Local Government Funding

Debate between Jim McMahon and Maria Caulfield

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.