Local Government Finance
Debate between Hilary Benn and Graham Stuart(10 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
Hilary Benn
I shall come to that point directly, but the Minister did not actually contest the NAO figure. The reduction in resources of 1.7% that he has talked about today is a selective figure, because it does indeed include council tax, the better care fund and other ring-fenced funding, but if that is excluded the LGA says that the reduction is actually 8.5%. Whatever the statistics that the Minister wants to argue about, the truth is that local government has faced the biggest reductions in the whole of the public sector, as we heard in an intervention.
We should first pay tribute to councils for the extraordinary job that they have done—councils up and down the country, of all political parties—in trying to deal with the consequences of the cuts, because their effort has been herculean. I pay tribute to the Minister for his tone, which is slightly different from that of his predecessors, but councils really resented the Secretary of State once famously describing the cuts as “modest”—which I bet he now regrets—and the LGA’s fears for the future of local government as “utterly ludicrous”.
Mr Graham Stuart
If we are talking about making admissions, will the right hon. Gentleman now accept that his Government, at what seemed to be a time of relative plenty, skewed funding to urban areas at the expense of rural ones? Now that we are in a period of austerity, which will continue whoever is in power, it is those poorer, more highly taxed and yet lower-serviced rural areas that are suffering most. Will his party pledge to do something about that, or will it carry on putting its own party interests ahead of fairness for the British people?
Hilary Benn
I have to say to the hon. Gentleman that I resent that suggestion. I make no apology for the fact that the last Labour Government provided funding on the basis of need and that local authorities saw an increase in resources under Labour. I do not recall hearing any complaints about that from the then Opposition when those decisions were being made.
Hilary Benn
I am going to make some more progress; the hon. Gentleman has had his answer. I accept the point he has made in a number of these debates about the particular challenges facing rural areas. I want to see a fairer funding formula, and I shall address that a little later.
Ministers are in denial about the scale of the challenge that authorities face and are still claiming that the settlement is fair—this is my first and fundamental point. The Minister told the House in December that the settlement is
“fair to all parts of the country, whether north or south, urban or rural.”—[Official Report, 18 December 2014; Vol. 589, c. 1590.]
He said that again today, but let me tell him that nobody else believes it because it clearly is not true. He does not need to take my word for it; all he has to do is listen to what others have had to say about what Ministers have done. The Audit Commission has said that
“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.”
The Joseph Rowntree Foundation has said that
“cuts in spending power and budgeted spend are systematically greater in more deprived local authorities than in more affluent ones”.
The Public Accounts Committee report on the financial sustainability of local authorities said:
“local authorities with the highest spending needs have been receiving the largest reductions.”
The Chair of the PAC, my right hon. Friend the Member for Barking (Margaret Hodge), said:
“These cuts have not hit all local authorities equally, with reductions ranging between 5% and 40%.
Councils with the greatest spending needs—the most deprived authorities—have been receiving the largest reductions.”
At least the former local government Minister, the hon. Member for Bromley and Chislehurst (Robert Neill), had the honesty some time ago to say:
“Those in greatest need ultimately bear the burden of paying off the debt”—[Official Report, 10 June 2010; Vol. 511, c. 450.]
Today’s Minister mentioned council tax, but the one group of people who have not benefited from any freeze in council tax are those on the very lowest incomes, who have been affected by the changes to council tax benefit. There has been no freeze for them.
Hilary Benn
Once again, I do not accept the charge that this is about distributing funds to friends; it is about having a fair funding formula. I remind the hon. Gentleman that when the coalition Government took office unemployment in this country was falling and the economy was growing—[Laughter.] It is no good Government Members laughing, because the evidence, the statistics, the facts will show that that was indeed the case.
On council tax increases, Ministers have frequently made reference to what happened under the last Labour Government, so I have taken the trouble to look at what actually happened then. The truth is that the biggest increases in council tax between 1997 and 2010 were put in place by Conservative-controlled authorities and the smallest increases were under Labour. Indeed, 11 of the top 15 increases in council tax during that period came under Conservative-controlled authorities, two were under authorities with no overall control and one was under a Lib Dem-controlled authority. I suppose that was a coalition.
Hilary Benn
No. The hon. Gentleman may not like the fact, but the truth is that Conservative-controlled authorities were leading the way in raising council tax. What I am interested in, in this debate, is what the figures show. Why is it that by 2017, as we heard a moment ago, the city of Liverpool, with the most deprived local authority in the country, will have lost half its Government grant since 2010? I have nothing against Wokingham, but why is it on course to have higher spending power per household than Leeds or Newcastle, despite the greater needs of those two cities? Why is it that, having claimed that those with the broadest shoulders would bear the biggest burden, Ministers have done the very opposite to local government? Will the Minister explain why Elmbridge, Waverley and Surrey Heath have been given an increase in spending power over the past five years although they are among some of the very wealthiest parts of the country? They rank among the 10 least deprived local authorities in England. There is a lot of austerity elsewhere, but it does not appear to apply in those places.
Hilary Benn
There is section 106 and there is CIL in order to raise financing. There are also the changes that we are proposing in order to give local authorities, such as the hon. and learned Gentleman’s, greater power over the construction of new homes so that communities can determine where homes are built, but when it comes to the new homes bonus, if one accepts the argument that it is regressive in its impact because it is top-sliced from revenue support grant which is supposed to reflect need and therefore goes towards areas where people want to build homes which tend to be less disadvantaged than others, it is a tough choice. But when people say, “What are you going to do to redress the unfairness of what the coalition has done?”, that is part of my answer.
I know that other Members want to speak so I shall make progress. In these difficult times, what councils want is, first, fairer funding, which we are committed to; secondly, help with longer-term funding settlements so that they can plan ahead; and thirdly, more devolution of power so that they can work with other public services to get the most out of every pound of public funding. We have heard Ministers argue in the past that the relationship of old was based on a begging bowl mentality. A former local government Minister used to talk about that. That is pretty insulting to local authorities which, over the years, have worked hard to grow their economies and create jobs. One cannot look at the growth and success of the city of Leeds over the past 30 years and say that that is the result of a begging bowl mentality. It is because the council, businesses and local people have worked hard to grow the economy, create jobs and improve people’s lives. It was a question of leadership.
That brings me to what is absent from the statement today—devolution of funding to local authorities. I support the city deals that the Government have put in place and I welcome them. I have said that before, but progress has been slow and timid. We had been promised a further deal for the Leeds and Sheffield city regions, following the recently agreed deal with Greater Manchester, but there is no sign of it. Who is running that policy? Is it the Secretary of State, the Chancellor of the Exchequer or the Deputy Prime Minister?
Everyone in the House knows that the reason why the deals are being held up is that the Chancellor wants to impose a metro mayor as part of the deal and the Deputy Prime Minister does not. I am not sure what the Secretary of State’s view is, but he is clearly no particular fan of combined authorities because he said not long ago that he is afraid that they
“will suck power upwards away from local councils”.
In case the Secretary of State has not noticed, combined authorities are local councils coming together freely, voluntarily, in the interests of co-operation, because they see the benefit for their residents. When the Minister replies, will he tell us when Leeds and Sheffield are going to get the same deal as Manchester?
The last point that I want to come on to is about the counties of England. We have heard some voices in the contributions today. It was noticeable that at the recent county councils network conference, for some reason not one of the Department for Communities and Local Government House of Commons Ministers was able to turn up to address the representatives of the county councils. It was extraordinary. I suspect the reason is that county leaders feel wholly ignored by this coalition Government because they see the devolution that has been offered to cities. Where is the devolution to counties and county regions? There is none. If we get the opportunity, we will change that. We would offer economic devolution to every part of England—county regions as well as city regions—to give them greater control over their economic future. On that, I am in agreement with the Minister. We would devolve decision making on transport investment and on bus regulation. If that is good enough for London, it is good enough for the rest of the country.
We would offer funding for post-19 skills, working with businesses and co-commissioning a replacement for the Government’s Work programme to help the long-term unemployed back into a job. We would offer new powers over housing so that communities can build the houses they want in the places they want, and the houses go to the people who need them. By devolving £30 billion-worth of funding—much more than the Government are offering—we would give combined authorities the ability to retain 100% of business rate income growth. The Prime Minister has said that he wants to move towards two thirds, so if he hurries up a bit, he will finally catch up with Labour policy.
Mr Graham Stuart
The right hon. Gentleman said that he would bring in a new, fairer funding formula for local government. Does he accept that in the formula introduced by the previous Government, weighting was put in for density—four times that for sparsity—which has absolutely no link to need, and that is partly why certain parts of the country, even under this Government, have unfairly benefited? Will he unpick that so that sparsity is given greater weight than density, which has nothing to do with need?
Hilary Benn
If we get the opportunity after a certain event on 7 May, I would be very happy to receive representations from the hon. Gentleman and everyone else, because when I say that we want to achieve a fairer funding mechanism, that is what I mean.
In return for this economic devolution deal, all we ask is that local government comes together to form combined authorities across England. Their shape will vary from place to place, because economic geography and travel-to-work areas vary. This is a challenge to local government. Local government says to all politicians, “Trust us more.” Well, we would trust local government more. We would say, “Get organised, and significant devolution of funding is on offer in return.”
Local Government Finance (England)
Debate between Hilary Benn and Graham Stuart(12 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
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.