Local Government Finance

Louise Ellman Excerpts

Tuesday 10th February 2015 Commons Chamber

[Kris Hopkins]

I do not have those figures, but what I will say is that I recognise that local government has had to make a substantial contribution to driving down the deficit left by the previous Administration. It is important that we recognise that local government has responded in an extremely positive way to the challenge we have placed before it.

During the consultation period, which closed on 15 January, my ministerial colleagues and I met a number of local authorities and representative groups. I also led a phone-in discussion, with more than 100 authorities participating. In addition, the consultation received numerous written responses. We considered very carefully the views of all those who commented on the provisional settlement. On 3 February, we laid before the House a local government finance report which confirmed our proposal for the settlement for 2015-16 as announced. We also confirmed our proposal that the council tax referendum principle for 2015-16 will be set at 2%.

I recognise the time and effort that those responding to the consultation—councils, in particular—have given in submitting detailed and considered comments on our proposals. As I said, we listened to those views carefully. In doing so, we recognised that councils asked for additional support. As a result, our announcement on the final settlement for 2015-16 included provision for a further £74 million to support upper-tier authorities, including to help them to respond to local welfare needs and improve social care provision.

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

If the Minister listened carefully to representations and wanted to be fair, how can the outcome be that Liverpool, the most deprived local authority in the country, is suffering some of the harshest cuts?

[Kris Hopkins]

We need to recognise—I have said this before—that the 10% most deprived authorities receive on average 40% more than the most wealthy authorities. It is right that we create a formula to ensure the more vulnerable and deprived areas get that response, but we should not just measure on the basis of what moneys have been allocated. Local authorities now have the ability to raise money and are rewarded for building houses. I would also point out that the growth deals associated with Liverpool are significant and are led by local leaders.

With the addition of these extra resources, the overall reduction in local authority spending power in 2015-16 is 1.7%. That is lower than that proposed in our provisional settlement. Taking into account the funds we are providing to support local transformation, the overall reduction is still lower, at 1.5%. Once again, the settlement ensures that councils facing the highest demand for services will continue to receive substantially more funding, and we continue to ensure that no council will face a loss of more than 6.4% in spending power in 2015-16.

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

Whatever the Government’s protestations, it is absolutely clear that the settlement is grossly unfair to Liverpool, the most deprived local authority in the country. The settlement can only be construed as part of an ongoing attack on public services.

This year, individual residents of Liverpool will in effect each receive a cut to their local services of more than £391. By 2017, Liverpool city council will have suffered an astounding real-terms cut of 58% to its funding from central Government. That is devastating. The city’s deprivation is mirrored in its tax base, and 77% of homes in Liverpool are in the lower council tax bands, A and B, which means that only 9% of the city council’s budget can be raised through the council tax. In West Oxfordshire, 49% of the budget can be raised through the council tax, because of the wealth of the area.

Mayor Anderson and his council are doing a valiant job in difficult circumstances. They are building new homes, and more than 2,500 have come on stream this year, which has produced more than £3.5 million in additional revenue, but that cannot match the massive cuts by central Government. The council has set a three-year budget to bring stability and has carefully examined threatened services. By looking at new ways to fund libraries it has managed to save the city’s libraries. When the Government withdrew funding for schools under the Building Schools for the Future programme, the council found a way of building the most essential schools. It has also protected Sure Start and children’s centres, although some cuts have been made and, sadly, those services are again being reviewed because of the new cuts being imposed by this Government. Reserves have been spent as far as it is prudent to do so —by 2017 the city’s reserves will be down to £17.6 million —and they cannot be reduced further if the council is to act prudently.

Despite all those measures the council has taken in becoming increasingly efficient and looking for innovative ways of funding public services and creating new revenue streams, vital services are being attacked. The most important and concerning crisis being faced currently is on vital packages of social care. Social care is support to enable people who are ill, elderly or disabled to live in their own home in dignity. When this Government came into power, 15,000 people in Liverpool had support through social care packages, enabling them to live a dignified life, whereas now, as a direct result of Government cuts, that is down to 9,000 people—6,000 people have been deprived of care, despite rising needs. Unless something dramatic happens, the figure will reduce even further. That puts people’s lives at risk and robs them of their dignity. It also affects hospital admissions, because it means that, increasingly, people who are well are not able to leave hospital because appropriate care is not available for them.

Liverpool’s council is enterprising. I was horrified last year when the Minister in charge of local funding at the time said from the Treasury Bench that he thought Liverpool was a city where people wanted to doff their caps. That was an horrendous statement to make; Liverpool is a proud city. It deserves support, it acts enterprisingly and it helps itself. Increasing numbers of jobs have been brought to Liverpool, and in two months’ time Cunard, in celebrating its 175th anniversary, will bring three major, spectacular liners to Liverpool. Their return is a symbol of the city’s renaissance, which has been brought about by the efforts of the city council. But whatever the city council does in supporting jobs and working with the private sector, it cannot provide the public services that the Government are so savagely cutting away. All I can ask for today is for the Government to be fair to local authorities in general, to be fair to the most deprived local authorities and to recognise that in Liverpool city council they have an enterprising, positive local authority, which is there to serve its people, bringing jobs and working with the private sector. Surely it deserves a better deal for public services to serve our local communities.