Local Government Finance

Nick Harvey Excerpts

Wednesday 12th February 2014 Commons Chamber

[Sir Nick Harvey (North Devon) (LD)]

Last November, I joined 30 colleagues on the Floor of this House to present petitions calling on the Government to close the gap in local government funding between rural and urban areas by a mere 10% by 2020. The petitions included 1,700 signatures from my constituency. In my view, that was a modest ask and I believe that we should look to the Government to do at least that and more in brisk order.

I recognise the problems faced by the Department for Communities and Local Government in the era of austerity, the need to eliminate the deficit and, of course, the debt repayments that will follow even when the deficit has been eliminated, but I believe that local government is taking too much of the burden—more than other Departments—and that, as the hon. and learned Member for Torridge and West Devon (Mr Cox) said a few moments ago, some local authorities are now facing such difficulties that their viability is in doubt.

It is vital that the Government should face up to the crisis towards which we are heading at great speed. Fundamentally, my complaint is as follows: why should some of the poorest people in the country, on the lowest wages, pay far more in council tax and receive far less grant from central Government while at the same time local services erode around them? That is what is happening in Devon and it is certainly what is happening in my constituency. The district council grant has been halved since 2010 and the total budget has been cut by a third over that time. This year alone, the Government have sliced the grant to the district council by 13.4%.

As for the wider picture, the situation is frankly no better for Devon county council. By next year, it will have seen a 60% cut in Government grant during the lifetime of this Parliament. Our schools and our health system are underfunded and, as other Members have said, the current system is quite simply broken. Rural residents pay council tax that is on average £86 a head higher than urban residents. They receive £145 less in Government grant than their urban counterparts, and this is a funding gap as wide as 50%.

It is welcome that the Government recognise the principle of there being a problem, and that they have put in place this emergency grant for a second year running, but I am sorry to say that even at the enhanced level that has been announced for the grant today, it closes that gap by only £1.04 a head, and at this rate it will take us 86 years to put right the gap in council tax payments, and 145 years to put right the gap in Government grant. This is simply not an adequate response to the scale of the problem that is faced in many rural communities throughout the country.

The Government make much of the spending power measure and bandy that about. That is a flawed measure. It looks at the current council tax revenues and believes that it is acceptable for some areas to pay much higher council tax and sees no reason why that should not continue in perpetuity. It also obscures the scale and impact of reductions in funding and the challenges that councils now face. For example, under the spending power measure, Devon county council has lost only 1.5% as against a national average of 2.9% in the latest settlement. But that obscures the fact that it has lost 9% in revenue support grant and, as I said, the district in my area has lost 13.4% in Government grant. Similar figures can be seen throughout the country.

[Paul Farrelly]

The figures from Devon mirror the situation in Staffordshire. Does the hon. Gentleman agree that it is a funny sort of localism that imposes referendum limits centrally from Whitehall?

--- Later in debate ---

[Sir Nick Harvey]

I agree, just as I think it is a funny form of localism that then starts trying to tell local authorities how often the bins should be emptied.

As the Chair of the Communities and Local Government Committee said, the whole model of local Government funding is now so fundamentally broken that there needs to be a cross-party endeavour to rebuild something from scratch on a blank sheet of paper. The situation that we are in now is untenable. Somehow or other, Whitehall convinces itself that by putting this degree of hardship on to local government, the public anger at seeing some of the services that impact on their daily lives most directly will miraculously be focused solely upon the local authorities that send out the bill. I say to my right hon. and hon. Friends that I simply do not believe that that is a sound political calculation. The public are not stupid and they will see the difficulties that local government, regardless of the party running any particular council, is facing at this time, and they will hold central Government to be responsible for it.

We have already heard from my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox) in the next-door seat about the parlous state of the highways and roads, but Devon county council is now consulting about a programme of cuts that will end all its non-statutory obligations: ending the subsidy on meals on wheels; closing its day centres; getting rid of all its residential care homes; axing mobile libraries and the smaller local libraries; and doing away with the youth service, except for young offenders. This will cause absolute fury on the part of voters. I do not think that it is acceptable. We have people moving into our area who are aghast at the low level of public services that they find in comparison with other parts of the country that they have come from. This is just not acceptable. It cannot go on like this. I made a speech similar to this last year. I told Ministers that they needed to do something about it if they wanted my support in the Lobby. A year has gone by, they have done nothing about it and they will not have my support in the Lobby this evening.