Local Government Finance

John Redwood Excerpts

Tuesday 10th February 2015 Commons Chamber

[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.

[Mr John Redwood (Wokingham) (Con)]

Can the Minister comment on the balance in his settlement between the money that goes directly in the block grant and the money that goes for special purposes and as a reward for certain kinds of conduct? How is that developing, and what difference does it make to the percentage change?

[Kris Hopkins]

I hope my right hon. Friend will forgive me; I cannot give him the percentage change, but I can give him some clear figures. For example, business rate retention by local authorities alone is some £11 billion, and as the Prime Minister said this morning, should a Conservative Administration be returned at the forthcoming general election, we would hope to increase that to two thirds.

Through consecutive settlements, we have ensured that these unavoidable changes to local authority funding have been applied in a fair and sustainable way, and through our reforms to local government finance we have established a basis for more self-reliant government—a sector less dependent on grant and increasingly confident about using the tools and incentives we are providing to grow their local economies.

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[Hilary Benn]

I agree and I shall come to that point, too, when I talk about the consequences of what has happened for health and social care more generally.

[Mr Redwood]

The shadow Secretary of State is usually very fair-minded, so does he agree that the largest local authority service is education, which has over the past five years had cash increases and small real increases in spending, and that the biggest local public service is the NHS, as administered locally, which has had real increases as well? Were they not the right priorities and would not his party have shared exactly that priority of protecting health and education?

[Hilary Benn]

Indeed. If one looks back at the record of the previous Labour Government, one can see that that is precisely what we did. In fact, we increased investment in those two things as that reflects public priorities. Of course, Government life is about the choices one has to make and one of the choices the Government have not made is to publish the figures that the NAO has asked them to publish. I suspect that Ministers know what the figures are and know that they will damage their argument that this is a settlement that is fair to all, north and south, and therefore do not want to reveal what is happening. We also know that the NAO has criticised the Department and Ministers for not paying close enough attention to what is going on. Again, those are not my words but those of the National Audit Office, which said:

“The Department has a limited understanding of the financial sustainability of local authorities and the extent to which they may be at risk of financial failure.”

That is why the Public Accounts Committee said:

“The Department does not understand the impact over time of reductions in funding to local authorities, and the potential risks of individual authorities becoming financially unsustainable if reductions continue.”

On current trends, the revenue support grant will disappear entirely by 2019-20. When the Minister replies, will he confirm that that is the case? What assessment have the Government made of the impact of that on the viability of local authority services, particularly in the areas most reliant on Government support? Indeed, I ask Members to pause for a moment and contemplate their local authority’s budget without any revenue support grant whatsoever. The Chair of the Public Accounts Committee was very clear when she said recently:

“Further cuts could not just undermine the entire viability of most optional services, but might threaten some statutory services in these areas.”

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[Hilary Benn]

If we get the opportunity after a certain event on 7 May, I would be very happy to receive representations from the hon. Gentleman and everyone else, because when I say that we want to achieve a fairer funding mechanism, that is what I mean.

In return for this economic devolution deal, all we ask is that local government comes together to form combined authorities across England. Their shape will vary from place to place, because economic geography and travel-to-work areas vary. This is a challenge to local government. Local government says to all politicians, “Trust us more.” Well, we would trust local government more. We would say, “Get organised, and significant devolution of funding is on offer in return.”

[Mr Redwood]

rose—

[Sarah Newton (Truro and Falmouth) (Con)]

Will the right hon. Gentleman give way?

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[Robert Neill]

It is a little like the classic Henry Ford approach of telling people that they can have any colour car they like so long as it is black. The Opposition are saying that people can have any type of devolution they like so long as they sign up to their version of what they now call a county region—that’s a new one! Calling it the north-east or east of England did not work; they are calling them county regions now, but only so long as people sign up to their imposed template.

Local government has not forgotten that this is the same team that introduced capping without giving it the chance to ask for the views of local voters; that introduced comprehensive area assessments; that interfered through the Standards Board and tried to micromanage the behaviour of councillors; and that did nothing to deal with predetermination, which stifled democratic debate. It is the same old Labour. They have not changed at all; they have just reworked the language. This is the same team that, at the end of the day, created the financial ruin of this country which, slowly, the coalition has had to put right. They are the people who damaged the hardest pressed in this country through their economic management, but there has been no apology or word of recantation.

[Mr Redwood]

Did my hon. Friend notice the continued insult to England? The Opposition say absolutely nothing about allowing England to settle her income tax levels, but they want Scotland to settle theirs. They want Scottish MPs to come down here and help dictate to England our income tax while they Balkanise England and pretend that breaking it up into mock European areas is some substitute for proper devolution.

[Madam Deputy Speaker (Dame Dawn Primarolo)]

Order. The right hon. Gentleman has got his point on the record, but you will stick to local government finance, won’t you, Mr Neill?