Local Government Funding

Helen Hayes Excerpts

Wednesday 3rd February 2016 Westminster Hall

[Helen Hayes (Dulwich and West Norwood) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate my hon. Friend the Member for Leicester West (Liz Kendall) on securing this debate. There can be no doubt that local government has been hit harder than almost any other area of the public sector over the past six years of the Government’s austerity programme. Among local authorities, councils with the most deprived populations have been hit the hardest of all. I represent part of Lambeth and part of Southwark. For simplicity, I will talk about Lambeth today, but exactly the same picture is played out across the border in Southwark.

Lambeth Council is the 29th most deprived area of England, and it has experienced the 13th highest level of cuts to date, with tens of millions of pounds of cuts still to come. Councils have been through six rounds of efficiency savings, and Lambeth has consolidated the number of core office buildings from 14 to two, reduced the number of staff by 1,000, cracked down on fraud to raise an additional £3.6 million and innovated to deliver more services online and share services with neighbouring boroughs, but it has lost more than 56% of its Government funding since 2010. Despite efficiency savings and innovation, cuts of that scale mean that the council still faces further impossibly difficult choices.

As the Prime Minister is aware, cuts to front-line services are hard to bear. Councils are increasingly forced to make a kind of Hobson’s choice between: the essential statutory services upon which our most vulnerable residents rely, such as the safeguarding of children and social care for older residents; the services that bind us all together, such as libraries, parks and street cleaning; and the services that help us build for the future, such as planning and school places.

The Government have taken a system designed to allocate resources to councils on the basis of need and turned it on its head, so that the councils with the greatest needs are dealt the greatest cuts. While the Government have cut, needs have continued to grow. The Government’s disastrous approach to housing has resulted in a dramatic increase in families presenting as homeless and needing temporary accommodation. Lambeth’s expenditure on temporary accommodation has increased from £2 million in 2011 to £11 million last year, and an ageing population means that the need for social care continues to grow.

By 2020, councils will receive no revenue support grant from the Government and will be funded entirely from council tax and business rates, with 55% of funding coming from business rates. That is a fundamental shift from a system of local funding based on allocation according to need to a system that will benefit councils with strong council tax raising abilities, a large business sector and the capacity for economic growth. Although there will undoubtedly be some winners in that system, there could potentially be some very big losers. There are big questions about how the Government will redistribute funding to councils with significant need to ensure that those with limited capacity to raise additional business rates do not face unacceptable consequences.

There is limited time today, and I will finish on time, but I hope that the Minister will answer some of those big questions about the mechanism for redistribution, and about the better care fund and how it will be distributed across the country. Without those clarifications, this major reform of council funding is a big leap into the unknown, fraught with risk.

[Philip Davies (in the Chair)]

Order. I call Jack Dromey.