Local Government Funding

Liz Kendall Excerpts

Wednesday 3rd February 2016 Westminster Hall

[Liz Kendall (Leicester West) (Lab)]

I beg to move,

That the House has considered changes to the level of local government funding.

It is a pleasure to serve under your chairmanship, Mr Davies. I want to start by paying tribute to councils across the country that are doing amazing work in very difficult circumstances to get better results for their citizens and better value for taxpayers’ money. I am a long-standing champion of reforming public services, and over the last 12 months I have seen countless examples of innovative councils rethinking what they are doing by joining up local services, shifting the focus towards preventing problems in the first place and giving local people more say and control. But welcoming and supporting the excellent work that many local authorities are doing must not obscure the brutal reality that councils now face.

My own council has suffered grant cuts of 37% in real terms since 2010 and has had to make £100 million of annual savings. Over the next four years, Leicester City Council will have to find an additional £55 million of savings.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I thank my hon. Friend for securing this very important debate. In the light of the Prime Minister’s recent letter to Oxfordshire County Council, does she share my concern that the significance of the problem seemed to take him by surprise?

[Liz Kendall]

I indeed find it ironic at best that the Prime Minister is writing to complain to his own council about the cuts his Government are forcing it to make. Many councils, including mine, are considering making very difficult changes in future. Even if they do that, as my council is trying to, and use up virtually all their current reserves, they will not be able to fill the gap, and the impact on vital local services will be severe. This picture is being repeated up and down the country.

If the Minister does not believe me or thinks I am biased because I am a Labour MP, he should listen to the Conservative chair of the Local Government Association, Lord Porter. After the spending review, he said:

“Even if councils stopped filling in potholes, maintaining parks, closed all children’s centres, libraries, museums, leisure centres and turned off every street light they will not have saved enough money to plug the financial black hole they face by 2020.

These local services which people cherish will have to be drastically scaled back or lost altogether as councils are increasingly forced to do more with less and protect life and death services, such as caring for the elderly and protecting children, already buckling under growing demand…Local government has led the way at finding innovative ways to save money but after five years of doing so the majority of savings have already made.”

He finished by saying:

“Tragically, the Government looks set to miss a once in a generation opportunity to transform the way money is spent across the public sector and protect the services that bind communities together, improve people's quality of life and protect the most vulnerable.”

I agree.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I congratulate the hon. Lady on securing this debate. Does she agree that while the big political picture often passes people by, what does not pass them by is when front-line services, often delivered by their local council, are impinged upon and restricted, as they seem to be in her local area? That is when hard-core political issues affect ordinary local people and they complain bitterly to their elected representatives.

[Liz Kendall]

The hon. Gentleman is absolutely right.

This huge problem is clearest in the hugely important area of adult social care. Already under this Government, 400,000 fewer older and disabled people are receiving publicly funded social care. That is a fall of 25% at a time when our population is ageing. More than 1 million people who struggle with the very basics of daily living—getting up, washing, dressing, feeding and going to the toilet—now get no help at all from paid carers or their families. Last year, the Care Quality Commission found that one in five nursing homes does not have enough staff on duty to deliver good quality care.

The latest survey from LaingBuisson shows that, for the first time ever, more older people’s care beds closed than opened. Five of the largest care providers predict significant provider failure over the next 12 to 24 months. I want to issue a warning that another failure of a big care home provider could be on the cards. Three of the larger home care providers have already withdrawn, or signalled their intention to withdraw, from providing publicly funded care.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

My hon. Friend is making a powerful case. Does she agree that if councils like mine in Birmingham or hers in Leicester followed the Chancellor’s advice and raised extra money through the precept for social care, they would still have the problem that the King’s Fund identified? If every council in the country did that every year for the next four years, we would still have a social care funding gap in excess of £3 billion.

[Liz Kendall]

My hon. Friend has hit the nail on the head. I will come to the social care precept. These problems will not go away. In fact, they will get far worse. Far from what the Government would like us to believe, there is a growing gap in funding for social care, which will have dire consequences for elderly and disabled people, their families and the NHS.

[Chris Davies (Brecon and Radnorshire) (Con)]

I thank the hon. Lady for bringing this debate forward. I remind her that in areas such as mine, which is run by her party in a devolved Administration, we are suffering great difficulties with local authority handouts. My local authority is suffering a 4.1% cut and delivering rural services exactly as she was describing. The cost of delivering those services to rural areas has doubled, if not trebled. That massive problem has been delivered by the hon. Lady’s Administration in my area.

[Liz Kendall]

I thank the hon. Gentleman for his intervention, but I know where I believe responsibility lies. It lies with the current Government. They say more money for social care will be provided, first, through the better care programme, although this money is not what it seems and is arriving far too late, when the sector is already in crisis. There will be no increase in better care programme money until 2017 and even then there will be only £105 million extra. The full additional £1.5 billion that the Government said social care is getting will not be available until 2020.

That will not all be new funding, because £800 million of it is supposed to come from savings in the new homes budget. Due to the way the money is distributed, a handful of councils will receive no additional better care programme cash and others will lose more in their new homes bonus than they gain. It is completely unclear whether the full £1.5 billion extra in the better care programme will still be allocated if the Government do not achieve the saving in the new homes bonus.

New powers to raise council tax by up to 2% to spend on social care—my hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe) referred to this—were announced in the spending review, but they will be nowhere near enough to fill the gap in social care funding.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

I congratulate my hon. Friend on securing this debate. Having faced £156 million of cuts over the last five years, Southwark Council has to find £70 million in cuts over the next three years, and that is expected to include about £30 million in social care services. Is she aware that the social care precept will contribute only £1.7 million per year if Southwark Council chooses to implement it?

[Liz Kendall]

I thank my hon. Friend for his intervention. He is absolutely right, and I will say more about that in a moment. In Southwark Council, like mine, there is no way that the social care precept will fill the gap.

[Catherine McKinnell]

My hon. Friend is being generous in taking interventions and is making a brilliant speech. Does she share my concern not only about the funding shortfall, but about the gross unfairness of the 2% council tax precept? Areas such as Newcastle, with the greatest social care needs, also contain the people who are least able to pay that additional sum of money. Once again, the Government are hitting the most vulnerable the hardest.

[Liz Kendall]

My hon. Friend is absolutely right. Even with the social care precept, the King’s Fund says that the gap in the funding required for social care will be about £3.5 billion by the end of the Parliament once the costs of increasing the national minimum wage in the social care sector are taken into account. And as my hon. Friend says, the social care precept could actually end up disadvantaging deprived areas and further widening inequalities, because the councils with the greatest need for publicly funded social care tend to have the lowest tax bases.

Leicester City Council and, indeed, Southwark Council will be able to raise only about £6.50 per head of population from the 2% social care precept, whereas Richmond upon Thames will be able to raise almost £15 per head. How can that be fair when Leicester, Southwark and other councils like that have a greater need for publicly funded adult social care than better-off parts of the country? In total, Leicester faces increased costs for adult social care of £21 million by 2020, but according to the Institute for Fiscal Studies, which has modelled this—I would be happy to give this information to all hon. Members—the council will be able to raise only about £7.5 million. That is only one third of what is needed. Where will the extra money for vulnerable elderly and disabled people come from?

[Barbara Keeley (Worsley and Eccles South) (Lab)]

My hon. Friend is making an excellent case. Does she, like me, wonder how the Minister will square the fact that adult social care has lost £4.6 billion since 2010 with the fact that the £3.5 billion that is being talked about will come in at a maximum of £400 million a year, as she is so carefully pointing out, and the fact that the better care funding will be only £1.5 billion by 2019-20? What we have is a gap that is widening by £700 million a year and money that is so risky, back-loaded and late.

[Liz Kendall]

My hon. Friend is absolutely right. Once again, we see the difference in the funding deal that social care gets compared with the NHS, where the money is more front-loaded. The social care funding is back-loaded, and what are councils supposed to do in the meantime?

These cuts to services are morally reprehensible and economically illiterate. They will leave elderly and disabled people without the help that they need. They will push families to breaking point and force even more people to give up their work so that they can look after elderly or disabled relatives because they cannot get the support that they need. That will deprive the economy of their skills and increase the benefits bill, and all of that will pile further pressure on an already struggling NHS, which will cost the taxpayer more.

We now have the second highest ever number of delayed discharges from hospital since data were first collected. One third of those are due to a lack of social care. In the last year alone, there has been a staggering 65% increase in delayed discharges due to a lack of care in the home. That makes sense for no one. The Government must urgently rethink their immediate support for council care services in the upcoming Budget, to ensure that people get the support that they need, and they must grasp the nettle of the long-term reforms that we desperately need to truly join up the NHS and social care, so that we finally have a single budget for these local services that people depend on and we stop the farce of continuing to rob Peter to pay Paul, pushing the costs up for everyone.

[Steve Double (St Austell and Newquay) (Con)]

The hon. Lady is making a passionate speech highlighting what she thinks the problem is. Will she enlighten us on what the solution is? Will the solution be more borrowing, or which other Departments will she take the money from?

[Liz Kendall]

If the hon. Gentleman had listened to what I said, he would know that the first point is that we are spending more money unnecessarily because we do not have a fully joined-up NHS and care system. We are spending more on elderly people ending up in hospital and getting stuck in hospital when they could be cared for at home. Also, we need a fairer funding formula. If the most disadvantaged communities, who most need publically funded care, do not get it, we will increase costs and demands because people will end up in the NHS. We need proper reforms of the system to get the best results for the people who use it and the best results for taxpayers’ money. My worry is that the Government are thinking, “The NHS and social care? Job done,” which is to be completely ignorant of the crisis that is unfolding and not take seriously the reforms that we need for the future.

I know that many hon. Members want to speak, so I will finish by asking the Minister some questions about the Government’s plans to change the way local councils are funded in the future and to give councils additional new responsibilities as a result. As a strong supporter of devolving more powers to local councils, I welcome the spending review announcement that councils will be allowed to keep 100% of their business rate growth by 2020. That will help to give councils some of the tools that they need to boost jobs, growth and investment and for which they have been arguing for many years. However, there is a real risk that that change, combined with the total abolition of grants, will exacerbate existing inequalities between different parts of the country and further harm deprived areas, which have already been hit hardest by the Government’s cuts. Once grants are abolished, how will the Government ensure a fair distribution of resources, especially when more deprived areas, with higher levels of need, may be less able to raise funds from business rates and council tax?

Can the Minister confirm that the additional responsibilities that the Government are considering giving councils by 2020 include funding all of public health services, attendance allowance and the administration of housing benefit? How will the Government ensure that future revenues from council tax and business rates keep pace with demand for the services for which councils already have responsibility, such as adult social care, and the new responsibilities that they may gain, such as attendance allowance, especially when our population is ageing?

The Government must work closely with local councils to provide proper answers to those questions and, crucially, to hardwire fairness into the system to ensure that the local services that my constituents and those of all hon. Members here today value and depend on continue to get the support that they need in the future.

[Several hon. Members rose—]

--- Later in debate ---

[Liz Kendall]

My hon. Friend mentions the difficulties and cuts in social care services. Has she seen in her local NHS the problems of more elderly people going into hospital and the delayed discharges from hospital, which, as I have argued before, cost the taxpayer more?

[Tulip Siddiq]

I thank my hon. Friend for her intervention. Yes, I have seen real-life examples of the situations she describes. We could focus on many vulnerable groups, but I particularly want to mention people with mental health problems. The Prime Minister has said over and over that we should have a frank discussion about people with mental health problems and not talk about them in hushed tones or whisper around the topic. Well, let me tell the House: people with health problems are the ones who are shouting the loudest, because local services are a lifeline for people with mental health problems. One constituent of mine tells me that the day centre she relies on—which helps her to handle her mental health problems and helps her with independent living and support—will not be there any more because it will be receiving £100,000 of cuts in the next few years.

We cannot talk about fixing the roof when the sun is shining if we crush the roots of local democracy, which is what is happening by disfranchising people and taking away the services they rely on. I urge the Minister to think carefully about how local councils are struggling and suffering as their budgets are hit over and over by national Government. If we have to make tough decisions, we have to take it on the chin in national Government and not simply push the blame on to local councillors and councils that are dependent on handouts from national Government.

--- Later in debate ---

[Liz Kendall]

With the greatest respect, that was a head-in-the-sand denial of the problems. The Minister said that, overall, the Government’s proposals are fair. They are not. The areas with the greatest need and the most deprived communities have been hit hardest.

I ask the Minister to look again at what is happening to adult social care. I am deeply concerned that care home providers will fail and that vulnerable elderly people will not get support. That will pile pressure on the NHS, and in the end we will have to pay the cost, but it will be more expensive and done in the least efficient way. Opposition Members will continue to press the case for fair funding for our councils and communities.

Motion lapsed (Standing Order No. 10(6)).