Ian Mearns
Main Page: Ian Mearns (Labour - Gateshead)Funding for Local Authorities
Ian Mearns Excerpts(10 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text
Neil Parish (Tiverton and Honiton) (Con)
I beg to move,
That this House has considered funding for local authorities.
I thank the Chairman of the Backbench Business Committee and the Committee for allowing us good time to debate this serious subject.
In the summer of 2012, the Secretary of State for Communities and Local Government recognised the penalty for rural authorities—that is, that the formula for allocating funds to local authorities disadvantaged those in rural areas—and improved the sparsity weighting for the formula for the local government financial settlement for 2013-14. That was the good news for rural authorities, and the Government must be commended for recognising that historical inequality and for seeking to improve the funding formula for local authorities to take into account the higher costs associated with delivering public services in rural areas. I fully support the Government in their stated aim.
However, the Government seemed to have a little wobble. The damping model that the Department chose to minimise the swing in funding for councils wiped out all the gains from the improved formula for rural authorities, and as a result their total funding actually fell faster than that of urban local authorities. I am not seeking to steal money from urban authorities; I seek a fair deal for rural authorities as well.
The Department allocated a further £8.5 million to the most sparsely populated authorities after the rural fair share campaign. MPs pressed the Department and made our case. However, that is still only a one-off grant for 2013-14, and it distributes the £8.5 million to 95 local authorities in amounts ranging from £649,000 to £856,000. Is the Department considering ensuring that we have a little bit more money than that next year? In fact, I would like another £30 million at least. I probably cannot horse-trade too much, but it must be recognised that the rural authorities are not getting their fare share. Although welcome, the one-off grant makes no material change to funding disparities within the overall £22 billion settlement. That is a very big sum of money.
Ian Mearns (Gateshead) (Lab)
I hope the hon. Gentleman accepts that there are significant regional variations in the impact of the cuts. It is not just urban or rural; in some regions, both urban and rural authorities are facing significant disproportionate cuts in relation to national averages. The north-east of England is facing cuts across the board of about 23% in the next two or three financial years.
Neil Parish
The hon. Gentleman is right, because what the Government seem to have done—dare I be so blunt as to say it—is to ensure that those that least need it get the most money, by which I mean the south-east of England. Coming from the west country, I would of course say that. Many of my colleagues from the south-east probably do not necessarily agree with me.
Neil Parish
Indeed. I thank my hon. Friend the Member for Beverley and Holderness for pursuing the issue with great vigour, for considering the issue with Ministers with such tenacity, and for helping to secure this debate, as well as for the support and information provided by the local authorities in Devon and across the country.
A quarter of England’s population live in rural communities. Providing services presents many challenges to local government. This is particularly true in rural Devon, where there are serious barriers to services, with nearly 56% of residents living in rural areas across the county and with the house price to earnings ratio well below the national average. Lower than average wages and higher house prices is a trend replicated in other rural local authorities.
Ian Mearns
Reflecting on the point that the hon. Gentleman has just made, I know that many people regarded the council tax and its implementation as a blessed relief in the aftermath of the poll tax in the early 1990s, but unfortunately property valuations have not been reviewed to any great extent since then. An eight-band taxation system might have seemed fair at the time, compared with what there was before, but it has meant an awful lot of people in poor value properties paying a much greater proportion of their income in local taxation.
Neil Parish
The hon. Gentleman makes a good point. However, the Government that he supported had 13 years to change that and chose not to. The problem with opening up the issue of council tax banding is that it is probably a very big can of worms. I understand why successive Governments have not gone there, but that does not necessarily mean that one day we will not have to do it.
One of the biggest obstacles to providing services to a dispersed rural population is the high cost of transport, which has a knock-on effect on nearly all other areas of local government responsibility, such as adult and social care services, refuse and recycling, and ground maintenance. In 2009, 42% of households in the most rural areas had regular bus services close by, compared with 96% of urban households. These rural bus links are often the only way for many residents, particularly pensioners, disabled people and the unemployed, to access public services. I think I am right in saying that some 20-odd per cent. of the population of Devon has to go to work on buses, and if there are no buses, it is very difficult for them to do so.
Angela Smith
I do not blame anybody for raising concerns about their own constituencies, particularly with regard to education, but that is not the key point in relation to funding for local government services. Metropolitan areas have significant rural aspects. In fact, Rotherham, Doncaster and Barnsley between them are 70% rural. The way in which the hon. Gentleman expresses his argument is not helpful in delivering more resources for his area. I repeat that the key issue is the central Government cuts to local government funding. The difference between provincial England and the capital is another issue that has been completely overlooked.
Ian Mearns
Before coming to this place I had the privilege and pleasure of being a local authority councillor in Gateshead for 27 years. Like my hon. Friend’s borough, Gateshead is very diverse: it has a concentrated urban core and a big rural hinterland. Councillors who represented the urban core and those who represented the leafy shire had these types of discussions, but we would never have swapped our social problems, because the differences were stark.
Angela Smith
My hon. Friend hits on a key point. That is why I mentioned the old pit villages in my constituency which even now carry the deep scars that were left behind, not just on the landscape but on the lives of the people who were, in effect, abandoned following the wave of closures in the late 1980s and early ’90s. People underestimate how difficult it is for an authority such as Barnsley to rebuild an economy that was built almost entirely in villages. It is not easy to rebuild that type of economic infrastructure once it has disappeared.
Local government provides many of the public goods that our constituents consume, whether they live in rural, suburban or urban areas. These include emptying bins, educating our children and picking up the pieces of shattered lives when things go wrong. Local government is the backbone of our civil society. There is no doubt, however, that it is approaching a crisis that is not of its own making, but that has been made in the offices of No. 10 and the Secretary of State for Communities and Local Government.
We have all seen the infamous graph of doom, which shows that councils will eventually run out of resources to run anything except the most basic of services. For my two councils that catastrophe will occur in 2018, when all discretionary spending will disappear and major cuts will have to be made to adult social care and other core functions. Councils up and down the country are being asked to do more and more, but with less and less resource.
In addition, it is clear that this Government decided early on to contract out many of their austerity measures for delivery to local councils across the country. The average cut to departmental budgets has been about 7% in real terms according to the special interest group of municipal authorities, but local authorities have seen their share of funding fall by 27% over the same period, with only benefits and welfare being cut more, which, of course, has in itself had a direct impact on demand for local authorities.
To compound matters for the core cities, while the average loss of Government support in England will be £240 per household in the years 2013-14 and 2015-16, the core cities will see a reduction of £352 per household. On the issue of rural and urban areas, metropolitan areas are bearing a large part of the local government reductions—much more than has been acknowledged so far in this debate—which is not at all helpful in terms of delivering for the rural areas in those metropolitan boroughs. That is on top of the already unequal cuts that core city authorities have experienced since 2010, which have seen them lose a third of their grants from central Government.
If that was not bad enough, these cuts have not been the end of it for many local authorities. The hidden cuts, including those major cuts to grants, are not so obvious to many of our constituents. For example, a £400 million cut occurred when council tax support was transferred to local authorities, and the cut to the early intervention grant removed £430 million at a stroke from local authorities. These cuts are now on a scale never seen before and they are having a chilling effect on local services.
Contrary to the belief of the Secretary of State, local government has not been a place of excess. In fact, it has been recognised for many years as the most efficient branch of government, and that makes it even more likely that cuts to its funding will have to come out of the services it provides.
Mr Clive Betts (Sheffield South East) (Lab)
First, I congratulate my hon. Friend the Member for Corby (Andy Sawford) on his new responsibilities as a shadow local government Minister, which are well deserved. I am sure he will do just as well at holding the Government to account as his predecessor, my hon. Friend the Member for Warrington North (Helen Jones), whom I congratulate on her achievements in the job and wish success in her new job.
The Local Government Association, whose figures I believe are accurate—it is a cross-party, Conservative-led group—states that in the course of this Parliament, Government funding to local government will be cut by 43% in real terms, which is more than twice the level of cuts experienced across government as a whole. Why is that? I hope the Minister will respond to that question.
Do Ministers somehow feel that the services that people receive from libraries, sports centres, environmental health, parks and street cleaning are less important than anything else? I suggest that they are not. Do they believe that local government is somehow less efficient and therefore has more ability to make cuts without damaging services? I do not think there is any evidence of that—indeed, the evidence has shown the opposite over the years. Local government has generally been more efficient and more effective in bringing about efficiency savings. Or, in the phrase that my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) used, is it simply about the Government contracting out the responsibility for making the cuts to somebody else, namely local councils? I suspect that that is probably the reality. Why have local services been picked out for larger cuts than anything else?
My second point is about the distribution of the cuts. We can argue about that, and everyone will have their own view, but it seems slightly unreasonable that Sheffield, despite all the demand for local services from local people and all its problems and challenges, should have received cuts of about £200 per head of population, whereas down in Windsor the cuts are £40 per head of population—five times less. I know the Minister will say that it is because cities such as Sheffield get more in grant, so they have more grant to cut. However, why have they had more grant than elsewhere in the past? We can argue about fine amounts, but essentially it is because they have more problems, more challenges and less resources than areas such as Windsor. That is true of many northern cities, which are the ones that we expect to be the powerhouse for growth and for rebalancing our economy. They are receiving the largest percentage cuts.
We can add in the cuts to the fire service, and there are also the new proposals that will redistribute health money away from cities such as Sheffield, because there will be less recognition of need in the formulas. Cuts in different services in the same areas will multiply the effects.
It is not just Labour authorities such as Sheffield that are saying that the cuts cannot be sustainable but the Local Government Association and Sir Merrick Cockell, who is a very reasonable man. He speaks well for local government as a whole on behalf of a Conservative-led, cross-party grouping that says the cuts are unsustainable. Those comments have been repeated by Conservative authority leaders such as the one in Kent, who says that there is no more capacity to keep on making cuts while keeping local government services sustainable.
The LGA states that, on top of the 43% cuts in this Parliament, there will be a gap of another £15 billion if the cuts continue to 2020, which local government simply will not be able to find. We know from its briefing—I have also had discussions with it about this—that based on the Government’s current forecast, there are 56 councils whose current levels of spend are 15% higher than their income is likely to be by 2015-16. There is a gap of 15p in the pound between their income forecasts and their current levels of spend, so some of those councils will get into serious financial difficulties. They are not councils of any one party persuasion, and they are not solely in metropolitan or rural areas—they are councils across the piece.
We know that the Department for Communities and Local Government monitors that matter, and we hope it is talking to the LGA about it, because it is a serious problem. The graph of doom has been mentioned, and whereas three or four years ago it was a bad idea that might happen at some stage, it is now a serious prospect.
My hon. Friend the Member for Penistone and Stocksbridge mentioned the situation in Barnsley, and I will obviously talk about Sheffield. There will have been £182 million of cuts between the beginning of this Parliament and 2013-14—the council has had to make those reductions. On top of that, we know that in 2014-15 and 2015-16, a further gap of £80 million will have to be bridged. If we take the projections forward to 2018-19—the Chancellor has indicated clearly his intention that there will be no rowing back from further cuts—there will be another £26 million on top. That money cannot be found without cutting into statutory services, because there is no leeway at all on discretionary services.
The figures that Sheffield council has produced for its current spending show that 38% of the budget goes on care for adults and children. What is often forgotten, however, is the contractual commitments that councils cannot get out of. The whole waste collection and disposal service in Sheffield is contracted to Veolia. Modifications can be made at the margins—there is already an alternate weekly bin collection—but long-term commitments in the incinerator and waste disposal contract cannot be altered. Any change made in such contracts has a financial penalty attached to it.
There is also the new private finance initiative scheme in Sheffield. It is absolutely great—the roads in Sheffield are being repaired, and we are delighted with what is being done. I congratulate the Government on supporting the scheme, which the previous Government drew up, and the council on implementing it. However, that PFI commitment is for the next 25 years and cannot be changed. There are also repayments on borrowing for schools and so on, which cannot be ducked out of. Such contractual commitments and debt repayments make up 46% of the budget, so that leaves 16%.
I have given the figures for the further reductions that are in the pipeline through to 2018-19. By then, the 16% discretionary funding that remains after statutory services, contractual commitments and debt repayments have been taken into account will have gone. There will be nothing left. It is not about which libraries will be closed, because no libraries will remain open. That is a serious situation in Sheffield, which is mirrored in other parts of the country. It is not about one authority somehow failing, it is a potential failure of local government as a whole, not through its own fault but simply because it will not have the necessary resources from central Government and will not be able to raise the money itself. It is a serious situation.
Ian Mearns
My hon. Friend is making an excellent speech and highlighting the drastic situation facing many councils, particularly in the north and north-east. I am afraid that when I talk to colleagues on the Government Benches, they often seem completely oblivious to the plight of councils such as my own in Gateshead, or those in Northumberland, Durham, Newcastle or Middlesbrough. Local authorities in the whole north-east region are facing average cuts of about £296 a dwelling in the next two years.
Mr Betts
My hon. Friend is absolutely right, but I would add that it is not just Labour councils in the north, with all their problems, that will face that situation. A number of smaller councils in the south and south-west will face almost a meltdown situation in the next few years if the same policy is continued.
Mr Betts
Of course I understand that and any council would want to try to minimise increases in council tax. However, let us also make clear that cost of living increases can come from a local library closure because people have to buy books instead of borrowing them for free, or from the closure of a leisure centre when a family has to book into a private club that involves a lot of extra cost. Cost of living increases can come in other ways, including through cuts in public services.
I also argue strongly that it is nonsense to have local government’s main tax based on a valuation carried out in 1991, and it is ridiculous that 20 years on we have not had a revaluation. The previous Government, this Government, and the previous Conservative Government all bottled out—it is all too difficult. In the end, we have a completely unrealistic situation. No one understands the system any more, which is an attack on democracy and accountability.
My hon. Friend the Member for Corby (Andy Sawford) in his new role will probably not want to comment on this point, but if we are to reform council tax and make it fairer, the relationship between the value of properties and the amount people pay should be reformed. Those in very expensive, large houses should pay more, but why bother with a mansion tax? All we have to do is increase the higher council tax bands, and ensure that the money that comes in goes to local government and does not get siphoned off by the Treasury for other purposes. That is why I am against the mansion tax—I put that on the record to ensure that I have been critical of what both Governments have done.
Ian Mearns
We have an eight-band system, but it is ridiculous to have a national mean of band D when in a borough such as Gateshead around 65% of all properties are in band A. People in that area in modest properties and on low incomes end up paying much more of their personal income as a proportion of local taxation. That is ridiculous and unfair.
Mr Betts
There is a case for review on whether band A should be also split, and there is a good argument for that to make the whole system fairer.
We must also look for other sources of funding for local government. I welcome the report by Mr Travers that the Mayor of London has initiated, which is a good contribution to a debate on how local government should be financed. I am not saying I agree with all the recommendations—the report is about London in isolation, although I am interested that the core cities are starting to engage in the argument, which raises questions about the rest of the country—but it is good that the Mayor has stimulated that debate. He has invited me and other Members to meet him to discuss that issue, and the Communities and Local Government Committee may initiate an inquiry into the matter. At least, however, the issue of how we can get more independent sources of funding for local councils has been raised.
Why not look at income tax again? I remember the Liberal Democrats when they were a radical party putting forward new ideas, not just agreeing with the Conservative party about things. They used to promote local income tax. I disagreed with them then because they wanted to replace council tax. I suggest—there was a report on local finance by the Select Committee in the previous Parliament—that we have local income tax as well, and make the local authorities responsible for a bigger percentage of the money they raise.
The Communities and Local Government Committee recently went to Sweden where people’s income tax demands include an amount for central Government, an amount for the county, and an amount for the municipality. The amount paid to the municipality is greater, because the services it provides cost more and are more important to local people. That is how Sweden operates. I know that the Political and Constitutional Reform Committee has looked at designating a certain percentage of income tax for local councils. That is a step forward, but why can councils not vary things? If councils want to vary services and local people want better services and to pay for them, why can there not be differences in different parts of the country? That is a challenge and a debate to be had. There is no one solution at this stage, but at least let us start to think radically about a way forward. We cannot simply go back to the idea that it will all come from central Government and council tax.
We also need to reform capital finances—for heaven’s sake, the cap on the housing revenue account is nonsense. Everyone who has looked at the issue can see that prudential borrowing rules apply to every other aspect of local government finance in the capital, apart from housing. Let local government be free to build the homes that people need, and let Treasury control move back from local government borrowing. The prudential rules exist and can be audited, and local authorities can be held to account.
Let us also hope for Government support for the LGA’s idea of a municipal bond agency, so we can return to a situation in which people can invest in their communities through bonds, with a good rate of return, so they can see where the money is going to improve services locally. There are lots of good ideas. We rightly focus on the impact of the cuts, but we should also look at how we deal with the situation in future.
The cuts the Government are inflicting on local government are unfair. There are not only cuts on local government, but on local services that people greatly value. Those cuts should not be that much greater than the cuts in the rest of government. The distribution of those reductions is unfair. At the same time, we must recognise the current situation and that we have a challenge for the future. How do we address it and make local government more financially independent? How can we give local government greater means to raise resources for their local services? If we can meet that challenge, it will be good not merely for local government and local councils, but for local communities, democracy and accountability. That is well worth debating.
Annette Brooke (Mid Dorset and North Poole) (LD)
I find myself agreeing with the hon. Member for Sheffield South East (Mr Betts) on a large number of his points. I am particularly pleased that he likes local income tax and the mansion tax. We clearly have a lot in common. Perhaps future campaigns will be a little different.
I have a quote on local government: “Local government is looking over a precipice. We will only be able to run statutory services such as adult social care and waste services.” That comes from a Liberal Democrat council leader, but it could have come from a local council leader of any party. We must consider that view—from the precipice or cliff—against the view that it is scaremongering. We need clarity. What is the true position? Every hon. Member who has spoken has identified the lack of transparency in the system, and I shall return to that point.
As hon. Members know, local government accounts for around 25% of all public expenditure. Given that the budget deficit had to be tackled, that was always going to take a big hit from cuts to public expenditure—I am on message now. Local government has shown great skill in reducing budgets. Committed local authorities under all parties have protected front-line services. I should like to put on the record that that is a credit to many councillors throughout the country, particularly given that satisfaction in council services has increased. Many hon. Members were surprised to hear the result of the research reported on the BBC showing that most voters believe that schools, bus services, parks, libraries and bin collections have improved in the past five years even as budgets have been reduced. Credit must be given where it is due.
Many hon. Members have mentioned bus services. I remind the House that I represent a constituency that has every type of council within it—there is a unitary authority in an urban area, and a county council and several district councils in the rural part—so I find it difficult to argue that one area needs more money than another for specific services; it is a difficult situation. Currently, the county council is consulting on the future of bus services, and it is possible that some of my constituents in villages will not be able to get to work or to access health or leisure services. The price of school transport has rocketed in price for the over-16s. That is compounded by the rising age of participation. I shall keep making the point on the Floor of the House that relatively poor hard-working families in the rural areas in my constituency are faced with bills of £450 or £750 per year for their 17-year-old to get to school. Members on both sides of the House have been remiss in allowing the age of participation to increase without putting finance in place for bus services. I urge all Departments— the Department for Education, the Department for Communities and Local Government and the Department for Transport—to talk about that together because it is so important.
Apart from cuts to rural bus services, I am faced with cuts in the urban area on routes where the buses are well used. The bus companies simply take the decision to cut the routes off without consultation, which is shocking. There seems to be no accountability. As far as I can tell, bus grants have been maintained. Some decisions are a ploy to ask for money from the local authority, but some are taken because the bus companies are not there to provide a service for my constituents.
Ian Mearns
The hon. Lady makes telling points, but I remind her that, in debates prior to the abolition of the education maintenance allowance, we warned Government Members that there could be implications down the line for people in rural areas.
Annette Brooke
The hon. Gentleman might recall that I spoke against scrapping the EMA because I was concerned about the impact on sixth-form choice when there is insufficient help from other services. That needs to be addressed. We have bursaries, but I thought the EMA should be reformed. I do not believe that there is enough support, particularly given the increase in the age of participation. I certainly welcome the fact that the Government reviewed the situation and put extra money into schools and colleges to help the most needy, but there is not enough money to cover the current situation, especially in rural areas.
In June, the spending round announced a further 10% real-terms reduction in core local government grant funding. The LGA analysis of the subsequent consultation covering the settlement funding assessment showed that money received up front will be reduced by 15% in real terms. The Government frequently use the figure of a 2.3% cut for 2015-16. They give the impression of a certain level of cuts, but it is all much more complex. We are told that local government will get extra money for health and social care, but then we discover that that is not all new money. We know there is top-slicing and the extra top-slicing. Councils have the opportunity to bid for lots of different pots of money, but that causes great uncertainty at a time of financial difficulties.
We have had some good news, which I notice Opposition Members have so far not mentioned, such as city deals and growth regions, which will put extra money and opportunities into the core cities outside London. That is exciting decentralisation work, and we must give credit for that important work.
Local government faces both opportunities and threats, although some opportunities can also be seen as threats. The freeze in council tax, and the extra money from the Government to support that, has been an opportunity for local councils in some respects, and I welcome the fact that residents in some of the councils I represent have benefited from the council tax freeze. On the other hand, the freeze removes democratic freedom, which is not a good thing.
A further big opportunity can be found in the merging of health and social care budgets, which is an enormous step forward of which the Government can be really proud. But no council knows how much money it will get back for social care. How can councils plan or operate in a business-like fashion if they do not have that certainty? One of the biggest threats has to be the escalating cost of adult social services. I represent an area with an ageing population, and local government has to be given enough support to bring health and social care budgets together to innovate. Local government has not been backwards in innovating over time—I think it has been the most innovative part of government—but the Government should work with local government to ensure that we bring out all the opportunities that are available.
I agree with hon. Members that top-slicing the new homes bonus is a threat. Allocating that money to a local enterprise partnership is an issue. I am quite in favour of LEPs, but they do not have any democratic foundation. If an LEP covers an area with several councils—a county council and two unitaries, for example—the small district councils that will lose their new homes bonus do not have a seat on the board, because they cannot all have seats on the board. I would like the Minister to address that problem. We have opportunities and we have threats, but it is the Government’s role to support councils in getting achievements from those opportunities.
The rural fair share campaign has been mentioned. I support the campaign and I know the struggles my small district councils have in order to survive, but it has to be part of a bigger re-examination of local government finance. However, it was great to get some movement and support on the problems we can all identify, regarding the extra costs of running a rural authority.
Grahame M. Morris (Easington) (Lab)
I congratulate the hon. Member for Tiverton and Honiton (Neil Parish) on securing the debate and on gaining the support of Members across the House, and I thank the Backbench Business Committee for allocating the time.
I will make some general points, but I would also like to make specific points regarding my region, the north-east, and my local authority, Durham county council. It is tempting to characterise the debate in terms of urban against rural and north against south—I can see the hon. Member for Tiverton and Honiton is smiling. We are not allowed to refer to pictographs, but when we analyse the figures produced by the Local Government Association and the Association of North East Councils, it is clear that it is not simply a rural versus urban issue—and particularly not a north-south issue—because many of the affected regions are in the south-west. Many inner city London boroughs are badly affected, as are our great northern cities.
I shall make some general points to begin with and then get down to some of the specifics about my own area. The Minister on the Front Bench is responsible for the fire authorities so I thought it would be remiss—given that we met representatives of our fire authorities this week and found that they were extremely concerned about the implications of the settlement—not to mention that issue. The scale of cuts that the fire authorities are going to have to make will amount to taking out an entire brigade from the north-east region. I am not suggesting that that would happen, but taking out the whole of the County Durham and Darlington brigade would be the consequence if the cuts fell on a single brigade in our region. The level of cuts is unprecedented. My fear is that austerity is failing, not just our region but Britain. Nowhere is that more apparent than in the evidence of cuts to local government funding.
My local authority has made written representations to the Minister, and I hope he will consider very seriously the points it has made. Indeed, after the comprehensive spending review of 2010, local authorities faced significant spending cuts in the emergency budget. We knew, and warned at the time, that these would inevitably impact on services, jobs and growth. Various figures have been quoted, but my local authority, which is Durham county council, has needed to make savings of £123 million during the course of this Parliament. That has resulted in nearly 2,000 job losses—approximately 20% of the work force—and it has certainly hit front-line services and vital support for the local community.
Along with all local authorities, mine understood that local government would be expected to contribute to reducing the national deficit, but, as a number of Members have pointed out, the consequences of this level of cuts have been astounding. Local authorities certainly did not expect to be targeted for disproportionate cuts when the Government were unable to address the problems that had to be faced in any other way.
I am worried because the Government have missed a number of economic targets that they set for themselves and because the very slow recovery we have seen—probably the slowest for over 100 years—is being exacerbated by the scale of the cuts in local authorities, particularly when it comes to discretionary expenditure. There is no money left for economic development. I see some Government Members shaking their heads, but I am afraid that that is certainly the case for Durham county council. As a large unitary council, it had a successful track record of working in partnership with both public and private sector organisations to deliver major infrastructure projects and to make a contribution towards jobs and growth. Its capacity to do so, however, has been completely taken away by the scale of the cuts.
When the Chancellor of the Exchequer told us that he intended to eliminate the deficit by 2015, he promised in the 2010 comprehensive spending review statement that there would be “fairness”. He said:
“Fairness also means that, across the entire deficit reduction plan, those with the broadest shoulders will bear the greatest burden”.—[Official Report, 20 October 2010; Vol. 516, c. 951.]
Frankly, those strike me as quite nice words, but it was a hollow promise. We now know that the Government will miss their deficit reduction plan, and it seems that the most deprived areas and the most vulnerable people are having to pay most for the Government’s extra years of austerity. Clearly, disproportionate cuts are being imposed on hard-pressed local authorities, particularly in regions such as mine. Durham county council now faces cuts amounting to more than 40% of its budget. It no longer needs to find savings of £123 million; it is now expected to find savings of more than £222 million by 2017. The austerity and spending cuts will extend into the next Parliament.
According to a report by the Association of North East Councils, the north-east region faces a “disproportionately high share” of the £5.5 billion cuts in council budgets that will be made between now and 2016. That means an average cut of £296 per household in the north-east, compared with a national average of about £233 per household. As was pointed out by my hon. Friend the Member for Sheffield South East (Mr Betts), the Local Government Association has forecast that, during the period of the current Parliament, local government’s core funding will fall by 43%. That confirms that councils are being hit harder than other parts of the public sector.
Some councils, especially those in parts of the south, have been relatively unaffected by the cuts, and are able to continue as they were before. However, the Government must listen to local authorities—particularly in areas that face challenges and are experiencing high levels of deprivation—which, along with their parliamentary representatives, are warning that such large cuts are unsustainable, and pose the risk that councils will be unable to provide statutory services.
While funding is being cut, demand for services continues to rise. More than 60% of Durham county council’s expenditure goes towards children and adults services, and the proportion is set to increase in the years to come. That is not because the council is being profligate, but because of demographic changes, an ageing population, and the fact that my area formerly had a tradition of heavy industry such as coal mining, shipbuilding and steelworks. The Government need to recognise that the legacy of that heavy industry continues to push up demand for adult social care for the elderly and disabled. Safeguarding Children is also experiencing greater demand: the number of complex cases requiring co-ordinated interventions by a number of services is increasing significantly.
Ian Mearns
My hon. Friend is entirely right. The levels of demand for children’s services, especially in complex cases and those involving a high level of need, has been growing exponentially in some parts of the north-east. In my borough of Gateshead, the number of youngsters taken into care has increased by nearly 50% in the last four years. It may be said that that is disgraceful, but if social services departments leave such children in situ with their families, the consequences are often tragic. Those increased demands need to be taken into account.