Hilary Benn
Main Page: Hilary Benn (Labour - Leeds South)(11 years, 10 months ago)
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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.
Robert Neill (Bromley and Chislehurst) (Con)
Does the right hon. Gentleman stand by the £52 billion of cuts for 2014-15 that appeared in his Government’s Treasury pre-Budget report in 2009? If not, what cuts would he make, and where?
Hilary Benn
I do indeed stand by the statement my right hon. Friend the Member for Edinburgh South West (Mr Darling), when Chancellor of the Exchequer, placed before the House and the country. I remind the hon. Gentleman that when he and his colleagues came into government the economy was growing—[Interruption.] It was. There is no good shouting about it. The signal achievement of the Chancellor over the past three years has been to put the British economy flat on its back, which is why we are in such difficulty.
The consequences of what is going on are these: first, local government is having to deal with cuts that are unfairly distributed; secondly, residents are having to come face to face with the consequences of those cuts; and, thirdly, the changes to council tax benefit are being made even worse by the effects of the overall cuts to council budgets. I want to address each of those in turn.
The Local Government Association says that
“funding for local government is projected to fall by 3.9% in 2013-14 and a further 8.5% in 2014-15. This means that the grant to local government will fall by 33% in real terms over the current spending review period.”
It is not possible, by any measure, to call that scale of reduction modest. The LGA goes on to say:
“Modelling work from the local government association shows a funding gap of £16.5 billion by 2019-20, if reductions in support continue on current trends.”
It is not modest; it is massive, and it is about time that Ministers started to recognise the truth of what they are doing.
If denial was not bad enough, the language that Ministers have used about those who are serving in local government has been, frankly, extraordinary and offensive. According to The Daily Telegraph, the Conservative council leaders of Derbyshire, Essex, Buckinghamshire, Wiltshire, Lincolnshire, Leicestershire, Kent and East and West Sussex wrote to the Prime Minister last month to complain about the Ministers on the Government Front Bench. They referred to “patronising language” and said that the nature and tone of constant criticisms of councillors’ work by Conservative Ministers is “most worrying”. They also highlighted
“ill-informed…criticism and sometimes highly inaccurate personal attacks.”
They—remember that these are Tory council leaders—concluded by saying:
“We believe it is essential to bring to your attention our concerns regarding some government policy affecting local government, the rhetoric that accompanies it and the effect it is having on our people.”
It is no good Ministers asking local government to take on an enormous challenge—which it is doing—if at the same time the people they expect to step up and respond are criticised, patronised and belittled.
Perhaps the Minister will explain why allowing councillors to save for a pension has, in his words,
“a corrosive influence on…independent thought”—[Official Report, 19 December 2012; Vol. 555, c. 105WS.]
Let us stop and think about that statement. If being able to save for a pension has a corrosive influence on independent thought, what hope is there for all of us in this House? That is an insult to councillors and it shows a fundamental lack of respect for people who are working really hard to cope in difficult circumstances.
Mr Betts
Is my right hon. Friend aware that the Communities and Local Government Committee produced a report recently on councillors and the community? We looked at the barriers experienced by people, particularly younger people in work, in becoming councillors. Many of them lose income because they give up work and have to attend council meetings. Is it not an absolute disgrace to suggest that they should give up their pension as well, so that their income suffers in later life, and a discouragement to people of working age from becoming councillors?
Hilary Benn
I agree completely. What makes it even more inexplicable is that elected mayors will be able to keep their right to save for a pension. That is what the Minister announced. Will his colleague, the Under-Secretary of State for Communities and Local Government, the right hon. Member for Bath (Mr Foster), explain when he winds up the debate the difference, in time, effort, commitment and dedication to the job, between an elected mayor and the leaders of Birmingham, Manchester and Leeds city councils, who also work full time and are dedicated and committed to their jobs?
According to the LGA, 19 December was the latest that a provisional local government financial settlement has ever been published. This has caused problems for councils trying to finalise their budgets for the forthcoming year. Council representatives to whom I have spoken talk of errors and double counting in the provisional settlement, which the Under-Secretary of State for Communities and Local Government, the hon. Member for Great Yarmouth (Brandon Lewis)—perhaps not surprisingly—did not mention and which does not inspire confidence. Will he explain how that came to pass and what steps he is taking to ensure that it does not happen again?
When the provisional settlement was announced, the Secretary of State said:
“Concerns that the poorest councils or those in the north would suffer disproportionately are well wide of the mark. The spending power for places in the north compares well with those in the south.”—[Official Report, 19 December 2013; Vol. 555, c. 874.]
I am afraid that the figures simply do not support that assertion.
Let us take a comparison between Wokingham, which the Minister referred to, and Leeds. The final figures in the Government’s documents show that spending power per dwelling in Leeds will be £1,874 in 2013-14, while in Wokingham it will be £1,815. The following year, it will be £1,800 for Leeds and £1,796 for Wokingham—a difference of just under £5. It is clear that the figures do not take account of relative need, because the percentage of children in out-of-work families in receipt of child tax credit is three times higher in Leeds than it is in Wokingham, the percentage of 18 to 64-year-olds claiming income-based benefits is more than three times higher in Leeds than it is in Wokingham, and the percentage of the population claiming incapacity benefit or disability living allowance is twice as high in Leeds as it is in Wokingham. How can that be fair?
Andrew Gwynne
I am sure that my right hon. Friend has seen the heat map produced by Newcastle city council. Was he as surprised as I was to notice that the only council in the midlands and the north, from the south-east right the way up to the borders of Scotland, to have a reduction of between zero to £50 per head was Cheshire East—the local authority of the Chancellor of the Exchequer?
Hilary Benn
My hon. Friend is absolutely right to point that out. I cannot say that I am surprised, given that the central point I am attempting to make is that the way in which the cuts have been allocated is fundamentally unfair.
If the Minister and Secretary of State do not accept that, then what about the Audit Commission? Last November, it produced a report called “Tough times 2012: councils’ financial health in challenging times”, which said:
“Councils in the most deprived areas have seen substantially greater reductions in government funding as a share of revenue expenditure than councils in less deprived areas.”
It could not be stated more clearly. That probably explains why the Secretary of State is so keen to get rid of the Audit Commission: how inconvenient that such an organisation dares to speak truth unto power.
The Secretary of State came up with the measure of spending power in 2010. Ministers now publish figures on spending power per dwelling but not on spending power per head of population. This is perhaps unsurprising given what the figures show. Taking into account this settlement, in 2014-15 the 10 most deprived local authorities in England will lose six times more spending power per head of population than the 10 least deprived local authorities, compared with 2010-11. No wonder Ministers did not want to present to the House figures based on population. The councils that will suffer the biggest cut in spending power over the two years are Liverpool, Hackney, Newham, Manchester, Knowsley, Blackpool, Tower Hamlets, Middlesbrough, Birmingham and Kingston upon Hull.
Graham Jones
Sat right in the middle of that list are the district councils of Burnley and Hyndburn, which are taking cuts of the same size but have a budget that is a fraction of those unitary authorities. The scale of the cuts is horrendous in those councils.
Hilary Benn
My hon. Friend is right. He anticipates what I am about to say, because how can that list be fair?
The Prime Minister says that we are all in this together, though less frequently these days because he gets laughed at when he attempts to do so. However, in this settlement, his local authority, West Oxfordshire, which is one of the least deprived in the country, ranking 316th out of 325 in the indices of multiple deprivation, is getting an increase in spending power of 3.1%, whereas some of the most deprived areas, such as Hastings, which we heard about earlier, and Burnley, which are respectively 19th and 11th out of 325 in the indices of multiple deprivation, are facing the maximum cut in their spending power, on the Government’s own measure, of minus 8.8%. How is that fair?
Lilian Greenwood (Nottingham South) (Lab)
Does my right hon. Friend think that Government Members are not even interested in protecting the most vulnerable? As the former local government Minister, the hon. Member for Bromley and Chislehurst (Robert Neill), who is in his place, put it:
“Those in greatest need ultimately bear the burden of paying off the debt”.—[Official Report, 10 June 2010; Vol. 511, c. 450.]
Is not that exactly what they are about? They are not interested in the people in Nottingham and elsewhere whom we represent.
Hilary Benn
My hon. Friend is right. That quote sums up wonderfully the philosophy the Government have brought to the cuts they are making.
Mr Kevan Jones (North Durham) (Lab)
What the Conservatives are doing does not surprise me; they are helping their own areas. Does my right hon. Friend recognise that in the recent announcement on support for rural councils, Durham county council was in but is now out for an unexplained reason?
Hilary Benn
We had a debate on Monday. Different areas have different needs and I acknowledge the particular challenges that local authorities serving rural areas face. The Government’s job is to balance all those things and come up with something that can be seen as fair.
Graham Jones
My right hon. Friend mentioned the small district councils of Burnley and Hyndburn, which are taking huge cuts that are almost the size of those in metropolitan areas such as Liverpool. The 8.8% figure he mentioned includes the efficiency grant, which is a two-year payment. After those two years, it is removed and they are facing a cliff edge that is far beyond 8.8%.
Hilary Benn
My hon. Friend makes the point about the circumstances his local authorities face extremely forcefully.
What does all this mean for the future financial sustainability of local government? The National Audit Office recently published a report that makes it clear that cuts to councils budgets are having a direct impact on front-line services, even though the former housing Minister went before the Select Committee, I think in 2010, and said that there should not need to be any cuts in front-line services. The Chair of the Public Accounts Committee, my right hon. Friend the Member for Barking (Margaret Hodge) was very direct in her response. She said of the findings from the National Audit Office on local authorities:
“I am alarmed to hear that 12% are now at risk of being unable to balance their books in the future, according to local auditors, with potentially disastrous consequences.”
It is worth reflecting on those words: more than one in ten councils are now at risk of being unable to balance their books in the future—that is what the NAO says. The Secretary of State may say that the graph of doom is scaremongering on the part of the LGA. Will he also say that this is scaremongering on the part of the NAO? If he does not say that, what is the Government’s answer to the picture unveiled by the NAO?
Steve Rotheram (Liverpool, Walton) (Lab)
The mayor of Liverpool has invited the Secretary of State to our city to have a look at the books for himself, so that he can point to where the city council is not making the efficiency savings the Government believe it should be making. Does my right hon. Friend believe that the Secretary of State should take up that challenge?
Hilary Benn
I very much hope that the Secretary of State is willing to accept that challenge; it would be good for him to see impact of the cuts.
Hilary Benn
I am grateful to my hon. Friend for reminding us. I do not know whether the Secretary of State will indicate whether he will accept the kind invitation he has received. There is no answer at the moment, but perhaps my hon. Friend the Member for Liverpool, Walton (Steve Rotheram) will find out subsequently.
One of the problems councils face is that there is some uncertainty in the system, because of the big change the Government are bringing in as a result of this statement. The truth is that it remains to be seen how local authorities will benefit from business rates localisation, particularly because the Government have given themselves so many ways in which they can take some of that growth in business rates for themselves. The business rate projection for each local authority has been averaged out over two years. Why did the Minister decide on a two-year period, rather than averaging out over a five-year period as his own consultation suggested?
On business rate appeals, although the Government have increased the adjustment of that to £593 million, will the Minister say whether he is confident that that will be sufficient given that the LGA says that appeals in the pipeline could be considerably larger than this, thus exposing local government to an unacceptable level of risk? Why did Ministers change the 2012-13 baseline to include cuts that would not take place until the next financial year? Was it to try to make the reductions in spending power look less than they actually were? I welcome the increased allocation for the public health grant, but because it is ring-fenced it does not really change the reduction being imposed on councils for all the other services for which they are responsible.
Finally—a lot of other Members want to speak—I turn to council tax benefit. Last year in this debate, I suggested to Government Members that they take a long, hard look at what this would mean for their constituents, including in areas where the proportion of pensioners was higher than average. Now that the change is almost upon us, many people in all our constituencies frankly have no idea what the coalition Government have in store for them.
Andy Sawford
May I draw my right hon. Friend’s attention to the evidence presented to the Communities and Local Government Committee on council tax benefit, including from councils such as Conservative-controlled Croydon, which is predicting a crisis when this comes in, particularly a huge rise in homelessness?
Hilary Benn
My hon. Friend makes a powerful point. As I was about to say, a number of families will be hit, not just by one thing, but by several of the changes. It is the accumulative impact that will be so striking.
In its briefing for today’s debate, the LGA wrote:
“Authorities will have to introduce council tax support schemes against the backdrop of a ten per cent cut in funding for this scheme. In practice this means that many councils will have no choice but to pass the cut on to the working age poor.”
The technical details are causing concern. London Councils, in its briefing on the settlement, wrote that it was disappointed with the lack of transparency around the funding for council tax in the future. It wrote:
“From 2014-15 the funding calculations for council tax support will be lost within the wider formula funding allocations and will be subject to the broader cuts to local government funding. However by including this funding within overall formula funding, it means that this already reduced sum could well be altered again”.
It wrote that it would become almost
“impossible to identify what a local authority actually receives for its local scheme”.
Will the Minister confirm that and explain the reasoning behind his proposed change?
We know that last autumn the Government panicked and announced their transition scheme worth £100 million, because they knew there was a car crash heading their way. Especially since councils finalised their council tax support schemes, which they had to do by the end of last month, it has become clear that a large number of councils, including the Secretary of State’s council of Brentwood, are not taking any of the transitional grant. Why is that? The report that went to Brentwood council made it clear that it would have cost it more to do so. It would have received just over £100,000 from the transitional fund, but it would have cost it an extra £300,000 to have taken it. That is not much in the way of help. It is more the economics of the madhouse.
We know that councils are trying to do their best to protect the vulnerable, but the 10% cut in funding, which comes on top of the further cuts announced in this settlement, leaves many with no option but to increase council taxes for the poorest. What does this mean for families? It is a tax rise on people who work hard—do not forget that some people receiving the benefit are in work—carers, the disabled and single mums, and it is happening because while the Secretary of State has spent a lot of time these past two years touring the country, pointing the finger at councils and saying, “You must freeze council tax”, all along he has been masterminding a council tax bombshell for those who can least afford it.
About 2 million people will remember April this year for the bills that will land on their door mats—bills that will tell them either that they have to pay council tax for the first time or that they face an increase. Why will those people, including those in authorities that decide to freeze the council tax, have a bill on their doormat? They are being singled out by the Chancellor and the Secretary of State because they have one characteristic in common: they do not have a lot of money. I say to the Minister that that is what I call a kick in the teeth.
Those same families will be looking at the TV and the papers and discovering that something else is happening in April. Bigger payslips will be dropping on to other doormats—those of people earning more than £150,000 a year, and those earning more than £1 million a year, because the Prime Minister, the Chancellor of the Exchequer and the Secretary of State have decided that those people really need a tax cut of £100,000 a year. How is that fair?
I will tell the House what this will mean in Leeds. According to the council, an estimated 41,000 families will be hit by this tax increase and by the Government’s equally unfair bedroom tax. In some cases, families will be hit twice over. In practical terms, it will mean that £9.4 million will be taken out of the pockets of people on the lowest incomes in Leeds to pay for higher rent and for higher council tax. Councils will be forced, once again, to start chasing people for money that they might not have—in some cases, small amounts of money—in a way that we have not seen since the days of the hated poll tax.
Mr Kevan Jones
Does my right hon. Friend agree that, in communities such as mine, the changes will have a dramatic effect on the local economy? The one thing that those people do is spend their money in the local economy.
Hilary Benn
My hon. Friend is absolutely right. The measures will take potential spending power and demand out of the local economy at a time when we have a crisis of growth. They are economically illiterate, as well as profoundly unfair. It is little wonder that the former Conservative Cabinet Minister, Lord Jenkin, who knows a thing or two because he was the man who designed the original poll tax, has called the Secretary of State’s plan—yes, it is his plan—the “poll tax mark 2”.
The settlement needs to be seen for what it really is. Despite the Government’s attempts to hide the truth, it is unfair and unjust. It is unfair to local residents who rely on their local services, and it is unjust in the way it hits the poorest areas and the poorest people hardest. That is why we will vote against the local government finance report today.