Local Government Funding

Jim McMahon Excerpts

Wednesday 28th March 2018 Commons Chamber

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

I thank all Members who have participated in this debate. It is fair to say that local government finance is not always the thing that enthuses people, but what we have learned today is that finance is there for a purpose: to deliver essential public services—or, in the words of the Secretary of State, “vital services on which we all depend.” To be fair though, that is probably where the Secretary of State’s understanding ends. He gets the principle, but not the true impact of austerity.

The best preparation for this debate would have been completely wasted because it would have missed the gift that keeps on giving, which is that the Secretary of State’s testbed for local government seems to be the sinking of the Titanic—a vessel that went out 106 years ago not fit for the journey ahead, without enough life rafts for the people on it and completely misunderstanding that there was an iceberg ahead and the damage that it would cause. Now, Northamptonshire might be the tip of the iceberg in local government terms, but the truth is that many councils are really struggling beneath the surface.

We have heard from my hon. Friends the Members for Garston and Halewood (Maria Eagle), for Bradford West (Naz Shah), for Reading East (Matt Rodda), for Stockton North (Alex Cunningham), for Dulwich and West Norwood (Helen Hayes), for Bedford (Mohammad Yasin), for Glasgow North East (Mr Sweeney) and for Leeds North West (Alex Sobel). The thing that ran through all those contributions was the human and community cost of taking money from public services. We hear that 64% of the Government grant has been taken away in Liverpool. That is not just a number on a balance sheet. It was money for essential services that existed to support a community that needed support to grow, develop and prosper. But that rug has been completely pulled from under the people of Liverpool.

We heard from my hon. Friend the Member for Reading East that local councils have very little clarity about what is heading towards them beyond 2020. It is true that many came forward as part of the multi-year settlement, but it is also true that the fair funding settlement is sending shivers down the spine of many local councils because they know exactly what it means. We saw it with the deletion of the area-based grant in 2010, when money directed at areas of high deprivation was completely taken away. Over recent years, the introduction of the transition grant and the rural services delivery grant have targeted mainly Tory shires. We know what fair funding really means to the Government.

[Maria Caulfield]

I have to disagree. As I said in my speech, rural areas have had 45% less funding per head of population for decades. The rural services delivery grant goes some way, although not all the way, to redressing that balance.

[Jim McMahon]

Well, actually, it does not. I will give the hon. Lady an example. If a county area that had a strong council tax base was given £1 in central Government funding and 90p of that £1 was taken away, the area was treated favourably in the transition grant and the rural services delivery grant. If a metropolitan area had £100 and £50 was taken away, far more money that was delivering public services in that area has been taken away—£50 versus the 90p taken from the rural area—because the starting point is very different.

We cannot compare an area with a strong council tax base of high-value properties due to the way in which that area has developed historically—nothing to do with the local authority—with a post-industrial town where the council tax base is predicated on low house values. In my area, 87% of properties are in band A and band B, so there is a very low starting point. That is why far more is needed in council tax from those areas to generate the same amount of money.

[Maria Caulfield]

The hon. Gentleman is being extremely generous in giving way. Perhaps he should come to see the areas of deprivation in Newhaven in my constituency. There are no high-cost properties there. Perhaps he needs to look at rural areas in the round.

[Jim McMahon]

This ought not to be a fight between areas of high deprivation in our urban core and recognising that some services cost more to deliver in rural areas. Labour is calling for a genuinely fair funding settlement that would take into account deprivation, differential service delivery costs and the very particular circumstances of our coastal communities, which feel very much left behind. But we have no faith at all that that is where the Government are going. The Government are trying to redistribute a diminishing resource; we are seeing the redistribution of poverty under this Tory Government. The money just does not exist to fund public services where the demand is growing, which is in adult social care and children’s safeguarding.

We heard earlier that Basingstoke and Deane is a paradise of local government where residents have seen no impact of cuts whatever. That is unless, of course, they remember the 46% reduction of net expenditure on pest control, the 45% reduction on environmental protection, the 33% reduction on food safety, the 66% reduction on recreation and sport, the 27% reduction on open spaces or the 17% reduction on street cleaning.

[Mr Jayawardena]

The hon. Gentleman clearly loves my former council very much. Would he agree, then, that actually only 6% of the budget comes from council tax, while the rest comes through well-managed finances and excellent use of our resources? We have created thousands of jobs whereas his party in that council has backed the wrong policies, turned down the economy and chosen to back vested interests in the unions.

--- Later in debate ---

[Jim McMahon]

It is true that this district council has increased spending in some areas, but unfortunately that is because of homelessness. One of the few budget lines that has increased is homelessness spending, which has gone up by 21%. As a result, the neighbourhood services that most people in the community would believe they pay council tax for have seen huge reductions. That council, which has no responsibility for adult social care or children’s services because those are delivered by the county council, has had to take money away from neighbourhood services. Yet this is meant to be the council that we hold up as a paradise of public services under the new settlement.

[Mr Jayawardena]

I am not sure that the hon. Gentleman understands the difference between a county council, a district council and a county area. Would he then welcome the fact that Hampshire is now getting more money as its core spending power than it had in the past? Will he reflect on why the Labour party voted against that?

[Jim McMahon]

Most people who understand local government finance recognise that the budget lines in total net expenditure include huge sums of money that the local authority has almost no control over in its everyday spend. For instance, education services are included in controllable spend, but the local authority has no freedom or flexibility at all to direct where that money goes. Since the disbanding of primary care trusts, the public health transferred spend has been included as part of core spending power for local government, but there are new pressures and responsibilities that councils are expected to deliver on. The Government have tried to offset cuts to basic neighbourhood services and the lack of funding in children’s services and adult social care through the smoke and mirrors in their calculations.

Let us see what this means in practice. Across England, since 2010, there has been a 54% cash reduction—not even a real-terms reduction—in spend on support for public transport routes. These are the neighbourhood services that our communities rely on. Tory MPs who will not support this Opposition day motion should think about the community bus services in rural areas that have been cut because the money simply is not in the system to provide those routes. Recreation and sport, essential for a healthy and thriving population, have had a 44% cash reduction; open spaces have had a 23% reduction; and trading standards, which provide essential community security, have had a 34% reduction.

In the last reshuffle, the Tories were like rats fleeing the sinking ship, but who would guess that rats are being protected because pest control has been cut by 49%? Only rats are safe under a Tory Government, it seems—that is, if they are not in one of the areas that has had to hike up the charges. In areas of deprivation, low-income families who cannot afford to pay the charges to keep away vermin are absolutely excluded from living in a safe and clean environment.

[Mr Jayawardena]

rose—

[Jim McMahon]

I give way to the hon. Gentleman; he is very keen.

[Mr Jayawardena]

The hon. Gentleman is very generous. I have two points. First, pest control still supports those on income support who need help, and indeed some of the older people in our community. Secondly, does he welcome the fact that Basingstoke and Deane Borough Council spends over £600,000 on community transport and public transport schemes?

[Jim McMahon]

What I know is that in Greater Manchester we have lost 1.2 million miles of public transport routes because of central Government cuts to vital subsidised routes. That is the real impact. There is not a single Conservative Member, whatever they say, who can put their hand on their heart and say that the cuts have had no consequences for community life in their areas, because they absolutely have.

Earlier today, we had a debate on the review of the Manchester arena attack. For those of us who were affected by that within our communities, it was a very difficult moment. I ask the Government what assessment has been made of cuts to emergency planning budgets, because £21 million has been taken from those budgets since 2010—a 36% reduction.

Later, we will have a debate on the money that has been taken from our frontline policing. Councils also provide essential infrastructure to make sure that people can live in decent, safe and thriving communities. We have seen a 40% reduction in crime reduction spend by local authorities and a 66% reduction in community safety services—that is the people who go round parks and cemeteries to make sure they are safe and the CCTV operators who can capture evidence and hold criminals to account. That is where the money is being taken from. When we have the policing debate, we will hear about the absolute frontline impact of the cuts, but we also need to think about the council services that have been snatched away through austerity, because that has been the real impact.

[Mr Jayawardena]

Will the hon. Gentleman give way?

[Jim McMahon]

I cannot give way again. I will happily share a drink with the hon. Gentleman in the bar later and compare Basingstoke and Deane with Oldham, but that is as far as we need to go today.

If the Tory Government are determined to see Britain through Brexit, it has to be based on strong foundations. Essential to that are strong, high-performing public services. In many of our areas, not only have our economies been left behind but our public services have been completely fragmented and fractured as a result of Tory austerity.

What we say today is: enough is enough. Local government has taken the brunt of austerity, but it cannot carry on. We know the deficit, which has been identified by the LGA and the National Audit Office. All we ask for is that we see from this Secretary of State the same energy that the Defence Secretary showed when he went out and publicly demanded money for his Department and that the Health Secretary showed when he demanded money for the NHS.