Local Government Finance (England)

Matt Western Excerpts

Monday 24th February 2020 Commons Chamber

[Mr Kevan Jones (North Durham) (Lab)]

The Secretary of State opened the debate by announcing that this is the best local government funding settlement for a decade. That would not take much beating when we consider what has happened over the past 10 years. In the previous debate, on police funding, I referred to the year-zero approach, because it is as though anything that happened before December 2019 was someone else’s fault and had nothing at all to do with this Government; as though they are a new Administration who are coming in to put everything right. But most of the Ministers now on the Front Bench voted for the austerity of the past 10 years, so it is with some chutzpah that they are now trying to convince us that they had nothing to do with it.

We also now have a key in-word, which we will hear a lot more of. The hon. Member for North West Durham (Mr Holden) mentioned it when he talked about “levelling up”. Well, it will take a hell of a lot of levelling up. I will come on to answer his points about Durham County Council in a minute, because he is clearly going to try to play dog-whistle politics, which does not surprise me at all. He welcomes this statement as though it means extra money for the county council. Yes, this settlement is for this year—it is a one-year settlement. I hope that when the council and the police commissioner put up the local government tax, he does not blame Durham County Council. To do that would be to abnegate his responsibilities, as he would be welcoming it in this place, but saying another thing in County Durham. I look forward to him supporting whatever difficult decision the police commissioner and Durham County Council have to make on the local council tax precept. No doubt, he will try to say something different locally.

This is a one-year settlement. We now have the so-called new fairer funding formula coming in, but we need to remind ourselves about what has gone on previously. Durham County Council has lost 40% of its budget in the past 10 years. That is £232 million. In the early days, when we had Eric Pickles as Secretary of State, this could all be done by cutting back on pot plants and getting rid of chief officers. Well, I am sorry, but I defy anybody who says that we can get 40% efficiencies out of an organisation and still deliver the same services, because we clearly cannot.

What we have had today is the Secretary of State saying that we will have a fairer funding settlement that respects need. That is not what the Government have been doing over the past 10 years. On every indication, the funding formula is seeing money being moved from areas of deprivation to areas of affluence. The National Audit Office has identified that. While Durham County Council has taken huge cuts, places such as Surrey and Wokingham have had increases in their core spending budget. We get to a ridiculous situation now where, if we look at 2019-20, core spending per dwelling for Durham is £1,727, whereas for Surrey it is £2,004. People might ask what difference it makes. It comes back to what we have heard for the past 10 years, which is not only that austerity is needed, but that, somehow, everywhere in the country is the same in terms of delivering services—whether in Surrey, in an inner-city metropolitan area or in County Durham. The two main drivers that are swallowing up most of the budget of counties such as Durham are adult social care and looked-after children.

[Matt Western (Warwick and Leamington) (Lab)]

My right hon. Friend is being very generous. He is making a terrific speech as usual. Does he agree that this issue, as he is describing it, is actually compounded by the deceit that, as part of the devolution of power and fiscal responsibility, these authorities would be able to retain more business rates, but the reality is that the Government do not want increases in business rates, and neither do businesses, because they cannot afford them. The reality is that those authorities will not be given those moneys in any event.

[Mr Jones]

I will come on to business rates in a minute. I will give an explanation as to why, for example, Durham County Council is doing what it is doing with its headquarters. I would argue that it is a response to Government policy.

If we look at adult social care in Durham, we see that there are 3,295 people in home care, 3,151 in residential care, 736 in supported living schemes, and another 763 receiving direct payments. The difference between Durham and places such as Surrey is that we have a higher proportion of people requiring council support. As my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy) identified, we do not have a large package of support. We actually self-finance, and that makes a big difference in terms of the pressures on local councils.

The same is true if we consider looked-after children not just in Durham, but across the north-east. In Durham, we have 900 children in local authority care. As was said earlier, the number of looked-after children has increased by 20% in the last decade, but in the north-east it increased by 72% in the same period. Two councils in the north-east, Hartlepool Borough Council and Middlesbrough Council, have more than twice the national average number, and five times more looked-after children than Wokingham Borough Council. The new funding formula has to take that need into account. The idea that everywhere is the same is complete and utter nonsense.

The bigger debate, which has not really been had, is about the Government’s direction of travel over the past 10 years, which has been to reduce the amount of central Government funding to local authorities and to push the burden on to the local council tax base. Again, County Durham is at a disadvantage. More than 50% of our properties are in band A, so an increase of 1% in Durham raises very little compared to such an increase in more affluent areas with large numbers of higher-band properties. That will have to be taken into consideration. For true levelling up, there will have to be a complete reversal of what has happened over the past 10 years. If we get to a situation in which what a local authority requires is raised locally, councils such as mine will be at a huge disadvantage, certainly given the increase in the number of looked-after children and individuals in care in the area.