Local Government Finance (England)

Jim McMahon Excerpts

Wednesday 10th February 2016 Commons Chamber

[Jim McMahon (Oldham West and Royton) (Lab)]

I refer Members to my entry in the Register of Members’ Financial Interests. I am a serving councillor on Oldham Metropolitan Borough Council.

I pay tribute to councillors up and down the land for the fantastic work they do in delivering excellent public services right across the communities we are here to serve. Time after time, residents say that they trust local government far more than central Government. Review after review has concluded that local government is the most efficient arm of government—far more efficient than any central Government Department.

However, the term “lions led by donkeys” could not be more apt than when we look at the relationship between central Government and local councillors, who are the frontline in delivering services and often the last line of defence for the communities they are there to serve. For far too long, local government has been subjected to the whims and follies of Ministers who use critical public services as a plaything—as a toy.

In central Government’s armoury, cash is the weapon of choice. As a councillor for 12 years, and as a former council leader representing a community of 250,000 people, I have witnessed and, indeed, implemented settlements passed down by this Government. As demand for support increased, money was taken away, as the link between need and the available cash was being broken.

The Government were warned time and time again that removing money from prevention would only shunt costs on to other parts of government. That is why, for almost every pound taken from local councils in Greater Manchester, the same amount has been shunted across to welfare and health, because the pressures just get moved around the system. That makes things worse for the people we represent, and it saves the Government no money whatever.

[Liz Kendall]

Is my hon. Friend aware that the cost of delayed discharges from hospital is almost £1 billion a year? That could buy more than 40,000 elderly people a full year of home care. How does that make moral or economic sense?

[Jim McMahon]

I absolutely agree. The better care fund had a mechanism for putting money at the frontline to make savings further down the line, but it was completely inadequate for the needs that were there.

The Chartered Institute of Public Finance and Accountancy has placed on record its view that some councils could well fall over. The challenge, of course, will not come from one lone council failing to set a budget; it will come in the courts. As entitlement to basic services such as children’s services, education and social care are taken away, somebody will test that entitlement in court. When the judgment is that their entitlement has unlawfully been taken away, that will send a shockwave through the system that central Government are not fully ready for. At that point, the system may well fall over.

The truth is that the Government do not want to be honest about the true cost of cuts. Most people will accept that adult social care is one of the biggest challenges facing local government and society more generally. Our older population grew by 11.4% between 2010 and 2014, while core funding was being taken away. Age UK estimates that more than 1 million people have unmet care demands. What is the Government’s response? It is lacklustre, weak and pathetic; it simply does not address the social care crisis in this country today.

[Barbara Keeley]

My hon. Friend is perfectly right to quote those figures from Age UK for unmet care demands, but the need to meet those demands falls on unpaid family carers. The Government passed the Health and Social Care Act 2012, which gave carers rights, but there is no funding for that. That is what legislation will have to address.

[Jim McMahon]

I thank my hon. Friend. We can talk about figures, and this is a debate about the settlement, so we are likely to do that, but we need to think about the human cost too. Down the line, what will these things mean for individuals, families and our communities? Oldham’s £200 million of cuts leaves a gross budget of £188 million. More than half the town’s money has been taken away by the Government.

If the answer to providing adult social care is a 2% levy on council tax, let us follow that through to see what it means. For Oldham Council, a 2% increase in council tax, as directed by Government, would generate £1.5 million, because of course the town has a low council tax base to begin with. However, the increase—just—in the living wage impacts on social care contracts, and so, not even taking into account an older population or increased demand, there is a £2.7 million increase in wage bills. With £1.5 million generated in council tax and £2.7 million in increased wage bills through the Government’s living wage, the numbers do not add up. This does not even allow us to stand still; we are going backwards.

I am sure that the hon. Member for St Austell and Newquay (Steve Double) is very pleased with a cash bonanza to buy his vote today, but some of us were not so fortunate. We had a raw settlement and a raw deal from this Government, because on top of the £200 million in cuts, we cannot ignore the rural relief grant. So it is cash after cash after cash for rural areas, not taking into account a single bit of need. It has already been pointed out that 85% of this funding is being given to Tory shires, but let me go closer to home and look at Greater Manchester.

Trafford has some rural areas, but let us look at them: Bowdon, Alderley Edge and Hale—“Footballers’ Wives” territory. This is the most affluent borough in Greater Manchester. It has the highest council tax, the highest business rate base, and the healthiest budget as a result of this Government’s policies—but that is not all. Because of the way that you have protected your side, you have something in common with Trafford—Baroness Williams of Trafford, the Local Government Minister and former Trafford Council leader, who lives in Trafford. Is a “friends and family” discount being offered? What do we need to do, Greg? Do you want to come and live in Oldham? If that helps our financial situation, then we will—

[Madam Deputy Speaker (Natascha Engel)]

Order. I know that the hon. Gentleman is new, but he speaks through the Chair, so when he is saying “you” he is addressing me. Members are referred to as hon. Members or named by their constituency.

[Jim McMahon]

I am very sorry for that slip, Madam Deputy Speaker.

The truth is that the five most deprived areas get absolutely zero—nothing—from this Government. At the same time, the five least deprived areas, together, share £5.3 million between them.

[Greg Clark]

I appreciate that the hon. Gentleman is new to this House, but first he should know that of course Trafford does not get any rural grant because it is not a rural authority. Secondly, he might want to reflect on the remarks that he made about my noble Friend Baroness Williams of Trafford, who is, and has been throughout her career, an excellent public servant. She has done great work, not only in Trafford, for Greater Manchester, and is a woman of the utmost integrity. I think he will want to reflect on that.

[Jim McMahon]

I am quite happy with my comment. There is a direct link between Government Members who had to be bought for their vote today and the fact that the only council in Greater Manchester to receive the transitional grant happens to be the place where the Local Government Minister lives. I am sorry about that, but I did not choose where the Baroness chose to be a council leader and chooses to live.

The crux of the issue is that the Government steered through the cuts in a very politically tactical way but have not at all understood their true impact, which has been found in review after review, and by the Public Accounts Committee in this House. If the responsibility of Government is to look after the welfare of their citizens, then on that test I am afraid they have failed.

--- Later in debate ---

[Dr Blackman-Woods]

I think that is the fourth time we have heard that from the Secretary of State this afternoon, but that does not make it right. Durham County Council has clarified that, and it thinks that the settlement is totally unfair.

[Jim McMahon]

Simon Henig, the leader of Durham County Council, has just sent me a message to say that that aspect was part of the original consultation, and that it does not consider the latest round, which includes the transition fund, to be fair.

[Dr Blackman-Woods]

I am grateful to my hon. Friend for confirming what I have just said. Those of us in Durham think that the settlement is absolutely shocking because, once again, it hits hardest those councils with the greatest problems and highest levels of disadvantage, such as Durham. I had hoped that the Secretary of State’s comments on Monday would go some way to addressing the balance in favour of areas with the highest need, but I am afraid there was not a glimmer of that. Given the Government’s record of unfairness and widening inequalities, it is perhaps not surprising that the settlement massively favours Conservative councils. In fact, 87% of the funding announced on Monday is going to Tory councils.