Local Government Finance

Debate between Richard Burden and Brandon Lewis

Wednesday 12th February 2014 Commons Chamber

[Brandon Lewis]

The 10% most deprived areas in the country and the areas with the most need have a higher spending power in the first place and get a bigger Government grant.

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

On this issue of spending power, may I take the Minister back to the first and second answers that he gave and see how he puts them together? My hon. Friend the Member for Birmingham, Erdington (Jack Dromey) talked about the reduction in spending power in a deprived area such as Birmingham. The Minister said, yes, but it has a higher spending power in the first place. My hon. Friend the Member for Easington (Grahame M. Morris) then said that the reason—

[Richard Burden]

The Minister said that the reason was that such areas have higher needs. If that is the case, let us go back to the same question: why do the most deprived areas with the highest needs get the biggest reductions?

[Brandon Lewis]

It is best to refer the hon. Gentleman to the answer I gave a few moments ago.

In response to the question about flooding asked by my hon. Friend the Member for Newton Abbot (Anne Marie Morris), let me say that we are currently experiencing the wettest winter for 250 years, and that has an impact on local authorities’ finances. Many are working tirelessly for the safety of their communities. The Government have made it clear that they are committed to supporting them unequivocally. The severe flooding and storms have affected rural and urban, town and country alike from Great Yarmouth to Dawlish.

Sixty-two local authorities have thus far indicated that they will apply under the Bellwin scheme for financial assistance. The grant reimburses local authorities for the cost of their immediate actions to safeguard life and property. We have enhanced the terms of the Bellwin scheme in response to the most recent severe weather events. The floor has been lowered so that more councils can apply, which will be of particular benefit to the unitary and county authorities. We estimate that that could be worth an extra £15 million to those councils, and we will be paying 100% above the threshold as opposed to the previous 85%. For the longer term, I am committed, along with my colleagues across Whitehall, to undertake a review of the Bellwin scheme to assess what changes may be needed in the light of more frequent and challenging weather events. Members will no doubt already have noted that we have provided a £7 million severe weather recovery fund for those areas affected before and over Christmas.

We have also listened to the wider concerns—I note the comments that have been made in interventions already this afternoon—of colleagues in rural areas about the extra challenges their local authorities might face in achieving service delivery efficiencies. We are topping up the rural services delivery funding by an extra £3 million this year, including the extra £2 million announced today, so it is now worth £11.5 million, which is a further boost to the 95 authorities that will benefit this year.

Financial Sustainability (Local Government)

Debate between Richard Burden and Brandon Lewis

Tuesday 7th January 2014 Westminster Hall

[The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)]

One would be forgiven for believing that there was some golden inheritance for local government when this Government came in. Many council leaders across the political divide would struggle to recognise the description given by the shadow Minister. Having been a council leader under the last Government, I find the idea of the Labour party favouring anything involving flexibility or partnership with local government, as opposed to top-down central control through one mechanism or another, almost laughable.

We should put this debate in context. We still have not heard anything from the Labour party about the £52 billion in cuts to local government that they outlined—local government still has something to fear. Members have also talked about money for areas. We have heard the debate about the difference between rural and urban areas. We would argue that we have created a fairer position, but we should also remember the backdrop outlined by the right hon. Member for Birmingham, Hodge Hill (Mr Byrne): the previous Government basically spent all the money. As my hon. Friends the Member for Bromley and Chislehurst (Robert Neill) and for Hereford and South Herefordshire (Jesse Norman) rightly said, we are working within the tight financial envelope left to us by the mess of the last Labour Government.

Having said all that, I must also congratulate and thank the hon. Member for Birmingham, Edgbaston (Ms Stuart) for securing a debate on this important issue and for her thoughtful opening speech. This Government have armed local government with a fair funding deal for all parts of the country—rural and urban, district and county, city and shire—which means that councils can plan budgets and deliver sensible savings while protecting front-line services. I will come back to the context of “fair” in a moment.

As has been outlined, every bit of the public sector must do its bit to pay off Labour’s deficit, including local government, to account for a quarter of all public spending. Our hats should go off to local government for the impressive work it has done, because we have shown that we can make those savings and still deliver good front-line services. Public satisfaction is at an all-time high, especially compared with 2010.

The autumn statement ensured that local government is protected from further spending reductions for 2014-15 and 2015-16. Councils now have the stability and certainty to plan their budgets and move ahead with transforming local services and ongoing efficiencies, which they absolutely need to do.

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

Will the Minister give way?

[Brandon Lewis]

No, I will not, due to the time constraints.

Councils now have stability. A number of local authorities have already done much work to prove that efficiencies deliver not only savings, but better services for their residents. Ultimately, that is the key. It is not about Government money or councils’ money; it is about taxpayers’ money being spent on good front-line services for local residents. I encourage authorities to look at the good councils out there doing great work with efficiencies and innovation, such as those that have done work through the community budget programme and the public service transformation network.

Their work is becoming more efficient and effective for council residents. Independent reports show that it is saving about £20 billion a year in this country. More importantly, areas going forward with such innovation show better outcomes for residents, not the least of which is being highlighted through the work of the better care fund, which involves work between the Department for Communities and Local Government and the Department of Health, and is showing benefits. I will touch on Members’ individual points in a moment, and I will write to the hon. Lady with some details about the better care fund, particularly with relevance to Birmingham. I am happy to meet her separately on that issue as well.

The average spending power reduction for councils in 2014 is expected to be limited to 2.9% per household. Members have mentioned the top 10% and the bottom 10%. Let us be clear that authorities’ spending power in the most deprived areas is much higher. In 2014-15, it is up to about £4,200 per dwelling in the 10 most deprived authority areas, compared with about £2,100 per dwelling in the 10 least deprived. That absolutely reflects, as the hon. Member for Southport (John Pugh) said earlier, ensuring that need is recognised.

The hon. Member for Birmingham, Edgbaston mentioned better care, as I have said, and education, which I will feed through to the Department for Education. I appreciate the invitation to Birmingham. I will look at the diary and see whether we can work out a visit, to ensure that we get up there. However, I gently point out to Members from Birmingham, Liverpool and Newcastle that we are holding consultations right through January—councils are coming to see me to talk about the financial settlement—and at the moment those individual authorities have not even asked for an appointment to come and see the Department. I gently suggest that those Members go back and say to those authorities that if they feel they need to talk to the Department they should make appointments to come and see us. I am seeing the councils from the north-east next week, but at the moment Birmingham and Liverpool councils have not asked to come and see us.

Local Government Finance (England)

Debate between Richard Burden and Brandon Lewis

Wednesday 13th February 2013 Commons Chamber

[Brandon Lewis]

I hope that in his speech the hon. Gentleman will tell us about the cuts for local government of £52 billion that Labour have not even announced yet. How will they deal with that?

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

To put it as politely as I can, some of the figures the Minister has been using today are questionable to say the least. He emphasised his willingness to talk. Core Cities twice wrote to his right hon. Friend the Secretary of State to ask for a meeting. There was no response. The Secretary of State is sitting alongside the Minister. Will he tell us through the Minister whether he is prepared to meet Core Cities—

Council Tax (Benefit Claimants)

Debate between Richard Burden and Brandon Lewis

Tuesday 29th January 2013 Westminster Hall

[Brandon Lewis]

I will come back to that point in a moment.

Let me give another example. Mansfield district council has agreed a scheme that will see claimants pay a maximum of 8.5% of their council tax bill and no change to the support that they receive on top of that for six weeks after returning to work, which is better than the current four. The council has also set up a hardship fund to assist people who experience genuine financial difficulties as a result of the changes. That is the kind of sensible, forward-thinking approach that I hope to see other local authorities adopting. The debate is a good opportunity to put on the record some of the great work that authorities are doing.

[Richard Burden]

In reality, Birmingham is losing £11 million in Government support to help people on low incomes or on fixed low incomes with their council tax. It is being told by the Government that for two years, perhaps—no commitment after that—it might get £2 million back if it does what the Government say. The Government’s financial envelope, looking forward to the next five years, will leave Birmingham with a shortfall of £625 million, although it is being told that if it freezes council tax, it will get another bung, but only for two years. This sounds like a loan shark offering a payday loan that will leave Birmingham’s citizens much worse off in the space of two years.

[Brandon Lewis]

I will touch on a comment that was made by my hon. Friend the Member for Birmingham, Yardley earlier. To be fair, he made the point very well. Some hon. Members are confusing their role as Members of Parliament in representing their residents when they criticise my hon. Friend and make comments about supporting Birmingham. The job of an MP is not to support the council; it is to support, defend and stand up for the residents. There is nothing wrong with a Member of Parliament standing up for the residents and challenging the council on whether it is doing the right thing and putting in a good scheme. I have already given examples of councils that are doing the right thing by their residents. If Birmingham does not choose to do that, that is a decision that Birmingham residents should consider carefully when they get their opportunity at the ballot box.

--- Later in debate ---

[Brandon Lewis]

I will come back to that point in a moment, but as it happens I do not agree that that is the difficulty; it is just part of a wider package. As ever, Opposition Members tend to pick on one thing rather than look at an issue as a whole. The flexibilities that we have given to local government, along with councils’ ability to crack down on fraud and error—£200-odd million last year alone, which in most people’s books is a lot of money—give local government enough to deal with the measure. Across the country, that comes to more than its cost.

I am disappointed that some councils have failed to rise to the challenge to explore every option, and that they are taking what they perceive to be the easier route of looking at double-digit across-the-board cuts. That is a short-term approach that slashes entitlements for the poorest without looking at other ways in which to manage the funding reduction, and it is not sustainable. It is common sense that asking the poorest to pay contributions of 30% is simply unreasonable and, in the longer term, as the funding for council tax support is built into the baseline level of business rates funding, councils have everything to gain from helping people back into work. That is where their focus should be.

It is, of course, for local authorities to consider the appropriate funding to be applied to support local taxpayers as part of their wider budget decisions. Making councils financially responsible for providing support creates stronger incentives for them to get people back into work and to reduce costs.

[Richard Burden]

Why is the support scheme that the Government are offering only temporary?

[Brandon Lewis]

That issue was raised earlier, and I said that I would come to it, so if the hon. Gentleman will bear with me I will do so.

We want to ensure that councils are doing all the right things. They should be looking at back-office functions, tackling fraud and error, and carrying out every one of the “50 ways to save”, especially an authority such as Birmingham, where the spending reduction for 2013-14 is just 1.1%.

To provide the space and the support for local authorities to design a scheme that protects the poorest by making the most of opportunities to find savings elsewhere, the Government announced in October the provision of an additional £100 million transitional grant for 2013-14. The money will be available to councils—billing and major precepting authorities—that choose to design their local schemes so that people currently on 100% support pay between 0% and no more than 8.5% of their liability, the taper rate does not increase above 25%, and there is no sharp reduction in support for people entering work. Details of how the grant can be claimed were sent out on Friday.

As time is of the essence, I will skip to the core query about the grant being for only one year. I recommend that authorities that have not yet looked at their schemes do so very quickly now so that they might qualify for the grant. It is for only one year because it is, effectively, pump priming. It gives councils that year—that opportunity —to redesign their schemes, to consider how they fund other services and look at what they do with the flexibilities we give them regarding council tax and encouraging local growth. The benefits will come during and towards the end of the first year, and we are putting the money in up front to give the councils a cushion to get them through that year. I will be very clear about this: we will closely watch the decisions local authorities take on their schemes and the impact on the poorest people in their communities before deciding whether to take further action.

Localising council tax support is an important step towards reducing the welfare bill. The measure will not only reduce spending by £470 million, but give local authorities significant local control. It will give them an opportunity to make council tax support an integral part of the council tax system. Ultimately, the new localised system will enable councils to take decisions locally about the provision of council tax support in their areas, and it is consistent with the drive for greater local financial accountability and decision making.

Question put and agreed to.

Oral Answers to Questions

Debate between Richard Burden and Brandon Lewis

Monday 12th November 2012 Commons Chamber

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

Going back to the issue of council tax benefit reduction, will the Minister confirm that Birmingham takes the biggest hit in the country—more than £10 million? The transitional grant will not go anywhere near compensating for that, so does he think that the council tax freeze that he trumpets does not apply to the most vulnerable and that their council tax should increase, or that Birmingham city council should squeeze middle-income earners in Birmingham to compensate?

[Brandon Lewis]

I hope that Birmingham city council will do the right thing and look at its back-office costs and at cracking down on fraud and error, which were worth about £200 million last year alone. I also hope it will make sure that it follows this Government’s outlined scheme to have a council tax freeze for its residents last year, having had council tax double under the previous Labour Government.