Local Government Funding: North-East

Sharon Hodgson Excerpts

Tuesday 1st March 2016 Westminster Hall

[Jenny Chapman]

It is shameful.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

Indefensible.

--- Later in debate ---

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

I congratulate my hon. Friend the Member for Darlington (Jenny Chapman) on securing this important debate. She made an outstanding speech and has given her parliamentary colleagues from throughout the region the opportunity to make the case for our local authorities, which have been hardest hit by the Conservative Government’s spending cuts. She has also given us the chance to lobby the Minister and perhaps bring about the same outcome that we have heard was achieved by the Minister’s Conservative colleagues in Northumberland. If we can secure the same outcome as they did, this will have been a very productive debate indeed. I will not hold my breath, though.

The Prime Minister’s intentions for the north-east are well documented, going well back before the 2010 general election.

[Helen Goodman (Bishop Auckland) (Lab)]

Does my hon. Friend agree that one of the questions the Minister must answer is why none of Durham, Darlington, Hartlepool, Stockton, Sunderland or Newcastle benefited from any of the Government’s rural funding? My constituency covers 300 sq km and the neighbouring constituency in Durham is the same size, yet we got none of the extra rural funding. Given the levels of deprivation, we would like an explanation of why that is the case.

[Mrs Hodgson]

I hope the Minister will explain. Perhaps the special circumstances are that, unlike Durham, Northumberland has two Conservative MPs. The unfairness speaks for itself.

[Alex Cunningham]

I do not know whether my hon. Friend is correct in assuming that it is something to do with Tory MPs. We have a Tory MP in Stockton—the Under-Secretary of State for Communities and Local Government, the hon. Member for Stockton South (James Wharton)—and we got nothing.

[Mrs Hodgson]

That says more about that Minister. His lobbying was obviously not as successful as that of his colleagues in Northumberland.

The Prime Minister is on the record saying, in an interview with Jeremy Paxman before the 2010 election, that the north-east and Northern Ireland are the two areas where his planned public sector cuts would have the greatest impact. True to his word, when he walked into Downing Street in 2010, propped up by the Liberal Democrats, he began implementing some of the deepest and most devastating cuts our region has ever seen. I would hazard that they are even worse than the cuts under Margaret Thatcher, which I never would have thought possible.

Here we are again: councils in some of the poorest parts of the country are having to cut services back to the bare bones. The fat went long ago. In most of our region, especially the coalfield communities, some of which I represent, there was for many years trepidation about what the Conservatives would do if they were ever in power again. It is with no surprise or pleasure that we gather here to point out that the Government have truly lived up to those dire expectations. After six years of belt-tightening, Opposition Members listened with disbelief as the Secretary of State for Communities and Local Government stood at the Dispatch Box last month and announced a local government settlement of £300 million of transitional funding, 85% of which will benefit Tory councils that have not faced anywhere near the funding cuts meted out to Labour councils. Labour councils are expected to tighten further and add a few notches to an already worn-out belt. If that were not already impossible, it certainly is now.

Not a penny of the funding that was announced is directed at the majority of councils in the north-east, where unemployment is the highest in the country at 8.1% and poverty remains a persistent issue. Some of the poorest communities in the country are paying for 36% of the Government’s austerity measures. Social care is a burgeoning issue for many of them, especially given that the people who use social care will bear 13% of the cuts.

Tomorrow, my local council, Sunderland, will pass its budget for the 2016-17 financial year. It must find £46 million of savings this year and a total of £110 million by the end of this Parliament, on top of the £207 million that it had to find during the last Parliament. That means that the council has a total of £290 million to spend by 2020, compared with the £607 million it had in 2010, before the Conservatives came to power in 2010. That is less than 50% of its pre-2010 budget. That is not trimming, belt-tightening or streamlining; it is an attack—a full-scale assault. So much for the rhetoric of a northern powerhouse. Northern poorhouse, more like.

Of the £290 million of spending power that Sunderland has left, £182 million is reserved for statutory adult social care and children’s services. The remaining £108 million will have to pay for all other services, including waste collection and disposal, libraries, museums, housing, business investment, and sport and leisure. Those wide-ranging services need proper investment to be suitable for public access, but with such a small budget for those services, it is obvious that the council will struggle to maintain the high standard that our local communities deserve and expect.

Significant cuts will also have to be found within the needs-based funding elements, including children’s services. An 8% per annum cut is expected in the early intervention budget on top of the 50% cut to early intervention services since 2010. Children’s services and early intervention are such important areas. If funded correctly, they can mitigate greater costs further down the line by preventing children from becoming adults with multiple issues. The Government’s policy is so short-sighted.

No doubt the Minister will talk about devolving the collection of local business rates. Labour supports that policy in principle, but in practice it will further ingrain unfairness into an already unfair system. He may also talk about the 2% increase in council tax to fund social care as a means for councils to bring in additional funding. For low-tax councils such as Sunderland, such measures will not bring in the funding they require to continue to provide the local services that we rely on. It is estimated that the 2% for social care will bring in only £1.5 million for Sunderland, but our local social care demands are approximately £3 million. Where does the Minister think the additional funding should be found? This is one of the greatest public policy crises that we face in this country. For Sunderland, the prognosis remains bleak for the near future. There is no respite or support on the horizon from the Government.

[Catherine McKinnell]

My hon. Friend is making a powerful speech about the ingrained inequalities, which the Government’s policies will deepen. Is she aware that Newcastle City Council estimates that the 2% council tax precept will raise £1.4 million a year, whereas it faces a spending shortfall of £15 million? It is a simple mathematical calculation, and it does not add up.

[Mrs Hodgson]

I often wonder whether the Government’s calculators and experts stop functioning when it comes to some of these numbers. They seem to have dyscalculia—numerical dyslexia—when working out the sums for the north-east, but they are not troubled by it when working out the sums for the rest of the country.

[Ian Mearns (Gateshead) (Lab)]

I apologise for being late, Sir David. I have been chairing the Backbench Business Committee. The 2% rise for social care will raise about £1.4 million in my authority, yet of the £300 million cuts mitigation fund that the Secretary of State established, £300,000 is going to the north-east of England, all of which is going to Northumberland. Some £114 million is going to eight shire counties surrounding London, all of which are Conservative-controlled. No formula can explain the rationale for that.

[Mrs Hodgson]

The only rationale is political bias. That is what we are trying to highlight. It is obvious what has gone on; the figures speak for themselves. The Secretary of State’s brazen audacity in outlining the cuts at the Dispatch Box last month and the brass-necked nature of that announcement beggar belief. It shows how little the Government care. He knew that it would be seen through, but it did not bother him.

We have heard time and time again about the deep unfairness of the Government’s financing of local authorities in the north-east and other unitary councils across the country, but Ministers still do not understand the impact it will have on the most vulnerable in our communities. It cannot be ignored any longer. I hope that the Minister will heed our words. We are a strong, collective voice from the north-east arguing for fairer funding. I hope he will assure hon. Members present that he will take our concerns back to his Department and the Secretary of State to ensure that he reconsiders the devastating, short-sighted decisions of his Department on our region. I am sure that the Secretary of State will understand—as we have heard, he is a local lad from Middlesbrough. If he does not get it, what hope have we got? The Eton boys in Downing Street never will.