Local Government Finance

Rishi Sunak Excerpts

Tuesday 5th February 2019 Commons Chamber

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)]

It is a pleasure to close the debate. I start by joining my predecessor, my hon. Friend the Member for Nuneaton (Mr Jones), in paying tribute to all the committed people who work in local government and deliver for their communities every single day. We are all grateful to them for their hard work and dedication. I thank all hon. Members for their passionate speeches today, particularly those who brought their personal experience of local government to the Chamber—our debates are the richer for that. Although I may not agree with the content of Labour Members’ speeches, I respect the passion with which they represent their local communities.

As a northern MP, I feel that the north is lucky to have, in my hon. Friend the Member for Carlisle (John Stevenson), a champion for the northern powerhouse. He is committed to pushing the Government on rebalancing the economy and working constructively with them. That sentiment was echoed by my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton), who spoke well about the importance of economic regeneration in his constituency and what the Government are doing to support his residents as they look to a brighter future.

My hon. Friends the Members for Northampton South (Andrew Lewer) and for Lewes (Maria Caulfield) made excellent speeches about the need for all Members and all local authorities to think about how we can serve our constituents better and at cheaper cost every single day. We should always strive for ways to achieve that, given that the taxes that fund our public services are paid through their hard work and efforts. My hon. Friends the Members for Rugby (Mark Pawsey) and for Waveney (Peter Aldous) do a great job in this Chamber of representing their district council and county council respectively, and I thank them for all their engagement with me and the Department over the few months in which I have had this job. I can tell my hon. Friend the Member for Rugby that the Secretary of State is well aware of the excessive activity of a few councils with respect to borrowing for commercialisation, and this is something that the Department is actively looking at as we speak to the Treasury.

Many Conservative Members, including my hon. Friends the Members for Bromley and Chislehurst (Robert Neill), for Gloucester (Richard Graham), for Lewes, for Thirsk and Malton (Kevin Hollinrake), for Waveney, for Redditch (Rachel Maclean) and for Bexhill and Battle (Huw Merriman), made powerful and compelling cases for a root-and-branch review of how we distribute money in local government today. We heard about the specific issues that councils face on the ground that our current funding formula simply does not capture. I pay tribute to their work in bringing this to my attention and that of officials. They mentioned issues such as the rapidly changing demographics that are driving up demand for adult social care. These are the kinds of things that a new formula fit for the 21st century should absolutely cover, and I look forward to working with all of them as we develop a funding formula that is right for every part of this country.

My hon. Friends the Members for Northampton South, for Thirsk and Malton and for Bexhill and Battle spoke of the absolute importance of getting adult social care right. I know that my colleagues in the Department of Health and Social Care are committed to doing exactly that, and I agree that the solutions should be radical, not statist. I hope that they will include consideration of the excellent work of the Select Committee.

Three themes have run through the speeches that I have heard in the debate, and they are the three things that everyone agrees that our local councils do: first, they support the most vulnerable in our society; secondly, they drive economic growth in their areas; and, thirdly, they build strong communities. I am proud to say that this Government are backing them to do all three. It is local authorities whose hands are the first to reach out to those who fall on hard times, and I am delighted that this settlement provides them with a real-terms increase in financial resources to support that vital work.

Councils told us that the most acute pressure that they faced was in adult and children’s social care, so this Government responded with £650 million in incremental funding in the Budget. Councils told us that they wanted to do more to support people with disabilities, so this Government responded with an extra £55 million to make vital home adaptations. Rural councils highlighted their particular challenges, so this Government responded by maintaining the rural services grant at record levels. But Conservative Members measure success not by how much money we spend, but by how many lives we are changing, so we are supporting local authorities to innovate and improve to ensure that we are careful with taxpayers’ hard-earned money and that people are getting the best possible services.

In children’s care, where there is a huge variation in performance, we are investing £84 million to spread best practice from Leeds, Hertfordshire and North Yorkshire across the country so that children everywhere will benefit from best-in-class practice. In technology, we recently launched an innovation fund to support councils in embracing the digital revolution. Working with the Local Government Association, we are developing a tool to help councils to benchmark, analyse and drive performance. Across local government, whenever there are opportunities to improve lives, save money and transform services, this Government will be relentless in pursuing them.

The Government understand that the only sustainable way to pay for our public services is to create the economic growth that will fund them. Let us not forget the vital role that councils play in creating prosperity for their communities. Rather than being reliant on central Government handouts, local authorities should be empowered and rewarded for their entrepreneurship. I am pleased to say that our business rates retention scheme does exactly that, and local authorities are expected to retain almost £2.5 billion of business rates growth this year. Across the nation, from Yorkshire to Southampton, our 15 new business rates retention pilots demonstrate this Government’s commitment to backing councils’ ambitions for their local economies. We all know that the enemy of that growth is the higher taxes that the Labour party would inflict on our residents.

Local authorities are key to strengthening our communities. Every single day, they ensure that people are proud of the places in which they live. Those communities must start with the houses that people call home, so this Government are backing local authorities to fulfil those people’s aspirations. The new homes bonus part of the settlement has awarded councils almost £8 billion since it started for 1.5 million additional homes that they have brought forward, each one providing incentive and rewards for those councils that are trying to ensure that every one of their residents can fulfil the dream of homeownership.

However, local authorities told us that they want more. They want greater flexibility to build more of their own homes, so this Government listened and lifted the housing revenue account borrowing cap. Strong communities also need vibrant high streets, so this Government are trusting local councils with a £675 million fund to transform and revitalise our town centres. Finally, when it comes to our communities, the only holes that I want to be pouring money down are the ones on our local roads, so this Government were pleased to ensure that councils have £420 million to fill potholes for our motorists. From homes to roads to high streets, this Government are backing local authorities to create communities where everyone can thrive.

We have heard a lot about deprivation today, and there was an accusation that this Government are somehow trying to massage the numbers. When we put together the new funding formula, we listened to the Housing, Communities and Local Government Committee report that was published at the end of 2017, which made a compelling case for reducing the number of indicators to fund local government without sacrificing accuracy. That is exactly what our funding formula does. Deprivation accounts for less than 4% of the variation in spend for universal services—[Interruption.]

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

Order. I need to hear what the Minister has to say. I am sure that he is nearly at the end.

[Rishi Sunak]

We heard a lot about Liverpool and a lot about Surrey. Members of this House should know that households in Liverpool have £400 more to spend on local services than households in Surrey. Only a third of spending in Liverpool is financed by council tax versus almost 85% in Surrey. This funding formula is accurate and based on the facts.

In conclusion, I will continue to listen to local councils to learn from their expertise and to champion their cause across Whitehall. I tell them that their voice is heard loud and clear and that they will be supported by this Government. I commend the settlement to the House.

Question put.

The House proceeded to Division.

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

I remind the House that the motion is subject to double-majority voting: of the whole House and of Members representing constituencies in England