Marcus Jones
Main Page: Marcus Jones (Conservative - Nuneaton)Local Government Finance (Tameside and Oldham)
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The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
It is a pleasure to serve under your chairmanship, Ms Dorries. This is the first opportunity that I have had to welcome the hon. Member for Ashton-under-Lyne (Angela Rayner) to the House. I congratulate her on securing the debate and commend her on her speech about the situation in Tameside and Oldham. She and her colleagues are not necessarily enthusiastic about what is happening in her area as a result of the northern powerhouse talks, but I certainly take her comments today seriously.
The way local government is funded is extremely important and creates a great deal of debate. Thanks to the Government’s long-term economic plan, the deficit is falling, the economy is growing and employment is at a record high. The Government are putting public finances back on track. The past five years have seen huge changes in the way in which councils operate. Local government accounts for almost a quarter of total public expenditure. It was therefore inevitable that local government would have to play its part in reducing the deficit, but it has done so efficiently and effectively, delivering sensible savings while protecting front-line services. In fact, public satisfaction with local government services has increased or been maintained across the country over the past five years. That illustrates how successful councils have been. However, the job is not yet done, and the next five years will present further challenges. The Government still need to take difficult decisions about local government funding, to ensure that the public finances are on a sustainable path, and councils will need to continue to play their part.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Will the Minister give way?
Mr Jones
I will in a moment, but I will make further progress first.
For Britain to be truly successful, every part of the country must thrive. With the 2015-16 settlement, the Government attempted to be fair to all of our great cities, counties, rural shires and coastal communities. The overall reduction in local authorities’ spending power in 2015-16 is 1.7%. When taking account of the funding provided to support local transformation, the overall reduction is lower still—1.5%. To answer one of questions from the hon. Member for Ashton-under-Lyne, those authorities with the greatest demand for services continue to receive substantially more in funding. Only London and the north-east have higher spending power per household than the north-west.
Mr Michael Meacher (Oldham West and Royton) (Lab)
Will the Minister give way on that point?
Mr Jones
I will give way in a moment.
Just to put that in context, in Oldham the spending power per household is £2,400 and in Tameside it is £2,070, against a national average of £2,086. Furthermore, we have ensured that no council will face a loss of more than 6.4% in their spending power in 2015-16, the lowest level since we started out on the road to recovery.
During the past five years there have been unavoidable changes to local authority funding from central Government. We have ensured that these changes have been applied fairly and sustainably.
Mr Jones
I will give way in a moment.
Through our reforms to the local government finance system, we have established a basis for a more self-reliant local government, and a sector that is less dependent on Whitehall and is instead increasingly confident in using the tools and incentives that we have provided to grow local economies.
Andrew Gwynne
The Minister talks about a fair funding settlement, but does he not appreciate that, because of their make-up, local authorities have different needs from and demands on services? Tameside and Oldham, for example, are grant-dependent because the council tax base is low and their ability to raise additional finance is therefore limited.
Mr Jones
I understand what the hon. Gentleman says. That is why the north-west—particularly the Oldham area—has greater spending power than many other parts of the country. However, he undersells his area’s potential to raise revenue locally, through additional council tax and business rate retention. Councils have a greater stake in stimulating local growth. Authorities throughout the country are benefiting from greater powers in this sense, including—
Mr Jones
I am going to make progress.
Councils benefiting from those powers include Newcastle, Sunderland and Northampton, which had the greatest growth in business rates retention in 2013-14, as a result of enterprise zones and new development deals. Authorities’ own estimates for 2015-16 show that 94% are expecting growth in their business rate income, above the level of assumed growth of £544 million in total. In response to the point made by the hon. Member for Denton and Reddish (Andrew Gwynne), I remind him that Oldham and Tameside forecast growth of £1.8 million and £2.4 million respectively, putting both councils in the top 100 authorities in England in terms of additional income.
Mr Meacher
On that point, I ask the Minister for a fourth time to give way.
Mr Meacher
Can we get to the real point of this debate, which is that Oldham in particular, which I and my hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) represent, is having to take a £200 million cut by 2017, as she said? In this current year, it is having its spending power cut by 4.3%, whereas Oxfordshire, which happens to contain the Prime Minister’s constituency, has an increase of 1.3%, and Cheshire East Council, which happens to contain the Chancellor’s constituency, is having a 1.5% increase. Does that not clearly indicate a flagrantly politically partisan distribution of resources between Tory areas, where the need is less, compared with Labour areas where it is far greater?
Mr Jones
I should say to Opposition Members that I will not take any further interventions after the right hon. Gentleman’s lengthy contribution. He needs to put this matter in the context of the authorities that he mentioned having far less spending power than those we are discussing in this debate.
The other way that the areas in question will no doubt benefit is through the new homes bonus. Councils benefit directly from the number of new homes built in their area and from bringing empty property back into use. We have provisionally allocated £1.2 billion of new homes bonus funding to local authorities in England for 2015-16. Of that, Oldham will receive £2.1 million and Tameside £3.5 million. Since the scheme began, local authorities have been rewarded with a total of £3.4 billion.
As well as growing their economies, the best authorities are transforming how they do business and demonstrating innovation, including in how they work with local partners. We are supporting them as they do so, helping them to achieve savings and, perhaps most important, improving outcomes for the people who use local services.
In November, the Government announced the 73 projects that were successful in bidding for the transformation challenge award. The projects will receive £90 million to improve services and ultimately will save the public sector more than £900 million. I would like to give several examples, particularly one in Manchester, but I do not have time to do so during this debate.
One critical area where the Government must work with councils to transform services is adult social care. I hear what the hon. Member for Ashton-under-Lyne says about her experience and I am sure that the House will welcome that experience. The Government are clear that the NHS and social care services must work together and move away from operating in financial silos. They must secure the best possible value from the local funding available for health and care in order to improve people’s lives. The Government are committed to making that happen, but just putting more money into the system is not the answer, despite Opposition Members’ comments. We need radical reform of how health and social care are delivered. The better care fund provides a new approach to protect social care services, breaking new ground in driving integration between health and social care.
Despite the challenges that I have mentioned, most local authorities have coped well. Most authorities froze council tax in 2015-16, helping people with the cost of living. The Government once again provided additional funding equivalent to a 1% council tax increase to help them to do so. This was the fifth successive year of freeze funding provided by Government, bringing the total package to £5 billion. That has helped to reduce council tax by 11% in real terms since 2010, with the average band D household saving up to £1,059. That is in stark contrast to the 13 years of Labour government, when council tax bills doubled.
Mr Jones
I cannot, due to the length of the interventions that I took previously.
The financial constraints facing councils make it even more important that we deliver on our critical agenda of devolving power to local places and local people. That is one of the most exciting agendas in local government at the moment. Local government should no longer think of itself as a manager of central programmes, but should embrace its new power and responsibility.
The Government’s commitment has been demonstrated by the inclusion—the hon. Member for Ashton-under-Lyne will have seen this—of the Cities and Local Government Devolution Bill, which has started its progress in the House of Lords. Alongside the Bill, we will be talking to councils about their ideas for devolution, so that we can agree deals that make devolution a reality. The Government want the process to be bottom up and recognise that the right approach will be different in every area. We want to devolve power to cities, rural areas and neighbourhoods. The Bill will bring about the most far-reaching decentralisation of power in living memory and in particular will create a northern powerhouse with Manchester and other northern cities. It will create a directly elected mayor responsible for co-ordinating significant powers and budgets across transport, back-to-work support and health and adult social care.
Last November, Greater Manchester and the Government agreed a devolution plan that saw powers over transport, planning and housing transferred from central Government control to the Greater Manchester combined authority. In February, building on that, 10 local authorities, including a number that Opposition Members represent, came together with 12 clinical commissioning groups and NHS providers in Greater Manchester, along with NHS England, and agreed that from April 2016 they would take joint control of the estimated £6 billion health and care budget in the region. That will enable Greater Manchester to be freer to respond to what local people want, using experience and expertise from across government and the NHS to help improve outcomes and change the way in which public money is spent.
There is little doubt that the next five years will bring further financial challenges but, with the spending review approaching, hon. Members will appreciate that I cannot say much more about our financial plans today. The Government wish to work constructively with local government on these issues, and we are ready to listen to the views of councils.
Question put and agreed to.