Local Government Finance (England)

Robert Jenrick Excerpts

Monday 24th February 2020 Commons Chamber

[The Secretary of State for Housing, Communities and Local Government (Robert Jenrick)]

I beg to move,

That the Local Government Finance Report (England) for 2020–21 (HC 68), which was laid before this House on 6 February, be approved.

It is my pleasure to follow the successful passage of the police settlement and to speak after a number of brilliant maiden speeches, to which I had the pleasure to listen. I gently say that although today is the 100th anniversary of Nancy Astor’s first speech as the first female MP, the first five female councillors were elected more than 10 years before that, in 1907, after the passing of the Act allowing female ratepayers to stand for local councils. It is always local government that gets there first.

It is my privilege as Local Government Secretary to work closely with public servants throughout the country who day in, day out deliver the local public services that we all rely on. These are the people who are improving people’s lives, ensuring access to vital services and helping some of the most vulnerable in our society. I saw this again in the past fortnight, with those who responded to the storms, just as they did during November’s floods. I am immensely grateful for their efforts and delighted to be backing them and their communities today.

[Mrs Heather Wheeler (South Derbyshire) (Con)]

Will my right hon. Friend congratulate the parish councils for the really important work that they do to look after flood victims? In Coton in the Elms, Willington, Egginton —goodness me, I need to say so many more—Repton and Barrow upon Trent they worked so hard to help their neighbours in the very difficult times during the recent floods.

[Robert Jenrick]

I am absolutely delighted to agree with my hon. Friend. Serving on a parish council is an important role in local democracy. I give my praise, along with hers, to all those who serve on parish councils—including in my own constituency, where a number of communities were flooded very seriously over the past week—for the work that they have done to support their local communities as they begin to recover from the very serious floods.

It is because those individuals and the communities they represent matter to this country that today we are backing them with the best local government funding settlement for a decade. The settlement delivers a 4.4% real-terms increase in spending power for councils—£2.9 billion extra. It has been widely welcomed by the sector. It injects significant new resources into adult and children’s social care. It places councils on a stronger financial footing from which to build. It achieves all of that while protecting people from excessive council tax rises—the kind of regressive tax increases that we saw hurting working people year after year under the last Labour Government, during whose time in office council tax doubled.

[Ms Lyn Brown (West Ham) (Lab)]

I am staggered, to be honest, because I think that council tax is a regressive tax. Each adult in Newham has lost 50% of the grant that was given by the Government, in an area where more than 50% of our children live in poverty, in order to give to the Tory shires. Does the Secretary of State honestly think that is a fair settlement?

[Robert Jenrick]

If the hon. Lady is concerned about funding for local public services, she will join me and my colleagues in supporting the best local government settlement we have seen for a decade. She says that council tax is regressive, so what happened under the last Labour Government, when council tax doubled? Under this Government council tax has fallen by 6% in real terms, while we have continued to deliver important public services.

I was determined to champion local government in September’s spending review. I want to thank those who responded so constructively to the two consultations we ran at the end of last year. We can be proud of what we have achieved, and particularly of how the settlement delivers for the most vulnerable in society. It secures £1 billion of new Government funding for social care, alongside the extra £410 million that we invested last year. That is a major new injection of funding that will help local authorities to meet the undoubted rising pressures on the care system, which we all see in our communities and in our own lives.

We will also be maintaining all funding going into the improved better care fund, at the same time as the NHS contribution to the better care fund rises by 3.4% above inflation to over £4 billion, in line with the broader NHS settlement. Alongside this, I am allowing local authorities responsible for adult social care to raise council tax by an additional 2% above the core referendum principle. That is a necessary step that is specifically targeted to meet demand and ensure that vulnerable people are supported.

[Mr Kevan Jones (North Durham) (Lab)]

Councils such as Durham County Council are being disadvantaged, because even if they increase their council tax by 2% to cover that element, it will raise far less than could be raised by some councils in the south, which have larger council tax bases. The demands on Durham County Council are far greater than those on councils in Surrey, for example, because we have fewer self-funders, so how can that be fair?

[Robert Jenrick]

I will turn now to the specifics for the right hon. Gentleman’s constituency. This settlement will see a 7.1% increase in core spending power, and the additional social care grant for next year will be £12.8 million, which is a very significant increase. For the reasons he has just set out, we decided to apply an equalisation to the social care precept, which will ensure that those areas of the country with the lowest tax base will see more funding flow to them, in a redistribution of funding from those areas elsewhere in the country that, as he rightly says, have higher tax bases. We chose to do that at £150 million, which is more than has been done in previous settlements, precisely to answer the point he makes.

[Mike Wood (Dudley South) (Con)]

Local authorities in the top quartile of deprivation are seeing increases averaging £12.3 million next year. Does my right hon. Friend agree that this demonstrates that the Government have listened to the concerns of those local authorities that have been most hard-pressed in recent years?

[Robert Jenrick]

That is absolutely right. My hon. Friend’s own local authority will see a 6.6% increase in its core spending power next year, as a result of this settlement.

[Several hon. Members rose—]

[Robert Jenrick]

Let me make some progress.

Taken together, these measures mean that the Government are making almost £6 billion available next year across adult and children’s social care. I appreciate that this is only the start. Fixing social care is one of the defining issues of our generation, which is why this Government will be commencing cross-party talks on social care very soon to get this right once and for all. We welcome hon. Members from all parts of this House to participate in those talks and to do so in a spirit of finding a consensus and of moving forward as a country.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I cannot help but feel concerned that, in spite of what the Secretary of State is saying, the reality around both planned cuts and cuts that will result from the so-called fair funding review will actually make my local authority more than £8 million worse off, when it has already had £200 million cut since 2010. What will that mean to the people—both adults and children—who rely on social care?

[Robert Jenrick]

I do not doubt the hon. Lady’s sincerity in raising the question, but I do warn against unnecessary scaremongering. The reports that we saw in the press on the fair funding review were put out by the Labour party’s local government press office. They were not based on any actual numbers created by my Department. We have not even published the consultation yet, and so I would disregard them. In fact, the Local Government Association itself later went on to say that these figures are not reliable and are not something on which local councils should make spending decisions. We will proceed with the fair funding review, and I will come on to speak more about that in a moment. We think that it is right that we update what is undoubtedly an antiquated formula and that we base the funding of local public services more closely on the needs of local communities.

[Dr Luke Evans (Bosworth) (Con)]

I am glad to hear that the Secretary of State is considering fairer funding. Getting fairer funding, as he will know, is very close to our heart in Leicestershire as we are near the bottom end of the table. One of the interesting things about Leicestershire is its sparsity and rurality. When it comes to making a new equation, will he be considering the fact that it may take a social worker, or some other service, up to an hour to move from Hinckley to, say, Twycross? Will that factor be included in future plans?

[Robert Jenrick]

It will be, yes, and that is absolutely right. It is important that the new formula, when we bring it forward, takes account of sparsity, the cost of delivering public services in rural settings and the fact that there is deprivation to be found in shire counties, as there is in other parts of the country. I say that as a representative of the county of Nottinghamshire, with long-standing pockets of deprivation in former coalfield communities, all of which needs to be taken into consideration as we bring forward a better updated formula.

Another priority on which not just social care but so many other vital services rest is ensuring that councils have the stability that they need to plan ahead, and I believe that this settlement will help them to do that. It maintains all the grants from 2019-20 and increases core funding in line with inflation. Today, I am announcing a £40 million boost for the sector from the business rates levy account—extra funding that I know will be very welcome by the sector. I recognise that this is a one-year settlement, and I will be leading another push at the comprehensive spending review later this year to ensure that local services get the long-term funding that they need. This stability also gives authorities a platform from which to drive efficiencies and learn from the very best practice of councils across the country, and will act as a spur to improvement.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

One of the ways in which the Secretary of State could give multi-year, almost permanent, guarantees about levels of funding is through a much more ambitious programme of devolution. Is it not time for an English devolution Bill, so that all councils have the fiscal powers that they need to meet the needs of their communities?

[Robert Jenrick]

If the hon. Gentleman will give me a few minutes, I will come on to our ambitious plans for devolution. He will have seen in the Queen’s Speech that later this year we will bring forward a White Paper on English devolution, which we hope will build on the very good work done in recent years, including to establish Mayors across the country.

Today’s settlement is good news on many counts; it provides more money and more stability for councils, but above all, it is good news for local people. We are delivering the best settlement for a decade while keeping people’s council tax bills low. Under the Conservatives, council tax in England is 6% lower in real terms than in 2010. The average council tax bill increase in 2020-21 is projected to be below 4%. That compares to an average increase of 5.8% between 1997 and 2010. It was a Conservative-led Government who ultimately made sure that local people had the final say on their council tax bills, following years of tax rises under Labour.

[Mr Clive Betts (Sheffield South East) (Lab)]

The Secretary of State says that council tax bills are 6% lower than in 2010, but does he accept the figures produced by the Institute for Fiscal Studies, which show that in real terms, local government spending per head of the population has fallen by 20% since 2010?

[Robert Jenrick]

I am not familiar with those figures, but I am sure that the hon. Gentleman will welcome the fact that through this settlement, we are providing a 4.4% real-terms increase in spending for councils, while keeping council tax as low as we can.

I am putting forward a controlled package of council tax referendum principles based around a core increase of 2%, with a flexibility of up to £5 for shire district councils. This strikes the right balance between giving local authorities flexibility to meet the needs of their local area and empowering local residents to veto excessive increases.

As we have heard in a number of interventions, we are also fundamentally changing how we allocate council funding, to deliver a fairer, more up-to-date, more transparent way of allocating taxpayers’ money. It must be right to explore how we can bring the increasingly convoluted and outdated funding formula into the 21st century, and how we can better link the funding of public services to the needs of individual local authorities. There is no question but that the fair funding review is a substantial piece of work. There are many different views on the way forward, which raise challenging questions that we will need to work through in the months ahead. We plan to consult widely on our proposals this spring, and to listen to the views that we receive. In that spirit, I hope that we in the House can work together to build consensus, and move forward to a better funding formula.

[Mr Steve Baker (Wycombe) (Con)]

I am grateful to my right hon. Friend for mentioning the pockets of deprivation in shire counties; I could certainly take him to some in High Wycombe. He talks about fair funding; those of us on the fringes of our major cities have additional pressures, as people who need additional services come to live in our area. Together with the Chancellor, will he consider how we can ensure that the fringes of not just London, but all our major cities, are equipped to deal with the extra pressures that they face?

[Robert Jenrick]

My hon. Friend makes an important point. Knowing something of his constituency, I think it is the perfect example of a part of the country where there is great affluence, but also significant pockets of deprivation. We need to ensure that funding for local authorities that provide public services is based on the actual needs of the community, not a formula dreamed up many years ago.

[Jack Dromey (Birmingham, Erdington) (Lab)]

Forty-one per cent. of children in Birmingham are growing up in poverty. Nearly half a million Birmingham citizens live in some of the most deprived areas of Britain. Birmingham is on track for £784 million-worth of cuts to its budget. Its workforce has been cut in half. Children’s centres and youth centres are closing, with catastrophic consequences for the city. The Secretary of State referred to the Local Government Association’s assessment of the fair funding review on social care funding. Is it not the case that its assessment is that the current direction of travel will see money channelled from high-need areas such as Birmingham to lower-need areas like Surrey and Buckinghamshire?

[Robert Jenrick]

That is not the view of the LGA. After the Labour party issued a press release suggesting something along those lines, the LGA gave the clarification that it is impossible to speculate because we have not published the figures; we have not published our consultation. So with great respect to the hon. Gentleman, he will have to wait until—[Interruption.] Well, it was the Labour group on the LGA. I am not going to base my views on the press releases of the LGA’s Labour politicians; I am going to base them on the reality of what we intend to bring forward in future.

On the serious point that the hon. Gentleman raises, we will be consulting in the spring, and that will address issues important issues such as that. I hope that he, Birmingham City Council and others who take an interest in these matters will participate in that consultation. We will of course listen to his views as we bring forward a better settlement that attempts to work for all parts of the country. The settlement that we are voting on today is a good settlement for Birmingham. It provides a 6.4% increase in funding, or £27 million additional funding, for social care.

[Gary Sambrook (Birmingham, Northfield) (Con)]

Does my right hon. Friend agree that the problem in Birmingham is that the Labour administration simply cannot control a budget or deliver services properly? For instance, it spent £15 million on resolving the bin dispute, we have a budget for a bus depot that has gone from £2 million to £15 million, and £100 million for all three phases of the Paradise development was spent in the first phase. The problem is that Labour councillors cannot manage a budget.

[Robert Jenrick]

What a refreshing change it is to have my hon. Friend in the House representing Birmingham in the way he does. He is absolutely right that Birmingham City Council has a lamentable record of delivering public services. It cannot even manage the bins in Birmingham. That is why we were forced to bring independent non-executive directors into the council to monitor its performance. I want to see it improved in the years ahead, and I am sure that he will be holding it to account very robustly in this House.

Let me turn to the broader agenda that we will be pursuing in this Parliament. A new approach to funding is an important moment for local government, but this is just the beginning of our ambitions for local democracy. I want to work with councils on the overriding mission of this Government, which is to level up all parts of the country. That means, at every level of government, from Whitehall to town halls, delivering on the priorities of the British people. It means building on the success of the devolution revolution that we pursued in the last Parliament with our regional Mayors, who already cover one third of the population of England and 50% of the population of the north.

I want us to secure more devolution deals like the ones raised by the hon. Member for Harrow West (Gareth Thomas). We have already made progress since the general election in Sheffield. That deal is now, I hope, unlocked, and we will see the Mayor there assuming the full powers as soon as possible. We have also made progress with other important parts of the country, including Leeds and West Yorkshire—I sincerely hope that those deals will proceed at pace—and we are opening discussions with several other areas. Some seek the powers and responsibilities of the proven mayoral model to emulate the impact of great Mayors such as Andy Street and Ben Houchen. Others seek the greater ability to plan and to deliver strategically that comes with a combined authority or a unitary authority. We will support, encourage and incentivise each of those reforms in any part of the country that shares our determination to move forward.

[Mr Betts]

I thank the Secretary of State for giving way again. I very much welcome the Sheffield city region deal, and I want to pay credit to the previous Northern Powerhouse Minister, the right hon. Member for Rossendale and Darwen (Jake Berry), for the perseverance he showed in trying to get all the authorities in the city region together to do that deal. Does the Secretary of State agree that any powers that other mayors have must now be made available to my hon. Friend the Member for Barnsley Central (Dan Jarvis), Mayor of the Sheffield city region?

[Robert Jenrick]

I happily join the hon. Gentleman in paying tribute to my right hon. Friend the Member for Rossendale and Darwen and others in this House, including the hon. Gentleman, who have persevered with that devolution deal, which at times seemed a forlorn cause but now appears finally on course to being fully implemented. We have made it clear that we will be offering all existing mayors the full suite of powers that are available to Andy Burnham as the Mayor of Greater Manchester, with the exception of the health powers that he exercises—I think there is widespread agreement that a degree of further thought is required before we roll out those powers in other parts of the country, but we are certainly not opposed to doing so once we have given that more time and consideration.

Our English devolution White Paper will look to spread the benefits of greater control to all parts of the country, and this is the right time to do it. At the start of a new Administration and at a moment of national renewal, we must seize the opportunity to reform local government and give more powers back to the public.

Levelling up means firing up our towns through our £3.6 billion towns fund, so that they can be engines of opportunity and growth. From St Ives to Stocksbridge, towns and their local councils are engaging actively in that, using the towns fund to attract private investment and invest in transport, skills, culture and technology.

It means pulling out all the stops to deliver 1 million homes over this Parliament and nurturing places that inspire pride and a strong sense of belonging. I firmly believe that we can build the houses that our country needs—houses of all types, including more affordable homes—while also building safer, greener, more beautiful homes in communities that foster neighbourliness and a true sense of identity. We will be asking a lot of councils. We will be asking them to deliver the housing need of their communities, and in some cases, to do so without encouraging needless urban sprawl or the ruination of the countryside and a loss of the green belt. That will mean that they will have to be ambitious and to develop brownfield land aggressively, as we are seeing in some of the best parts of the country. It will mean reimagining town centres and building upwards with gentle density.

No one can abdicate responsibility for meeting the acute housing needs of our country, and some councils are already leading the way in doing that. Last week, I wrote to councils that are exceeding the housing need of their communities to thank and praise them. I hope that more councils will follow their example, and we will support and incentivise councils in the years ahead to do so.

The investment that we make today is part of a wider picture of investment to renew communities and to address the priorities of the public, which we promised to do in the general election and for which we were lent the support of millions of people across the country, and we now need to repay the trust that they placed in us. We heard about some of that investment earlier today, with the recruitment of 20,000 extra police officers over the next three years.

It also means investing over £14 billion more in our schools between now and 2022—an extra £150 million a week and the largest cash boost in a generation. It means putting more money into our buses, with an extra £220 million in our national bus strategy and £5 billion for buses, cycling and walking, which will play an important part in the lives of all our constituents. It means upgrading our local roads, backed by £28 billion of investment, and more money for potholes. It means committing to fund the Leeds-to-Manchester route as the first stop on our journey to deliver Northern Powerhouse Rail. It means committing to High Speed 2—the spine of the country’s transport network—alongside radical improvements to local transport networks all across the country. It means investing £500 million in new youth clubs and services, and creating a £250 million cultural investment fund to support local libraries, museums and social and cultural capital in our communities.

Thanks to the almost £3 billion of extra investment that we are providing, this settlement will see constituencies in every corner of England getting more money next year, while protecting taxpayers. That means more money for the most vulnerable and the key public services on which we all depend, and a sound basis on which local government can build for the future with confidence. Let us get behind this settlement and allow that good work to begin today.