Local Government Finance

Lord Beamish Excerpts

Wednesday 7th February 2018 Commons Chamber

[Mr Kevan Jones (North Durham) (Lab)]

The Secretary of State talks about core funding. I think the average for county councils—[Interruption.] Mine is Durham, by the way, for the Parliamentary Private Secretary who is looking it up. [Laughter.] The average is a 2.1% increase, but for Durham it is only 1.4%. The reason for that—[Interruption.] Durham County Council—the PPS has got the wrong one! [Laughter.] The reason is the low council tax base, as 55% of properties in County Durham are in band A, which affects the council’s funds—County Durham, if the PPS has still not got it.

[Sajid Javid]

The hon. Gentleman is obviously familiar with the numbers for his own council, which is good to see, and his council is getting an increase. As I have said, and this will be a theme throughout the settlement, we have to always make sure that we are striking the right balance between providing increased resources and keeping any burden on taxpayers to an absolute minimum. I hope that the hon. Gentleman would support that.

We are creating a whole system of local government that is fit for the future. The current formula for financial allocations has served local areas well over the years.

--- Later in debate ---

[Mr Kevan Jones (North Durham) (Lab)]

Since 2010, Durham County Council has had its expenditure cut by £224 million, although after hearing the Secretary of State speak today, we might think that local government is somehow in a strong position. My hon. Friend the Member for Sheffield South East (Mr Betts) was right: the root cause of this is the austerity during the last seven years. I will not let the Liberal Democrats off the hook for their responsibility for that, because they were in government and agreed to it.

This year alone, Durham County Council faces pay inflation of £4.8 million and general inflation of £3.2 million. The impact of the national living wage increase of 4.4% means another £3 million. There is a £3 million cost relating to the demographics of elderly people, and an additional £5 million due to pressures on children’s services, which has been mentioned. That means that, in 2018-19, Durham County Council will have to make further savings of £15.3 million.

Much reference has been made to the fairer funding formula, but I think it should get done under the Trade Descriptions Act, because the Government are doing what they have been doing for the last seven years. This is about the pork barrel—they put the money where they can get the votes. That is why, for example, it is not surprising that rural sparsity funding is going to Conservative-controlled areas. Lo and behold, even though Durham is a beautifully rural county, it does not get any of that funding.

If we look at core spending power, the average increase for county councils for 2018-19 is 2.1%; for County Durham, it is 1.4%. The reason for that is what we heard in our debate on police funding: it comes back to areas with a low council tax base. If we look, for example, at the effect of a 1% increase in council tax, it is not surprising that the ones that score for core spending on that are Wokingham, with 0.8%, and Buckinghamshire, Surrey and Dorset. It was interesting to listen to the hon. Members for Wellingborough (Mr Bone) and for Corby (Tom Pursglove) talking about Northamptonshire, because under the system that is being brought in, their core expenditure will rise by 3.8%, compared with County Durham’s at 0.5%.

The root cause lies in the clamour for so-called fairer funding back when the coalition Government entered office. I hear what people say about need, but the needs assessment was taken out of the formula, and that has continued under this Government. As a result, the formula does not recognise that areas have particular needs, such as in relation to looked-after children or growing demand for elderly care. Instead, the Government are rewarding their own areas. I do not for one minute accept the idea that there is not poverty in rural areas—there is—but, as my hon. Friend the Member for Oldham West and Royton (Jim McMahon) said, the evidence does not prove that it is more costly to deliver services in those areas than in the constituency of my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell), for example, or some other urban conurbations.

Government Members are comparing apples and oranges, and we should think about the pressures in urban areas such as those of my hon. Friends the Members for Stoke-on-Trent Central and for Nottingham North (Alex Norris) regarding looked-after children, to take just one example. I am sure that the number of looked-after children in those areas is larger than that in some rural counties—even one such as County Durham—and that creates great pressure. It is not one of those services in which councils can pick and choose what they deliver. They have to deliver the service, and, whatever anyone says, it is very expensive to provide.

In 2010, the Government set out, as my hon. Friend the Member for Sheffield South East said, to make savings from local government. I was interested in what my hon. Friend the Member for Nottingham North said: the Treasury could guarantee getting the money because it was the councils that would have to do the implementation. We are now suffering as a result, however. If we are to make local councils more reliant on raising finances from council tax, areas such as mine—55% of its properties are band A—will always be at a disadvantage, even though our elderly population is growing and the demands on our services across the piece are growing.

I agree with the hon. Member for Wellingborough about social care. We need to take a cross-party look at this, because the problem will not go away, whoever is in government. The situation is not made any easier, however, with some of the nonsense in this funding formula, such as the 7% cut to public health, which will have a direct impact on that area. What we have is more of the same: a Conservative Government rewarding Conservative areas and dressing that up as a funding formula, when it is actually a pork barrel. Unless we address the situation fairly and prioritise need, this scandal in local government—and it is a scandal—will continue.