Local Government Finance

Jim McMahon Excerpts

Tuesday 5th February 2019 Commons Chamber

[Richard Graham]

No, let me make this point first.

I remember how Labour grew the cake in Gloucester: by shrinking the economy; by spending furiously on public services while 6,000 of my constituents lost their jobs in business, apprenticeships dried up, and engineering and manufacturing were on the verge of closure, as my Labour predecessor blithely ignored the fact that we had the second worst-performing secondary school in the country; by churning out youth unemployment; and by closing the King’s own post office. We know all about Labour growing the cake, going bankrupt, increasing unemployment—like all Labour Governments—and then complaining about austerity when Britain calls for the Conservatives to sort things out.

Let this House not forget that it was the last Labour-run—

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

indicated dissent.

[Richard Graham]

The hon. Gentleman should listen to this. It was the last Labour-run city council in Gloucester that sold the car park for a pound and bought it back for a million. Let us also not forget that the current Leader of the Opposition claimed that 672 Gloucester City Homes tenants had been thrown out, although the actual figure was eight.

We do not need to take any lectures from the Opposition on growing the cake, but does that mean that every Conservative Government get it right? No, of course not. I wish to highlight briefly some of the issues for us in Gloucester. Library research confirms that Gloucester is in fact the worst-affected council, with a year-on-year spending decrease between this year and next of 4.4%. The council’s core spending power fell by more than 8% over the past four-year period.

In today’s world, we know that all second-tier councils must do as much as they can to generate efficiencies, whether by generating savings from increased productivity, merging their back offices, sharing space with other authorities or scrapping the mayor’s car—you name it. That is what every good council should be doing and it is what Gloucester City Council has done. The truth is, though, that as an urban district authority, it is difficult for us to grow and generate new homes bonus, because we have only 5 square miles of land. We are penalised by the deadweight calculation, which is the starting point of the number of homes, and we do not benefit as much as we could from business rate retention, although we are part of the pilot project in Gloucestershire.

The council is a good one. It is well rated by peer group reviews and respected in the city. It is leading on creative physical regeneration, with an award-winning bus station that is much admired in Cardiff and elsewhere, and making real progress on human regeneration by making sure that rough sleepers are helped into housing through the social impact bond and gearing up for a new homelessness hub, both of which are funded by the Government. None the less, the additional costs of dealing with homelessness issues are greater than the extra revenue we were given.

The Minister, who did see Gloucester and Cheltenham councils, at my request and that of my hon. Friend the Member for Cheltenham (Alex Chalk), has made some pragmatic decisions, but they do not, I am afraid, resolve the financial problems that my city council faces. These include issues such as pension contributions and the business of council fees and charges income. Despite being able to raise our precept, we will not, I am afraid, be able to match the costs if our city expects the delivery of the services that it so values at the moment.

I would love to ask the Minister this: will he have not a full blown review of local government funding, as the hon. Member for Liverpool, West Derby (Stephen Twigg) called for, but arrange for a senior official to look specifically at our city council and offer advice on whether the system is working for us and fair, and what more we can and should do to raise the revenue to deliver the services that are so valued across our city of Gloucester?

--- Later in debate ---

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

We have not heard a great deal today. We expected, perhaps, a rabbit to be pulled out of a hat. Word had it that the Prime Minister had a few quid to give out, but we have not seen much of that today. It could have been used in a morally just way: it could have been sent to the areas that have suffered the biggest cuts although they also suffer the most significant deprivation. Those areas have been targeted by the Government, as has been set out today in the many excellent speeches made by Labour Members in particular.

My hon. Friend the Member for Sheffield South East (Mr Betts) said that people now questioned why they were paying council tax at all, given that the neighbourhood services that they received were being reduced. My hon. Friends the Members for Liverpool, Riverside (Dame Louise Ellman), for City of Chester (Christian Matheson) and for Liverpool, West Derby (Stephen Twigg) made the same points about the human cost of removing vital public services. My right hon. Friend the Member for North Durham (Mr Jones), my hon. Friend the Member for West Ham (Lyn Brown) and my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne) outlined the very real community impact of austerity and the Government’s targeting of our communities. Through to my hon. Friends the Members for Redcar (Anna Turley) and for High Peak (Ruth George), we heard story after story of the human and community cost of austerity.

What shift did we get from the Government? Absolutely none. Why? This has not happened by accident, and the Government will not suddenly wake up and realise that they have made a horrible mistake. The policy has been deliberate and targeted from day one. The Institute for Fiscal Studies said:

“In England, cuts have been much larger for poorer, more grant-dependent councils than their richer neighbours.”

Why?

“This pattern arose directly from the way central Government allocated grants.”

That was deliberate and targeted and it has not stopped today. Despite our calls and our outlining the real human cost, the policy continues.

[Mr Jim Cunningham]

If the Government were serious about helping women and bringing an end to austerity, they could have funded local authorities to give free bus passes to the women they robbed of their pensions. Surely they could have done something like that.

[Jim McMahon]

The Government have been very good at shifting money from those who need it most to areas that will secure the support of their Back Benchers. How many times today have we heard Conservative Back Benchers praising their Front Benchers and thanking them for giving in to their lobbying? So much back patting has gone on as Government Members congratulate each other on taking food off the tables of the poorest in society to shift funding to the richest.

We have heard time and again from Conservative Members how much more expensive services are in rural areas. There is no doubt that some services are more expensive to deliver in rural areas by unit cost. However, let us look at the evidence. In 2014, the Government commissioned a report that examined every single service that local authorities deliver throughout England. It showed that it is true that some, but only 15%, of services are more expensive in rural areas. In urban areas, 31% of services are more expensive, and whether areas are urban or rural has no bearing on the delivery of 50% of services. The evidence therefore shows that services are more expensive to deliver in urban areas. That is because the deprivation is ingrained and generational. It is tied to the local economies, and councils are there to try to keep it all together.

When our communities have asked for hope and direction, what have they been given? Not even warm words or an acknowledgement of the human cost. Now more than a million older people do not get the social care they would have got in 2010. Children who are at risk of violence and abuse are not given the protection they need, because the Government have walked away and said that it is nothing to do with them. It is everything to do with them. When other Departments were fighting their corner, where was the Ministry? When austerity first struck, local government was hit hardest. We have lost 800,000 members of staff from local government. We have the lowest number of staff since comparable records began, yet the central Government workforce is the largest since comparable records began. Local government has taken more of a hit than any other Department. Within local government, Labour-controlled areas have taken the hit, and that is politically motivated.

The Government had the chance to put this right today. They have failed to be fair and just, and failed the people we come into this place to serve. Shame on the lot of you.