Local Government Funding: Merseyside

Rishi Sunak Excerpts

Tuesday 30th October 2018 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Hollobone.

I start by congratulating the hon. Member for Garston and Halewood (Maria Eagle) on securing this debate and it is good to see a strong turnout from Merseyside colleagues as well.

It did not sound like the hon. Lady was aware that in fact my very first visit as Minister for Local Government was indeed to Liverpool, both to see the City Council and to work with the troubled families programme, and I was delighted to accept an invitation from the hon. Member for Liverpool, Wavertree (Luciana Berger) shortly after being appointed to this particular role.

Being relatively new to this role, I am the first to say that local authorities have done a commendable job over the past few years, maintaining a strong level of services in the face of rising demand. In responding to the specific points that the hon. Member for Garston and Halewood made, I will first outline my broad vision for the role of local government, which consists of three particular areas: first, to drive economic growth; secondly, to help the most vulnerable in our society; and, lastly, to build strong communities. I will take each of these areas in turn, specifically in relation to the points that have been made by hon. Members about Merseyside.

I will start with the economics. In this financial year, councils on Merseyside— including Sefton, Knowsley, Liverpool, Wirral, Halton and St Helens—had an aggregated core spending power of around £1.3 billion. Core spending power is the standard measure of a local authority’s key financial resources. It includes money from the central Government grant, which is typically known as the revenue support grant, but also the money raised locally from council tax, the money raised through the business rates system, and further specific grants from central Government for things such as adult social care, the better care programme and, indeed, the new homes bonus.

Across Merseyside, core spending power is up every single year in this four-year spending period and up 2% this year as well.

[Maria Eagle]

I received a parliamentary answer from a colleague of the Minister about police spending, which said that over the last year £5.1 million of extra money had been given to enable the police to tackle the very serious crime that my hon. Friends the Members for Liverpool, Wavertree (Luciana Berger) and for Wallasey (Ms Eagle) referred to. In fact, that money came from the Government simply allowing a precept increase; it all came from hard-pressed council tax payers in Liverpool and not one penny piece came from the Government. How can the Minister justify the ridiculous figures that he is using, which hide the Government’s contribution by referring to everything else that can be raised in any other way? That is a way of abdicating responsibility.

[Rishi Sunak]

I totally reject the suggestion of hiding. It would be ridiculous to look at any local authority’s financial resources without considering the various ways in which such an authority funds itself. I am delighted that the hon. Lady is focused on keeping council tax low. Indeed, the Government have ensured that council tax today is lower in real terms, across the country, than it was in 2010. We have heard various suggestions from Labour Members about doubling council tax, which is something I assume the hon. Lady, being on the side of hard-working taxpayers like us, would reject.

The idea that the funding formulas do not take account of deprivation or the differing ability of areas to raise council tax is totally erroneous. For example, when the adult social care precept was introduced, it was understood that different areas would raise different amounts from it, which is why in the incremental billions of pounds that the Government have injected into the social care system directly through the better care fund there is an equalising measure to take that into account. That is exactly why, today, the most deprived authorities have a core spending power per household—taking into account all those things, council tax included—that is 23% higher than that of richer authorities. Indeed, that is why areas with larger council tax bases provide more of their area’s resources from council tax; Merseyside provides less than half of the amount those areas do, because the council tax base in Liverpool is that much lower. It is totally wrong to suggest that that is not taken into account.

I think it was alleged that I, or the Government, had removed deprivation from funding formulas. I can categorically say that I have not removed it from any funding formula. We are in a root and branch review of how local government is funded. We are in the midst of various consultations and I would be delighted to have hon. Members’ suggestions.

[Mr Howarth]

If that is the case, will the Minister explain why Knowsley, which is one of the most socially deprived parts of the UK, has had a £100 million cut in its grant? His figures just do not add up.

[Rishi Sunak]

I can tell the right hon. Gentleman that Knowsley’s core spending power per household is about 20-something per cent. higher than the average for a similar metropolitan authority, which takes into account exactly his point. He talked about the fair funding review and, as I said, that is exactly where all the issues will be considered, ensuring that deprivation or, indeed, multiple other factors, are taken into account in the new funding formula.

[Ms Angela Eagle]

Will the Minister give way?

[Rishi Sunak]

No. I will try to make some progress.

When it comes to that point, I am convinced and confident that those factors are taken into account. Indeed, as we restructure the fair funding formula, they will continue to be taken into account fairly and accurately.

Beyond Government grants, driving economic growth locally is the only sustainable way to ensure that we can raise the money we need to fund our services, and business rates retention is one such opportunity. I am delighted, and I am sure hon. Members here will join me in recognising, that Merseyside is in the fortunate position of being a 100% business rates retention area, which means that the local councils keep all the growth they generate from those rates. That is not something that is enjoyed by every local authority—[Interruption.]

[Mr Philip Hollobone (in the Chair)]

Order. We do not really want sledging in the Chamber. The hon. Member for Wallasey (Ms Eagle) is sitting opposite the Minister and he must be heard with courtesy. Her side of the House was heard with courtesy during all its contributions. I know that the hon. Lady’s attempt to intervene was not accepted by the Minister, but she could have another go. However, she is more likely to be successful if she does not keep shouting across the Chamber.

[Rishi Sunak]

Thank you, Mr Hollobone. I think the hon. Lady was being snide about the fact that Merseyside is a business rates retention pilot. I am sure that the £54 million that Merseyside will keep this year in additional funding as a result of the pilot is nothing to be snide about, and will make an enormous difference on the ground, helping the people I know she cares about. Many other local authorities across the country would be happy to be one of the pilot areas, so if she thinks that Merseyside would rather not be one and would give up the opportunity to others, I would be happy to talk to her afterwards.

[Jim McMahon]

Will the Minister give way?

[Rishi Sunak]

I will try to make some progress.

Business rates retention is not the only incentive for local growth, as it sits alongside the other support the Government give to local authorities’ wider ambitions through local growth deals. For example, £2 million has been invested to create the first dedicated digital skills academy in the UK, at the City of Liverpool College, and more than £13 million has been invested in a highway infrastructure scheme comprising a series of essential and integrated improvements along the A565 corridor. In sum, the Government strongly support Merseyside’s economic growth, whether through direct investment or business rates retention, and thus enable it to fund services over the years to come.

[Dame Louise Ellman]

Will the Minister give way?

[Rishi Sunak]

I will make some progress.

The second vision I outlined, which is undeniably one of the most crucial roles for local government, is to continue to help the most vulnerable in our society. It is local authorities, as we have heard, that support the elderly, the disabled and our children in need, and we owe an enormous debt of gratitude to councils for their incredible work. I am delighted that the Government back local authorities to carry out those vital duties. Last year, the Budget provided an additional £2 billion for social care. Earlier this year, another £240 million was announced for social care winter funding, and in the Budget yesterday the Chancellor announced that a further £650 million will be provided for care services next year.

In contrast to what we have heard, the flexibility to use the funding for things such as children’s services is something that local authorities have specifically asked for. They will have the flexibility in each local area to use the funding for different care services, rather than its use being dictated by central Government. I would have thought that all Members appreciated their local areas having such flexibility to make the best use of the money, in the way they see fit.

I am pleased to say that that increased investment and better working between the NHS and local government is paying dividends on the ground. We have seen social care free up 949 beds a day since the peak two years ago—a 39% reduction in social care delayed transfers of care. In Merseyside, progress has been seen particularly in St Helens, and I commend the local authority on reducing such transfers by 72% since the February 2017 peak.

I have mentioned the troubled families programme, which is making amazing strides to support our society’s most vulnerable families. When I visited the Clubmoor children’s centre in Liverpool, it was a privilege to talk to several of the families participating and to see the life-changing work at first hand. I am proud to say that the Government have invested £1 billion in the programme over this spending cycle, with 130,000 families nationally achieving significant and sustained progress against the goals they have been set. In almost 17,000 of the families, one or more of the adults has moved into work, and the families I spoke to told me that that was central to their ambitions.

Across Merseyside, 10,000 families are being helped with more than £20 million of funding, and I pay tribute to Liverpool City Council in particular for doing a very good job, working with early help assessments. We heard from the hon. Member for Halton (Derek Twigg) about the importance of early intervention. Referrals to children’s services in Liverpool were down 3% in the most recent year—

[Mr Howarth]

On a point of order Mr Hollobone. I want to place it on record that, had he been here, my hon. Friend the Member for Halton (Derek Twigg) would have made a significant contribution, but he is, in fact, not here.

[Mr Philip Hollobone (in the Chair)]

Thank you for that point of clarification. It will be on the record.

[Rishi Sunak]

I apologise to the hon. Member for Liverpool, West Derby (Stephen Twigg), who mentioned the importance of early intervention. I thank the right hon. Gentleman for the point of order. That great work in the last year builds on three successive years of reductions in referrals to children’s services.

We talked about the importance of local authorities in building strong communities and the Government back that, whether through the funds for Liverpool City Council from the controlling migration fund, ensuring that communities are connected through the roads fund that was announced yesterday, or bringing high streets together and creating pocket parks—something that Liverpool has benefited from. Whether through building economic growth, supporting communities or helping the vulnerable, the Government are determined to recognise the role that local government plays and to back it with what it needs.