Spring Statement

Lord Shipley Excerpts

Wednesday 20th March 2019 Lords Chamber

[Lord Shipley (LD)]

My Lords, I remind the House that I am a vice-president of the Local Government Association. I thank the Government Chief Whip for enabling us to have this debate in the Chamber. Given the importance of Spring Statements it is the right place, even though on this occasion the economic outlook is so full of uncertainties.

In the autumn, the Chancellor declared the end of austerity, but he protected only the National Health Service, defence, and the international aid budget. A new forecast by the Office for Budget Responsibility meant that he could, for example, have spent more to help low-income families this spring by ending the five-week waiting time for universal credit, which just reinforces the feeling among claimants that the state does not care, and ending the benefits freeze, which is causing greater poverty for many families a year early. The Resolution Foundation has shown how the bottom fifth of families will be £100 worse off this year when the top 20% will be £280 better off.

For just £1.4 billion, the Chancellor could have helped those who need a bit more money the most. Yet the Government seem unwilling to redress the balance of social and financial inequalities, so there is no significant new revenue funding for public services, which impacts hardest on those who depend on those public services. There is no confirmation of the spending envelope for the forthcoming spending review, nor a date for it to take place. And now we know that, in growth terms, we have one of the weakest of the advanced economies. Growth is forecast this year to be down to 1.2% from 1.6%.

The Chancellor was right to warn of the economic damage a no-deal Brexit would cause, but wrong to suggest that the Government’s deal is the only alternative. As the Treasury Select Committee has demonstrated, there is no “deal dividend” because the Office for Budget Responsibility has already factored one into its forecasts. Anyway, the best deal dividend would be to remain in the European Union—without that, private sector investment will fall.

It is wrong in principle to let austerity continue for unprotected government departments, as the Chancellor has decided. Current spending plans will not repair the crumbling nature of our public services and waiting for the spending review later this year is not enough. Demand for local government services—which represent one-quarter of public spending—is going to rise faster than the income that councils can derive from council tax and business rates. The Government need to address this fundamental problem.

In addition, they must get the fair funding review right to ensure adequate redistribution from richer areas to poorer ones where people are more dependent on public services. They also need to think seriously about the future of business rates as a tax because they may no longer be fit for purpose, not least because of the difficulties experienced by the retail sector in the face of digital competition. Surely the time has come to examine more fully the case for land value taxation, which could overcome some of the current problems of business rates and enable more decisions on tax raising to be taken at a local level—for example, a tourist tax. A number of councils want to look at the potential of this, and should be empowered to do so.

It is the role of a Spring Statement to review the capacity of our taxation system to raise the money needed fairly and efficiently. I have concluded that we need a national debate on how public services should be funded, both locally and nationally. In my view—as I have said—local councils need more tax-raising powers. It has been estimated that there will be an overall funding gap of £3.1 billion next year, which could rise to £8 billion by 2024-25. The pressures are particularly acute in schools, policing, adult social care, children’s services, homelessness support and neighbourhood services. It is a lengthy list.

The Government must understand better than they appear to the impact of an ageing population, which will increase demand for adult care year by year without the resources increasing to match it. This year nearly all councils are raising council tax—three-quarters by more than 2.5%—and nearly all are increasing fees and charges. The Government have failed to explain why they are pushing extra tax raising to a local level on services such as adult social care away from national taxation, which historically has funded it. It is vital that the Government use the spending review to deliver truly sustainable funding for local government.

The Chancellor announced £100 million for the police to combat knife crime. Youth services generally have been cut heavily over recent years and now we find that the National Citizen Service is to have a £10 million rebranding. Yet just 12% of eligible teenagers take part in this scheme, which was only recently introduced. Would not the money be better spent on council-run youth services, which have seen a 52% reduction in funding since 2010?

On housing, the Chancellor claimed that the Government were on track to deliver their target of 300,000 new homes a year. However, the figures to date include many conversions and, as we now know, Help to Buy has pushed up house prices and given huge profits to some builders. The Chancellor said that the Government will build 30,000 new homes with a £3 billion affordable housing guarantee scheme for housing associations. This is one more announcement on housing but—given all the announcements over the last year on housing and other announcements in this Spring Statement, and given the absence of any detail of how the Government are delivering those commitments in practice—do all the announcements mean that the Government are well on target to delivering their commitment of building 300,000 new homes a year? Can the Minister say when the figure will be reached? Will the Government publish a detailed annual review of the milestones they achieve?

I draw the Minister’s attention to the fact that housing benefit now costs £22 billion a year. If we invested in new social homes, we could reduce this. In this respect, the recent report by Shelter on how this could be done is an important contribution to the thinking here, and I hope that the Government will think seriously about how to invest in building social housing, to save the revenue costs in housing benefit caused by high rents in the private rented sector.

It is not all criticism. I welcome the borderlands growth deal which will strengthen the deep ties across the border regions of England and Scotland, as the Chancellor said. I have concerns about the northern powerhouse—very little was said about that—and the Chancellor failed to mention the shared prosperity fund. The Government have repeatedly been pressed to explain how the EU structural funds will be replaced. They are worth £2.5 billion a year to the UK and are vital for the poorer parts of the country. Will final decisions be announced in the spending review on the shared prosperity fund, along with Transport for the North’s bid for improved public transport across the north? Both are urgently needed.

In the Written Ministerial Statement issued as part of the Spring Statement, there is a brief response to the recent consultation on planning reform. It says that the Government will:

“Introduce a package of reforms including allowing greater change of use between premises, and a new permitted development right to allow upwards extension of existing buildings to create new homes”.


I have serious concerns regarding the proposed expansion of permitted development rights in this way, and I look for the Minister’s confirmation that such proposals will be subject to full parliamentary scrutiny. The proposed expansion includes creating a new permitted development right for the demolition and redevelopment of commercial buildings for residential use, creating a new permitted development right to allow the upward extension of buildings for creating new homes or extending existing ones, and creating new permitted development rights to allow changes of use from what have been key town-centre uses.

There are huge dangers in these changes. They could undermine the planning process by denying local communities a proper voice on development. They will bypass important quality safeguards offered by the planning process, including the right to light. They will deny local planning authorities an important means of delivering planned and sustainable mixed-use environments. They will prevent local authorities from collecting planning fees and developer contributions through the planning process. This money is vital for delivering affordable local housing and infrastructure. The recent report of the Housing, Communities and Local Government Select Committee, High Streets and Town Centres in 2030, said:

“The Government should suspend any further extension of PDRs, pending an evaluation of their impact on the high street”.


I hope that the Minister will look very carefully at this, because I agree with that conclusion.

Finally, on the living wage review, I was pleased to see that the Chancellor wants the living wage to rise. It is a huge problem that two-thirds of the working-age poor are in work or live with someone who is in work. Low pay is partly responsible for this situation—the review he announced is urgent and he should be commended for initiating it. Despite some recent signs of wage growth, far too many people remain in low-paid, insecure employment. In conclusion, business confidence is low, investment is stalling, incomes are stretched and we have a divided country. It is vital that the spending review has addressing those problems as its central aim.