Merseyside: Funding of Local Authorities

Neil O'Brien Excerpts

Tuesday 8th February 2022 Westminster Hall

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Neil O'Brien)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Wirral West (Margaret Greenwood) on securing this important debate. As she has shown today, she is a passionate advocate for not only her constituency, but the whole of Merseyside. She has done us a favour by bringing together Members from across the region on the eve of the local government finance settlement debate to look at the funding in Merseyside.

Merseyside is a place with a hugely proud history and present. It is a European capital of culture, has legendary musical exports and at least two iconic football teams, and has, over the course of my lifetime, made significant economic progress, bouncing back from a difficult period of de-industrialisation. On the other hand, while Liverpool is absolutely recovering and making progress, we recognise that the city region continues to face profound challenges of deprivation and poor health—challenges that are among the most severe in the country.

We are committed to delivering a more prosperous future for Merseyside, and we want to help the area to play to its considerable strengths while it adapts to the challenges that I mentioned. Our plan is to do that in two different ways: first, through extra resources for local authorities in the local government finance settlement; and, secondly, through our flagship levelling-up proposals.

[Mick Whitley]

Will the Minister give way?

[Neil O'Brien]

I am afraid that I do not have time to give way; I am so sorry.

[Dame Angela Eagle]

Oh, come on!

[Neil O'Brien]

I am up against the clock, as the hon. Lady knows.

As we announced on Monday, the local government finance settlement for the next year makes an additional £3.7 billion available to councils in England; that includes funding for adult social care reform. This is an increase in local authority funding of more than 4.5% in real terms compared with the previous year, and we expect core spending power—the measure of resources available to local authorities to fund service delivery—to rise from £50.4 billion in 2021-22 to £54.1 billion in 2022-23, which I am just about to come to. I emphasise that the Government are providing around £1.6 billion in additional grant in the next year through the settlement, and through additional funding for things such as the supporting families programme and cyber-resilience. What that means for Merseyside is that core spending power will increase for all authorities in the region by at least 7.7%, compared with last year.

[Maria Eagle]

Will the Minister give way on that point?

[Neil O'Brien]

I have made it clear that I will not give way.

[Mr Philip Hollobone (in the Chair)]

Order. The Minister has made clear that he is not giving way. I am not saying whether that is right or wrong. However, I point out that he has six minutes left. I know that feelings are running high, but everybody has had their say, so let us give the Minister the courtesy of hearing what he has to say.

[Neil O'Brien]

Thank you, Mr Hollobone. That 7.7% increase is above the average cash increase across England of 7.4%. It is a cash increase of 7.7% for Sefton, 7.9% for the Wirral, 8.1% for Liverpool city, 8.4% for St Helens and 8.5% for Knowsley.

However, as every Member here will know, we vowed to build back better from the pandemic, and that is not only about local authority spending. We plan to do that through a cross-government mission to level up the country. We will increase our support for local councils, such as those in Merseyside, taking control of their destiny and stimulating their own growth.

Last week saw the long-awaited publication of our levelling-up White Paper, which Members referred to. It set out our plans. Part of it is about helping people directly; that is why we have changed the universal credit taper rate, making the average full-time worker £1,000 better off. Part of it is about employment support and the extra £1 billion we are spending on helping sick and disabled people into work, so that they have a chance to earn more money. It is also about directly increasing wages through our record increase to the national living wage, which again will make people about £1,000 better off.

On the one hand, we are helping people in Merseyside directly, and on the other we are devolving unprecedented powers to Liverpool and Merseyside. When we came to power, the only part of England that had any devolved powers was London, the capital and the richest part of England. That settlement was obviously unbalanced—good for London, but not necessarily good for the rest of the country. As Members mentioned, the Secretary of State for Levelling Up, Housing and Communities is speaking at the Spine in Liverpool today, alongside council leaders and metro Mayors—a post that did not exist when we came to power—from across the north of England.

However, we know that our ambitions for Merseyside will not be delivered without proper investment, so our ambitions are backed up with funding. Since Steve Rotheram’s election as Liverpool city region Mayor in May 2017, the Government have provided the city region with £172 million through the transforming cities fund and £332 million through the local growth fund, and will provide it with £710 million over the next five years to transform local transport networks. Across the Liverpool city region, four areas have also seen substantial cash injections through the towns deal programme, which is designed to rejuvenate high streets. That includes £37 million for Southport; that is one of the biggest town deal investments to date. Through that kind of funding, we can help restore people’s civic pride in the place they call home in the years ahead. I also draw Members’ attention to the launch last year of the dedicated freeport in Liverpool, which estimates suggest could add £850 million to the local economy and create 14,000 new jobs.

To answer a question raised by Opposition Members, Members should look forward to further details on the UK shared prosperity fund, which we will set out shortly. That fund is worth £2.6 billion and will back the sort of projects that help people access opportunities in places of need. To respond directly to one of the questions asked, that will be an allocative process, not a competition. We are responding to the desire of places to have certainty about their funding. A number of Members raised questions about the commissioners. None of us wanted commissioners to have to go in. According to the independent Liverpool City Council commissioners report last year,

“The Council is emerging from a difficult, somewhat toxic period that has led to police investigations.”

I do not want to delve further into that. However, none of us wanted those commissioners to have to be there. We hope that their work will be complete soon.

A few hon. Members spoke about the wider context. The tax share of GDP is at a record high; there is increased corporation tax and capital gains tax, so the rich are paying more through that route; a crackdown on tax avoidance has raised £160 billion-plus; we got rid of the double Irish arrangement and various other tax dodges that flourished under the last Labour Government; and we introduced the first tax on private jets. We have done a number of things to ensure that those with the broadest shoulders are paying, and that is why we are able to produce the increases in spending power for local authorities that I outlined.

Provided that the local government settlement passes through the House tomorrow, we believe that Merseyside and the local authorities making up the region will be on a firm footing for the year ahead. We are moving to a multi-year settlement as soon as we can. It is important to get that right. I am confident that the hon. Member for Wirral West and all those who have contributed to today’s debate will share in my pride at the progress that has been made in Merseyside over the past decade. If I think back to when my brother and friends used to live there, there has been humungous progress across Merseyside.

In Liverpool’s heyday, when it dominated transatlantic trade, it was considered the New York of Europe. Today, the fusing together of the powerful role played by the Liverpool City Region Combined Authority and its Mayor with significant Government investment in the region has given the city region a new lease of life. The alchemy of science, health, technology, culture and education that we see in Merseyside in 2022 is testament to a truly great city region, and to its people looking not back but forwards with confidence. Although the city region is part way through its renaissance, there is a lot of potential still to be realised, and I look forward to further discussions with colleagues from across the House on how we can best support Merseyside.