Financial Sustainability (Local Government)

Debate between Jesse Norman and Steve Rotheram

Tuesday 7th January 2014 Westminster Hall

[Steve Rotheram]

I have, and I mean to refer to it later. I also have further evidence about how badly the Government have treated Liverpool. I understand what the hon. Member for Southport (John Pugh) said about years of dishonest argument, but that is not what we are talking about. At times that dishonest argument was about some authorities that thought they should get a greater increase than other authorities. We are now talking about savage cuts, not increases.

Not only is Liverpool’s cut the deepest; there are 38 other areas that will receive either a flat settlement or an increase in funding. How can that be fair? What happened to the Chancellor’s claim that he would not balance the budget on the backs of those in most need, or to the Government mantra that we are all in this together? Before some hon. Member intervenes with the inevitable argument that Liverpool will still receive above the national rate per capita, let me point out that the very fact that the city is struggling to meet its statutory requirements as a local authority gives credibility to the argument that further consideration of the funding formula is necessary to reflect socio-economic and multiple deprivation indices.

Perhaps the best description of the consequences for Liverpool of Ministers’ actions was from the shadow Health Secretary when he suggested:

“The Government do not understand, or they do not care, and they just rip up the fabric of an entire city. It is disgraceful.”—[Official Report, 18 December 2013; Vol. 572, c. 765.]

I could not have put it any better myself: it is managed decline, based on an inequitable formula that, at its core, is predicated on an ideological assault on the cities that no longer offer the Tories or Lib Dems any form of electoral support. It is not fair and it is not good news for local government.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

I wish, in a way, that the debate had followed the lines laid out by the hon. Member for Birmingham, Edgbaston (Ms Stuart) in an admirably even-handed and non-partisan way. Is it not true, as a matter of historical fact, that under the previous Government, heat maps were generated that specifically tied public funding to areas of actual and potential Labour support? That has been in the newspapers. We know that it is a well established fact, which has been well attested from other grounds. Should the hon. Gentleman not be properly recognising that in his remarks?

[Steve Rotheram]

Deprivation has always been recognised on heat maps and areas of the country are well known in that regard. I do not accept the premise of the hon. Gentleman’s question. If he is saying that money in the formula was given to those areas of greatest need, and that showed up on a heat map, yes, that is true, and quite rightly so—it should have been.

Some might argue that it is simply coincidental that Labour-controlled Liverpool, Labour-controlled Manchester, Labour-controlled Birmingham, Labour-controlled Sheffield, Labour-controlled Newcastle and so on are the hardest-hit councils, with, in some cases, cuts to their budgets of more than 50% over the life of this Parliament, while councils that benefit most are well-off, Tory-controlled authorities. Some might suggest that that is just a coincidence, but I do not buy that. The formula was designed to do exactly that.

[Jesse Norman]

Let me put on the record that the heat maps are not reflective of imbalances in deprivation funding at all. Let us take an example that is completely open and known to everyone, which is the scandal of the private finance initiative, in which 106 new hospitals were built at enormous cost. The vast preponderance of them were built around a model of funding that was for very large outpatient hospitals in major cities, and it was deliberately targeted on those cities. The result has been, at a time when health care has been moving to a much more localised, technology-enabled solution, a disaster for health care. We will find that these great hospitals, including the new one being built in Liverpool, struggle as a result.