Local Government Funding

Rachael Maskell Excerpts

Wednesday 27th March 2019 Westminster Hall

[Mrs Anne Main (in the Chair)]

We will return to where we left off. You have five minutes and 47 seconds, Mr Jarvis.

[Rachael Maskell (York Central) (Lab/Co-op)]

On a point of order, Mrs Main. The Division is still going on and an hon. Member has not yet returned. Should we wait until he returns before we continue the debate?

[Mrs Anne Main (in the Chair)]

We have already waited for the customary 15 minutes. The proposer of the motion and both Front Benchers are here, so we will carry on.

--- Later in debate ---

[Rachael Maskell (York Central) (Lab/Co-op)]

It is a pleasure to serve with you in the Chair, Mrs Main, and to follow my hon. Friend the Member for Bolton South East (Yasmin Qureshi), who made a positive case for what the Labour council is trying to achieve in such constrained times. I congratulate my hon. Friend the Member for Colne Valley (Thelma Walker) on securing this debate at a crucial time for our local authorities. By the end of the next financial year, my constituents across York will have experienced an £189 cut per household, which has had a significant impact on families. I often say to colleagues that in York they need to look beyond the walls and travel into the communities to see the real deprivation in our city. York itself is the most inequitable city outside London, and it experiences severe deprivation.

It is important to consider deprivation when creating a so-called fair funding formula. York has the worst-funded schools in the country, and one of the worst-funded health authorities. Crime is rocketing by 13%, which is 5% above the national average, yet 60 police staff have been cut. Those cuts are having a cumulative impact on our city, and the need to fall back on the local authority is escalating. As a result we must consider what is happening with different funding formulas and that cumulative impact, not least because of the many partnerships that existed, which is where the real work is done to address issues of crime and public health. Resilience is breaking down in our cities, and we must ensure that funding works across the board.

The cuts have impacted on social care in our city, which is under particular strain because hospitals cannot discharge patients, the support is not there, and there is a knock-on impact on other services. York has a particular reputation for delayed discharge, and it is not a good one.

There are also pressures on social care. We cannot recruit the social care workforce—people cannot afford to live in our city because the housing is so expensive and the wages so low. I urge the Minister to take a more holistic view of his brief and to work cross-departmentally when looking at the funding formula, because of that impact.

I am also concerned about future dependence on business rates. We have debated those rates many a time in this House, and they have a negative impact on the retail outlets in York, as well as other businesses, because we have a false market. What has happened is much like the sub-prime market that existed ahead of the last crash. Many offshore landlords have invested in York, hiking up the prices, the values and the rentals of their properties. As a result, they are more interested in their investment in the longer term, rather than in the high street, so 50 units in the city are empty. Sadly, our Tory-Lib Dem city council just puts stickers in the windows of high street outlets, as opposed to trying to get businesses in. Increasing business rates therefore have an impact, because businesses leave and the revenue does not come to the council. There is a negative cycle. I will be interested to hear the Minister’s comments, and it is certainly something that I have discussed with Treasury Ministers at length.

The precept is also a regressive tax on social care. It is important for us to look at more progressive, fairer and more proportionate forms of taxation, as opposed to some of the measures put in place instead. Again, with issues such as the precept, areas of deprivation will clearly not generate the same levels of money and resource for social care as more affluent areas. We therefore see greater inequality yet again. Even within York we have serious inequality. In fact, between the most and least affluent areas of York is an eight-year gap in life expectancy, which demonstrates not only economic inequality but its impact on health and other social determinants of health.

We therefore need the local authority to be properly resourced. Sadly, the Tory-Lib Dem failure in our city has meant that resources have not gone into the right places to address inequality. The council has been quite profligate in how it has used limited and restrained resources without bringing real benefit to our city, so I am absolutely delighted that Labour has put a well-costed programme together.

“Getting York back on track” is our manifesto for York to move forward. It looks at how to bring investment into our city and to ensure that we build a more sustainable and long-term approach to delivering services, putting in vital resources and growing the economy by attracting businesses. We are a low-wage economy so it is vital to have investment for good-quality jobs in the future. Socially, we also want to address the very issues of my constituents’ constant need, such as investing in our city centre by putting in a family quarter, or ensuring that we have higher environmental credentials in our city, which should be something that all local authorities are mandated to have.

We want to be carbon neutral by 2030. A pressing agenda throughout the country is to have carbon budgets, and we want water provided on our streets, so that people are not buying plastic bottles. Such investments are made for the long term of our planet as well as of cities. We are talking about funding, so I will be interested in what focus the Minister has on improving the environmental credentials of local authorities and their contribution to that agenda.

I will leave it there. I can say so much more about what Labour wants to do when we come to power in May, but the Minister already has much to respond to today.

--- Later in debate ---

[Rishi Sunak]

It is nice that we are now talking about whether the increase in funding is enough. I am glad we have moved the debate on. It is also good to hear Labour Members talking about the importance of council tax. We believe in keeping people’s council tax bills down. They will be 6% lower in real terms this year than they were when this Government came into office, and they have risen slower than under the last Labour Government, when they increased at an annual rate of almost 6%. This Government are committed to keeping council tax bills low, and it is important that we are mindful of that.

Many points were made, and I want to try to address as many as I can in the time available. I would like to do so through the framework with which I look at local government, given the sheer range of things it does. Local councils do three important things: support the most vulnerable in our society, drive economic growth in their areas and build strong communities. I believe very much that this Government are backing them in doing all three of those vital tasks.

First, as we heard, local government helps the most vulnerable in our society. Local authorities are the first to reach out those who fall on hard times, and I am delighted that our recent settlement provides them with increased funding to do exactly that. Councils have told this Government that the most acute pressure they face is in adult and children’s social care, so in the recent settlement and Budget, the Government responded with an additional £650 million for adult and children’s social care this year. That includes £240 million to ease winter pressures and the flexibility to split the remainder between adult and children’s services as local preferences dictate.

We also champion authorities that put innovation at the heart of service delivery. We heard a lot about money, but the outcomes that that money delivers are just as important. We should be focused not just on what goes in but on what comes out. The Government will focus relentlessly on ensuring that taxpayers’ hard-earned money is well spent.

On children’s care, about which we heard a lot, a recent National Audit Office report noted the enormous variation in performance and cost among local authorities. That is nothing to do with the political colour of those authorities; it is just down to differences in leadership and management practice. That is why it is important that the Government are backing practices in Leeds, Hertfordshire and North Yorkshire with an £84 million fund, and taking their models, which deliver higher-quality outcomes at lower cost, across the country.

The hon. Members for Colne Valley and for Stockton North (Alex Cunningham)—and indeed the hon. Member for Croydon North (Mr Reed), who is no longer in his place—rightly mentioned the importance of early intervention, in which I strongly believe. I have been a relentless champion of the troubled families programme since I have had this job. He is not here anymore, but the hon. Member for Croydon North will have seen the Secretary of State make a very significant speech last week about the progress of that programme and how it is transforming children’s lives on the ground, getting people into work and keeping people out of the criminal justice system.

Knife crime is also important. That is why a £10 million extension was recently made to the troubled families programme, specifically to support families against youth crime. That funding is now benefiting 21 areas that bid into the programme to tackle that vital issue. The hon. Gentleman talked about funding running out. That is because we are at the end of a spending review period. Of course, in the spending review, I and the Government will be batting very hard for a successor programme to the troubled families programme. The Secretary of State committed to that last week, and I wholeheartedly support it.

I am also passionate about technology, which has the potential to be transformative. I recently launched an innovation fund to help councils embrace the digital revolution. Technology helps deliver services better on the ground and find ways to save money. Together with the LGA, we are developing a tool to help councils to benchmark, analyse and drive their performance. I believe there are considerable opportunities across local government to improve lives, save money and transform services, and we will pursue them all relentlessly.

The second thing local authorities do is drive economic growth, ensuring that every part of our country can prosper. Ultimately, that is the only sustainable way to fund the public services that we have heard so much about and we all care passionately about, and it is the only way to improve living standards in our communities. There may well be fundamentally different points of view on that. The Government believe that, rather than being funded by central Government handouts, local authorities should be empowered and rewarded for their entrepreneurship. Indeed, even Labour Members expressed different points of view about the degree of autonomy local government should have to raise its own money and about over-reliance on things such as business rates—the single largest way for local areas around the world to raise income. It is all very well saying we want more local autonomy, but we must understand what that means in practice.

Our business rates retention scheme does exactly that, putting power in the hands of local authorities to reap the benefits of their hard work. This year, on top of the £46 billion I mentioned, local authorities will retain an additional £2.4 billion of business rates growth. The 15 new business rates retention pilots across the nation, from Northumberland to Southampton, demonstrate this Government’s commitment to backing councils’ ambitions for their local economies.

[Rachael Maskell]

Will the Minister also acknowledge the challenges that business rates create? What will the Government do to address those?

[Rishi Sunak]

I am happy to do that. I am glad that York and Kirklees—the areas represented by the hon. Lady and the hon. Member for Colne Valley—joined my local area to be part of one of those business rates pilots. That will generate an extra £34 million, which our councils have worked together to decide how to deploy in our area. That is central Government backing our area’s ambitions. The hon. Member for York Central (Rachael Maskell) is right to mention business rates. The change in retail shopping habits is a pressing issue. There is a range of measures, from small business rates relief to rural rates relief and the new retail relief, giving retailers a foot—