Local Government Finance

Lord Johnson of Marylebone Excerpts

Tuesday 5th February 2019 Commons Chamber

[Robert Neill (Bromley and Chislehurst) (Con)]

It is a pleasure, as always, to follow the hon. Member for City of Chester (Christian Matheson).

I welcome the many positive aspects of the funding settlement, including the assistance given to the elimination of the negative rate support grant and the additional moneys given through the better care fund, which will benefit local authorities such as mine. However, it also highlights the pressing need for us to move swiftly and radically to overhaul local government funding properly. An efficient authority, Bromley will balance its budget this year, but unless we have change, in four years’ time we will have a funding gap of between £20 million and £30 million, depending on the assumptions one makes. The current system is not sustainable in the long term, which is why it is critical that we press ahead with the fairer funding review and with a radical approach to the devolution of business rates, as well as with the other initiatives that the Government are looking at in this area. That must include a White Paper on adult social care, to follow the Green Paper that has been promised. It is critical that we have that early, in time for the 2021 finance review.

[Joseph Johnson (Orpington) (Con)]

Will my hon. Friend give way?

[Robert Neill]

Of course I will give way to my borough neighbour.

[Joseph Johnson]

Does my hon. Friend agree that it is time we had an adjustment to our local authority’s baseline, to reflect the fact that it has made enormous efficiencies in order to absorb a 50% real-terms cut over the past four years, and to reward it for being one of the most efficient local authorities in the country?

[Robert Neill]

I very much agree with my hon. Friend.

I will now deal with the specifics. Bromley has historically been a low-cost authority, and credit must go to the Conservative-led Bromley Council, which has made savings of around £97 million per annum since 2011-12. However, because it has been efficient historically, there is really no fat left for it to cut, and because of the way the system works at the moment, there is no reward for efficiency. There is no reward in the formula for being a historically low-cost and efficient authority. If anything, perversely, we tend to get penalised for this, and that needs to be put right in the spending review.

We also need to recognise that there are more nuances, even in an outer-London Borough such as Bromley, than people might expect. Deprivation is now moving across London, and the old distinction between inner and outer London does not work any more. Bromley has the fourth lowest level of settlement funding in the whole of London, despite having the sixth highest population. It is the largest borough in terms of geography, and it has the highest proportion of older people, with all the cost pressures that that places on adult social care. It also has the largest road network, but it’s funding settlement is the second lowest per head of population.

That does not make sense to the members and officers of Bromley Council, who are working hard to deliver services for our residents. They have a limited ability to make further savings while maintaining statutory services, and the scope for discretionary spend is more and more squeezed. There are pressures not only on adult social care but on the temporary accommodation budgets, not least because the operation of benefit caps in London is pushing people in private rented accommodation out from inner London to the outer-London boroughs such as Bromley. That means that we, in turn, are having to accommodate people out in Kent. This is leading to real difficulties for many London boroughs.

There are also real pressures on children’s services and social care. Bromley has behaved magnificently in turning around its social services, which were rated poor two years ago, but are now rated good and outstanding in terms of leadership, with a Minister describing the speed of turnaround as unprecedented. The council achieved that despite funding pressures, but those pressures still exist. More children are diagnosed or recognised as having complex needs that must be dealt with, for example. Again, the current settlement mechanism is too blunt and opaque an instrument to deal with the situation adequately.

We must also consider the full implications of the Homelessness Reduction Act 2017. I warmly welcomed the Act, but the truth is that, in practice, not all the costs are being picked up for local authorities such as Bromley, so we need to consider a revised formula. The same goes for the deprivation of liberty social care arrangements, because their costs must also be picked up. Such things can be achieved through a sensible revision of the formula.

Turning to the need for business rates reform, Bromley has gone into the London business rates pool and wants to work collaboratively with its neighbours. However, Bromley wants to become self-sufficient and does not want to be dependent on Government grants in the long term. Its ambitious approach to supporting development in the borough, particularly in the town centre in my constituency, underlines that desire, but it needs a proper slice of devolution as a reward in a way that is not currently available given how the pool operates.

Finally, if we are to give local government genuine flexibility, we must look again at the amount of ring fencing within some of the remaining grants. I would hope that we could move a situation whereby such a grant as there is simply comes as a block and then the local authority has the flexibility and leeway to move money around based on its priorities. A simple example from Bromley is that the council is unable to move money from the schools block into the higher-need blocks or into special educational needs transport. A suburban borough such as Bromley has larger distances compared with inner-London boroughs and so requires a greater level of flexibility than the formula currently permits.

While welcoming the settlement, which I shall support tonight, I hope that the Minister will take away my specific points and the broader cry for root-and-branch reform of local government funding.