Local Government Finance

Philip Dunne Excerpts

Wednesday 7th February 2018 Commons Chamber

[Sajid Javid]

I can tell the hon. Gentleman that the core spending power for Stoke-on-Trent—with hyphens—is increasing by £3.5 million in the settlement. Indeed, the core spending power per dwelling for Stoke-on-Trent is higher than the average for the class. I hope he welcomes that.

The consultation on fairer funding closes on 12 March and I urge all those with a stake in the system to make their voices heard. We aim to introduce this new approach from 2020-21.

[Mr Philip Dunne (Ludlow) (Con)]

I applaud my right hon. Friend for launching the consultation on fairer funding. Will he be able to reassure the House that, in contrast to some of his predecessors who have said nice words about fairer funding but have not reflected the significant changes that were introduced under the previous Labour Administration, the consultation will inform the next spending review so we will actually to see it put into practice?

[Sajid Javid]

I can give my hon. Friend that reassurance and I take this opportunity to thank him for the strong representations he has made on behalf of Shropshire, which have fed into the settlement.

The business rates retention programme will also be introduced in 2020-21. It will give local authorities powerful incentives to grow their local economies. So far, this has been a resounding success. Under the current scheme, local authorities estimate that they will receive about £1.3 billion in business rates growth in 2017-18, a significant revenue stream on top of the core settlement funding that is set to continue into 2018-19.

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[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

Thank you, Madam Deputy Speaker. Well, what on earth was all that about? We have been waiting since December to get this detail. We were told that discussions were taking place and that there were journeys over to No. 11 to make sure that we secured money for housing and public services such as adult social care. To see just crumbs off the table being provided is depressing.

On my way here, I often walk past the Department for Business, Energy and Industrial Strategy. I imagine the Secretary of State, when he was in that Department, being fulfilled, happy, contented and enthusiastic about his brief. What a contrast with now! He clearly does not have the energy for this brief and does not understand the detail, to the extent that incorrect information was presented to the House during the December debate.

Probably more telling is how little attention the Secretary of State got from the Chancellor. The social care crisis ought to have been addressed in the autumn statement, but because it was not, he now has to work within the departmental budget.

[Mr Dunne]

The hon. Gentleman seems to have completely ignored the £2 billion given to adult social care in the March 2017 Budget. What is his response to that?

[Jim McMahon]

I am pleased the hon. Gentleman asks that question. At that time, there was already an in-built deficit in the Budget because of the increase in the national living wage and employers’ national insurance contributions, so even within the £2 billion allocated there was a £1.3 billion in-year deficit, because of the need to make sure that the provider market could be sustained. That is my response. It is just not enough money. Everybody in the House and our communities knows that. It is just a shame that the Secretary of State does not carry the weight in the Treasury to get the money into the Department and out to councils and into our communities.

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[Mr Philip Dunne (Ludlow) (Con)]

It is a pleasure to lead the debate from the Back Benches today, and I will start by agreeing with one point made by the hon. Member for Oldham West and Royton (Jim McMahon): his congratulations and applause for the work of local government staff up and down the country in delivering services for local residents day in, day out, with a resource base that is diminishing overall. However, I disagreed with almost everything else that he said.

The hon. Gentleman seems to have a limited recall of local government finance, which may not be his fault, as he has not been in the House for very long. Those who were Members between 1997 and 2010, under the previous Labour Administration, will recall that there was a significant shift of local government resource from rural to urban areas. The hon. Gentleman referred to a piece of research undertaken in 2014, but I encourage him to read more widely. In particular, he should look at the work done by the Rural Services Network, which has carried out considerable research into the additional cost, which it acknowledges, of the delivery of services—[Interruption.] The hon. Gentleman says from a sedentary position that that is not the evidence, but it is the evidence provided by the RSN. I should declare that I co-chair the all-party parliamentary group on rural services, which is supported by the RSN.

I do not have very long to speak—you have given us a tight time limit, Mr Speaker—so I will confine my remarks to a few points. I will give the shadow Minister one example of the unfairness, as I and other Conservative Members see it, between rural and urban areas. The proportion of spending power funded by council tax in rural areas for the coming year, 2018-19, is 69%, while the proportion of spending power funded by council tax in urban areas is 55%. The burden on council tax payers in rural areas is significantly higher, which can be illustrated by comparing almost any urban authority with any rural authority that I care to mention.

My rural authority is Shropshire, which I will compare with Coventry, an urban area not that far away that has a similar population base, Shropshire’s spending power in the provisional settlement, before the additional measures announced this week, is £1,623 per dwelling, whereas Coventry’s spending power is £1,780, so there is £157 more spending power per dwelling in Coventry. Coventry generates £21.5 million more than Shropshire, and as £21.5 million is close to 9% of Shropshire’s total spending power, it represents a significant divergence in capacity at a time when the costs of delivery in rural areas are going up disproportionately.

One of the reasons why the costs of delivery are increasing disproportionately is the rapid acceleration in the age profile of our residents in rural areas. I have been surprised to discover that my constituency of Ludlow now has the 11th oldest population in the country, so there are only 10 constituencies in which more than 28.2% of residents are aged over 65. The situation is leading to considerable cost pressures on the delivery of adult social care in rural areas. The cost in Shropshire is going up by roughly £10 million a year, so the increase in core spending that will result from this settlement will be more than absorbed by the increasing cost pressure on delivering services to our increasing elderly population.

I welcome the measures announced by the Secretary of State this week, and I welcome the fact that the Government will publish a Green Paper in the summer on the cost of social care. It behoves us all to get involved, and I am sure that many all-party groups and interested groups outside the House will make representations. The all-party group on rural services, which I have the pleasure of chairing, will certainly make a representation.

My final point, in my last minute, will be to welcome yesterday’s announcement of a £16 million increase in the rural services delivery grant. I am pleased that £900,000 of that will come to Shropshire to reflect the costs I have mentioned. I also welcome the extra £150 million for the adult social care support grant, on top of the £2 billion announced in the past 12 months, about which the Opposition spokesman was so grudging. This reflects the Government’s recognition of the challenge in social care, and we are doing the right thing by trying to meet that challenge.

I also welcome the announcement about the retention of capital receipts for an additional three years, which will be of great help to authorities such as Shropshire Council. I am particularly pleased that the Secretary of State confirmed in response to my earlier question that the current review will be taken forward into the spending review.