Local Government Funding

Preet Kaur Gill Excerpts

Tuesday 15th January 2019 Westminster Hall

[Preet Kaur Gill (Birmingham, Edgbaston) (Lab/Co-op)]

I beg to move,

That this House has considered local government funding.

It is a pleasure to serve under your chairmanship, Mr Walker. I declare an interest as a vice-president of the Local Government Association, a superb organisation that fights for the interests of local government on many levels, delivering services, empowering communities and investing in our future.

The Government’s obsession with austerity has targeted many areas of people’s lives in the UK, but the largest proportion of cuts has fallen on local government. I applied for this debate in order to ask the Government to recognise the folly of that approach and truly end austerity. As a councillor and council cabinet member, I have experienced the cuts at first hand. I have taken part in extremely difficult budget discussions and decisions in the face of increasing demand, which itself has been brought about by other Government policies that have made life harder for my constituents. I have also worked with local communities to try to offset and alleviate the most damaging impacts of Government policies.

To achieve real co-operative change in transport, housing and economic growth, however, councils and local communities need to be given sufficient resources and power. Under this Government, the opposite has happened: local authorities have had to cut staff levels, scale back many non-statutory services and try to save money in other ways. After nine years of cuts, first from the coalition Government and then from the Conservative Government, I am glad to see that the Government have now managed to find more money: an extra £1.6 billion has been found for 2019-20 in comparison with the initial funding plans set in 2016.

[Catherine West (Hornsey and Wood Green) (Lab)]

I congratulate my hon. Friend on securing this debate. Does she agree that on a day on which the House is debating Brexit, it is particularly galling that £4 billion is going into some sort of no-deal black hole while our children’s centres, libraries and important council services are all desperately at risk?

[Preet Kaur Gill]

My hon. Friend is absolutely right. The Government can do it when they try—instead of wasting that money, which is the kind of money that local government absolutely needs right now.

I am sure the Minister will tell us that the extra £1.6 billion is a great success that shows that the Government are listening, but can he tell us why has it taken them so long to acknowledge the failure of their own funding plans? Before he says that everything is going to be okay, let us look at some of the facts: 361 of Birmingham’s 364 schools are facing cuts, almost a quarter of West Midlands police funding has been cut and, as a result of scything cuts since 2010, Birmingham City Council has lost £642 million from its annual budget and is expected to be forced to make further savings of £123 million per annum.

[Ellie Reeves (Lewisham West and Penge) (Lab)]

I thank my hon. Friend for securing this debate. Lewisham Council has had to make cuts of £165 million since 2010. Despite its best efforts, it now has to make difficult decisions about things like grants to the voluntary sector, libraries, street sweeping and lollipop people. Does she agree that central Government need to fund our councils properly so that they can serve the community properly?

[Preet Kaur Gill]

My hon. Friend rightly describes the plight of her council, and it is the same for many councils up and down the country. I hope that the Minister will really take stock of hon. Members’ contributions today; it is great to see so many Members present to debate local government finance, which is such an important topic.

[Janet Daby (Lewisham East) (Lab)]

I thank my hon. Friend for securing this significant debate. As my hon. Friend the Member for Lewisham West and Penge (Ellie Reeves) rightly says, Lewisham Council has experienced significant cuts since 2010. Those cuts have had an effect on our Lewisham population; social workers’ caseloads have increased and we are seeing difficulties in securing beds for people with mental health problems. Does my hon. Friend the Member for Birmingham, Edgbaston (Preet Kaur Gill) agree that the Government need to stop making these silly cuts and start investing in local government?

[Preet Kaur Gill]

My hon. Friend is absolutely right. I hope that the Government really listen to what Members say today about the devastating impact of cuts to councils in their constituencies.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

Does my hon. Friend agree that the problem is not just the direct cuts to councils, but the extra services that councils are expected to take on? In my area, the NHS has stopped funding the low vision clinic, so Labour-led Brighton and Hove City Council has had to pick it up—whereas my other local council, Conservative-led East Sussex County Council, is refusing to do so, leaving partially sighted people with nowhere to go for the vital adaptations that they need.

[Preet Kaur Gill]

My hon. Friend’s important intervention tells us about the plight of councils as a result of non-statutory services not getting the investment that they need. We will end up with councils delivering only statutory services, which will by no means meet the needs of our diverse communities.

In the context of Birmingham’s projected population growth of 121,000 by 2031, the cuts will mean even less money in real terms per person. Nor is the situation unique to Birmingham, as we have heard from many hon. Members across the country. The Institute for Fiscal Studies reports that

“funding from government grants, business rates and council tax is still set to be 1.4% (£0.6 billion) lower in real-terms than in 2015–16, which is equivalent to 4.2% per person after accounting for forecast population growth.”

Whatever the Minister and the Secretary of State may say, that means that councils will have less money to deliver services. This is not about the need to find minor efficiencies following a period of high spending; it follows a period of dramatic and coalition Government-enforced reduction of 22% per person, in real terms, in council spending on services between 2009-10 and 2015-16.

[Graham Stringer (Blackley and Broughton) (Lab)]

My hon. Friend is making a very strong case about the damage that is being done to local services by cuts in the Government grant. Does she agree that there is no resilience in local government’s tax base, which is strangling local democracy, and that there needs to be a reversal of the changes that were made in the late ’80s and early ’90s to councils’ abilities to raise their own money?

[Preet Kaur Gill]

My hon. Friend raises an important point, which I will touch on later.

Not only was that devastatingly large amount taken across the country, but the spending cuts hit more deprived areas far harder than other areas, a point which I will come back to later. The Government often mock Members asking for more money for a particular cause, but that misses the point. These cuts are not just about money; they are about what the money allows local government to do, or not to do—it is about the services and support that local government can provide to empower communities and support individuals to fulfil their potential.

New research by Unison shows that 66% of local councillors do not think that local residents are receiving the help and support they need at the right time. Does the Minister understand that that is not because councillors and council workers are not working hard enough? Does he agree that the reductions of £16 billion to core Government funding between 2010 and 2020 have led to that situation? Will he make public all the data and analysis his Department have put together on the scale and variation of local responses to cuts, as well as on the impact of almost a decade of austerity on local government, and the inequalities it has reinforced and perpetuated?

What does the Minister say to Lord Porter, the Conservative chair of the Local Government Association? In the most recent copy of First, the magazine for local government—I have a copy that I am happy to share with the Minister—he said:

“Next year will continue to be hugely challenging for all councils, which still face an overall funding gap of £3.1 billion in 2019/20.”

That figure is not what is needed to make progress or to invest further in the future of our families and communities—that is just to stand still. Does the Minister agree with Lord Porter?

I know that universal credit is not the Minister’s brief, but I hope he will take the opportunity to discuss his understanding of the problems that universal credit is causing for citizens and therefore for local government. What analysis has the Department done of the impact on local government of rent arrears from council tenants on universal credit? Residential Landlords Association research reveals that the number of private landlords with tenants receiving universal credit and going into rent arrears rocketed from 27% in 2016 to 61% in 2018, with the average amount owed in rent arrears by the universal credit tenant rising 49% between 2017 and 2018. If there are similar findings for council tenants—there is no reason to think universal credit impacts differently on council tenants from those in private accommodation—local authorities will be put under further pressure by a failed Government initiative.

This is not party political. This is not about Labour councils wasting money, or Conservative councils being frivolous. Lord Porter said:

“Councils can no longer be expected to run our local services on a shoestring.”

Does the Minister think that those Conservative councils that have gone bust or reduced services to the legal minimum have received enough funding? Will they receive enough funding through the latest funding settlement? If so, does he think that they went bust because of their own failures—and will he outline those failures?

When the Prime Minister took office, she promised that the mission of her Government would be to tackle injustices. Since 2015-16, the most deprived councils have seen a cut of 2.8%, while the least deprived have seen a small real-terms increase of 0.3%. That is not tackling an injustice—that is embedding and reinforcing one.

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

My hon. Friend is making a fantastic speech. In Central ward in Hull, more than 47% of children live in poverty. That is one of the highest rates of poverty in this whole country. More people in Hull claim jobseeker’s allowance than the national average. At the same time, there have been £120 million of cuts. Does my hon. Friend agree that that could never be justified by any Government that are serious about giving every child equality of opportunity?

[Preet Kaur Gill]

My hon. Friend makes a really important intervention. The figures are harrowing. I hope the Minister is listening carefully and will respond to Members’ interventions at the end of the debate.

Local government is not homogenous. The service needs of their populations, ability to raise revenue locally and reliance on central grants all differ substantially. Proposed and existing policies such as business rates retention and council tax limits will mean different councils can raise significant amounts, which may not match the spending pressures those councils face.

As academics from Cambridge pointed out in October 2018, the Government’s austerity politics have led to

“a shrinking capacity of the local state to address inequality...increasing inequality between local governments themselves and...intensifying issues of territorial injustice.”

Local authorities vary in the needs of their population for services, their reliance on central grants and their ability to raise local revenue. With the Department planning to introduce 75% business rates retention for all local authorities, and access to public services for citizens increasingly reliant on the local tax base—whereby poorer areas are not as able to provide as many public services or the same quality of infrastructure as areas with healthier, more wealthy tax bases—without a strong redistributive element, the under-investment, or even lack of investment, in communities and the people who live there will see them unable to prosper.

Will the Minister ensure that no council has its funding reduced as a result of a new distribution system? What actions will he take to that end? The National Audit Office has highlighted the dangers of bringing in a business rates retention model that has not been fully tested. Will the Minister commit to making public a full and thorough evaluation of the pilot schemes before committing to any further roll-out?

I could raise any number of areas where Government cuts to local government are causing immeasurable immediate and long-term damage—from homelessness to fire safety, from crime prevention to children’s services and public health. Reductions in any of those areas are not impact-neutral, as they influence and prohibit the capacity to prevent and support. As I was cabinet member for public health at Sandwell Council, I will focus on public health, and I hope my colleagues will pick up on other areas.

Councils’ public health budgets are being cut by £531 million between 2015-16 and 2019-20. The Government are taking with one hand, while, at the same time, putting more money into the NHS. Preventing illness and catching problems early so they do not develop further down the line will save the NHS and social care money, so the short-sightedness of cutting public health funding must be due either to ignorance, or to a political choice to undermine councils’ abilities to improve the health of the public. Which is it?

[Laura Smith (Crewe and Nantwich) (Lab)]

My hon. Friend is making an excellent speech. The underfunding of social care is a travesty in itself, but it also has consequences for our hospitals, including avoidable hospital admissions and delayed transfers of care. Does my hon. Friend share my concern that the cuts to local government funding are far-reaching and could have a profound impact on our NHS?

[Preet Kaur Gill]

My hon. Friend raises an important point. The NHS spends only about 5% of its funding on preventive measures. That just cannot be right. As she rightly says, social care costs will soar, and that makes no sense at all.

The Government have announced that they will phase out the public health grant after 2020-21. Instead, they expect business rates retention to entirely fund public health spending. Health inequalities will increase. While they have proposed some kind of top-up system, as with many areas concerning local government, it is unclear how that would work and to what extent that top-up would support the local authorities that need it.

[Catherine West]

Does my hon. Friend agree that one area of particular concern is sexual health services, which are being particularly hard hit?

[Preet Kaur Gill]

My hon. Friend makes a really important point. We need to invest more money in public health and not siphon it away from councils, for issues such as sexual health, drug and alcohol strategies, mental health—there are a number of issues, and I could go on.

Does the Minister agree that preventive services and approaches are the most efficient and effective way to improve outcomes for our residents and tackle many of the issues that they face? If so, does he agree that local government needs appropriate and sufficient funding to achieve that goal by providing frontline services and working with civil society to develop and sustain multi-organisation and agency approaches? If he agrees on those two points, does he believe that, as things stand, our local authorities have the resources necessary to deliver those services and approaches now and in the future?

I thank all Members who have attended this debate and who are waiting to contribute. The turnout reveals the depth and strength of feeling about this important issue. We all work with our local councils and know the vital services they provide and the work they put into care for our multitude of residents and citizens, particularly support for families, protection of children and care for older and disabled people. We all know that the Government’s current attitude and approach are not sustainable, and we need this Administration to wake up to that fact and address it properly.

I have waited until now to mention Brexit, which we must discuss and examine, if only briefly. The Government have committed billions to many Departments in preparing for Brexit. With the Treasury giving the Department only £35 million for preparations, will the Minister allay the fears of councils around the country by promising that any additional financial commitments and burdens that are placed on councils as a result of Brexit are fully funded by central Government? We need fully funded local government to drive many of the things that make Britain a great country in which to live and work. With councils already facing a funding gap of £7.8 billion by 2025, the Government must take the opportunity of the final settlement and the 2019 spending review to deliver truly sustainable funding to local government. Are they up to the challenge?

[Mr Charles Walker (in the Chair)]

I apologise again to colleagues for my unforgiveable lateness. We will start winding up at 3.40 pm, so everybody should keep their speeches quite short, because there are about 13 speakers.

--- Later in debate ---

[Preet Kaur Gill]

I thank the Minister for his response and for paying tribute to councils up and down the country. I also thank him for acknowledging the real challenges local government faces. Although I welcome the £1 billion for the troubled families programme, there is still so much more to be done.

I thank my hon. Friend the Member for Oldham West and Royton (Jim McMahon), who reminded us about the people and communities these cuts impact, and I thank all other hon. Members for their contributions. The right hon. Member for Witham (Priti Patel) touched on social care and the funding settlement. My right hon. Friend the Member for Enfield North (Joan Ryan) spoke about knife crime and youth violence in her constituency, and the decimation of neighbourhood policing up and down the country.

I thank the hon. Member for Central Suffolk and North Ipswich (Dr Poulter), my hon. Friend the Member for Warrington South (Faisal Rashid) and the hon. Member for Chelmsford (Vicky Ford), who talked about the outstanding social work practice in Essex despite the pressures on social workers on the frontline. As an ex-social work manager, I know those pressures only too well, but I commend Essex for its work in that respect.

My hon. Friend the Member for Leigh (Jo Platt) co-chairs Labour Friends of Local Government, ensuring that the voice of local government is heard loud and clear in the House. My hon. Friend the Member for Norwich South (Clive Lewis) mentioned the plight of some of his constituents and funding cuts to early years services. My hon. Friend the Member for York Central (Rachael Maskell) made the excellent point that local authorities are the game changers, and my hon. Friend the Member for Brighton, Kemptown (Lloyd Russell-Moyle) talked about his council facing bankruptcy within three years, which is shocking.

My hon. Friend the Member for Nottingham South (Lilian Greenwood) made the point that cuts to preventive services mean paying more in the long term. We also heard from the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) and my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy), who made a passionate speech about fairness. I thank all hon. Members and I thank you, Mr Walker.

Motion lapsed (Standing order No. 10(6)).