Local Government Finance

John Healey Excerpts

Tuesday 10th February 2015 Commons Chamber

[Kris Hopkins]

We need to recognise—I have said this before—that the 10% most deprived authorities receive on average 40% more than the most wealthy authorities. It is right that we create a formula to ensure the more vulnerable and deprived areas get that response, but we should not just measure on the basis of what moneys have been allocated. Local authorities now have the ability to raise money and are rewarded for building houses. I would also point out that the growth deals associated with Liverpool are significant and are led by local leaders.

With the addition of these extra resources, the overall reduction in local authority spending power in 2015-16 is 1.7%. That is lower than that proposed in our provisional settlement. Taking into account the funds we are providing to support local transformation, the overall reduction is still lower, at 1.5%. Once again, the settlement ensures that councils facing the highest demand for services will continue to receive substantially more funding, and we continue to ensure that no council will face a loss of more than 6.4% in spending power in 2015-16.

[John Healey (Wentworth and Dearne) (Lab)]

Does the Minister accept that spending power disguises the real pressure on many councils, and that the money allocated does matter? Barnsley, which covers part of my constituency, is facing eye-watering cuts: a 26.9% cut in the revenue support grant next year, it tells me, and an overall cut in its settlement of 13.6%. It is absolutely nothing like the smaller figures he is giving the House.

[Kris Hopkins]

I hope, then, that the right hon. Gentleman has apologised to his constituents for the financial nightmare this country faced in 2010. The Government are not making these decisions out of a desire to reduce funding for the sake of it; we are responding to the appalling economy that Labour left.

--- Later in debate ---

[Hilary Benn]

I am grateful to my hon. Friend for putting the record straight, given the charge that has been laid against us by the Government. The fundamental question today is why the system has been moving away from one where funding properly reflected need to one where the principle is being lost. That question was put by my hon. Friend the Member for Sheffield South East (Mr Betts), who chairs the Select Committee, in this debate last year, but so far there has been no answer.

[John Healey]

My right hon. Friend is making a powerful and principled point about the way that funding has moved against those areas with greatest need. He is making that case with great clarity, but does he accept that using spending power, as he just did, disguises the depth of the cuts that many councils face? It really cannot be the case that we can accept £1.8 billion of a better care fund in next year’s budget as an increase in councils’ spending power when the power to approve the spending decisions lies not with councils but with the health service in those areas?

[Hilary Benn]

My right hon. Friend makes an extremely important point. That is why the attempt that the Minister made to include that spending power, when we know that a goodly portion of that money is not in the hands of local authorities, is not a fair reflection. The point I put to the Minister is simply this: the NAO said that the Government should publish figures detailing the change in individual local authority income in real terms since 2010-11 so that the cumulative impact of funding reductions could be plain for all to see. The question is why have the Government refused to do it, and why are we relying on the finance department of Newcastle city council to do the work of the Department for Communities and Local Government?