Jim Cunningham
Main Page: Jim Cunningham (Labour - Coventry South) Local Government Finance Bill
Jim Cunningham ExcerptsMonday 23rd January 2017
(7 years, 11 months ago)
Commons ChamberRead Full debate Local Government Finance Bill 2016-17 Read Hansard Text
Mr Jones
As I said earlier, the hon. Gentleman commands a significant amount of respect in this House in regard to these matters, and, while he does not always realise it, there are Government Members who listen to the suggestions and concerns he raises, but I reiterate to him that we are moving into a different world, and that is why we have chosen to implement the system laid out in the Bill.
Mr Jim Cunningham (Coventry South) (Lab)
Given that the Minister is shifting the emphasis in terms of resources on to local government, how much does central Government expect to save as a result of this exercise?
Mr Jones
This situation is fiscally neutral. We expect the current expenditure of local government to be realised from the current local taxes that are raised locally, and there will be an additional £12.5 billion of spending that will also go to local authorities. As I said earlier, this Bill does not look at these items of expenditure—that is a separate principle—but we will certainly be looking to devolve additional responsibilities to local government, in discussion with local government and organisations such as the Local Government Association, which we expect to be fiscally neutral.
Mr Cunningham
The hon. Gentleman, whom I have a lot of respect for, must know that it is not really fiscally neutral, because central Government are saving money as a result of shifting the resources on to local government through the abolition of grants and so forth. Equally, he is asking local government to raise certain sums of money themselves, and we will surely reach a point where local government cannot sustain that. The important point is that central Government must be saving money—not necessarily his Department, but somewhere in the Treasury.
Mr Jones
As I said to the hon. Gentleman, an additional £12.5 billion will be going to local authorities. That will be on a fiscally neutral basis. I also point out that the whole principle on which this system is built is such that it will give local authorities the incentive to widen their business rates base and raise additional funding for providing local services as a result.
Mr Jim Cunningham (Coventry South) (Lab)
It is a pleasure to follow the right hon. Member for Cities of London and Westminster (Mark Field). I have known him a long time, and I have listened to him in many debates in the House.
I will go along with the Bill tonight and support my Front Bench, but I have to say I am a bit suspicious. I am sure the Chairman of the Communities and Local Government Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), knows what I mean by that, because, to be perfectly frank, we have been here before with Conservative Governments. I have been in local government, and we could go right back to Lady Thatcher’s years. When Governments want change, they always use a carrot. One particular carrot that was used in local government way back in the days of Lady Thatcher was local authorities being told that they would be able to keep their capital receipts. They were able to do so initially, but gradually, on a taper, that was faded out. Let us be careful about Conservative Front Benchers enticing us to go down a road that we may regret, because the strategy, as is quite clear now—the Minister as good as said it himself—is to shift the burden of certain services from central Government to local government. As anybody with any experience of local government knows, there will at some time come a point where central Government will want to cut local government spending. Once again, they will say to local government, “You’re spending too much money—you’re spendthrifts.” We have been down this road before. Nevertheless, I will cautiously go along with these proposals—subject, obviously, to our being able to amend them further down the road.
Having said that, it would be remiss of me not to talk about the situation in Coventry. Coventry suffers from the same prospect of potential job losses, library closures and reductions in youth services that we have heard about from those on my Front Bench. We could name a whole catalogue of problems. Since 2010, there has been a 40% cut in Government funding to local councils. Ministers speak of tough decisions but force impossible choices on to local authorities instead. The Government have passed the buck, quite frankly, forcing councils to scale back services as demand has increased. The funding gap currently facing local councils is massive. These pressures are especially acute in Coventry. The funding for Coventry City Council has been cut by a massive 45% since 2010—in other words, a £315 cut per person in Coventry. This reduction is expected to rise to 55% by 2020. There is no way to make up the shortfall without either cutting services or raising local taxation—council tax.
The pressures on social care create a massive gap that remains between the resources available and the funding required. Services are overstretched across the country. The precept offered by the Government cannot make up the shortfall: it is a panic measure that offers too little too late and will cement the idea of a postcode lottery where service quality depends on the affluence of residents. These pressures have been highlighted recently by Surrey County Council, which now plans to hold a referendum to increase council tax by 15%. In the early ’70s, Coventry council did the same thing, holding a referendum on increases in the local rates, as the system was then. Surrey County Council has cited the pressures on social care and children’s services. Both the Chancellor and the Health Secretary have homes in areas covered by this authority. This is a Tory-run council in one of the most affluent areas in the country, so it is an admission of failure in the policies of this Government. If funding is going to be so tight in Surrey, how bad must it be everywhere else? More must be done to integrate health and social care. In their last days, the previous Labour Government wanted to get on board with this Government, then in opposition, to create an amalgamated national care service. That was rejected, and there were various views about that. With health and social care, a failure to deliver on one means a breakdown in the delivery of both.
The 100% retention of business rates by local councils is of course welcome, because it is right that local authorities can shape their services, but this must not come at the expense of further regional inequality. Poorer regions must not suffer at the expense of richer parts of the country. Safeguards are required to prevent a race to the bottom among councils and to ensure that funding is still allocated according to need. Coventry must not lose out once these changes come into effect. I urge the Government to promise that no area will be worse off because of these changes. I also urge them to provide clarity on how this revenue would be distributed so that there is a level playing field for all authorities. I agree with the Chairman of the Select Committee that the Minister should be held accountable every year. As MPs, we are very often in the situation of knowing what our local authority needs, and we need to be able to put its case in this Chamber, not away from the Chamber, so that Ministers can be accountable.
Jim McMahon
That is an absolutely fair point that has been raised by not just me but very credible think-tanks and by the LGA, whose financial review stated that we need a broad review of the tax base to make sure that local authorities have a broad range of taxes and that they are resilient to future change and future shocks.
It is not good enough just to say that councils need to reform.
Mr Jim Cunningham
For very many years now, on and off, we have debated local government. Does my hon. Friend agree that we should have some sort of independent inquiry to have a good look at the needs of local government and how it should properly be funded?
Jim McMahon
I strongly believe, as would many in local government, that local government finance and the powers that are contained within local government should have constitutional protection from the interference of central Government. It cannot be at the whim of the Minister of the day, or even the Prime Minister or the Chancellor, to change the viability and sustainability of public services to such a degree.
We have made some progress with the four-year, multi- year settlement. I am pleased that the majority of local authorities have put in for that, but it was of course based on the projections of doom—on local authorities being told before the efficiency plan was submitted that they had to live within their means, but taking no account of the demand. At one point, the efficiency plans had been submitted, but there was a gap that has not been addressed through the funding settlements that are now being brought in. With the best will in the world, unless central Government bite the bullet and deal with the chronic underfunding of social care, council tax payers will continue to bear the brunt. It is absolutely wrong in a civilised country that people’s ability to receive decent social care is based on the tax base of their local authority, based on house values in 1991, and not on their need for that service.
Mr Cunningham
On social care, I met the chief executive of University hospital Coventry a couple of weeks ago. One of the big dilemmas is that people with mental illnesses are turning up at the hospital and looking for treatment when they should be going elsewhere. There is a real difficulty, certainly in the midlands, in looking after the carers in that situation. Does my hon. Friend agree that something should be done about that?
Jim McMahon
I absolutely agree with my hon. Friend, but his point goes beyond adult social care and the acute sector. Over this parliamentary Session, we have been discussing the cuts to community pharmacies and the impact that they are going to have. A lot of Greater Manchester’s Healthier Together programme is based on the preventive work of our community pharmacies, but 16 community pharmacies in my own town face closure. That is not part of the health devolution programme to Greater Manchester, but it is being held up as a place that has health devolution. That is because it is very tightly defined and the Government, with the best will in the world, just will not let go, for different reasons.
Members should not just take my word for it. During my years in local government, I had the pleasure of working with some fantastic people. I should be careful not to overstate this, given that he is one of the mayoral candidates in the race for Greater Manchester, but the Conservative leader of Trafford Council, who is also a vice-chair of the LGA, is very clear that this is not fiscal devolution, but a retention of rates that will be set centrally. If we mean it, we should all learn to let go, trust our local councils and trust local people to hold them to account.
Gavin Barwell
There are two issues here—making sure that the arrangements that we have in place cater for circumstances in which there is a significant loss in a local authority’s business rates income from one financial year to the next, and giving advance warning of the timing of closures so that local authorities have time to prepare appropriately. Perhaps my hon. Friend may wish to have discussions with the Under-Secretary of State, my hon. Friend the Member for Nuneaton, as the proposals go forward.
Mr Jim Cunningham
The Minister mentioned the fact that the Government want to grow local economies through the measures in the Bill. One problem as a local economy expands is the shortage of housing. If the private sector cannot cope, why do the Government not take the shackles off councils and allow them to borrow to build council houses, so that they can take the pressure off mortgages?
Gavin Barwell
The hon. Gentleman tempts me on to my pet subject. If his argument is that we need to build more homes in this country, I absolutely agree with him, and so does the Secretary of State. There will be a White Paper shortly with a package of measures to encourage all sectors to build more homes, but I point him to the announcement that the Chancellor made in the autumn statement of a further £1.4 billion for the building of affordable housing. The commitment of the Secretary of State and myself on that issue is clear.
The hon. Member for Great Grimsby (Melanie Onn) and my hon. Friend the Member for St Austell and Newquay referred to the measures on rate relief for public toilets. Indeed, there was quite a lot of toilet humour during the debate. Because I am not at home for my birthday, my children are watching, so I will keep it clean. I simply point out one thing to the hon. Lady. She asked whether, if public toilets were closed, the relief would still apply—whether they would still be liable for rates. The answer is quite complicated: they might still be rateable—so there is a potential for a charge—but unoccupied properties with a rateable value below £2,000 do not pay business rates, so they might fall below that threshold. If they are above it, the powers in the Bill would be applicable. I hope that that gives her the detail she was looking for.
My hon. Friend the Member for Torbay (Kevin Foster) spoke powerfully about the pressures on coastal communities and made a plea that, as we look at the fair funding review, we make sure that those particular pressures are taken into account. I know that other hon. Members will share his concern, and I thought he made his points very forcefully.
My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) spoke incredibly powerfully and showed a real understanding of the detail of local government finance. I have heard it said that when Einstein published his general theory of relativity, for a number of years only two or three people around the world understood it. I think the local government finance system is similar in that regard, but it sounds like my hon. Friend is one of the two or three. He talked about regression—the fact that the formula is not based purely on an assessment of need but takes past spending patterns as a proxy for what is needed—which means that to some degree the political decisions of different authorities have an impact. I think he was arguing that we move away from that, which is absolutely something we can look at as part of the fair funding review.
My hon. Friend the Member for Somerton and Frome (David Warburton) spoke powerfully about the importance of the measures on a rural rate relief. He is a great champion for rural communities, and we are pleased to include this measure; it will ensure that rural small businesses get the same treatment as small businesses in other parts of the country.
My hon. Friend the Member for Wells (James Heappey) spoke powerfully not just for his own constituents but for rural communities across the country in trying to ensure they get a fair deal from the fair funding review. The House considered this issue last year, and I know that he and the Secretary of State feel strongly about it, but we need to get the detail right and ensure that the formula takes account of the needs of all communities, whether inner-city areas, suburban areas such as the one I represent or rural communities, and ensure that they all get a fair deal out of the system for determining finance.
The final Back-Bench speech was from my hon. Friend the Member for Waveney (Peter Aldous). He made several points but one in particular bears repeating: about the importance of implementing the fair funding review at the same time as we extend business rates retention to 100%. It is clearly essential in those circumstances to ensure an equitable distribution of the income that local government as a whole raises through that tax. That was an important point.
The hon. Member for Oldham West and Royton (Jim McMahon), who wound up for the Opposition, made two points that are worth my picking up on briefly. He spoke rightly about making sure that the system prevents those communities from sinking that, for whatever reason, cannot raise additional funding from growth and might therefore find themselves deprived of income, which could become a self-replicating cycle. The Government want to address that in several ways. For one, we want to make sure that we get the system for local government funding right, but it will not have escaped the House’s attention that earlier we heard about an industrial strategy from a Government determined that all parts of our country benefit from the economic growth we are delivering. It is again worth looking back at the record of the Labour Government and their failure to do that. We do not intend to repeat that mistake.
The hon. Gentleman made one final point about local government finance. I want to make it absolutely clear to him that nobody on the Government Benches thinks that every single community in the country should have the same level of funding per head. We absolutely recognise that funding should be based on need. Let me give him a statistic: his own local authority has a spending power, per dwelling, of just under £1,900. In the Prime Minister’s community, that figure is just over £1,300, so his constituents are getting a spending power that is nearly 50% more to reflect the fact—quite rightly—that there are extra needs in his community. I want to make it absolutely clear on behalf of the Government that we are committed to a fair system that reflects need.
It is probably worth putting on the record some of the other things that the Bill does that have not received the same attention in the debate. The pooling arrangements and the possibility for groups of local authorities essentially to replicate enterprise zone policy is a really important measure. Some mention has been made of the powers in the legislation for the Greater London Authority and for mayoral combined authorities to levy a 2% supplement on business rates, if local business has been consulted, to fund new infrastructure. Again, this tempts me into my role as the Minister for Housing and Planning, but the Secretary of State and I are both convinced that if we want to see not just economic growth, but the housing that we desperately need, putting in place the right infrastructure is absolutely critical.
As constituency MPs, I suspect we have all quite often experienced how the resistance to building new housing in our communities is driven by a perception that over the years new housing has not been accompanied by the necessary infrastructure, so people have found it harder to get an appointment with their GP or to get their children into the local school, and found that their local trains are overcrowded or their roads are more congested. It is vital for the Government to tackle this problem, and make sure that we get infrastructure in place that will not only fuel economic growth, but help to deliver the housing that we so desperately need.