Local Government Finance

Helen Jones Excerpts

Wednesday 8th February 2012 Commons Chamber

[Grant Shapps]

My hon. Friend is absolutely right. While he tries to expand his argument to cover measures such as the un-ring-fencing of some £7 billion of expenditure each year, it is revealing that the Labour party does not want to acknowledge that we are living in tough times. They do not acknowledge that we have done a series of things, including keeping councils in four different bands, each with a different floor level, and ensuring that the most dependent areas see their funding fall by proportionately less overall.

[Helen Jones (Warrington North) (Lab)]

The Minister’s argument totally ignores the differences between council tax bases in different authorities, and the amounts that authorities can raise from a similar rise in council tax. On business rates, he is ignoring the fact that all predictions show that even if top-ups and tariffs are uprated by the retail prices index, the gap between the wealthiest local authorities and the poorest will grow under the Government’s plans.

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[Grant Shapps]

This measure will ensure that local authorities have a stake in the economic well-being of people in their communities—the person living behind the door at No. 22 or wherever—and in whether they can get back into work and off welfare, for example. It is absolutely right to localise council tax benefit, simply because it gives the local authority a stake in helping that person back to work. At the moment, the money goes directly from the centre to the individual, and the local authority does not play a part. In the same way, the local authority currently has no stake in attracting more businesses to an area or in building more homes.

[Helen Jones]

Will the Minister admit that 80% of economic development is down not to what local authorities do but to what the Government do—or, in this case, what they do not do. He is making the mistake, again, of assuming that people receiving council tax benefit are all out of work. The people who will be hardest hit by his scheme will be poor families in work.

[Grant Shapps]

First, I think that 80% of business development comes from businesses, not from government, whether local or central, but we might just have a different view about that. Secondly, it is hard to take historical figures, such as the hon. Lady’s 80% figure, and project them forward, simply because we do not know what will happen. We have created in this country a local government finance system entirely divorced from economic realities. Frankly, under the current system, it has made no difference to councils whether businesses have survived or thrived in their local areas. That is wrong, and that is what we will turn around. It is absolutely right to do that.

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[Helen Jones (Warrington North) (Lab)]

We have heard numerous examples of the damage being inflicted on local communities by the Government’s slash and burn approach to local authority spending. It has inflicted on councils larger cuts than any Government Department has taken, without planning or looking at the effect on individuals, and even without any thought of the longer-term economic consequences.

My hon. Friends have highlighted the situation very well. My hon. Friend the Member for Sheffield South East (Mr Betts) talked about front-loading of the cuts making it impossible to plan, and the uncertainty local councils face. My hon. Friend the Member for North Tyneside (Mrs Glindon) gave powerful examples of what is happening, and talked about the cuts in school food provision and the increase in home care charges. My hon. Friend the Member for North Durham (Mr Jones) talked about the injustice of the cuts to front-line services in his area, and my right hon. Friend the Member for Knowsley (Mr Howarth), speaking for one of the most deprived authorities in the country, highlighted how the cuts are being inflicted on the poorest communities. All have shown how people are having to live with the harsh realities of life under this Government.

Of course, the Government, far from trying to hide the fact that they are hitting the poorest most, are quite up-front about it. The Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), in a quote he should be reminded of again and again, said:

“Those in greatest need ultimately bear the burden of paying off the debt”.—[Official Report, 10 June 2010; Vol. 511, c. 450.]

That’s it then—not the bankers, not the millionaires in the Cabinet; the poorest pay the price. Same old Tories, and, apart from the hon. Member for Portsmouth South (Mr Hancock), same old Lib Dems: always telling us they are going to do “something”—we know not what—and then trooping through the Lobby desperate to hang on to their chance of a ministerial car. It is said that it profits a man nothing to give his soul for the whole world—but for a Honda Civic? Really! Once again, we see the poorest paying the price and, in the second year of this settlement, the damage being inflicted on the most vulnerable people.

As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) reminded us, the Government began with cuts in the working neighbourhoods fund and the Supporting People grant, which helped 1 million people, including victims of domestic violence and people with mental health problems. The Government have gone on to entrench that unfairness in the system and so we see, for example, that by the end of the two-year period Liverpool will have lost £235 per person in spending power, Manchester’s figure will be £186, Birmingham’s will be £155 and Nottingham’s will be £147. Those are the cities that the Government say are going to lead our economic revival. It is not even a case of one half of the Government not knowing what the other half is doing, because one half of the Department does not know what the other half of the Department is doing either.

Let us have a look at what happens in other authority areas. Wokingham council, our favourite authority, actually gains overall from this settlement. Dorset, taken as a whole, has a cut of 10p per person, while the figure for Richmond upon Thames is 80p and the figure for the Windsor and Maidenhead authority is a massive, by its standards, £2.20. What do many of those authorities have in common? They contain the constituencies of Cabinet Ministers. Does that not make nonsense of this statement from the Deputy Prime Minister:

“Our core aim is to hard-wire fairness back into national life”?

Tell that to the people who have lost their Sure Start programmes, and to the elderly people and disabled people who are paying more for home care or who are not getting that care at all because the eligibility criteria have changed.

[Bill Esterson]

rose—

[Helen Jones]

My hon. Friend will have to forgive me for not giving way, but we are short on time.

Tell that to the people whose community centres, libraries and day centres have closed. The truth, which Government Members have to face, is very simple: people who are wealthy can buy themselves out of those cuts, because they can pay for care and buy their books, but the people the cuts hit most are those who cannot do that. I am talking about the people who have paid their taxes all their life and then find that they cannot get care in their old age and that their sons and daughters are caught between trying to look after them, to work and to look after their children. I am talking about the families on low wages who go out to work every day and want their children to get on but cannot afford to buy all the books they would like and are dependent on their libraries. [Interruption.] I hear the muttering from the Parliamentary Private Secretaries and I know that the Tories are going to say, “We do not do this because we want to, but because we have to.” Let us start nailing that myth, shall we?

In the year from autumn 2009 to autumn 2010 the economy grew at 3.9% and unemployment was falling. So successful have the Tories been that the economy is now in negative growth, the level of unemployment is nearly 2.7 million and, scandalously, one in five of our young people is unemployed—and borrowing is increasing. The Government’s approach has not worked. They could, of course, have worked with local authorities on long-term savings and they could have assisted local authorities to use their spending power to help tackle those problems. Before they started their cuts, the local authority procurement budget was £34.2 billion, most of which was spent with small and medium-sized firms. Councils such as Tameside—it did this through its Tameside investment project—were using their purchasing power not only to build new schools, but to assist local firms; it put £15 million into local companies.

[Andrew Gwynne]

I am grateful to my hon. Friend for mentioning “Tameside Works First”, the initiative of my local authority. Is she also aware that Tameside council had 700 young people on the future jobs fund, which was scrapped by this Government?

[Helen Jones]

My hon. Friend makes a good point, and I shall be dealing with that matter in a moment. The Government could have worked with local authorities to use that purchasing power, but what they failed to understand was that when it is cut too far, too fast, those local companies do not expand—they contract or go bust. The Government, while taking that approach, have taken away every lever local authorities had to help their local economies. Nottingham alone lost £6.5 million from the scrapping of the future jobs fund. My hon. Friend the Member for Denton and Reddish has mentioned Tameside—[Interruption.] If the Minister wants to intervene, I will be happy to let him.

[Grant Shapps]

Will the hon. Lady repeat something we heard for the first time in the Chamber a couple of hours ago, which is that those on the Front Bench deplore the fact that Nottingham city council will not publish its expenditure online?

[Helen Jones]

We believe that all councils should publish their expenditure and we would like the DCLG to set an example by not being so far behind the curve in publishing its expenditure, too.

The Government took away the community growth fund and abolished regional development agencies. Scandalously, they will not even let local authorities participate in the Work programme so that the very people who understand their local communities best and have long-term relationships with local businesses are excluded from it. That is the problem with this settlement. It is sending local areas, many of them the most deprived in the country, into a spiral of decline. People are facing cuts to services, increases in charges and a loss of jobs.

Some 129,000 local government jobs have already gone and more than 700,000 are likely to go. What happens then? Those people cannot spend money in the local economy, so private businesses lose revenue and as they suffer they lay people off. Local councils are locked in a spiral of more and more demands on their services and less and less revenue. That is why we oppose this settlement. It is unfair, it hits the poorest most and, most of all, it is economically illiterate. I urge my hon. Friends to oppose it tonight.