Local Government Finance (England)

Liz Kendall Excerpts

Wednesday 10th February 2016 Commons Chamber

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

Liverpool is one of the most deprived local authority areas. It is also entrepreneurial and outward-looking, always ready to adapt to new circumstances and welcoming innovation. Despite the valiant efforts of Mayor Joe Anderson and his hard-working councillors, it is not possible to protect the people of Liverpool against the cuts from this Government—cuts of 58% up to now, with an additional 9% cut in funding for next year. Indeed, that cut might be even bigger, because the council still does not know how much money will be available for two crucial services—I am referring to the public health grant and the independent living fund. Both those vital funds are important for the wellbeing of the people of Liverpool, and we still have no final figure on how much money will be available there.

In my short contribution tonight, I want to focus on the growing crisis in adult social care. Adult social care in Liverpool has already suffered a £90 million cut as a result of Government actions. We have been told that the new precept, the new tax to be levied on the people of Liverpool, and the Better Care Fund will resolve that situation. When we look at the facts, we can see that those two measures together will deliver £2.9 million next year, but there is already a need for an additional £15.2 million to cover the implementation of the national living wage and the demographic changes resulting from the rise in the number of elderly people in Liverpool. That means that the measures that we have been told will solve the problem will do very little indeed next year.

The council is not standing still and simply wringing its hands. It has been trying to develop innovative ways of working. It is talking to the local health authority—the clinical commissioning group—to see how it can work better with them to produce support services, but there is no way that the funding gap can be plugged next year. There will be more disastrous cuts for very vulnerable people in Liverpool. I am already hearing, day after day, from individuals—they are often people suffering severe disabilities who are trying very hard to live a normal life—who have been told that their care packages will be cut because, despite the council’s best efforts, the funding for those packages is being significantly reduced.

[Liz Kendall (Leicester West) (Lab)]

Does my hon. Friend agree that the Government must look at bringing forward to this year the additional funding that they promised from the better care fund, so that there is not a gap, and so that the council at least gets some extra money to support vulnerable, elderly and disabled people?

[Mrs Ellman]

I certainly agree with my hon. Friend. In the case of Liverpool, it is possible that there could be some help in future years, but the figure that has been put forward at the moment is purely an indicative one. The council does not know what will be available in the future.

It is also important to recognise the very low tax base of a place such as Liverpool. Some 78% of its properties are in bands A and B, making the potential of the council to raise funds locally very difficult indeed.

I am acutely aware that there have been problems across all public services in Liverpool, because of consecutive years of Government cuts, including what is to come next year. I know that the council has done its best to protect people from those cuts. I have focused on adult social care, because that affects the people who are most in need. I go back to the comments that I made earlier about the council not knowing how much money will be available in the independent living fund. That is also about supporting people who need help the most.

My concern is that, unless the Government act now, more and more people will face crises and more and more people will suffer great hardships. Those people who are striving hard to live a normal life will find that the rug is cut away from underneath their feet. That is intolerable, and I ask the Government and the Secretary of State to revisit this area now, to look again at the provision of adult social care in Liverpool and in other areas of need and to take action so that more and more people do not suffer in this unacceptable way.

--- Later in debate ---

[Robert Neill]

I had better not because I need to save time.

Very often, the greatest driver of adult social care is not purely deprivation; it is age profile, as much as anything else. We need to build that sort of thing into the equation. We also need to make sure that where local authorities—

[Liz Kendall]

Will the hon. Gentleman give way?

[Robert Neill]

I am sorry. I have been generous and time is short.

We need to make sure, going forward, that where local authorities can demonstrate long-term efficiency and a record of reinvesting in improved services, that is given as much weighting in the calculation of a formula as a purely formulaic needs ratio matrix that has been established in the past. That will drive behavioural change. Those of us who call ourselves localists want to give local authorities the tools, the means and the incentive to change behaviour and to be more efficient and more self-reliant. We are part-way down the track on that.

The return of business rates to the localities is a huge step forward. It was an error that my party made in government, but we have rectified it and that is a good thing. The next step that I hope the Secretary of State will take in the succeeding years of this settlement is to entrench efficiency as something that should be rewarded, just as much as ticking boxes on the needs indices are. Then we will get genuine fairness in local government, something that is genuinely responsive to local needs, and gives local representatives the ability to shape their policies and financing to the needs, concerns and aspirations of their communities. If we achieve that, this settlement will be worth a very great deal indeed. I commend it to the House.

[Jim McMahon (Oldham West and Royton) (Lab)]

I refer Members to my entry in the Register of Members’ Financial Interests. I am a serving councillor on Oldham Metropolitan Borough Council.

I pay tribute to councillors up and down the land for the fantastic work they do in delivering excellent public services right across the communities we are here to serve. Time after time, residents say that they trust local government far more than central Government. Review after review has concluded that local government is the most efficient arm of government—far more efficient than any central Government Department.

However, the term “lions led by donkeys” could not be more apt than when we look at the relationship between central Government and local councillors, who are the frontline in delivering services and often the last line of defence for the communities they are there to serve. For far too long, local government has been subjected to the whims and follies of Ministers who use critical public services as a plaything—as a toy.

In central Government’s armoury, cash is the weapon of choice. As a councillor for 12 years, and as a former council leader representing a community of 250,000 people, I have witnessed and, indeed, implemented settlements passed down by this Government. As demand for support increased, money was taken away, as the link between need and the available cash was being broken.

The Government were warned time and time again that removing money from prevention would only shunt costs on to other parts of government. That is why, for almost every pound taken from local councils in Greater Manchester, the same amount has been shunted across to welfare and health, because the pressures just get moved around the system. That makes things worse for the people we represent, and it saves the Government no money whatever.

[Liz Kendall]

Is my hon. Friend aware that the cost of delayed discharges from hospital is almost £1 billion a year? That could buy more than 40,000 elderly people a full year of home care. How does that make moral or economic sense?

[Jim McMahon]

I absolutely agree. The better care fund had a mechanism for putting money at the frontline to make savings further down the line, but it was completely inadequate for the needs that were there.

The Chartered Institute of Public Finance and Accountancy has placed on record its view that some councils could well fall over. The challenge, of course, will not come from one lone council failing to set a budget; it will come in the courts. As entitlement to basic services such as children’s services, education and social care are taken away, somebody will test that entitlement in court. When the judgment is that their entitlement has unlawfully been taken away, that will send a shockwave through the system that central Government are not fully ready for. At that point, the system may well fall over.

The truth is that the Government do not want to be honest about the true cost of cuts. Most people will accept that adult social care is one of the biggest challenges facing local government and society more generally. Our older population grew by 11.4% between 2010 and 2014, while core funding was being taken away. Age UK estimates that more than 1 million people have unmet care demands. What is the Government’s response? It is lacklustre, weak and pathetic; it simply does not address the social care crisis in this country today.

--- Later in debate ---

[Graham Stuart]

I expect that my right hon. Friend and I will always be on the same side on such matters. He is right in what he says.

One of the most important aspects of the settlement—the promise to look again fully at the needs of local government—is not actually in the settlement, and it is long overdue. As my right hon. Friend has just said, when the facts change, sometimes my opinions do, too. The fact is that this country has a fast-ageing population, as Labour Members have said, and the distribution figures show that older people are disproportionately to be found in rural, rather than urban, areas—[Interruption.] Some people are saying “Nonsense!” and “Rubbish!” I do not know what dataset they have, but just as there is a massive discrepancy between the amounts per head for rural and urban areas—it was 50% when Labour left power, and it is 45% now—

[Liz Kendall]

Nobody from the Opposition is denying that elderly people live in rural areas, but does the hon. Gentleman agree that we have to consider those people’s ability to pay? The most deprived areas have the greatest need for publicly funded care. Does he not agree that that must be part of the equation?

[Graham Stuart]

Some of the hon. Lady’s colleagues deny that the people in rural areas are older, on average, than those in urban areas. They shouted “Rubbish!” just moments ago when I asserted that, even though the shadow Minister acknowledged it in his speech in January. People are, on average, older in rural areas, and the hon. Lady is clearly unaware of—or, like too many of her colleagues, closes her ears to—the fact that people in rural areas are, on average, poorer than those in urban areas. Average earnings based on residence are lower in rural areas than in urban areas. Average earnings based on place of employment are lower in rural areas than in urban areas. That is not to say that centres of real deprivation do not need special and specific support, but to generalise that the poor burghers of Sheffield are all on the breadline, whereas everyone in Withernsea in my constituency is living it up in some rich, prosperous rural idyll, is nonsense. I know that the hon. Member for Leicester West (Liz Kendall) would not do that, but too much of the Labour party’s argument has suggested otherwise, as has much of today’s debate.

If we are to move to a fair system, we must recognise how iniquitous it was of the Labour Government to use density to drive funding to wealthier, younger, less needy urban areas. The Labour party is now screaming about an adjustment that recognises an ageing population, predominantly based in rural areas, who are also poorer. Those are the facts; if they are not, I will happily take another intervention from the hon. Ladies who shouted “Rubbish!” at me. The Labour party was shameful in skewing the funding formulae. It is equally shameless now in pretending that my right hon. Friend the Secretary of State is being unfair in dealing with the mess that the previous Labour Government left behind and making the tough decisions that he has to make.

In a less partisan spirit, I say to Members from all parts of the House that we must work together on the needs assessment to embed efficiency, not dependency and incompetence, and to recognise hard need such as an ageing population. Someone who is relatively healthy but old has—guess what?—higher health needs and higher social care needs. They are entwined, as colleagues from all parts of the House have said. They are predominantly less well funded in rural areas than in urban areas, so there is greater need. The Labour party should hang its head in shame at the fact that it turned its face utterly against that clear and present need. If the party apologised, as it should, for doing so, it would have much more traction in the debate to appeal for a fair and proper settlement.