Local Government Funding

Jeff Smith Excerpts

Wednesday 3rd February 2016 Westminster Hall

[Simon Danczuk (Rochdale) (Ind)]

It is a pleasure to serve under your chairmanship, Mr Davies, and I thank the hon. Member for Leicester West (Liz Kendall) for securing what is a very important debate.

Under this Government and the previous one, local authorities have faced enormous cuts to their budgets while receiving an ever-increasing workload. Rather than power, the only thing that seems to have been devolved is austerity. The Chancellor’s spending review and the recent local government settlement were further blows for Rochdale.

During the last Parliament, Rochdale was hammered. The council was forced to cut more than £200 million from local services, which was almost half the available budget. The council leader, Richard Farnell, has been preparing for a £40 million cut over the next two years, but he will now have to plan for a further 4.5% cut to spending powers after the local government settlement, when the average cut across England was only 2.8%.

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

I am grateful to my borough neighbour for giving way. Like others, he has made an important point about the unfairness of the cuts. To illustrate that unfairness, if Manchester had had a fair share of cuts over the course of the last Parliament—not being protected from cuts but just suffering our fair share of them—we would be £1.4 million a week better off. Surely that is unfair to the really deprived boroughs in this country.

[Simon Danczuk]

The hon. Gentleman makes an important point about the unfair way that these cuts have been spread across the country.

Services in Rochdale have already been stripped back to the bare bones. For example, £8 out of every £10 in Rochdale is spent on children, the elderly and the disabled. The cuts to our budget will have a devastating impact on the most vulnerable people in our town.

I do not say this lightly, but Rochdale is one of the most deprived communities in the United Kingdom. Unemployment is higher than the national average; people in the town are earning £635 less per year than they were in 2010; and on top of that, under this Government we have to accommodate more than 1,000 asylum seekers every year.

Rochdale has repeatedly been one of the three councils in the country that have been hardest-hit by successive cuts under this Government. There are proposals to cut the public health grant, despite the grant providing vital support for preventive services around drugs and alcohol, and for community health improvement. We are struggling with these issues in Rochdale, and such a cut would be devastating.

As has already been mentioned, measures in relation to the social care precept are welcome. I welcome the concept but there is an added problem, because these measures are just scraping the surface in terms of the problems facing local government. The measures will disproportionately benefit wealthy areas, not least because most of Rochdale’s housing is in council tax bands A and B, which means it only raises £1.3 million for the local authority. That money will go nowhere in terms of meeting the demand for social care. It will not even meet the increases to the minimum wage for workers in care homes; that is how inadequate the policy is.

Let me briefly turn to the point about the 100% retention of business rates, which gives Rochdale a similar problem to the one I have just described. We do not have the ability to generate the same level of resources locally for the services the area requires compared with councils with a higher tax base.

I will finish by saying that if we truly want to empower our local communities, we need to fund them properly. A one-size-fits-all policy will not deal with the issues that we need to tackle: health, education, jobs and local regeneration. Rochdale needs and deserves a better funding regime than this Government are currently creating.