Local Government Finance

Lyn Brown Excerpts

Tuesday 5th February 2019 Commons Chamber

[Mr Betts]

That is quite a good record. If the hon. Gentleman looks back, he will find that one of the problems was the lack of regulation of financial institutions, but the Conservatives criticised Labour for regulating too strongly throughout that period.

I will try to be charitable to the Government by saying that I can welcome some elements of the spending review, including an extra £650 million for social care. However, that has to be set against the LGA’s analysis of a £1 billion deficit in both children’s and adult social care, which will rise to £3 billion for each in 2025. I can welcome the fact that the spending power of councils as a whole will not fall in real terms—there is a 2.8% increase in cash terms—but that is spread differently across various authorities, and is cushioned by increases in council tax. Those increases bring in more money in richer areas, of course, and those are the areas that have received the smallest cuts to their grants since 2010. Those two things do not sit well together.

Sheffield has seen a 50% cut in grants since 2010 and major cuts to services. Social care services for both children and adults overspent by £15 million last year and will do so again this year. This is not a local authority out of financial control. It has not yet used its reserves, but next year, for the first time, it is planning to do so. Of course, that can be done for only a limited number of years. Many authorities across the political spectrum are in the same position.

Care is very important, but there are other services to consider. Sheffield and most authorities have done the right thing by concentrating on care, because they have statutory responsibilities to the elderly, children in care and people with disabilities, but National Audit Office figures for cuts to other services since 2010 show that private sector housing has been cut by 60%, that traffic management and road safety has been cut by 60%, that recreation and sport has been cut by 50%, that libraries have been cut by 30%, and that planning and development has been cut by 50%. Those cuts are hitting communities. In the end, it is not councils that are hit by such cuts; it is communities. It has happened in my city, where libraries are having to be staffed by volunteers, grass-cutting is done less often and private sector housing officers are not sufficient to bring selective licensing on the scale that we would like. There are cuts to funding for road safety, with bus routes scrapped, and children’s centres and youth centres closed. That is happening in the constituencies and local authorities of Conservative Members, too. What worries me is that as most people do not have family members in care, they see the other council services: parks, buses, libraries, road maintenance and refuse collection. Those are the services that matter to them, but they are the services that are subject to the biggest cuts of all.

[Lyn Brown (West Ham) (Lab)]

My hon. Friend is making a fabulous speech. I really appreciate what he says about culture and the role of libraries, leisure centres and parks. They are really important for physical and mental health, but people do not appreciate that.

[Mr Betts]

Absolutely right. We hear people start to say, “What is my council doing for me? What am I getting from it? I’m paying a lot more as council tax rises by 6%, but I’m getting a lot less.” We should all worry about the impact on and support for local democracy, and local councils as a whole, if that continues and people think that they are paying money into the system but getting nothing out. There was something very wrong with the announcement of another cut to the public health grant of £80 million in the very week in which the Government promoted their new long-term funding plan for the NHS and said that prevention would be more important in the future. Those two things just do not fit together.

There have been two clear facts since 2010: first, local government has been subject to bigger funding cuts than any other sector of the public realm; and, secondly, within those cuts to local government, the biggest have been in the poorest areas. Those two facts are absolutely clear. Looking ahead, how can we deal with that? First, there has to be a bigger pot of money for local councils in the spending review. The answer is very simple. The Housing, Communities and Local Government Committee has welcomed 75% retention of business rates. It also said that that money should not be used to replace public health and other grants. The money needs to be kept in place and used to help to fund the gap in social care and to reverse some cuts to the other services I have just described. That money needs to be kept in local government, not used to mop up other grants that are going to be cancelled.

On the funding review, there is a question of not just the totality of the money, but how it is distributed. I accept that one area’s fairness will possibly be another area’s unfairness, and we will have different views, but taking deprivation out of the foundation element—taking money away from deprived areas and moving it to others—is very difficult to justify. I say to the Secretary of State that this is a serious exercise. I hope that in the end the Government do not get to a point where they use that mechanism as a way of financially manipulating money into Conservative areas, because that is the suspicion among Labour Members. I accept that this is a difficult and complicated job, but the Government need to be very careful that the process does not become seen as an exercise in financial gerrymandering. That would be very sad for local government, as well as for the people we represent.

There are two challenges for the period ahead. Let us all stand up for local government and ensure that it does better in the next spending review and has a better allocation of resources. Let us then make sure that those resources are fairly delivered. I am sure that we will have a lot more to say about that in the future, but those are the two tests by which I will judge next year’s spending review.

--- Later in debate ---

[Lyn Brown (West Ham) (Lab)]

Like other Members, I want to remind Ministers what the places that they have cut so savagely actually look like. By next year, Newham will have lost 48% of its grant—£138 million a year. That is a £1,301 cut for every household, which is the second highest cut in the country in what is arguably the second poorest borough in the country.

Conservative Members like to pretend that this is all about population—the number of residents in an area who need council services. How can that be true given that Newham grew by almost a third in the 10 years leading up to 2015? We are already the fourth largest London borough by population, and we are expected to have the second largest population growth in London over the next 22 years as well. We also have the youngest population in the country, with 40% of residents under 25 according to the last census. That obviously massively increases need for children’s and youth services, as well as for local authority school services, public health, welfare assistance and more.

The Government seem to think that the only age group that needs council support is pensioners—through social care. It is absolutely true that social care is in crisis, and that affects my constituents in the same way it affects those of every other Member, but young people need much more support as well, and nothing illustrates that better than the fact that nine of my young constituents were murdered between January 2017 and March last year.

A further change that has increased demand for council services is the huge growth in the proportion of my constituents who have to rent privately. Private rentals have doubled—they made up 23% of the total in 2006 and 46% 10 years later—and private rents are simply extortionate. The lower quartile rent on a two-bed over a chicken shop in Newham is now £1,250 a month. Lower quartile earnings are £1,168 a month, so a month’s full-time pay will not even cover the rent, let alone luxuries such as food, heating, clothes and so on. It cannot be any wonder then that the council recently found that, when housing costs are included, 67% of Newham’s children live in poverty.

Although we do have serious problems locally due to the consequences of right to buy, it is not social housing that has reduced so massively, but owner-occupation. In 2006, owner-occupation represented 47% of local housing but, over 10 years, it has more than halved to just 23%. Homelessness and temporary accommodation are extreme problems in Newham—the situation is the worst in the country. The number of Newham residents in temporary accommodation almost doubled between 2012 and 2017. There are more children in temporary accommodation in the 36 sq km of Newham than there are in the 63,000 sq km of Yorkshire, the south-west, the north-east and the east midlands combined.

This urgent and horrifying crisis is simply awful for the families who have to live with it day by day, but it has also meant fewer people living in Newham for long periods, thereby building up relationships and a sense of community, and far more people feeling constantly insecure. That insecurity in itself has generated yet more need for council services, and I believe that it has contributed to everything from criminal gang activity to mental health crises, and from childhood obesity to elderly loneliness—and even to things like fly-tipping. All these issues have a cost to the council and make it harder for council workers to do their most important jobs for the public.

Can the Government seriously tell me that my constituents have not been harmed by their cuts, and that those cuts have not contributed to the rise in young people being murdered or in fear on my streets? Can they seriously tell me that continuing these cuts over the next year will not deepen that harm? No, they cannot—not honestly. Frankly, the best way that this Government can help my constituents is by getting out of the way.