Local Government Finance

Jim McMahon Excerpts

Wednesday 5th February 2020 Commons Chamber

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

It is a privilege to wind up this important debate. We all believe in the power of local public services, but you can’t do it on the cheap.

May I congratulate Government Members who have made their maiden speeches today? The hon. Members for North Norfolk (Duncan Baker), for Keighley (Robbie Moore) and for Orpington (Mr Bacon) all displayed a real sense of place and community.

May I also thank my fellow Labour Members for their contributions? My hon. Friend the Member for Sheffield South East (Mr Betts) is, of course, the Chair of the Housing, Communities and Local Government Committee, which has done a great deal of work on local government finance and devolution in particular. He was very clear that unless we address the crippling pressure on adult social care and children’s services, there will be a £10 billion funding gap. He also commented on the real pressure on and costs for neighbourhood services, which we all see in our communities. Many of the services on which we rely have had to be removed so that adult social care and children’s services can be kept going.

My right hon. Friend the Member for North Durham (Mr Jones) pointed out that the red wall Tories were all absent from this debate, even though the areas they represent—[Interruption.]

[Mr Kevan Jones]

The hon. Member for Sedgefield (Paul Howell) is waving, but he has not been here for most of the debate.

[Jim McMahon]

Better late than never. The hon. Gentleman has missed contributions highlighting the impact of austerity and cuts on many of the seats now represented by Conservative MPs. It is little wonder that the actual formula—the data, analysis and impact—has not been shared with the House at all. Why is that? The answer is that the Government realised that they need to go back—[Interruption.] I am going to continue, so that the Minister has time to respond.

Council tax increases generate very different amounts of money, depending on the locality and its funding base. A 5% increase in Wokingham would generate £5.2 million, while the same percentage increase in Knowsley would generate just half that amount, even though both areas have a similar population base. That is no way to fund adult social care. There is a genuine postcode lottery whereby house price valuations that are nearly 30 years old determine whether somebody gets looked after in their old age. I just do not think that is a fair way to do it.

I congratulate my hon. Friend the Member for Jarrow (Kate Osborne) on her fantastic maiden speech. What stood out in particular for me was the sense of the power of community. In spite of deindustrialisation and the real pressures faced through austerity, it is the power of people and place that binds and makes communities. The Government just need to be a bit more on their side in future, compared with the past 10 years.

My hon. Friend the Member for Ealing, Southall (Mr Sharma) highlighted that £300 million has been taken from his local authority budget, and noted that the fair funding review is far from fair. It takes money from areas of high deprivation and directs it to more affluent areas, which is absolutely the opposite of fair.

My hon. Friend the Member for Luton South (Rachel Hopkins) highlighted a £130 million cut and its impact on neighbourhoods. My hon. Friend the Member for Vauxhall (Florence Eshalomi) highlighted the important role that councillors play in making sure that we have strong local leadership, but they need Government on their side. Far too often, when we ask the Government to step up and to do what is right, they are late in doing so, like some Members arriving in the Chamber. The example was given of the Government being far too late in responding to the cladding issues facing many tower blocks. I am afraid that that is just not good enough.

The truth is that the Government do not want to talk about finance. They know that they are not on strong ground on that issue. They certainly do not want to give any detail about the fair funding review, because it would highlight just how unfair the review really is. I am glad that the Ministers are sitting down, because this will surprise them: we are not going to accept the amendment tabled in the Prime Minister’s name. It does not mention finance; it talks about devolution. The Prime Minister wants to be able to pretend that his flavour of devolution is all about giving people power, but that is not what we have experienced.

Under this Government, many parts of this country have been denied devolution. There is no clear framework to enable local areas to know exactly what types of powers can be devolved to them. What we see with this Government is a flavour of devolution that goes from Ministers to Mayors, whereas Labour recognises that to give real power to communities, we need to start off in neighbourhoods and work up to the nation. Neighbourhoods and communities have not been central to the Government’s devolution agenda, and that has been the hallmark of all we have seen from this Government. I am glad that Labour Mayors are using their powers to ensure that the worst excesses of this Government do not filter down as strongly through to their communities they serve.

We have talked about the town centre fund. Clearly, all of us want to see investment in our town centres. We recognise their importance at the heart of our communities, and the decline that many have seen while retail has struggled to catch up with the online world. But frankly, we will never make progress if the Government are not willing to recognise that the business rates system is actively harming our high streets and town centres. It is not good enough to give just the local independents a boost. Of course that is welcome, but it does not go far enough. Doing only that massively underestimates the importance of anchor stores to bring footfall into big town centres.

[Kevin Hollinrake]

I think the shadow Minister said that the business rates system is driving the change on the high street. I speak as somebody who has a number of properties in my business, and that is not what is driving this change. It is a change in consumer behaviour that is driving the change on the high street.

[Jim McMahon]

It is right to reflect that the high street will always evolve. It will never be what it was, and it will of course be different in the future. But that does not mean that we should just give up and accept that decline is inevitable. The types of spaces that are often talked about are bespoke spaces. It might be possible to reuse a single shop front, but how it is possible to reuse a whole shopping centre that was built to be a retail core?

The Government’s agenda of only supporting independent traders massively underestimates the impact of anchor stores such as Debenhams or Marks & Spencer, which bring footfall through a town centre. How can it be right that companies such as Amazon can have very clever accountants to hide their profits away from Her Majesty’s Revenue and Customs—which cleaners in their factories would not be able to do, by the way? How can it be right that Manchester airport’s warehouse distribution centre pays half the business rates of Debenhams in Manchester city centre? Where is the fairness in that system? If the Government really want a future for town centres and high streets, they really have to address that issue.

The Minister for the Northern Powerhouse and Local Growth, the right hon. Member for Rossendale and Darwen (Jake Berry), was right to thank local government, but I am afraid that it will be beyond ironic to many that these thanks came from the Minister who has lorded over austerity and who tries to ignore the fact that the last 10 years have been under a Tory Government, whether in coalition or not. I am afraid that it is not good enough for him to disown the last 10 years as if they had never happened.

Most councils have done a fantastic job to survive. It has been the hard work and leadership of local councillors that has meant that many areas have not just been about decline, but have been offered hope. Council officers have worked so hard to ensure that public services can be delivered. But while thanking them, maybe we should give consideration to the fact that there are more than 900,000 fewer council officers today than there were in 2010; they have been sacked and sent out the door because councils do not have the money to pay them. That is the reality on the ground.

When we were told that austerity was over, I do not think that anybody really expected that we would go back to 2010, but nor do I think that anybody expected the cuts to go even deeper even faster, and that is exactly what will happen under the fair funding review. I challenge the Minister—if he is so confident that that his fair funding review is well thought through and genuinely fair, and that the evidence base is robust and can be tested, what is there to hide? Why not place the data in the Library by the end of the week, so that every Member of this Parliament can hold the Government to account?