Merseyside: Funding of Local Authorities

Philip Hollobone Excerpts

Tuesday 8th February 2022 Westminster Hall

[Mr Philip Hollobone (in the Chair)]

I remind Members that Mr Speaker encourages everyone to observe social distancing and to wear masks.

[Margaret Greenwood (Wirral West) (Lab)]

I beg to move,

That this House has considered funding of local authorities on Merseyside.

It is a pleasure to serve under your chairmanship, Mr Hollobone. I begin by thanking Mr Speaker for granting this debate, and I also thank Members from across Merseyside for attending today. I look forward to hearing their contributions.

According to analysis by the National Audit Office on selected main revenue income sources for local authorities, in 2010 Government funding for local authorities in England was just over £34 billion. Over the course of the next decade it decreased steadily, and by 2020 Government funding to local authorities in England was just over £8 billion. The cut of funding from £34 billion to £8 billion is staggering, and goes a long way to explain why we have seen the widespread erosion of public services. It represents a cut of around 76.5%. In other words, local authorities are being expected to continue to provide public services when they are receiving a fraction of the money they used to receive from central Government. No wonder our communities are feeling it.

If we look at Merseyside in the context of those National Audit Office figures, we see that the Government funding cuts that its local authorities have suffered are even higher than the England average. In my own local authority of Wirral, in 2010 the council received just over £266 million in Government funding, but by 2020 that figure was down to just over £40 million—a reduction of around 85%. Colleagues will be only too aware that it is a similar story elsewhere in Merseyside, and I am sure that we will be hearing details of the impact of those cuts.

I ask the Minister to listen closely to the figures that I am about to share. In Knowsley, the same National Audit Office figures show that in 2010 the local authority received more than £243 million in Government funding; that figure was down to just over £35.6 million in 2020—a reduction of around 85.3%. In Liverpool, in 2010 the local authority received more than £560 million from the Government, but by 2020 that figure was down to just over £75 million—a reduction of around 86.6%. In St Helens, in 2010 the local authority received more than £151 million, but in 2020 it received just over £16 million—a reduction of around 89.4%. In Sefton, in 2010 the local authority received more than £203 million, but 2020 saw it receive just over £16.7 million. That is a drop of around 91.8%.

Although local authorities have generally kept 50% of business rates revenues raised locally since 2013—and there is a pilot scheme to keep 100% of them in Wirral—that is nowhere near to making up the shortfall created by Conservative Government cuts. For example, Wirral Council received over £110 million less in annual income in 2020 than it did in 2010. Similarly, Knowsley received £116 million less, Liverpool over £209 million less, St Helens over £60 million less, and Sefton over £94 million less. Those staggering and brutal cuts by central Government are really punishing our communities. Political decisions taken by Conservative Governments since 2010 have had the effect of running down and forcing the closure of local public services.

Let us remind ourselves what it is that local authorities deliver. They provide and look after our libraries and leisure centres. They maintain our roads, streets, parks, and our open spaces where people relax, exercise, walk their dogs and where children play. They license taxis, the sale of alcohol and the movement of animals. They provide support to local businesses and chambers of commerce, stimulating the local economy. They manage planning processes, are responsible for public health, bin collection and waste disposal, free school meals, welfare support and advice and adult learning. They are responsible for trading standards and ensuring the safety and standards of the products that we buy. They are responsible for social services, safeguarding children and ensuring that vulnerable adults, including people with dementia, are cared for and protected, whether in their own home or a care home.

A decade of cuts to local government has resulted in £8 billion being lost from adult social care budgets, and many vulnerable people have been left without the support that they need. Some 400,000 older and disabled people are on council waiting lists for care, and there are more than 100,000 staff vacancies across the sector. That is a truly damning indictment of this Conservative Government. In short, local authorities, the services they deliver and the public realm they maintain are fundamental to our society and the way we live. If we want our councils to deliver good-quality universal public services, they need to be funded properly.

The Conservative party presents itself as the party of tradition, but it is anything but. The cuts it has imposed on local authorities since 2010 undermine our way of life and our traditions, and are pulling away the foundations of our communities. I am sure that we will hear from colleagues across Merseyside about what these cuts mean to their constituencies.

I want now to talk specifically about Wirral, where, as I outlined earlier, the local authority saw an 85% reduction in Government funding between 2010 and 2020, and received around £110 million less in overall income in 2020 than in 2010. The authority has been told that it must find savings of £20 million in its budget for 2022-23. Not doing so could lead to Government intervention. As a result, the council has been forced to make proposals to meet these financial constraints. The proposals are wide ranging and, if implemented, would have serious implications for communities in Wirral. The proposals include the permanent closure and demolition of Woodchurch leisure centre and swimming pool.

--- Later in debate ---

[Several hon. Members rose—]

[Mr Philip Hollobone (in the Chair)]

Order. The debate can last until 5.30 pm. I am obliged to call the Front-Bench spokesman for Her Majesty’s Opposition no later than 5.12 pm—the guideline limit is five minutes—and then the Minister, and then there will be three minutes at the end for Margaret Greenwood to sum up the debate. Until then, it is Back-Bench time and there are seven superstars from Merseyside seeking to contribute. There will, I am afraid, have to be a strict four-minute time limit, and then everybody will get in. We will start with the first person on my list, Maria Eagle.

--- Later in debate ---

[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.