Local Government Funding Settlement

James Brokenshire Excerpts

Thursday 13th December 2018 Commons Chamber

[The Secretary of State for Housing, Communities and Local Government (James Brokenshire)]

With permission, I will make a statement on funding for local authorities in England next year. Every day, councils and the many hard-working, dedicated people who work for them do their communities proud, delivering the essential services on which we all depend and making a difference to every life they touch. It is a privilege to be working with and representing those communities. In doing so, I am determined to ensure that they get the resources and support they need to rise to new opportunities and challenges, to grow their economies and to ensure that there is opportunity for all and that no one is left behind. The draft local government finance settlement being published today is an important step towards that. The provisional local authority funding allocations will be subject to further review before final settlements are made in line with my Department’s usual processes. This provisional settlement confirms that core spending power is forecast to increase from £45.1 billion in 2018-19 to £46.4 billion in 2019-20—a cash increase of 2.8% and a real-terms increase in the resources available to local authorities.

It has been challenging for councils to drive efficiencies as they have contributed to rebuilding our economy and tackling the deficit that we inherited from Labour. That is why I am delighted that the Budget committed around £1 billion of extra funding for local services, with a strong focus on supporting some of our most vulnerable groups. That includes £650 million for adult and children’s social care in 2019-20. Of that, £240 million will go towards easing winter pressures, with the flexibility to use the remaining £410 million for either adult or children’s services and, where necessary, to relieve demands on the NHS. That is on top of the £240 million announced in October to address winter pressures this year.

In addition, the Budget pledged an extra £84 million over the next five years to expand our children’s social care programmes to support more councils with high or rising numbers of children in care. That builds on the good work my Department is already doing through the troubled families programme to improve all services for families with complex programmes. The Budget also provided a boost for our high streets via a £1.5 billion package of support, including a business rates discount worth almost £900 million and a £675 million future high streets fund to help them adapt and thrive in changing times. In addition, a further £420 million will go towards repairing and improving our roads this year.

I recognise some of the pressures within social care. I have been working with the Secretary of State for Health and Social Care to address those pressures, and the Government will soon publish a Green Paper on the future of social care. It is a complex issue, and we are working with local authorities to ensure that we get things right. We have taken that approach across the board, listening carefully to councils of all shapes and sizes across the country and responding. My thanks go to my Ministers, especially the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak), for all their work. As a result, I can confirm that I will increase the rural services delivery grant by £16 million in 2019-20 to maintain it at last year’s level, recognising the extra costs of providing services in rural communities.

In addition, I am committing up to £20 million to maintain the new homes bonus baseline at 0.4% in 2019-20, to ensure that we continue to reward councils for delivering the homes we need. There will also be no change to the council tax referendum limits set for local authorities in 2018-19, aside from further flexibility offered on the police precept level. Authorities will have the flexibility to increase their core council tax requirement by up to 3% and can draw as needed on the adult social care precept to meet demand for services, but local residents will continue to be protected and be able to approve or veto any excessive rise in a referendum. Measures that I have agreed with the Home Secretary to allow police and crime commissioners to increase the police precept to £24 will help PCCs tackle the changing demands they face.

I am also conscious that so-called negative revenue support grant remains an issue in certain areas. Having consulted on options for addressing it, I am pleased to announce that we intend to directly eliminate the £152.9 million negative RSG in 2019-20 using forgone business rates. That will prevent any local authority from being subject to a downward adjustment to its business rates tariffs and top-ups, which could act as a disincentive to growth.

We have been listening, and we have been acting on what we hear. Nowhere is that more true than when it comes to answering calls from councils, over many years, for more control over the money they raise. Our plan to increase business rates retention to 75% from 2020 provides that and more, giving local authorities powerful incentives to grow their local economy. Under the current scheme, councils estimate that they will receive around £2.4 billion in business rates growth in 2018-19, a significant revenue stream on top of the core settlement funding I am unveiling today. It is therefore no wonder that councils are queuing up to get involved in the pilots we have been running to test the new approach.

I am delighted to announce that, in 2019-20, 15 new pilots will get under way in Berkshire, Buckinghamshire, East Sussex, Hertfordshire, Lancashire, Leicestershire, Norfolk, Northamptonshire, North and West Yorkshire, North of Tyne, Solent combined authority, Somerset, Staffordshire and Stoke, West Sussex and Worcestershire. We will also be piloting 75% rates retention in London and continuing the existing pilots in devolution deal areas.

I am also pleased to announce that every authority in England stands to reap the rewards of increased growth in business rates income, which has generated a surplus in the business rates levy account in 2018-19. We propose to distribute £180 million of levy surplus to all councils, based on need.

I am aware that a few authorities continue to undertake significant borrowing for commercial purposes. I share the concerns of the Chartered Institute of Public Finance and Accountancy and others about the risks to which those local authorities are exposing themselves and local taxpayers. We are considering with Her Majesty’s Treasury what further interventions may be required.

We are also launching two further consultations today, on reforms to the business rates retention system and on the new approach to distributing funding through the review of relative needs and resources. There is little doubt that the current funding formula needs fixing and replacing with a robust, straightforward approach in which the link between local circumstances and the allocation of resources is clear. With those consultations, we are making important progress towards that and towards a stronger, more sustainable system of local government.

So 2019 is shaping up to be a big moment for local government, drawing together our plans for a new approach to distributing funding and increasing business rates retention, as well as the upcoming spending review. No one knows their local area like councils, which are at the heart of their communities, and we are supporting them to harness their vast local knowledge and networks—yes, to make the best of available resources and to increase efficiency, but also to innovate and improve the way we deliver services. We are working with local authorities to promote efficiency, and we will use that work to develop a package of support to help councils become more efficient and get better service outcomes. We will launch a continuous improvement tool in spring 2019, and we are championing authorities that are putting communities at the heart of service delivery.

The smarter use of technology is clearly pivotal to this work, and it has the potential to be genuinely transformative, which is why the digital declaration launched by the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for Richmond (Yorks), to share and spread best practice is so important. The declaration is backed by a £7.5 million local digital innovation fund, and I am delighted to say that the first successful bids were announced last week to kick-start projects led by councils to promote service transformation.

There is so much excellent, inspiring work under way in our local communities, and it is right that we get behind it and have faith in the authorities that, day in and day out, always deliver. This settlement and the extra funding announced in the Budget reaffirm that faith, delivering a cash-terms increase of 2.8% and a real-terms increase in spending for local authorities in 2019-20; delivering extra support for the vulnerable, for quality public services, for our high streets and for local economic growth; and paving the way for a fairer, more self-sufficient and more resilient future for local government and a brighter future for the people and places it serves. I commend this settlement to the House.

[Andrew Gwynne (Denton and Reddish) (Lab)]

First, let me thank the Secretary of State for giving me advance sight of his statement. But the real thanks have to go to our councillors, of all political persuasions and none, and to the frontline heroes who, despite almost a decade of austerity, have worked hard to keep our local public services going at the same time as demand has increased and funding has fallen through the floor. The under-resourcing of local government—the sector has lost 60p in every £1 of central Government funding, according to the Tory-led Local Government Association —and the reverse redistribution policies of his Ministry have exacerbated these problems, and he cannot hide from that fact.

Let us bust the myth—this might come as a revelation to the Secretary of State and his Ministers—by pointing out that not all areas are the same. Some areas have greater deprivation and greater poverty, and greater demand for people-based services as a consequence, yet these same areas have fronted the heaviest cuts, and that is continuing—it is not ending. But the Government’s approach, as we have heard here again today, is to shift the burden on to council tax. He knows, and it is an inconvenient truth, that areas such as the one I represent and the one my hon. Friend the Member for Oldham West and Royton (Jim McMahon) represents cannot bring in anything like the resource from council tax that his own council can bring in, and that widens the inequality across England.

So can the Secretary of State confirm how much of the 2.8% that he has announced, with fanfare, is actually being raised through council tax rather than from central Government funding? Can he confirm that he is recommending an inflation-busting council tax rise this year to local government to plug his Department’s gaps? How will he therefore address the inequality issue whereby revenue support grant is distributed on a needs-based formula, but council tax revenue is collected and spent locally, meaning that the richest parts of this country will be able to raise significants more than the parts of the country with real deprivation and real demand on public services? Can he confirm that his plans mean a £1.3 billion cut to RSG next year, offsetting the £1.3 billion of spending in his announcement? That really is the reverse redistribution that I talked about.

Does the Secretary of State agree with his official who told the Public Accounts Committee that the sector is sustainable only if it delivers only statutory services? The Secretary of State will know that councils deliver much more than the bare legal minimum—700 or more non-statutory services to be precise. We are talking about Sure Start centres, libraries, parks, museums and investment in youth—all are not included in his assessment of sustainability. So which of those should councils stop providing altogether, if they are to take the advice of his officials? The truth about this statement is that it was actually the worst secret Santa ever, because much of what he has announced today was already announced by the Chancellor in his Budget—there is nothing new here.

On adult social care, we were told by the Tory-led Local Government Association that it needs £1.3 billion next year and £2 billion for children’s services, yet the Secretary of State has re-announced £650 million for both—not only that, but it could be shared with the NHS. How is that going to be split between services for adults, children’s services and the NHS? Can he clarify that? The Secretary of State says he is working with the Health and Social Care Secretary to soon publish the Green Paper on social care. Given the pressures that councils are facing, and the real heartbreak and misery experienced by service users, can he tell us how soon is “soon”? Or is this like the Brexit meaningful vote, whereby no date is ever given? The fact is that social care is in crisis. The promised Green Paper has now been delayed four times and it is more than a year late.

On public health, we have seen this week that health inequalities are widening, with life expectancy going backwards in the poorest parts of the country. After £700 million of cuts to public health budgets, and more cuts to come next year, all falling disproportionately on the poorest areas, why is the Secretary of State not doing more to protect those budgets from being used for what are clearly non-public health projects?

Two years ago on the steps of Downing Street, and again last night, the Prime Minister promised to build a country that works for everyone. At her conference, she promised to end austerity. But is it not the case that Brokenshire today delivered another broken promise? Food bank use has increased to the highest rate on record. Child homelessness has increased to the highest level in recent years. Yesterday, we were told that for the first time since records began, life expectancy has come to a standstill, and in some areas it is falling.

The UN special rapporteur on extreme poverty and human rights warned that local authorities have been gutted by a series of Government policies. Although the Secretary of State may wrap up his statement in Christmas paper, when we unwrap the parcel we will still see poorer areas in this country getting poorer. Frankly, that should shame us all.

[James Brokenshire]

I appreciate the hon. Gentleman’s comments, but I am disappointed that he has not recognised the increases in spending that were set out in the Budget and that I have underlined, and the fact that I highlighted further spending in today’s statement. To take up his theme, one of my colleagues questioned whether the hon. Gentleman might be the Gwynch that stole Christmas. He should recognise that even in his local area there is Stockport Metropolitan Borough Council, with an extra £5.6 million in core spending; Tameside Metropolitan Borough Council, with an extra £4.5 million in core spending; and Oldham Metropolitan Borough Council, with an extra £3.6 million increase in core spending.

The hon. Gentleman should recognise the context of the work that the Government have done to clear up the mess that we inherited. [Interruption.] No, no— the UK economy has grown for five years, there are 3 million more people in employment since 2010, and manufacturing has grown for its longest period in the past 20 years. I recognise that local government has contributed to the hard work involved in clearing up that mess. We know that the demand on local services has increased. We have recognised that in the statement and will ensure not only that councils have the tools and flexibilities to deliver efficiently and effectively, but that they will have the additional funding that I set out today. We are equipping councils well.

The hon. Gentleman highlighted several points about deprivation. The most deprived authority’s core spending power is 23% higher than that of the least deprived. We take council tax into account in funding and when we look into issues of equalisation. He also highlighted the issue of negative RSG. I addressed clearly and firmly in my statement how that will be dealt with.

On social care and the £650 million, the hon. Gentleman questioned the need for strong integration—strong working between our councils and our NHS—to deliver quality services. That is profoundly what needs to happen so that we are looking after the most vulnerable in our communities. I am sorry if those on the Opposition Front Bench do not acknowledge or accept that. It is a fact that 93% of local authorities recognise that the better care fund has promoted integration and improved joint working in their areas.

This is a statement and settlement that, yes, acknowledges and recognises the pressures on social care, and that there is more work to do in respect of the forthcoming Green Paper and on how we will apply the learning from local government to drive better services. I will continue to be a champion for local government and what it delivers and does in our communities. I am proud to support local government and that positive work within our areas.

[Dr Sarah Wollaston (Totnes) (Con)]

Devon has successfully piloted the 100% retention of business rates, and it has injected an additional £20 million into Devon to support local economic growth and public services, but the pilot is due to end in March. Surely the whole point is to continue pilots that are a success. Can the Secretary of State provide any reassurance for Devon as to whether it will be able to continue, because it was not in the list of counties that he mentioned?

[James Brokenshire]

I recognise the challenges and issues over the business rates retention pilots. Not everyone has been successful in relation to the pilots for 2019-20. We are piloting on the basis of 75%. That is on the basis of the new system that is being introduced in 2020 so that we can properly understand how it will operate in practice. I will certainly highlight to my hon. Friend some of the other issues in relation to, for example, the rural services grant, and how that will be beneficial to her local community, but, obviously, we will look at the representations that are received through this provisional settlement.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I thank the Secretary of State for advance sight of his statement.

The Government’s austerity policies, as we have heard from the Labour Front-Bench spokesman this morning, have been deeply affecting councils in England for many years. I have been in this Chamber listening to debates about the struggles that they have had. Those austerity policies have also hit Scottish finances, but, in contrast, the Scottish National party Government continue to treat local authorities very fairly, despite the fact that the Government have cut the Scottish budget by £2 billion between 2010-11 and 2019-20. There are some warnings from Scotland on match funding and pilots, because this Government also continue to short change local authorities in Scotland directly in other ways by their failure to match the city deal funding from the Scottish Government by £387 million. It is especially critical at this time for Dundee, which faces the prospect of losing 850 Michelin jobs, as the Tay cities deal falls short because the Government have failed to match the Scottish Government’s spending by £50 million

Mitigating Tory costs for local authorities will cost the Scottish Government £435 million next year. On pilots, the extra administration costs of dealing with the hard-hearted and shambolic roll-out of universal credit has meant that Highland Council, a pilot area, has run up costs of more than £2.5 million, which is directly attributable to the costs of universal credit. The council leader and I have written numerous letters to the Secretary of State for Work and Pensions, and the matter has been raised with the Minister for Employment on numerous occasions. The questions are: when will the Secretary of State’s Government reimburse councils such as Highland Council and their tax payers and when will they live up to their responsibility for city deals and make good on their shortfalls?

[James Brokenshire]

I am grateful to the hon. Gentleman for his comments. I am pleased that he recognises the contribution that city deals have made in Scotland, the contribution that the UK Government are making in Scotland to ensure that that sense of growth and opportunity is felt very firmly, and how we contribute in that way to see that that is felt throughout our United Kingdom. I am sorry that, in some way, he does not fully appreciate and recognise the contribution that we are making. On the point that he makes more broadly in relation to universal credit, obviously, care and attention has been given to this matter by my colleagues, who I am sure will listen to the points that he makes. However, I say to him that the Scottish Government themselves have flexibility over welfare policy and over what they can do to deal with some of the issues and concerns that he has highlighted, and therefore that they have responsibility in that regard.

[Robert Neill (Bromley and Chislehurst) (Con)]

I welcome the change and elimination of negative revenue support grant; that is most important. Will the Secretary of State confirm also that outer London boroughs such as Bromley will in fact profit as a result of the increases that he has announced, but, when the former is revised, will he also bear in mind the need to take into account those authorities that have a track record of historical efficiency and low cost?

[James Brokenshire]

As my hon. Friend has highlighted, we do intend to directly eliminate the £152.9 million negative revenue support grant using forgone business rates. That will prevent any local authority from being subject to a downward adjustment to its business rates tariffs and top-ups that could act as a disincentive for growth. I am sure that he will look at the detail of this. Obviously, we have the business rates retention pilots of 75% for London and that long-term sustainable funding arrangement for local government.

[Mr Clive Betts (Sheffield South East) (Lab)]

At the time of the Budget, the Local Government Association, of which I am pleased to be a vice-president, welcomed the £650 million extra for social care, but contrasted it very clearly with the funding gap in adult and children’s services of £2.6 billion. That, it said, would lead to more than 1 million people not getting the care they need and, in the LGA’s own words,

“threaten other services our communities rely on”—

such as libraries, street cleaning and parks. Will the Secretary of State confirm that, for the majority of councils, there is no additional funding in this statement over and above the amounts announced in the Budget, which the LGA described as “inadequate”, and that, for the next financial year, this will mean further cuts and more austerity still being the order of the day for most local councils?

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[James Brokenshire]

I recognise the work that the Communities and Local Government Committee does in scrutinising and challenging things in the way that it rightly does on behalf of hon. Members. Obviously, the hon. Gentleman will have noted what I said in relation to negative revenue support grant and other matters within the statement on additional funding that is being made available to local government. Yes, the £650 million is important to support adults and children’s social care and to deal with some of the pressures. That is why I also highlighted the specific fund to drive innovation to help councils that are struggling with some of those pressures to innovate and to make sure that we are raising standards and responding to the needs, acknowledging also that there is other income from council tax and business rates retention growth, too.

[Theresa Villiers (Chipping Barnet) (Con)]

I welcome the help that the Government are providing for local high streets, and may I urge the Secretary of State to make sure that the new Help for High Streets fund is up and running very soon and is providing help to local town centres in my constituency?

[James Brokenshire]

We will certainly be doing our utmost to ensure that councils are able to bid into the £675 million, knowing that, yes, there are challenges on our high streets; no one can deny that. There is a need for innovation and a need to see investment going in there, as well as a taskforce that will support that activity, learning and recognising very firmly the recommendations from the Timpson review, which has been of great assistance.

[Wera Hobhouse (Bath) (LD)]

I was really disappointed with the announcement, as it really does nothing to address the growing inequalities across our country. One of the biggest problems, of course, is that much of local government funding is now based on council tax, and council tax is so very unfair. When will the Government revalue properties so that dwellings worth £300,000 in one area are no longer in the same council tax band as dwellings worth £100,000 in another area?

[James Brokenshire]

I am always sorry to disappoint the hon. Lady, but I will have to do so on that point. However, I can highlight the £3.5 million additional funding from 2018-19 to 2019-20 for Bath and North East Somerset unitary authority. Therefore, we do take account of the differentials in council tax and how grant is applied, and that is very firmly recognised and understood within the system.

[Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con)]

Will the Secretary of State confirm that my constituents in Northumberland will benefit from the increases in the rural services delivery grant, which is a most welcome recognition of the rurality challenges with which our public services have to deal across my vast and very sparsely populated constituency?

[James Brokenshire]

As I have indicated, we acknowledge some of the real pressures within rural areas—some of the additional costs that come through from that—through the rural services delivery grant. We also acknowledge those pressures through the business rates retention pilot, which I am sure will be of assistance in my hon. Friend’s area.

[Mr George Howarth (Knowsley) (Lab)]

I welcome the announcement of an increase in core spending power, but I estimate that it will be worth about £2.5 million in Knowsley. Set against that, however, the Secretary of State will be aware that Knowsley, with some of the highest need in the country, has also shamefully had the biggest cut in support from central Government, at £100 million. Is the Secretary of State not ashamed that need is now almost irrelevant to the allocation of local government funding?

[James Brokenshire]

I simply do not accept the core issue behind the right hon. Gentleman’s comments. Indeed, we are undertaking the fair funding review, which will allow further reflection on and recognition of some of the pressures that are felt between councils. Knowsley will see an increase of £2.8 million between 2018-19 and 2019-20, which will mean core spending power per dwelling of £2,282.

[Sir Desmond Swayne (New Forest West) (Con)]

To balance, in 2021 Hampshire will have cut a total of £560 million from its budget. Will the Secretary of State acknowledge the difficulties faced by even the best-run councils?

[James Brokenshire]

I acknowledge the pressures that councils have been experiencing and the hard choices that so many have had to make to deal with the issues with the public finances to which we have had to respond. I hope that my right hon. Friend will recognise the additional funding announced today. Equally, as we head towards the spending review next year, we will look carefully at further efficiencies and opportunities to ensure that councils are sustainable for the long term.

[Maria Eagle (Garston and Halewood) (Lab)]

Liverpool City Council and Knowsley Borough Council cover my constituency of Garston and Halewood. Both have been severely hard hit, with more than 60% of their Government grant removed. Will the Secretary of State explain how his announcement will help Liverpool City Council to meet the enormous gaps that have been created as a result of his Government’s policies?

[James Brokenshire]

The funding and allocations announced today certainly recognise some of the pressures that councils in Liverpool and elsewhere have been facing—for example, with regard to social care issues. It is important that we recognise those pressures and the growth that has been experienced. The additional funding will assist, but long-term reform is needed through the Green Paper and, in relation to the long-term funding situation, through the spending review. That needs to be addressed next year.

[Vicky Ford (Chelmsford) (Con)]

Essex County Council and Chelmsford City Council do an excellent job, and the real-terms increase is welcome. However, there are real pressures because the area is growing, with 16,000 new homes due next year. Will the Secretary of State look favourably on our housing infrastructure bid, and will there be another chance for business rates retention projects for those who were not called for this year’s pilot?

[James Brokenshire]

We are moving to a system in which 75% business rates retention will be the norm around the country. In relation to the housing infrastructure fund, we received a large number of bids worth almost £14 billion to deliver 1.5 million homes back in 2017, and further funding has been committed to that. We are looking carefully at this matter because we want to build the homes that our country needs and get the infrastructure in place to deliver them.

[Ms Karen Buck (Westminster North) (Lab)]

Will the Secretary of State confirm that local authorities are now housing 82,000 homeless families in temporary accommodation? Can he confirm that that has risen by 5% in the last year and by 71% since 2010, and can he tell us how much it actually costs local authorities?

[James Brokenshire]

I recognise the pressures of homelessness and temporary accommodation, and we have committed £1.2 billion across the board to respond to and deal with the issue. I am committed to dealing with some of the most acute pressures and issues, including rough sleeping. I want us to move towards a situation in which that is eradicated, and we get people into homes and give them the support they need. That is a clear priority for me.

[Huw Merriman (Bexhill and Battle) (Con)]

I thank the Secretary of State and his excellent Minister for Local Government, who have given East Sussex County Council a great deal of time and support. I welcome East Sussex being added to the pilot for 75% business rates retention. Using this year’s figures, that will be worth an extra £3.6 million. Does the Secretary of State agree that projects such as the delivery of a new road and business park in East Sussex will mean more money retained by East Sussex, and more jobs and growth in the local economy for my constituents?

[James Brokenshire]

I welcome the innovation in East Sussex highlighted by my hon. Friend. That is what I see in local government—the real drive and desire to do the right thing for communities, and to see jobs, growth and prosperity. This Government will continue to support that.

[Jack Dromey (Birmingham, Erdington) (Lab)]

Birmingham is reeling from the biggest cuts in local government history—£690 million, with another £86 million to come. Children’s centres are closing, and there have been cuts to school transport for disabled kids and to advice for poor people. The consequences are ever more serious, yet the Secretary of State seems to favour low-need, leafy shires at the expense of the great city of Birmingham. Does he not recognise that this is not a fair deal but a bad deal for the city, and that Birmingham has simply had enough?

[James Brokenshire]

No, I certainly do not acknowledge the hon. Gentleman’s point. Core spending power per dwelling in Birmingham is around 10% higher than the average. I draw his attention to the extra £18.2 million that he will see through today’s announcements. We want to see the great city of Birmingham continue to thrive and flourish, which is precisely why we are supporting it.

[Bob Blackman (Harrow East) (Con)]

This year is the last year of the multi-year settlement, so what happens to the 3% of councils that did not sign up to the efficiency savings? How are they treated? More importantly, what are the Secretary of State’s plans for the future of multi-year settlements, so that councils can plan for the future?

[James Brokenshire]

I firmly recognise the benefit of multi-year settlements. We have seen this through councils’ ability to plan and to drive efficiencies and effectiveness. As my Department prepares submissions for next year’s spending review, I will reflect carefully on the matter in order to recognise the ability for councils to plan, while also ensuring that we promote innovation.

[Kate Hoey (Vauxhall) (Lab)]

Does the Secretary of State understand that there is a limit to back-office efficiency savings and the new income that councils can get? Since 2010, Lambeth has seen some of the biggest cuts of any council in the country. There is a rising demand in inner-city areas that we can do nothing about. Just how does the Secretary of State think that councils can continue to deal with this rising demand with the level of funding that they are receiving?

[James Brokenshire]

A lot of that demand is in social care pressures, which is why we have made these announcements. Equally, I recognise that there is a need for long-term reform and sustainability to ensure that we can meet the needs of the future. I am firmly discussing that issue with the Health Secretary as we look at the social care Green Paper. Core spending power in Lambeth is also above average for that class of council, but we will continue to reflect on the issue.

[Martin Vickers (Cleethorpes) (Con)]

I thank the Secretary of State for our recent meeting to discuss a further devolution deal for Greater Lincolnshire. In his statement, he referred to promoting efficiency. Does he agree that more resources for frontline services could be released if we created more unitary authorities, and would he welcome such proposals?

[James Brokenshire]

I want to drive efficiency and effectiveness, and I recognise some of the incredible work that has already been undertaken. My hon. Friend highlights the issues of unitarisation, which we very much want to be locally driven. I will certainly be setting out my further thoughts on the conditions to be satisfied, knowing that there needs to be a unanimity of view or that we seek proposals from particular areas to make it effective.

[Sandy Martin (Ipswich) (Lab)]

In my previous role, I warned Suffolk County Council that reducing services in children’s centres would lead to increased numbers of children being taken into care. Does the Secretary of State accept that increase in demand for children’s social care is at least partially caused by cuts in preventive services such as children’s centres, and will his Department assess the correlation between children’s centre cuts and an increase in the number of children taken into care?

[James Brokenshire]

We are investing in prevention and ways to promote good standards across local authorities. That is why, at the autumn Budget, the Chancellor announced an additional £84 million over five years to work with a number of local authorities that are seeing high or rising demand for children’s social care to ensure that they improve their practice and decision making in delivering for those families.

[James Cartlidge (South Suffolk) (Con)]

I welcome my right hon. Friend’s announcement, particularly on the rural services delivery grant. There is no doubt that rural counties such as Suffolk do face specific costs. Will he outline specifically what this will mean financially for Suffolk?

[James Brokenshire]

The Under-Secretary of State, my hon. Friend the Member for Richmond (Yorks), has been highlighting the additional £400,000 for Suffolk in the rural services delivery grant. We are providing £81 million to the most sparsely populated areas in 2019-20, recognising the pressures that my hon. Friend the Member for South Suffolk (James Cartlidge) has highlighted and just how important that is.

[Karin Smyth (Bristol South) (Lab)]

It is the season of goodwill, and I indicated to the diligent Parliamentary Private Secretary that I would like a copy of the hand-out questions, but I have had to make up my own.

Last week, I met the nursery heads and children’s centre leaders in south Bristol. We know that these centres are the greatest, most efficient driver of social mobility in the country. May I therefore invite the Secretary of State to south Bristol to meet those nursery school heads and children’s centre leaders to explain how, if they are not part of his assessment on sustainability for local authorities, they fit into the Government’s policies on social mobility and increasing skills for our country?

[James Brokenshire]

I was in Bristol just a few short weeks ago looking at the issue of homelessness, but I recognise the hon. Lady’s bid for me to look at some of the other important services and the work going on that is affecting her community. Yes, there are pressures on children’s social care—I recognise that, and it has been recognised in today’s announcement. I will continue to work with my colleagues at the Department for Education as we look at the spending review and ensure that we have a sustainable system knowing the pressures that are there.

[Mr Speaker]

In a similarly festive spirit, I can tell the hon. Member for Bristol South (Karin Smyth) that she has brought back fond memories for me, because in 1992 I fought the Bristol South constituency. Unfortunately for me, and probably for the benefit of the nation, the Bristol South constituency fought back.

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[James Brokenshire]

I am grateful to my hon. Friend and, indeed, to all the Somerset MPs who have highlighted to me some of the specific issues that have been engaged in. I welcome the feedback that she has relayed to the House on how we acknowledge some of the particular pressures in rural areas. It is interesting to note, Mr Speaker, that, by the sound of it, you came very close to going into the Bristol area. However, we will continue to focus on all areas around the country as we look at the spending for councils moving forward.

[Mr Speaker]

Not that close.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

Unfortunately, Liverpool City Council is not very happy with today’s news. I listened very closely to the Secretary of State, but he did not mention anything about replacing European funds that will be lost if the Prime Minister’s withdrawal agreement passes—whenever that may be. Liverpool City Council has secured £110 million from Europe for various projects over the next few years that is going to be vital in the face of £440 million of cuts since 2010—a 64% cut in real terms that has seen devastating consequences. Will he today commit to replacing those moneys if it turns out that they will be lost?

[James Brokenshire]

On EU funds, we will be consulting in due course in relation to the UK shared prosperity fund—the UK-wide arrangements that will replace the structural funds. I am sure that the hon. Lady will have the opportunity to make representations on that. I acknowledge, yes, that some funding is received through the existing funds, but there is now the opportunity for the UK to shape this and also to deal with some of the bureaucracy to ensure that more money goes to the frontline.

[Simon Hoare (North Dorset) (Con)]

My right hon. Friend will know that with the home-grown proposals for the unitary councils of Dorset, we have been at the cutting edge of modernisation and delivering value for money and quality services. Will he say a little more in relation to Dorset, specifically, regarding the outcome of his announcement on negative revenue support grant and the very welcome news about the rural services delivery grant?

[James Brokenshire]

Negative RSG will be eliminated, as I have indicated. My hon. Friend will see in the different schedules that will be published the implications of the rural services delivery grant. He will also notice, in relation to Dorset, the statutory instrument that has been laid in relation to council tax harmonisation, which I am sure will give him all the clarity he will need for his council for the future.

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

The battering of Birmingham has been remorseless. In the food banks where I work, demand is up by a third on the past year. In the soup kitchen where I worked on Sunday night, demand was up by 50% on the past year. The rough sleepers I helped to count sleeping on our pavements a couple of weeks ago were up by 50% on the past year. Yet our council has been forced to table proposals to cut council tax support for the poorest in our community because the Secretary of State has ruled out access to our reserves. Birmingham MPs wrote to him on 25 November to ask to discuss this. We have not yet had the courtesy of a reply. When will he meet us to discuss when the battering of Birmingham will stop?

[James Brokenshire]

I hear what the right hon. Gentleman says. I will certainly look into his letter of 25 November and get back to him in relation to the points that he makes. But I would also highlight how we have been supporting the west midlands area in relation to issues such as rough sleeping, which he highlights, with our Housing First programme to ensure that we are getting the help that is needed to the most vulnerable people, getting them off the streets and getting them the support that they require.

[Mr Philip Hollobone (Kettering) (Con)]

I declare my interest as a member of Kettering Borough Council. I thank the Secretary of State for listening to the campaign by local authorities in Northamptonshire and local hon. Members that Northamptonshire be granted a business rates retention pilot. Can he explain in simple terms, for the benefit of my constituents, how this will help local government finance as local councils reorganise in Northamptonshire?

[James Brokenshire]

I understand that Northamptonshire has estimated that the potential benefit is in the order of £18 million in relation to the business rates retention arrangements, with the growth in business rates. That is the change that we want to see across the system. I recognise the continuing issues and challenges within Northamptonshire. I can certainly commit to my hon. Friend to continue to work with colleagues on this.

[Sarah Champion (Rotherham) (Lab)]

Rotherham Metropolitan Borough Council has had to make £170 million of cuts and savings since 2010, yet this year alone we have had a 40% increase in the number of looked-after children, which was unplanned because they have come from the National Crime Agency’s historical child sexual exploitation investigation. The £84 million that the Secretary of State cites is actually Department for Education money for innovation, not frontline social work. So exactly how is Rotherham Council meant to look after children on a day-to-day basis?

[James Brokenshire]

The hon. Lady is right about the £84 million, which is about driving innovation, and driving good standards and different forms of practice, so that councils can learn from each other in that way. In terms of the core elements of this, I point to the £650 million and the £410 million within it that enables councils to use it for issues such as children’s social care, given the issues and pressures that are there. That is why we have responded in this way. Clearly, I acknowledge and recognise the points that she makes. That is why we have made those decisions but, equally, why we will continue to work with councils on this hugely important issue.

[Rehman Chishti (Gillingham and Rainham) (Con)]

By way of a declaration, I am a member of Medway Council. Conservative-run Medway Council has the lowest council tax in Kent and excellent frontline services, and it has made a real success of the 100% business rates retention scheme. It has now applied for £170 million to build 13,000 houses through the housing infrastructure fund. In the light of its success, will the Secretary of State look at its bid favourably?

--- Later in debate ---

[James Brokenshire]

We are looking at all bids for the housing infrastructure fund. I appreciate the ambition of Medway and other councils to deliver the homes that our country needs. We are scrutinising those bids so that councils can deliver that. I recognise and appreciate the work that Medway is doing and how it is keeping council tax down.

[Clive Efford (Eltham) (Lab)]

The National Audit Office says that local government funding will be cut by 56% between 2010 and 2020. My local authority’s funding has been cut by 63%. Last night, there were 948 households in temporary accommodation in Greenwich, and 21,000 children went to sleep in households in poverty. Is that not the reality of Tory austerity, and are those people not paying the price of the consistent cuts that this Government have made to local government funding?

[James Brokenshire]

The hon. Gentleman highlights one element of the local government settlement. However, that does not take account of council tax, business rates retention or the better care fund. In relation to core spending power, I hope he recognises the additional £44.3 million that Greenwich Council will receive in 2019-20. It is important to look at all the forms of funding that make up the overall finances available to local government to deliver for their areas.

[Jack Brereton (Stoke-on-Trent South) (Con)]

I refer the House to my entry in the Register of Members’ Financial Interests. I thank the Secretary of State and the Minister for Local Government for the work they have been doing, and in particular for Stoke-on-Trent and Staffordshire’s inclusion in the 15 business rates retention pilots. Does the Secretary of State agree that that will help the Conservatives on the local authority in Stoke-on-Trent to continue their fantastic work to build a stronger economy and more job opportunities?

[James Brokenshire]

I congratulate Stoke-on-Trent and commend my hon. Friend on all he does to champion his community. The business rates retention pilots will certainly assist the 15 councils selected, but we want to see that benefit being rolled out to all councils. That is why this will be tested further, as we look to 2020 and beyond, so that other communities can see that positive impact.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

By 2022, Newcastle City Council will have had to save £327 million due to slashed Government funding and rising demand. We see that in the increased litter on our streets, the reduced library opening hours, reduced support for the most vulnerable among us and the terrible choices that Newcastle councillors and council officials have to make. The council is currently consulting on yet further cuts. Will the Secretary of State respond to that consultation and explain why slashed services should be further slashed, now that austerity is supposedly over?

[James Brokenshire]

First, I hope that the hon. Lady’s voice gets better quickly in time for Christmas. There will be a 75% business rates retention pilot in Newcastle in 2019-20, which will release additional funds to meet some of the pressures that she highlighted, and core spending power will increase further. We must also look at the devolution deals and all the support and investment being provided. I hope she sees the positive things in this statement that will address a number of the points that she highlighted.

[Neil O’Brien (Harborough) (Con)]

It is very welcome that Leicestershire will see a 4.4% increase in its core spending power next year, and it is extremely welcome that we will get a business rates retention pilot worth £13 million; I thank Ministers for meeting me to discuss that. However, the local government funding formula is opaque and unfair, and Leicestershire is unfairly under- funded. Can the Secretary of State assure me that he will continue to look at a fair funding formula and look closely at the Leicestershire model, for comprehensive reform?

[James Brokenshire]

I thank my hon. Friend for his active participation in our work on long-term funding and the fair funding review, and I thank Leicestershire for its participation in and support for that. He highlighted some of the announcements today, including the benefit of around £14 million for Leicestershire. He has been a good and active champion. We want people to be engaged in the fair funding review, to ensure that we learn from the evidence, so that we get this right.

[Kerry McCarthy (Bristol East) (Lab)]

After the Budget statement, 76 council leaders, including the Mayor of Bristol, wrote to the Secretary of State warning that more money was needed to avoid a “catastrophic collapse” in key council services. Does he really think that those 76 council leaders will be reassured by what they have heard today?

[James Brokenshire]

Those council leaders should recognise the additional funding being allocated to councils up and down the country, but I know that further innovation, support and discussions are required. In terms of the spending review next year and the long-term arrangements, I want to see a sustainable future for our local councils and the delivery of services in the hon. Lady’s constituency and elsewhere. I am determined to deliver that.

[Mark Pawsey (Rugby) (Con)]

I welcome the Secretary of State’s announcement, and in particular the funding and clarity provided on two issues for district councils that have an agenda for growth, such as Rugby Borough Council. First, he has retained the threshold on the new homes bonus, which will continue to provide an incentive for councils to grant planning consent for homes. Secondly, he has eliminated the negative revenue support grant, which was a particular concern to many district councils, meaning that councils will continue to have an incentive to provide business growth.

[James Brokenshire]

I know that my hon. Friend is a champion of district councils, and I commend him for all his work. As I said in my statement, I hope there will be recognition that we have listened on a number of issues, including negative RSG and the new homes bonus. This is a settlement that councils can get behind, so that they can get on and deliver for their local communities.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

I thank the Secretary of State for allowing Stoke and Staffordshire to be in the business rates pilot. It is late—it should have been last year—but it is welcome. However, I remain confused. When I wrote to the Conservative leadership at Stoke-on-Trent City Council last February about their increase in revenue support grant, they told me that it was an ineffective measure of their spending ability and that they will still have to make severe cuts in their budget. Who is right—the Conservatives at the council who tell me their budget is still being squeezed, or the Conservatives in Parliament who tell me that spending has never been greater?

[James Brokenshire]

I would highlight the additional core spending power of £3.9 million that will be delivered for Stoke-on-Trent. I am grateful for the hon. Gentleman’s recognition of the inclusion of those areas in the business rates retention pilots. The point is that councils can look to a number of different funding streams for the delivery of their services, including direct grants, business rates retention and council tax. We look at the funding that councils are delivering for their communities in that overall context.

[Helen Goodman (Bishop Auckland) (Lab)]

Further to the question from my hon. Friend the Member for Rotherham (Sarah Champion), the £84 million for children’s services is over five years, which means it is only £16 million a year. The £410 million is to be shared between adults, the NHS and children’s services, yet in County Durham the number of children looked after has risen by 300 to more than 800, which means an extra £7 million a year. Will the Secretary of State acknowledge that his increases are inadequate, and that he needs to go back to the Treasury to ask for more?

[James Brokenshire]

I certainly recognise the pressures that councils have experienced in relation to children’s social care as well as adult social care. That is why there is flexibility for councils to determine how the £410 million is allocated between each of the pressures they are experiencing. Durham unitary authority will see an extra £13.1 million in 2019-20. The £84 million is spread over five years. It is about a sense of innovation and driving up standards. I certainly commit to continuing to work with colleagues in the Department for Education on these issues, and I recognise the pressures and the need for continued innovation in preparation for the spending review.

[Dr Paul Williams (Stockton South) (Lab)]

The cuts to the public health ring fence—£1 million has been lost in Stockton-on-Tees in the past two years—mean health visitors with unsustainable case loads and sexual health services under increased pressure. What guarantees does this settlement give that there will be increased public health investment in our most disadvantaged communities?

[James Brokenshire]

Within the social care element, there is obviously a focus on taking pressure off the NHS—how social care in the NHS goes hand in hand. I am a profound advocate for the prevention agenda that my right hon. Friend the Health Secretary has advanced. I certainly commit to continuing to work with him to ensure that we focus on the delivery of the prevention agenda in local communities. That obviously involves public health, and we are therefore seeing fewer people going into hospital. We are delivering the sort of system that actually makes sense and ensures we take pressure off our NHS.

[Liz McInnes (Heywood and Middleton) (Lab)]

Rochdale Council has had to make £178 million of cuts since 2010 due to cuts in central Government funding. The latest cuts are to the grants for our community centres. Does the Secretary of State think it is an efficient use of council funds to cut these much-needed community centres?

[James Brokenshire]

Clearly, it is for individual councils to make their decisions. I gently remind the hon. Lady again that these changes have had to be made to deal with pressures in the public finances, and that councils have had to make hard decisions because of the bigger macro issues we have had to deal with. However, I hope that she will recognise the increase in core spending power that Rochdale will see from the announcement I have made today. I encourage councils to do all that they can through local decision making, knowing that, yes, changes have had to be made, and that is a consequence of some of the implications we have had to pick up as a Government.

[Mr Jim Cunningham (Coventry South) (Lab)]

Over the past eight years, Coventry City Council has lost well over £100 million in resources from the Government. It faces pressures on children’s services, youth services and social care—and it is about time we had the Green Paper on social care. It would have been more welcome if we had been able to look at the overall picture and could ask questions now about the police precept, so that we could make a judgment about the 2.8% increase in cash terms. We would then have got a better judgment because, under the guise of local democracy, the Government are shoving their responsibilities for funding local services on to local authorities. Local authorities will then get discredited, and in three or four years’ time the Secretary of State will come along and talk about capping profligate local authorities. He needs to get real for a change.

[James Brokenshire]

I say gently to the hon. Gentleman that he will have an opportunity during the statement to follow to raise any questions about policing—or about what I have said today about flexibility on the police precept—with the Minister for Policing and the Fire Service, who has just joined me on the Front Bench. I am sure my hon. Friend listened very carefully to what the hon. Gentleman said. This is about providing our police with additional funding to meet their needs and those of local communities, and such flexibility is one of the means of doing so.

[Dr David Drew (Stroud) (Lab/Co-op)]

Further to the point raised by the hon. Member for Cleethorpes (Martin Vickers)—my hon. Friend in this respect—will the Secretary of State, given the reputed back-office and other savings produced by the move to unitary authorities, look at setting up a fund to encourage the remaining parts of the country at least to consider doing so as the way forward in really making local government work in those areas?

[James Brokenshire]

I am grateful to the hon. Gentleman for the approach he has outlined. Certainly, as we look to the spending review and to different ways in which we can drive further innovation, we will consider how unitarisation has brought benefits to some parts of the country in producing savings on back-office and other arrangements. We do want that to be locally driven and for there to be such support for it, but he makes an interesting suggestion and I will certainly reflect on it further.

[Diana Johnson (Kingston upon Hull North) (Lab)]

In the Secretary of State’s statement, he said that he has been

“listening carefully to councils of all shapes and sizes across the country and responding.”

May I therefore ask him how exactly the £650 million for adult and children’s services, and apparently for the NHS as well, will deal with the national funding crisis now—I repeat, now—in adult social care and children’s services, which is currently estimated to be about £3 billion?

[James Brokenshire]

With the additional funding announced in the Budget, the Government will have given councils access to £10 billion of dedicated funding that can be used for adult social care in the three-year period to 2019-20. I know that longer-term reforms are obviously required to put the system on a sustainable basis. That is why we have now gained the £650 million to support councils in dealing with a number of these pressures. Again, I highlight how we deliver care and support better by having stronger linkages between our NHS and our council services, which this will help drive.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

For two weeks running, I have asked the Prime Minister about the devastating funding challenges that the Tyne and Wear fire and rescue service is facing. I know she has been a bit busy, so she may not have had time to have a word with the Secretary of State. In the light of the fact that funding local services such as social care, fire services and the police through the council tax precept just does not work in areas such as mine, as he well knows, and that the reserves have already been allocated, how does he propose to fill these drastic funding gaps?

[James Brokenshire]

I would be pleased to discuss this further with the hon. Lady. I would highlight that, overall, fire and rescue services will receive about £2.3 billion in 2019-20. She talked about the reserves. Certainly, the financial reserves held by single-purpose fire and rescue authorities increased by over 80%—to £545 million— between 31 March 2011 and 31 March 2018, which is equivalent to 42% of their core spending power. However, I will certainly reflect further on the points the hon. Lady has made, and I look forward to discussing them with her.

[Jeff Smith (Manchester, Withington) (Lab)]

For the past eight years, the Government have in effect outsourced the hardest decisions on the most severe cuts to the most deprived local authorities. It is just not fair on a city such as Manchester, where, in the eight years to 2020, we will see a £600 per household cut in funding. Is it not true that austerity will never be over until we have not only the sticking plaster that the Government are implementing in relation to these cuts, but some proper funding restored to the most deprived authorities in this country?

[James Brokenshire]

I say gently to the hon. Gentleman that this has been about the empowerment of Manchester. It is about Manchester getting more of the benefits and more of the decision making, with devolution arrangements worth about £7 billion, which my hon. Friends on the Front Bench have highlighted. As I hope the hon. Gentleman will see from the details of the information published on the settlement, there is an extra £11.8 million for Manchester in 2019-20—an extra amount of that sum—to support services in that great city.

[Christian Matheson (City of Chester) (Lab)]

The modus operandi of this Government—whether we are talking about the police, fire services or, as today, local government—is to smash financial support for public authorities and, when they are unable to deliver services, to attack them for such an inability; or, if they are forced to increase the council tax to make up the shortfall, to attack them politically for increasing the council tax. Since most of the additional spending power the Secretary of State is announcing today will come from the local authorities themselves, does he plan to use the same tactic in this funding round?

[James Brokenshire]

I gently say to the hon. Gentleman that I am a proud champion of local government. I celebrate the incredible work that our councils do up and down the country, and the local government officers and staff who work tirelessly for the benefit of our communities. As we look to the future, I will continue to underline that message about the positive things councils do in transforming communities and the life chances that they deliver. Rather than knocking that, I will be supporting and celebrating it.