be short term, councils miss out on the economies that would be possible if they could take a longer view. For the first time in the history of local government, the settlement gives indicative figures for the next four years to any council that shows that it can translate such certainty into efficiency savings.
Mr Andrew Turner (Isle of Wight) (Con)
There is a deep hole in the arrangements for the island. Can the Secretary of State work with locals, of all parties and of none, to find solutions to the problems that we face?
Greg Clark
Indeed, and I pay tribute to my hon. Friend for the work that he does as MP for the Isle of Wight in bringing together all its leaders and councillors, regardless of party political affiliation, to promote its best interests. I look forward to visiting the island in his company to meet the councillors and officers.
Paul Farrelly (Newcastle-under-Lyme) (Lab)
My county of Staffordshire makes the transitional grant list at No. 18, with just £5.6 million. Next door to me, deprived Stoke-on-Trent gets nothing, against £24.1 million for Surrey. Why, in this battle of the S’s, does the south, as ever, win out?
Greg Clark
It is very straightforward. The amount of transitional relief is in proportion to the reduction in revenue support grant, and so Staffordshire had less than Surrey. That is purely mathematical. I should have thought that the addition of nearly £3 million to the council’s budget would have been welcomed by council tax payers. In fact, I know that it has been.
Simon Hoare (North Dorset) (Con)
As my right hon. Friend knows, I welcome the statement wholeheartedly. May I take him back to what he has said about certainty? That is welcome, from a district and county council perspective. Will he give further consideration over the coming weeks to providing certainty to town councils that they will be exempt from having their precept capped? They are trying to work in greater concert with district councils, and that parallel certainty will help them to forge such deals.
Greg Clark
There is a lively debate as to whether the bigger town and parish councils should be part of the capping regime. I have resisted drawing them into that, but I look to parish and town councils to exercise economy, recognising that the services that they provide are much valued but that they are paid for by council tax payers. If those councils continue to operate in an economical way, they may not give rise to the question on which my hon. Friend seeks certainty.
Liam Byrne (Birmingham, Hodge Hill) (Lab)
Will the Secretary of State give way?
Greg Clark
I am going to make some progress, as you have urged me to do, Madam Deputy Speaker. If I have time towards the end, I will take an intervention from the right hon. Gentleman.
The second feature of the settlement is that we have prioritised spending on adult social care—the care that we provide to our elderly and vulnerable citizens. [Interruption.] Labour Members groan and complain, but they should recognise that in response to the requests of local government, the Government have done something that the previous Government did not and established funding arrangements to ensure that we can protect our elderly and vulnerable citizens.
In September, the Association of Directors of Adult Social Services and the Local Government Association made a submission to the spending review—“Adult social care, health and wellbeing: A Shared Commitment. 2015 Spending Review Submission”—in which the two organisations jointly requested that an extra £2.9 billion be made available by 2020. With the introduction of the 2% social care precept and £1.5 billion made available to councils through an improved better care fund, up to £3.5 billion of extra funding will be available for adult social care by 2019-20.
Barbara Keeley (Worsley and Eccles South) (Lab)
Will the Secretary of State give way?
Greg Clark
I will not give way.
More elderly people living in our communities is a good thing—they are our parents and grandparents, and it is an advance that they are living longer than anyone thought possible—but we need to pay for their care needs. It is no reflection on the efficiency of a council if care costs increase because the number of older people is increasing in their communities.
Greg Clark
I will not give way.
A 2% precept is the equivalent of an annual £23 increase in the average bill for a band D property. That money can be used only for social care, and council tax bills are required to be transparent about the purpose for which the money is raised.
By the end of this Parliament, local government will retain all the business rates it raises. It is a huge transformation from a world in which, just three years ago, every penny that councils collected from local businesses had to be handed over straight to the Treasury. That meant that councils were dependent on the central Government grant. At the start of the last Parliament, nearly 80% of council expenditure was in the form of a grant from central Government. By 2020, all local government spending will be raised by local government. Councils and local people will reap the benefits of reviving economic growth, just as central Government and the country will benefit from the rising prosperity that the Government’s policies are fostering. With services financed locally, councils are even more accountable to their electorates, rather than to Ministers in Whitehall. Even as a Minister in Whitehall, I say that this is how it should be.
Helen Jones
I am sorry, but the Secretary of State is being disingenuous. He knows that the whole local government finance system, set up under the previous Government’s Local Finance Act 2012, takes no account of need. His social care precept will raise the most money in areas that have the highest council tax base, not in areas where there is greatest need, which tend to have the lowest council tax base.
Greg Clark
The hon. Lady makes two interesting points. On the first point, about the formula, I agree with her. It is too long since the underlying assessment of needs was updated—it is more than 10 years—and that is why I have proposed to go back to the drawing board and look at the needs and the resources available to each county. She is quite right on that point. On the second point, of course she is right: I recognise that the effect of a 2% precept is different in different parts of the country. The better care fund has been allocated differently precisely to take account of that. I would therefore have thought she welcomed that.
Mark Spencer
Does the Secretary of State recognise that councils that are progressive in supporting business and providing housing for their constituents will actually get a more generous income in future than those that do not support businesses coming into their area?
Greg Clark
My hon. Friend is absolutely right. It is of course better for councils to face in the direction of bringing successful businesses into their area and benefiting from that, rather than passing all such benefits up to the Exchequer.
A few moments ago, I mentioned the increasing elderly population, but, as I said to the hon. Member for Warrington North (Helen Jones), we have had a decade of significant demographic change without the needs-based formula—it determines how much a well-run council requires to deliver its services efficiently—being revised to reflect that change.
Greg Clark
The hon. Gentleman and the hon. Lady should be patient. I have given way to their hon. Friend, and I am going to make some progress.
That point was made repeatedly during the consultation by councils from all across the country and under the leadership of all political parties. That is why I will conduct a fundamental review of the needs-based formula to govern the change to 100% business rates retention, which I have described. It is not only the changing needs of different areas that need to be recognised, but the differing costs of providing services to residents depending on the area a council serves. As my hon. Friend the Member for Tiverton and Honiton (Neil Parish) was saying, the rural services delivery grant, which recognises the extra costs encountered by rural authorities in delivering services, is bringing £15.5 million into such councils this year. This settlement increases the grant more than fivefold to £80.5 million, which will ensure that there is no deterioration in Government funding for rural areas, when compared with urban areas, for the year of this statutory settlement.
Liam Byrne
The Secretary of State is being characteristically generous. However elegant the strategy, he must surely take a moment to look at the results. What Buckinghamshire gets from the Government will have been boosted by 11.4% by 2016-17, while Birmingham has been battered and is losing 10%. I welcome the shift to a needs-based formula, but surely he must see that massive discrepancies are emerging, when great cities such as Birmingham are being battered to bits.
Greg Clark
The right hon. Gentleman is an intelligent man, so he should go away and study the changes in the formula. When I met the former leader of his city, Sir Albert Bore, he recognised, as has the Institute for Fiscal Studies, that it is fair to proceed with an approach that looks at all the resources that are available to local councils. On that basis, his city of Birmingham, for which I have enormous ambition and regard, has benefited significantly. Of course, the transitional grant is for places that did not benefit from the changes in the formula.
Graham Stuart (Beverley and Holderness) (Con)
My right hon. Friend maintains a soft and genuine manner, which I admire, but I am made furious by the interventions by Labour Members, because when in power they skewed the whole system. They could not find a way to put the money into Labour areas without coming up with a falsehood. They put density into the formula at four times the weighting of sparsity, when there was no evidence whatsoever of any link between density and need. It was they who skewed the system, and it needs to be put right.
Greg Clark
My hon. Friend is a passionate advocate and he makes his case very well. I think that all Members across the House would recognise that after 10 years it is appropriate to look again at the cost of providing services in different areas—rural as well as urban—and at the changes in demographic pressures in that time. That sensible approach has been welcomed widely.
Dr Sarah Wollaston (Totnes) (Con)
Is it not true that the long-standing unfairness has been the penalty against rural areas? Areas such as Devon have a low-wage economy, but the highest council taxes. This settlement addresses that imbalance without penalising areas such as Torbay. I therefore congratulate my right hon. Friend on a very sensible settlement.
Greg Clark
I am very grateful to my hon. Friend. Every local government finance settlement has to strike a balance between the very different needs of different areas of the country. Most people who have reflected on the settlement that I have proposed, including the Local Government Association and the Institute for Fiscal Studies, have recognised that I have been fair to places, such as those she mentions, that have higher costs—Torbay has benefited from the change in the formula—and that I have committed to making sure that the new system for 100% business rate retention is founded on an accepted analysis of the costs and pressures that different authorities face.
Several hon. Members rose—
Greg Clark
I am going to make some progress, but I will give way to the Chairman of the Communities and Local Government Committee in a few moments.
Another important provision of the settlement is the continuation of the new homes bonus. It had not been guaranteed that the existing scheme would continue through the spending review period. I believe that the bonus has been a valuable source of funding for councils and a spur to much-needed house building, so I am very happy that the scheme will continue, subject to the changes on which I am consulting.
The settlement provides flexibility for councils with a record of keeping costs low by permitting a de minimis £5 a year council tax increase without requiring the cost of a referendum. We will consult on plans to permit well-run planning departments to increase their fees by, at most, the rate of inflation, as long as such income is used to decrease the existing cross-subsidy of the planning function by other council tax payers. Importantly, the settlement makes it clear that as revenue support grant declines, no council will have to make a contribution to other councils in either 2017-18 or 2018-19—something that was considered to be unfair in the provisional settlement by certain respondents.
Let me say a few words about the reductions in revenue support grant over the spending review period. As I have said, we are moving from one world to another; from a world in which the Government grant accounted for nearly 80% of local government expenditure in 2010 to one in which, by 2020, only 5% of local government spending power will come from the revenue support grant. In the same period, with the implementation of 100% business rates retention, the proportion of council spending power from local sources—council tax and business rates—will grow.
The reason for the change is not just financial. A council that is almost entirely dependent on central Government will, consciously or unconsciously, end up looking to central Government to be told what to do. Of course, since time immemorial, Governments have attached strings to the money they give out. My excellent predecessor, my right hon. Friend the Member for Brentwood and Ongar (Sir Eric Pickles), abolished 4,700 targets, measures and indicators to which every council in the country had to subjugate itself to obtain revenue to provide services for its residents.
That is no way for the proud towns, cities, counties and districts of this country to be governed. Places, many with a history as long and distinctive as our country itself, should not be reduced to complying meekly with Whitehall’s presumptuous demands. That is why a shift to funding from the people and businesses that councils exist to represent and serve, rather than all eyes being fixed on London, is so vital.
Our councils have been the strongest campaigners for this long overdue change, but in the consultation period that followed the statement on the provisional settlement, councils and colleagues made the compelling case that the transition to this new world needs to be sensibly managed and that the first two years of the settlement would pose particular challenges.
Greg Clark
I will give way in a second.
I agreed with those views, which is why I have ensured that the final settlement will include a transition fund worth £150 million a year to cover 2016-17 and 2017-18.
Rebecca Harris
My right hon. Friend spoke about Government attaching strings to their funding. It was a version of he who pays the piper calls the tune. Does he believe that we might be moving to a world that is much more democratically responsive not only to the local electorate, but to businesses? They have often felt neglected by their local council areas and they will now feel that they are rather more important and have a starring role.
Greg Clark
My hon. Friend is right. It was a ludicrous situation, whereby local councils levied business rates, collected them and sent them to the Treasury. Local businesses felt that they did not have the same direct connection as council tax payers with their local councils. The best run councils have always had a high regard for promoting business in their areas, and it is high time that they were rewarded and backed for that. The reforms do that.
Mr Betts
As the Secretary of State knows, I agree with the proposition that it is important that councils can raise more of their finance locally. It is not a question of whether, but how it should be done. A crucial element is the needs assessment review, which will set the basis for the new system of 100% business rates retention for the future. How does the Secretary of State intend to go about that? Will he fully involve the Local Government Association? Will he consider any independent element to the review to ensure that it is not seen as some sort of stitch-up by Government Members to look after their areas and ignore areas represented by Opposition Members?
Greg Clark
The hon. Gentleman has known me long enough to realise that, when I approach something, I do it seriously and rigorously. I take representations from everyone who has a sensible view to contribute, and I will certainly do that from local governments of all types. I hope that the hon. Gentleman and members of his Select Committee will contribute, as well as hon. Members of all parties who have a great deal of experience and knowledge of their constituents’ needs.
Under the proposed settlement, no council will receive less than was stated in the provisional settlement figures. However, the transition fund will ease the change from a system based on central Government grant to one in which local sources determine a council’s revenue. The fund will be applied in direct proportion to the difference in the revenue support grant that would have been experienced. It is as straightforward as that, whatever the Labour party’s conspiracy theories suggest. Indeed, some Labour-led authorities, including Lancashire, made the proposal. The transition fund will ease the pace of reductions in the first two years of the spending review period, after which income from other sources will grow.
The local government financial settlement is always important. It is the statutory act that allows councils to set their legal budget for the year ahead—the budget to deliver the services that we and our constituents rely on. This year the settlement contains some particularly important changes: indicative budgets for the entire spending review period to make longer-term planning a reality; a big increase in funding for adult social care, which is one of our councils’ most important responsibilities; action to help rural areas and a commitment to all councils that the move to 100% business rate retention will be accompanied by a fundamental review of the needs-based formula; and transition funding to smooth the long-overdue journey from our over-centralised state to a future where all money that is spent locally is generated locally.
Multi-year budgets have been delivered, social care prioritised, rural needs acknowledged, a fair funding review launched, and the devolution of funding advanced, and I commend the motion to the House.
Several hon. Members rose—
Mr Reed
My hon. Friend makes an important point. Actually, Surrey got more than £12 million. Surrey, which of course is where the Secretary of State just happens to be an MP, gets the most of any council. [Interruption.] The council next door to where the right hon. Gentleman happens to be an MP gets the most, with £24 million. Hampshire gets £19 million, Hertfordshire gets £14 million and the Prime Minister’s campaigning mum—admirable woman that she is—will be very pleased to see that Oxfordshire gets £9 million.
I am not criticising what those councils are getting. They did not deserve the scale of the cuts the Government had lined up for them, but then neither do Middlesbrough, Knowsley, Hull, Liverpool, Manchester, Birmingham, Darlington and all the other more deprived areas that have suffered far deeper cuts in the past six years but have been offered absolutely no help whatever.
Greg Clark
I suggest gently to the hon. Gentleman that if he aspires to be a Local Government Minister, a little geography might help. He is welcome to come to Tunbridge Wells. I would be happy to show him that delightful place. Since we are talking about geography, I am sure he is familiar with Durham County Council. In its submission to the consultation, it said:
“In our view, no authority can now claim that this approach is ‘unfair’”.
Does the hon. Gentleman agree?
Dr Roberta Blackman-Woods (City of Durham) (Lab)
I have absolutely no idea what the Secretary of State was saying or where he got it from. According to headlines in our local paper, the funding settlement for Durham has been slammed as unfair by the leader of the council.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. The hon. Member for Croydon North (Mr Reed) has to answer, and then he can give way to the Secretary of State.
Greg Clark
The hon. Member for City of Durham (Dr Blackman-Woods) asked a very reasonable question. The quote came from a document headed: “Durham County Council response to the 2016/17 Local Government Finance Settlement Consultation.” It states:
“The new approach is fairer and should never be reversed.”
Mr Reed
That is a misinterpretation of what Labour council leaders are saying. However much the Conservatives think this pre-council elections sweetener will work, the Rural Services Network is clear that this political bung will not change the dire financial crisis facing even rural councils over the next four years.
Mr Reed
No, I will not give way again. I will continue.
Some areas represented by Tory MPs, such as Stockton on Tees and Nuneaton, get nothing from the additional money. Those MPs need to ask themselves what their voters will think of MPs who vote for deep cuts and council tax rises for their own areas but throw millions at wealthier areas such as Tunbridge Wells.
Mr Reed
I have given way to the Secretary of State twice, and now I am going to continue.
I turn now to council tax. On Monday, the Secretary of State denied he had written to councils, telling them to put up council tax. Indeed, it was not the Secretary of State who wrote that; it was the Under-Secretary of State for Communities and Local Government, the hon. Member for Nuneaton (Mr Jones). [Interruption.]
Mr Betts
That was the next point that I was going to make. The Government should consider how the better care fund money could be distributed in a way that would help more poor authorities, but it would also be helpful—I know that the LGA has mentioned this—if more of that money could be provided until at least 2017-18, if not into the next financial year. I hope that the Secretary of State will consider that, because current back-end loading is a real problem.
The LGA has drawn my attention to the fact that the council tax base—which relates to the number of properties from which council tax will be raised—is assumed to rise by 7.8%. Will the Government explain precisely how they have made that calculation? It seems a very big increase indeed.
What account have the Government taken of the ability of clinical commissioning groups to help local authorities with their social care spending? In my own authority of Sheffield, the CCG has said that it faces a substantial reduction in its funding against the anticipated level for next year, but this year it is providing the council with £9 million of transfer funding to help it with its added social care provision. If that money is removed, any element from the better care fund or increased council tax will not be a substitute. I think that that is an issue for cross-departmental work.
The settlement will clearly result in cuts. The Secretary of State will argue that they will be less severe than those made in the last Parliament, but, of course, they are in addition to those that have already been made. In the last Parliament, when most of the larger percentage cuts were made in the metropolitan areas, which had the greatest needs and the greatest problems, we never once heard mention of a transitional arrangement to provide extra help for those councils. It has only come about now because the Government have developed a core spending power which includes council tax, and the richer councils happen to be more able to raise council tax. As they have suffered a bigger reduction in revenue support grant as a result of the initial spending announcement, a transitional funding arrangement has suddenly and magically been put in place for them.
Greg Clark
I think that, uncharacteristically, the hon. Gentleman’s memory is letting him down. He should recall that, in the last Parliament, there was a series of tariffs and top-ups to stop the bigger cuts being made. That money was top-sliced from the settlement. What I have now been able to do—and this was recommended by many authorities, including Labour authorities—is bring in new money from outside the settlement, and the hon. Gentleman should welcome that.
Mr Betts
I think that in the last Parliament there was a series of ceilings and safety nets, which is traditional in the operation of local government finance. I do not remember any occasion on which it was reported to the House, after the initial settlement, that extra money had been found to help metropolitan Labour councils that were suffering major cuts.
What will happen when the transitional funding comes to an end after the first two years of the settlement? Will the money be found from somewhere else, or will it be absorbed into the new review of needs? The Secretary of State announced that towards the end of the settlement he would effectively end the arrangement for negative revenue support grant, which affected some authorities. Which councils will pay for that, or will the money be found, again, from outside?
The way in which the needs assessment review is carried out is absolutely crucial. The Secretary of State has promised to involve the Select Committee and the LGA. Will he consider introducing an independent element at the outset? Perhaps initial assessments could be carried out by a body such as the Office for Budget Responsibility or the Institute for Fiscal Studies, on a politically neutral basis.
How can we begin to assess this process when we do not know the details of many of the other grants? When, for example, will the public health grant be announced, so that authorities know what they have to spend in that regard?
Let me return to the subject of my own authority in Sheffield. Its spending power is to be cut by 4.3%, which is more than the national average of 2.8%. There is also to be a £25 million cut in its revenue support grant. The reality for Sheffield is another £50 million of cuts in services: cuts in rate support grant plus extra spending needs coming on stream will mean a £50 million cut in services.
This is a very challenging settlement, even for an efficient council such as Sheffield, of which we can be proud. Indeed, we can be proud of the whole of local government for the way in which it has dealt with very challenging spending settlements over a number of years. It has dealt with them in a very efficient way—better than central Government, by and large. However, the cuts that local government is now facing are on top of the cuts it has already had, and they are eventually going to mean more library closures, more run-down parks and a whole number of worsening services.
As Chair of the Select Committee, I want to end on a positive note. The Committee as a whole has said that we want to work closely with the Secretary of State when the new funding arrangements for the 100% retention of business rates are implemented at the end of this Parliament, to ensure that those arrangements are put in place in the best possible way.
Barbara Keeley
Indeed; Tory Trafford. I was a councillor in Trafford, by the way, and I have to tell the Secretary of State that the council leader is not called Stephen Anstee; he is called Sean Anstee. The right hon. Gentleman has referred to him twice this week as Stephen—
Greg Clark
I thank my hon. Friend for giving way. I do not know why the hon. Member for Worsley and Eccles South (Barbara Keeley) is confused. I know Sean Anstee very well, and I have never been in any doubt as to his name.
Steve Double
I want to address the point about the transitional grant. I am happy to place on record that, as of Monday morning, I was one of the Conservative Members who would have been prepared to walk through the No Lobby this evening and vote against the Government. That was because the proposed settlement was unfair to rural areas. It would have widened the gap in Government funding between rural and urban areas. I campaigned passionately during the election to stand up for Cornwall as a rural area and to seek a fairer funding deal for it, and I was not prepared to support the proposed settlement.
It is a well-established fact that rural areas have had the raw end of the deal from central Government for decades, despite having some of the highest levels of deprivation in the country and a growing ageing population, with all the increased pressure that that places on the delivery of services and the increased demand that it creates, not to mention the additional challenges and costs of delivering those services in a rural setting. Yet places such as Cornwall have had to accept lower levels of funding for many years, not just for our local government, but for things such as our schools and police. I am proud that this Government, under the leadership of my right hon. Friend the Prime Minister, have started to address that issue—it has been going on too long. We have started to see extra money put into our schools and, through the rural services delivery grant, we have begun to close the gap in local authority funding.
When I looked at what was being proposed in the settlement, I was therefore disappointed to find that it would have widened that gap and started to undo much of the good work the Government have already begun. I could not have supported a financial settlement that was going to make an unfair system even more unfair to rural areas. If I had gone through the No Lobby tonight, it would have been my first rebellion against the Government. As someone who has a slightly inherent rebellious streak in their nature, I am slightly disappointed that my rebellion will have to wait for another occasion.
I am delighted to say that the Secretary of State has listened to the many voices from across the House from rural areas who highlighted that what was being proposed was simply unacceptable to rural areas. I want to place on the record my thanks to him for the way he has conducted this consultation. He met me, as well as my Cornish colleagues and MPs from many areas, and he listened to our concerns. I am not sure I am going to go as far as my hon. Friend the Member for North Dorset (Simon Hoare), who is no longer in his place, and offer a wet kiss, but I want to place on the record my great gratitude for the way in which the Secretary of State has listened to our concerns and come forward with proposals that address them.
Jim McMahon
I am very sorry for that slip, Madam Deputy Speaker.
The truth is that the five most deprived areas get absolutely zero—nothing—from this Government. At the same time, the five least deprived areas, together, share £5.3 million between them.
Greg Clark
I appreciate that the hon. Gentleman is new to this House, but first he should know that of course Trafford does not get any rural grant because it is not a rural authority. Secondly, he might want to reflect on the remarks that he made about my noble Friend Baroness Williams of Trafford, who is, and has been throughout her career, an excellent public servant. She has done great work, not only in Trafford, for Greater Manchester, and is a woman of the utmost integrity. I think he will want to reflect on that.
Jim McMahon
I am quite happy with my comment. There is a direct link between Government Members who had to be bought for their vote today and the fact that the only council in Greater Manchester to receive the transitional grant happens to be the place where the Local Government Minister lives. I am sorry about that, but I did not choose where the Baroness chose to be a council leader and chooses to live.
The crux of the issue is that the Government steered through the cuts in a very politically tactical way but have not at all understood their true impact, which has been found in review after review, and by the Public Accounts Committee in this House. If the responsibility of Government is to look after the welfare of their citizens, then on that test I am afraid they have failed.
Jenny Chapman (Darlington) (Lab)
I was hoping I was not going to be the next speaker because I am speechless after that peroration by the hon. Member for Beverley and Holderness (Graham Stuart). It is extraordinary what this Government have managed to do in pitting town against village, the north against the south, and the metropolitan areas against the shires. It is disgraceful. They have created division by the decision they made on the original settlements and then by finding this magic, back-of-sofa money. I have never known anything so deliberately partisan. I did not believe I would ever see anything like it.
I admire the hon. Member for St Austell and Newquay (Steve Double), who is no longer in his place, for at least having the honesty to come to the Chamber and tell colleagues he was thinking of voting against the Government today, but that he had changed his mind. He changed his mind—he was very open about why—because his council will get some extra money. He therefore felt that he could vote with the Government. Well, give me some extra money and I might think about doing so!
I do not resent Conservative Members for being good champions of their areas and winning some extra funding for their councils—that is one of the things we are in Parliament to do—but I hope that they enjoy the extra money they get and that they win the shire council seats for which it was clearly designed to ensure victory. I hope that they enjoy that, but that they realise it will happen on the back of services in my area and those of my hon. Friends the Members for Oldham West and Royton (Jim McMahon) and for City of Durham (Dr Blackman-Woods). These are the services for deprived children, the children centres that are closing in my constituency, and the libraries that are closing—
Jenny Chapman
My constituency has two libraries, both of which are to close. The market at the heart of my town is set to close. I hope Conservative Members enjoy the extra funding that they will receive, because my town and the people in my town are angry. I have never seen them this angry before. They are angry about what is going to happen, but also about the unfairness.
Jenny Chapman
I will not give way. Why should I give way? Why should I give way to the Secretary of State who is ripping the heart out of my constituency? Why should I give way to him? He had half an hour at the Dispatch Box; he made a statement on Monday; he had Communities and Local Government questions on Monday. He has dismissed all attempts by Labour Members to lobby him. He has provided nothing for my constituency. My constituency is a town the same size as Wokingham. My constituency gets nothing from transitional funding—not a penny. In fact, we will lose £2,000 a year. Wokingham is getting £2.1 million of additional funding. The two towns are the same size and have completely different needs. My town is losing out.
Jenny Chapman
I am not going to give way. I am going to allow other Members to make the case for their constituencies. I hope the Secretary of State listens to what we are saying and takes it on board. I know that he is familiar with my part of the country. He needs to think about the needs up there, because the people of the north-east will never, ever forgive this Government for what they are doing to our region.
Dr Roberta Blackman-Woods (City of Durham) (Lab)
Let me begin by providing clarification to the Secretary of State about comments on fairness from Durham County Council—this is via the wonders of modern technology—that related to certain aspects of the provisional settlement and not to the total or final settlement. The council said that the settlement would put the county at a huge disadvantage, and that none of the extra cash has been targeted at areas with the greatest need. It added that the settlement was “unfair” and “far too late”, and I hope that the Secretary of State will accept that clarification.
Greg Clark
It is clear that that is a response to the statutory consultation, and to reassure the hon. Lady that I am not taking anything out of context, the section that I quoted from is entitled, in bold, “Fairness of Settlement” and states:
“In our view, no authority can now claim that this approach is ‘unfair’.”
It is as clear as day.
Dr Blackman-Woods
I think that is the fourth time we have heard that from the Secretary of State this afternoon, but that does not make it right. Durham County Council has clarified that, and it thinks that the settlement is totally unfair.