Funding for Local Authorities

Mary Glindon Excerpts

Thursday 10th October 2013 Commons Chamber

[Mrs Mary Glindon (North Tyneside) (Lab)]

It is a pleasure to follow the hon. Member for Penrith and The Border (Rory Stewart), who made an eloquent case for rural communities. I congratulate the hon. Member for Tiverton and Honiton (Neil Parish) on securing this debate, as it gives me the opportunity to detail for the Minister the key finance issues facing my local authority, North Tyneside council. I am glad the hon. Gentleman did acknowledge the similarities of the things experienced by rural communities and deprived urban areas such as those in the north-east. I also wish to support the words of my hon. Friend the Member for Easington (Grahame M. Morris) in the case he made on behalf of the fire services. Our group received a presentation from our regional fire services earlier this week, where we saw the devastating effects the cuts are having and the fact that, again, it will be areas of deprivation that are put in more danger because of the cuts.

The Association of North East Councils has found that, nationally, the north-east has suffered the biggest cuts and has experienced much higher reductions in spending power than the national average. That has been said before. In North Tyneside the spending power per household is the worst in Tyne and Wear, as at £2,048 per household it is £468 per household less than our best-funded north-east neighbour, Newcastle. Moreover, North Tyneside council will have to make efficiency savings of £20 million for next year’s budget, which equates to 11% of the net revenue budget. At the same time, it will see a £12 million reduction in the revenue support grant—a reduction of just under 20% for the year. Announcements made in the Government’s spending review mean a 10% cut to core funding for councils in 2015-16, but the Government are now proposing a further £l billion cut for the north-east. For my borough that means a 40% cut in revenue support grant over two years.

The Government’s intention to protect council tax freeze grant might be good news in affluent areas that have higher council tax bases, but it is not in North Tyneside, especially as council tax support grant funding is being considerably reduced. I am not attempting to paint North Tyneside council as a whingeing council; on the contrary, the council has implemented savings over the first two years of the spending review totalling £32 million. By the end of the year, the efficiency savings will be £45 million. Furthermore, the council has implemented many of the saving ideas included in the Department for Communities and Local Government’s “50 ways to save” publication. Further cuts can only mean cuts to services, which will hit the most vulnerable in our communities hardest and will cost jobs in our region that we can ill afford to lose.

Like so many councils across the country, North Tyneside is seeing the rise in demand for adult social care that has been mentioned by so many Members today. The fact that young people with complex needs and many older people are living longer is to be celebrated, but that means that councils have to spend more of their budgets on adult social care. The DCLG must work with other departments and organisations to find a sustainable solution for funding adult social care so that increased life expectancy equates with a good quality of life for all those with social care needs.

The new homes bonus has benefited North Tyneside, providing specific funding to help the council’s economic growth priorities. However, the way in which the scheme is operated has resulted in the redistribution of funding from more deprived to less deprived areas of the country. The effect of that redistribution is that North Tyneside will lose about £1.6 million next year. Furthermore, the council is concerned about the recent technical consultation on the new homes bonus and regional growth fund to transfer 35% of the new homes bonus to our North East local enterprise partnership in two years’ time. Surely the Minister will agree that that goes against a core rationale of the new homes bonus scheme, which is to incentivise local authorities to encourage the building of new homes and to tackle long-term empty housing. That prompts a question for the Minister: where is the localism in making less money available for councils so that they have to make decisions on their spending priorities?

North Tyneside has always been a good, forward-looking council providing good levels of service across important areas, including social care and education. The council is not asking the Government for handouts but, like other councils in the north-east, in rural areas and in other urban areas, is simply asking for a level playing field on funding in these times of austerity.