Local Government Funding: North-East

Ian Mearns Excerpts

Tuesday 1st March 2016 Westminster Hall

[Ian Mearns (Gateshead) (Lab)]

I apologise for being late, Sir David. I have been chairing the Backbench Business Committee. The 2% rise for social care will raise about £1.4 million in my authority, yet of the £300 million cuts mitigation fund that the Secretary of State established, £300,000 is going to the north-east of England, all of which is going to Northumberland. Some £114 million is going to eight shire counties surrounding London, all of which are Conservative-controlled. No formula can explain the rationale for that.

[Mrs Hodgson]

The only rationale is political bias. That is what we are trying to highlight. It is obvious what has gone on; the figures speak for themselves. The Secretary of State’s brazen audacity in outlining the cuts at the Dispatch Box last month and the brass-necked nature of that announcement beggar belief. It shows how little the Government care. He knew that it would be seen through, but it did not bother him.

We have heard time and time again about the deep unfairness of the Government’s financing of local authorities in the north-east and other unitary councils across the country, but Ministers still do not understand the impact it will have on the most vulnerable in our communities. It cannot be ignored any longer. I hope that the Minister will heed our words. We are a strong, collective voice from the north-east arguing for fairer funding. I hope he will assure hon. Members present that he will take our concerns back to his Department and the Secretary of State to ensure that he reconsiders the devastating, short-sighted decisions of his Department on our region. I am sure that the Secretary of State will understand—as we have heard, he is a local lad from Middlesbrough. If he does not get it, what hope have we got? The Eton boys in Downing Street never will.

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[Ian Mearns]

We have done the mapping in my local authority, and if we cut 100% of all the services by 2021—refuse collection, grounds maintenance and everything that councils do—we will still have to make cuts in adult social care and children’s services to balance the books, once revenue support grant has been totally removed and the impact of the localisation of business rates kicks in.

[Sir David Amess (in the Chair)]

Order. Before the hon. Gentleman responds, I remind the House that three hon. Ladies still want to speak, as well as the Opposition spokesperson and the Minister who will respond. The debate finishes at 4 o’clock, so I hope that colleagues will bear that in mind.

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[Mr Marcus Jones]

There are MPs from my party who represent very wealthy areas and others who represent less well-off areas. I say to the hon. Member for North Durham (Mr Jones) that not all of our Members are from Surrey; my party would not have been able to win a general election based on a cohort of MPs from Surrey. MPs in my party come from a wide swathe of the country. The transitional grant was based not on where MPs come from but purely on the response to the local government settlement. It is intended purely to mitigate the most significant changes in funding for the authorities that had the greatest proportion of loss from the revenue support grant.

[Ian Mearns]

Does the Minister accept that even though the revenue support grant is due to be withdrawn completely, in the meantime the Government have written out any concept of addressing need? Local authorities such as mine in the north-east of England do not have the capacity to raise taxes locally because many of the properties in our area are in the lower bands, so the band D national median is meaningless.

[Mr Marcus Jones]

That is why generally, as I said, the areas that have been referred to in the debate that are receiving transitional grant had a higher reduction in revenue support grant than areas such as that represented by the hon. Gentleman. He and a number of his colleagues have taken a dim view of the north-east in relation to its ability to move forward as an economy and create business rate revenue and additional council tax.

To take the constituency of the hon. Member for Hartlepool (Mr Wright), for example, thanks to the business rate retention scheme during 2014-15 there was a 14.6% increase in revenue. To pick up on a point he made, we will move to full business rate retention in 2020, but before that there will be a consultation on how we deal with redistribution. We understand and accept that in some places significantly more business rates are collected than in others.

The approach we have taken in this historic settlement is aimed at supporting those areas with the greatest pressures and providing councils with the certainty they need as we move towards a system of greater devolution. The settlement allocates funding on the basis of the core resources available to local authorities, taking into account councils’ business rates and council tax as well as their revenue support grant. It ensures that councils that deliver the same set of services will receive the same changes in core funding for those services.