Local Government Finance

Hilary Benn Excerpts

Thursday 18th December 2014 Commons Chamber

[Hilary Benn (Leeds Central) (Lab)]

I am grateful to the Minister for giving me advance sight of his statement, and at least Ministers have chosen to come to the House today rather than having to be summoned, as happened last year.

In its recent report “Financial sustainability of local authorities 2014”, the National Audit Office found that the Government

“will reduce its funding to local authorities by 37% in real terms between 2010-11 and 2015-16”.

Will the Minister confirm that this is the case, and that the Government are going ahead with a 10% reduction in the main component of Government funding to local authorities in 2015-16, as also reported by the NAO? Councils have experienced the biggest spending reductions in the public sector, and they have done an extraordinary job in trying to deal with that, but they rightly resent the Secretary of State claiming, as he did, that the cuts are “modest” and that Local Government Association fears for the future are “utterly ludicrous”. Does the Minister still agree with those statements, given that in an open letter last month, a large number of council leaders, including 40 Conservatives, said bluntly:

“Services such as libraries, leisure centres and road maintenance continue to buckle under the strain of cuts and the ever-rising cost of caring for our growing elderly population”?

The Audit Commission has confirmed that

“Councils serving the most deprived areas have seen the largest reductions in funding relative to spending”.

That is still happening.

Why is it that the most disadvantaged communities are yet again being hit the hardest? Why is it that by 2017, the city of Liverpool, the most deprived local authority in the country, will have lost over half its Government grant compared with 2010? Why is it that Wokingham is on course to have a higher spending power per household than Leeds and Newcastle, despite those cities’ greater need? Why is it that, having claimed that those with the broadest shoulders should bear the biggest burden, Minsters have done the very opposite to local government? Given the complacency of the Department for Communities and Local Government, is it any wonder that the National Audit Office found that the Department had

“a limited understanding of the financial sustainability of local authorities”?

What is the Minister going to do about that? Councils are showing

“clear signs of financial stress”.

What contingency plans do Ministers have to deal with the potential failure of local councils? The truth is that the Government either do not want to know what is going on or do not care. Tough times do indeed require tough decisions, including on spending, but there is no justification whatever for taking the most from those who have the least.

I have a number of specific questions to put to the Minister. How many councils will face the maximum reduction in spending power of 6.4% in 2015-16? Will he accept the NAO’s advice and in the final settlement publish figures detailing the change in individual local authority income in real terms since 2010-11, so that the cumulative impact of funding reductions is made clear? How have the Government accounted for the better care fund when calculating 2015-16 funding reductions? Can he confirm that the new homes bonus actually takes money away from the most disadvantaged communities and gives it to areas where the new homes would probably have been built in any case? Does he not think that that funding could be more efficiently allocated to areas based on need?

Will the Minister confirm that the Secretary of State lost his battle with the Chancellor to save the local welfare assistance fund? It is clear that this year’s separate grant will now go and will not be replaced with any new money. That means that councils with the greatest need will face the greatest difficulty, because they are already facing the biggest cuts in funding. How much of the funding held back for the business rates safety net in 2013-14 is required for safety net payments, and what will be the total amount held back in 2015-16? The Minister talks about business growth incentives, so why will he not allow combined authorities to keep 100% of business rate income growth? Why has there been no economic devolution to counties? How will the business rates review affect the proposed revaluation in 2017?

On the impact on front-line services, 324 libraries have closed since 2011. What assessment has the Minister made of how many more will go as a result of this statement? How many more children’s centres will close, on top of the 578 that have gone since the Secretary of State took office? What effect will this statement have on women’s refuges, school crossing patrols and day centres for the elderly? We have just had an urgent question on the crisis in accident and emergency departments. Has it not occurred to Ministers that one reason why this is happening is the cuts that councils have had to make in social care? That is why the number of people over the age of 90 going to A and E in a blue-light ambulance has increased by nearly 50% in recent years.

In difficult times what councils need is fairer funding, help with longer-term funding settlements so they can plan ahead to protect services, and more devolution of power so they can work with other public services locally to get the most out of every pound of public funding. Nowhere is that needed more than in health and social care. If the loss of services we have seen already is only part of what the Chancellor and the Secretary of State have in mind for local government in the years ahead, let me tell the Minister that Labour Members will not be joining him in a headlong rush back to the 1930s. What hard-working councillors and communities wanted today was recognition of the increasingly stark choices they face and some practical help. Instead all they have got is Ministers who have no idea what is really going on.

[Kris Hopkins]

I am really disappointed with the right hon. Gentleman’s tone. There was no sense of guilt or shame about the situation we were left in when we came to power. Let me mention two speeches that were made last week. In one, my right hon. Friend the Chancellor talked about the requirement and need for us to live within our means and to grow our economy in order to be able to support public services. The other speech was about how the deficit was the big test for Labour, and we can see from the right hon. Gentleman’s response today that the Opposition have no chance of meeting that test. They have failed at the first attempt, wanting to borrow and spend more money.

The Government are confident that councils can respond to the challenging economic circumstances that we inherited, and they are responding. The NAO says that many councils are dealing with that; they have been able to fix and deliver a budget, and to respond to economic emergencies as they have come about. The reality is that all councils need to respond and transform their delivery, and despite the right hon. Gentleman’s words, the authorities are doing thaton the ground. The Labour authorities in Manchester, Sheffield and Sunderland have faced difficult choices but are transforming their services. They are more open-minded than the Labour team on the Front Bench, ensuring that they care about delivering good services where it is important to people and that they will deal with the circumstances they are left. In answer to his question, we are delivering a reduction of 1.8% this year—if we add the transformation challenge fund moneys in, the figure drops to 1.6%. Given the economic circumstances that this Government picked up four years ago, that represents considerable movement in the right direction.

The right hon. Gentleman talked about the most deprived authorities. The 10% most deprived authorities will continue to receive 40% more than the least deprived areas, and that is important. It is a standard that we have set and we will continue to do it. However, this is not just about grant; it has to be about promoting businesses. It is about increasing growth within a particular area. That is why this Government have set about, through city challenge, growth deals and the retention of business rates, giving councils the opportunities to grow the moneys in their community. There is no greater amount than that from house building, so the new homes bonus, worth £1.2 billion, is really important.

However, there are difficult challenges to address. The better care fund is there to address one of the fundamental challenges to public services which for generations councils and health authorities have failed to address—£5 billion to be used to work with local authorities, clinical commissioning groups and acute hospitals to deliver care for the most vulnerable people. Labour Members, the Labour Government and the House historically have failed to address that. We are facing up to this problem, and getting those social workers, doctors, health workers in the same place so that they can deliver services. That is the right thing to do.

We appreciate that welfare provision is important to people, so we are identifying the spending this year in next year’s money so that users of services and people who may want to call upon that money can understand how much money has been spent historically in this area. It will be up to the local council to set those priorities and make sure that that money is available.

The right hon. Gentleman talked about counties not being included in some of the devolution, but this Government are completely open-minded on devolution and look forward to all areas coming forward with ideas about how we can devolve powers. [Interruption.]

Finally, there was an ask about women’s refuges. The Prime Minister himself thinks that this is extremely important and intervened on the issue of women’s refuges and domestic violence and saw that an extra £10 million was put in. [Interruption.] Despite the fact that this country faced an economic disaster in 2010, we are delivering a fair budget for local authorities, making sure that they can set the priorities they believe are important to them. [Interruption.]