Local Government Finance (England)

Jim McMahon Excerpts

Monday 24th February 2020 Commons Chamber

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

First, may I congratulate the hon. Member for Cities of London and Westminster (Nickie Aiken) on what I thought was a really thoughtful maiden speech? It is quite telling when councillors come into this place. The experience and insight they bring, regardless of party affiliation, means that we are actually at one when it comes to the need for reform of local government. I very much welcome her contribution on that point.

I thank my hon. Friend the Member for Sheffield South East (Mr Betts), who is the Chair of the Select Committee, for the contribution he made and the insight he brings to this debate. He made it very clear, from information from the IFS, that we have now seen a 20% reduction in spending power since 2010. He asked the question that we all ask: if austerity is over, what does that mean in practice? Does it mean just that the funding cuts stop today, or does it mean that we will begin to rebuild what has been taken from many of our local communities since 2010?

My hon. Friend also laid out a statistic that was new to me—I was surprised by this, but perhaps I should not be so surprised—which is that 2.4 million cases have been linked to food contamination. No doubt a reduction in the number of our public health officials has played a part in that, but in England we are behind. In Wales, a takeaway has to display its food hygiene ratings on the door of the premises, as it does on online ordering platforms, in a way that a takeaway in England does not have to do. In addition to the need to rebuild our public health functions, we need to move forward and make sure we have mandatory food hygiene ratings so that people can make an informed choice about where they buy food.

As always, my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy) gave a real insight into the impact of cuts and austerity on her community. There are a staggering 848 looked-after children—almost doubling since 2010—with council services left at crisis point. There is a real tension: the Government have of course reduced the central grant and council tax is going up all the time, but the very councillors who are working to protect their community and their council often face the most criticism from local people for the very difficult decisions they have to make. That is a very difficult task for many.

My hon. Friend the Member for Harrow West (Gareth Thomas), as always, gave a London insight, painting a picture that we are not always used to hearing about in this place. We very much hear the story that London is thriving and the rest of England is really struggling, but we see real pockets of deprivation in this great capital that should shame us all. We are seeing every local authority really struggling to make ends meet and demand for services really going through the roof.

My hon. Friend also made the case, and I absolutely support this, for saying that we cannot believe that devolution in London has finished. The problem with devolution in England is that we look to London, and we discount it for the rest of England, believing that the job here is done, and it absolutely is not. If we look at devolution in our major cities around the world—New York, Tokyo and other places—we see real fiscal devolution and real law-making powers devolved to a local level, in a way that leaves London in the shadows. When we talk about levelling up, there is a need not just to talk about redistributing finance and capital investment, but about the powers needed across all our major towns and cities in this country to make sure that every community has the right to determine their own future.

My right hon. Friend the Member for North Durham (Mr Jones) was absolutely blunt in his assessment. It was interesting to hear the exchange across the Chamber on parts of that, but we can understand why tempers are so frayed on this fraught issue. How can it be right that 40% of a council’s budget—£232 million—has been taken away from local public services. In the midst of all that, when my right hon. Friend raises those issues and the impact on his community and reflects on the local authority’s difficulty in trying to balance the books, we have people who for reasons of cynical political game playing decide to make the local council the target, instead of laying the blame where it thoroughly deserves to be, which is of course with the Government who are pushing through those cuts.

My hon. Friend the Member for Enfield North (Feryal Clark), a councillor for 14 years, is also adding real quality to this place. We need more councillors coming here—maybe it should be a prerequisite of coming to this place, as perhaps then we would have a better quality of debate. The figure of £800 per person cut from that local authority is absolutely eye-watering. Although we bat around the numbers, as they are important, what this really means is that those essential services that make a place a decent place to live have been affected: the community centre is not open any longer; the library is now closed; the Sure Start centre that gave young kids the real start in life that they need is no longer there. A startling report today says that life expectancy is going backwards for women and is stalling for men. How can that be right? We are seeing a decrease that this country has not seen for 120 years. Why? It is because of the lost decade of Tory austerity. That cannot be right.

May I just place on record, as my boss my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) did, a tribute to the right hon. Member for Rossendale and Darwen (Jake Berry) for the work he did as the Northern Powerhouse Minister? One thing that I enjoyed about the right hon. Gentleman was that he knew how to take a good rebuttal, and the exchanges that we had were fun and in good spirit and were a good challenge. He worked hard behind the scenes to try to make progress on devolution, and I hope that continues.

My final point is that we cannot afford to continue this pressure on council tax. We all know that council tax is out of date, and maybe next April, when council tax revaluations turn 30, we can have a big party and crack open the sausage rolls, the prawn cocktails could come out and maybe a bit of fizzy orange, or perhaps we should look back and recognise that there has been a collective failure on council tax revaluation and the need to modernise. Governments duck this because it is not popular, but we now have a system that is very unfair.

How can it be right that over the last five years we have seen council tax increase by a third in England? That is not right. What would happen if income tax was increased by a third in the same period? What would happen if national insurance was increased by a third in the same period? What would happen if VAT was increased by a third in the same period? What would happen if fuel duty was increased by a third in the same period? And, God forbid, what would happen if beer duty was increased by a third in the same period? There would be a riot in the Strangers’ Bar as we speak. But of course there is not a riot over the council tax increase. Why? Because we can defer blame down to local councils, but it is just not good enough. Today we see that low-income families have 8% of their household income taken for council tax while that figure is only 1% for higher earners. That cannot be right. It is hugely regressive and it is getting worse with every year that passes.

If the Government really want to address this, it requires maturity. It requires a forward view and it requires a clear strategy that has to be more progressive and up to date, and must reflect geographical variations. It must also recognise that council tax has its limitations. Of course property tax is very important, but it cannot take the burden of adult social care and children’s services, and it cannot be right that our ability to receive adult social care in older age is determined by a house value 29 years ago, any more than whether a child gets the care that they need to protect them from harm is determined by the same measure.

We need to grow up on this; we need to tackle it, and we need a solution that puts councils in the right place for the long term.

[Mr Betts]

I agree with my hon. Friend. We need a separate funding stream for adult social care, as the two Select Committees recommended in the last Parliament. Also, my Select Committee recommended a review of council tax very much along the lines that the hon. Member for Cities of London and Westminster (Nickie Aiken) recommended, but the Government just dismissed it in their response and said they were not minded to do a review of any kind. Does my hon. Friend agree that that is disappointing?

[Jim McMahon]

It is disappointing, but is inevitable in a way, because there would be winners and losers—and, let’s be honest, the winners would be the poorest who have less agency to mount a campaign and the losers would be the wealthiest, the people with agency who can mount a campaign in objection to it, and the major right-wing newspapers will also mount a campaign against it. It will be called the garden tax, the conservatory tax, the porch tax, or the driveway tax, but it will never be a tax that is actually deemed to be fair. But that is what this country needs; it cannot be right in England that we carry on with such an unfair tax system.

If the Government want to be mature—if they want to look long-term, if they genuinely want to take the politics out of this, which is probably what is needed—I am sure our side would be looking to contribute to that, but if they want to wilfully ignore the impact on low-income families and on many local authorities now not able to fund decent local services, I am afraid they can expect strong opposition on this side.

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Luke Hall)]

I thank Members from across the House for their contributions to the debate. Everybody here represents a constituency and a community that they are passionate about. We have heard many examples of public servants working hard to give back to the communities we represent. I know that many Members are proud of the services that local government provides, and I hope that this evening will be a chance for us all to back those words up with action. That means backing this settlement, which will give councils up and down the country the certainty they want and need. That is what today’s debate is about.

This is the best settlement for a decade. It puts a game-changing £2.9 billion back into the sector overall. It focuses on the priority area of social care, in which we are providing unprecedented investment. That means putting £1 billion of new funding into a social care grant, as well as continuing to provide the £410 million we invested last year and maintaining funding going into the improved better care fund. At the same time, we are allowing local authorities responsible for adult social care to raise council tax by an additional 2% above the core referendum principle to meet rising demand. That means the Government are making almost £6 billion available next year across adult and children’s social care, which is a measure of our commitment to the most vulnerable in our society. Outside of social care, we are giving local authorities stability for the year ahead by maintaining all grants from 2019-20, while increasing core funding in line with inflation. Today, the Secretary of State announced a £40 million boost to the sector from the business rates levy account.

We are proud that our settlement delivers on all those fronts, while keeping council tax low and giving people the final say on their monthly bills and the services they want to see delivered. The council tax referendum principles we have put forward today are expected to result in the lowest average increase in council tax since 2016, protecting taxpayers from unaffordable and unwarranted hikes to their monthly bills. This is a great package of support for local government and one that starts to deliver on the promise to level up services across the country.

It is not just through the settlement that we are investing in local services to deliver on this agenda. We have pledged £3.6 billion to level up 100 communities across the country through the towns fund; committed £250 million in funding for vital infrastructure that will unlock over 20,000 homes; created a £500 million youth investment fund to pay for top-quality facilities for young people; and pledged a crucial £2 billion to back-fill potholes and make our roads safer. That is what this Government are delivering—a new programme of investment and renewal in our infrastructure and our public services.

A number of Members from across the House raised adult social care. The hon. Member for Sheffield South East (Mr Betts), the Chair of the Housing, Communities and Local Government Committee, raised a number of important points. We were grateful for his comments about the Select Committee’s willingness to work with us in the months ahead to develop a cross-party solution.

My hon. Friend the Member for Waveney (Peter Aldous) talked about the pressures on social care. We are acutely aware of the significant pressures councils face in the delivery of adult social care. We are hearing about that personally from councillors and council leaders up and down the country. The settlement put before the House today is a clear indication that the Government have not just heard those concerns but are acting decisively on them. For the coming financial year, we have given authorities access to almost £6 billion of dedicated funding. That includes £1 billion of grant funding for adult and children’s social care, on top of continuing existing social care grants.

The grant funding should not be viewed in isolation, however. As all Members know, councils pay for services in their area through locally raised revenue. That is why we have proposed a 2% adult social care precept, enabling councils to raise a further £500 million. That recognises the vital role that social care plays in supporting the most vulnerable people in society, while helping local authorities to meet the challenges posed by rising demand and pressures. In addition, the NHS’s contribution to the better care fund, which aims to increase health and social care integration, will increase by 3.4% in real terms, in line with the additional investment in the NHS in 2020-21.

The hon. Member for Kingston upon Hull West and Hessle (Emma Hardy) talked about the pressures on children’s social care and the need to work together on the new funding formula for local government. We can give her the commitment that we will work across the House on those issues. We will shortly start to release some of the figures to working groups, including council leaders. I am very happy to meet her and her neighbouring MPs to discuss the implementation of the formula to make sure that we do our best by the 848 children she spoke so passionately about. We announced the £1 billion for next year for adults and children, which can be decided according to local need, ensuring that councils under the most acute pressure receive additional funding and support.

Of course, the best way to improve outcomes for children is to remove the need for them to enter the care sector in the first place, which is why we have committed to a further year of funding for the troubled families programme. We are clear that that essential programme continues to provide intensive support for some of the most vulnerable families in our society. One of the Government’s first announcements was to confirm the £165 million to extend the programme for an extra year, so that more families can get access to early practical and co-ordinated help to transform lives for the better. This will provide intensive support for some of the most vulnerable families and place the programme on a stable footing for the future.

Anyone who has worked with the families and key workers on the troubled families programme will be aware of the incredible relationship that some of those key workers build with the families in helping them to turn their lives around. In the last five years, over 300,000 families have reported real improvements since joining the programme and around 28,000 people have moved off welfare and into work as a result of it. The multimillion-pound funding that we are providing will enable local authorities across the country to achieve even more in the year to come by helping up to 92,000 additional families.

One of the Government’s first announcements after being returned in December was to confirm the £263 million for local authorities to prevent and relieve homelessness in their areas through the Homelessness Reduction Act 2017 and this Department’s flexible homelessness support grant.

We had an absolutely incredible maiden speech from my hon. Friend the Member for Cities of London and Westminster (Nickie Aiken). She started by praising her predecessor, Mark Field, for the work that he did—I join her in that—and told her story about how she was the first woman to represent the seat. She is clearly going to do an incredible job. She outlined the incredible historical, cultural, economic and heritage contribution of her seat and the incredible work of the City Bridge Trust, and she talked hugely passionately about the work that she has already been involved in on rough sleeping. It is already clear from my meetings with her and her contribution in the House today that she will be hot on this topic and on holding us to account as we look to end rough sleeping for good by the end of this Parliament. She also talked passionately about local government finance reforms. I know that we will be working closely with her to develop the review of relative needs and resources in the weeks and months to come.

On rough sleeping, of course it is unacceptable that anybody should be sleeping on the streets in modern Britain. That is why we have brought forward our commitment to end rough sleeping for good by the end of this Parliament from the previous commitment of 2027, and why we have committed £437 million next year to tackle homelessness and rough sleeping—an 18% increase on last year. Our rough sleeping initiative is working, with a 32% reduction in rough sleeping compared with what it would have been had the initiative not been in place, and a 19% direct reduction, but we know how much more there is to do. That is why we are investing £112 million in the rough sleeping initiative in the year to come to continue giving people the support that they need. That will fund over 6,000 beds and 2,500 staff to support some of the most vulnerable people to move off the streets for good.

The right hon. Member for North Durham (Mr Jones) made the pun of the day in talking about the bottoms-up approach to rate relief on public toilets. The Non-Domestic Rating (Public Lavatories) Bill would have enabled this, but the Bill fell when Parliament was dissolved. We will of course consider reintroducing the measure in due course and keep him updated on that.

[Jim McMahon]

This point has been made at the Dispatch Box before, but a number of important, non-controversial Bills fell when the election was called. If the Government want to work cross-party on bringing those non-controversial Bills forward, we will be happy to support them.

[Luke Hall]

Of course we are very happy to do that. We will be bringing the Bill forward at the earliest possible opportunity, and we are happy to continue to have those discussions.

Members also touched on the importance of supporting rural communities in the settlement. The rural services delivery grant, at £81 million this coming year is, again, the highest paid out to date. We completely understand the importance of supporting rural communities, which is why in the review of relative need and resources we have proposed the crucial area cost adjustment, which will include an adjustment for the additional service costs associated with sparsity, isolation and market size. All those factors will be accounted for in a robust manner.

As positive as this settlement is, we are well aware that it does not solve all the complex challenges that councils face or relieve all the financial burdens they are shouldering, but it will help local government to address the pressures that have arisen over time, and it will give us the chance to look at the system again and make long-lasting, far-reaching reforms that will better serve communities up and down the country. Next year, we will deliver those far-reaching reforms: we will publish our devolution White Paper and set out our plans to unleash the potential of every region and to further level up opportunity; we will hold cross-party talks on social care to get this crucial issue right once and for all; we will implement the fair funding review to find a fairer, more up-to-date, more transparent and simpler way of sharing out taxpayers’ money; we will review the future of business rates, involving local government and colleagues in the House every step of the way; and we will look again at how we incentivise councils to build the homes we need.

Alongside all of this, there will be the spending review, at which we will settle the resources for local government. We intend to return to a multi-year settlement process. There will be different opinions about the way forward on all these matters, but this new and reinvigorated Government will be bolder than ever with our reforms. Deciding the future direction for local government finance will be a collaborative effort, which is why we will shortly consult on projects such as the fair funding review. We are determined to work across party lines to fix the social care challenges we have heard so much about today from Members across the House. I look forward to working with Members, many of whom spoke with eloquence and passion about the importance of solving this matter in a bipartisan spirit, to find a way forward.

That said, today is not about the fair funding review, the future of business rates or the new homes bonus; it is about giving councils the confidence and stability they need to plan for the year ahead. Today we are voting on next year’s package. I hope that every Member who wants to see local government access this game-changing £2.9 billion; every Member who wants to see this 4.4% real-terms increase in core spending power and £1 billion of new funding for social care; and every Member who wants to give local authorities the certainty and stability they need will vote for the motions tonight.

Question put and agreed to.

Resolved,

That the Local Government Finance Report (England) for 2020–21 (HC 68), which was laid before this House on 6 February, be approved.

Local Government Finance (England)

Resolved,

That the Report on Referendums Relating to Council Tax Increases (Alternative Notional Amounts) (England) 2020–21 (HC 69), which was laid before this House on 6 February, be approved.—(David T. C. Davies.)

Resolved,

That the Report on Referendums Relating to Council Tax Increases (Principles) (England) Report 2020–21 (HC 70), which was laid before this House on 6 February, be approved.—(David T. C. Davies.)