Local Government Finance

Richard Burden Excerpts

Wednesday 7th February 2018 Commons Chamber

[Richard Burden (Birmingham, Northfield) (Lab)]

I know that I will not be alone in observing that the level of casework coming through my constituency office these days has never been so high. The reason it is so high reflects a number of things. It certainly reflects the fact that 7,500 people used just one of our local food banks, the B30 food bank, last year alone; it reflects the changes in the benefits system; it reflects the persistent problem of low pay; and it reflects real problems of crime and antisocial behaviour that was covered in the previous debate.

The reality, though, is that so many of the cases that I take up today relate to services provided by Birmingham City Council. Yes, Birmingham does not always get things right, but then neither does any other local authority. However, as a council under Labour, it has continued to prioritise children’s services; kept most libraries open when many other authorities have closed theirs; and taken an active role in boosting jobs and skills for young people, leading to initiatives to manage and reduce the numbers of young people not in education, employment or training. It is also leading in the co-ordination of the response to the collapse of Carillion locally. It is building homes and has a programme to improve fire safety in tower blocks—we are waiting for a Government response on this—which needs and deserves help from the Government.

The truth is that so many of the problems that I see at my advice desk are down to the fact that Birmingham City Council is simply not allowed the resources by Government that it needs to provide the services that my constituents deserve. Figures in the provisional local government finance settlement show that Birmingham’s core spending power will drop by 2% over the period between 2015-16 and 2019-20, even if Birmingham City Council raises its council tax by the maximum 3% each year. In comparison, over the same period, Hampshire’s spending power will increase by 4.8%, Surrey’s by 4.7% and Warwickshire’s by 7.5%. Government funding to Birmingham City Council has been cut by almost £650 million since 2010. That is more than 75% of the current net budget. It has lost 40% of its workforce, and adult social care, which has rightly attracted a lot of attention in this debate already, has had to be cut by 48%. We all see the consequences of that.

Fairways, a day care centre in my constituency, is under threat of closure. In proposing that closure, Birmingham City Council has got it wrong. I hope that service users and I will persuade them to change course. However, the council has been put in this position and is on the brink of making the wrong decision due to the 48% cut in the budget for adult social care.

But the point I really want to make is not just that Birmingham needs more support, but that it deserves a fair deal in the formula used by the Government. The Government have failed to correct an historical error in the funding formula, which means that Birmingham is £100 million worse off today than it should be. Why? Because the Government cut grant allocations to local authorities in 2014-15 and 2015-16, pro-rated to the level of grant received, and they disregarded the ability to raise council tax income. The result was that the authorities receiving more Government grant because they were least able to raise council tax income—because of the generally higher levels of deprivation—received the largest cuts proportionately.

Birmingham City Council met the Government to discuss changes in approach to the distribution of the cuts made to local government, so that the cuts would take account of the ability to raise council tax. I am pleased to say that the Government did change their approach to allocating cuts from 2016-2017 in order to take that into account. However, the inherent unfairness of the first two years’ cuts remains. Based on the latest local government finance settlement, Birmingham City Council estimates that it will receive £100 million less funding in 2018-19 than if the cuts were made fairly.

Like all local authorities—particularly those with the highest levels of deprivation—Birmingham needs greater support from the Government. But I am not just making a special case for Birmingham because of that. I am asking that all local authorities are treated equally in the level of cuts made annually. And if they are to be treated equally, Birmingham City Council should receive £100 million of extra funding. The Government have not agreed to that. My question is, why not?