Simon Hughes
Main Page: Simon Hughes (Liberal Democrat - Bermondsey and Old Southwark)(13 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text
Caroline Flint
I do, and whether in local government, education or health, it is the poorest and vulnerable who are being hit the hardest, as well as those hard-working families who pay their way, but who also depend on local services to provide for themselves and their families. They do not ask for much from the Government, but they ask for them to be on their side—to make sure that work pays and that they can look after their families—and this Government are not providing that security. The whole House knows why that has happened—why local councils will lose almost one third of their funding over the next four years.
Simon Hughes (Bermondsey and Old Southwark) (LD)
A debate about local government is welcome, because local government and its financing are important, but as the right hon. Lady launches her attack on the Government, as she is entitled to do, will she make her position clear,? Did not her Government, when in office, say that there would be a £52 billion cut in public services? How much of that would have fallen on local government? Was the decision to end the working neighbourhoods fund and to cut regeneration funding not taken in March by her Government’s Chancellor of the Exchequer, when he was in office?
Caroline Flint
On the working neighbourhoods fund, I am afraid that the hon. Gentleman has fallen into his Tory coalition partners’ trap. The Tories say, and he repeats the claim, that we planned to scrap the working neighbourhoods fund and had already cut money from it. In the March Budget we did announce savings, including £300 million through rationalising the regional development agencies, but we clearly distinguished between those programmes that were not a priority and would therefore be scrapped and those, including the working neighbourhoods fund, to which we were committed but would look to find savings in. It was a three-year programme in which, in November 2009—[Hon. Members: “Three years.”]. Three years’ funding is more than the one year that we used to have under Tory Governments, and more than the non-existent funding that poorer communities had under the Tory Government from 1979 to 1997.
Indeed, in November 2009 we announced a £40 million boost to the fund, worth £1.5 billion from 2008-09 to 2009-10. Of course, we had to look at programmes, but there is no evidence whatever to suggest that we would have scrapped the working neighbourhoods fund. That is not the case.
Mr Pickles
In a moment.
The financial mess that the coalition has inherited is not just because of big banks; it is because of the irresponsible behaviour of big Government.
Simon Hughes
I sincerely hope that all Members, on both sides of the House, realise that local government must do its share of reducing expenditure to deal with the public debt and deficit that we inherited. Will the Secretary of State give me one explanation and one assurance? Will he explain why the comprehensive spending review’s four-year plan set out a greater reduction in the budget in years 1 and 2 than in year 3? Will he reassure me that, as I think Ministers have heard when we have come to see him in the Department, the whole of this year’s funding settlement for local government is being taken into account when the assessment of the reduction is made, not just the direct core funding provided by the grant from central Government?
Mr Pickles
My hon. Friend raises a very important point. The rules are different when sums are being reduced, rather than increased, so it is massively important that we examine all the finance available to local authorities and the gap in spending. I am going to address that most carefully, as I shall do for the precise phasing of the amounts. It is sensible to see these sums taken out at the beginning of the period, because the only way in which local government can approach a 26% reduction is not to salami-slice here and there, but to restructure, share services and the like. If it is going to do that, it had best get on with it.
Simon Hughes (Bermondsey and Old Southwark) (LD)
I am pleased to have this opportunity to speak in a debate on local government. As I said in an intervention on the shadow Secretary of State, local government is very important, as is funding local government properly, and I think it is perfectly proper for the Labour Opposition to choose the funding settlement for local government as the general subject for an Opposition-day debate. The title of the debate is therefore entirely appropriate; we should debate the distribution of local government funding and the effects of changes to it.
The only real matter of dispute that I have with the right hon. Lady and her colleagues is that many of them are making comments today as if the settlement had been announced, when instead we are, I hope, using our last chance to tell Ministers what we would like to happen. A whole succession of colleagues on the Labour Back Benches have reeled off figures as if they were the final settlement, and one has complained that one of his councils has not finally decided what cuts it should make. The hon. Member for Denton and Reddish (Andrew Gwynne) complained that Stockport council has not finalised that. My hon. Friend the Member for Cheadle (Mark Hunter) used to be the leader of Stockport council. Those of us who know that council, and many other councils, well understand that it has not yet finalised its budget—and neither has my local authority, which happens to be run by Labour, whereas Stockport is run by Liberal Democrats. They are waiting—
Simon Hughes
No, the hon. Lady entered the Chamber only a few minutes ago and has already intervened twice, and I want to deal with the contributions that have been made.
Most councils wait until the provisional settlement, which will be announced next week, after which they make representations if they feel it is not fair or appropriate, and then there is a final settlement. Of course there is planning for a budget, but today’s debate is an opportunity for us not to be doom-mongers about decisions that have not been taken, but to make sure we put cases and arguments publicly, that some of us have been making to Ministers and colleagues privately, as to what we believe will be the best possible settlement in the difficult financial circumstances of the time.
Barbara Keeley (Worsley and Eccles South) (Lab)
As the hon. Gentleman is accusing the Opposition of saying things in a particular way, we must be clear that local councils have been pleading with Department for Communities and Local Government Ministers for a steer on this because of the unprecedented level of cuts. The comprehensive spending review clearly shows front loading, yet the Secretary of State today still calls that fiction and will still not answer questions. Does the hon. Gentleman not agree that it is right that when councils ask for a steer they should be given a steer, yet we are still not getting a single answer from Ministers?
Simon Hughes
Of course councils make representations both collectively and singly and, understandably, once councils of all parties, including those run by Liberal Democrats, heard the announcement of the CSR in October, they told the Government that they thought the front loading of the four-year settlement was not as desirable as a more evenly spread reduction. I share that view. I intervened on the Secretary of State asking him if there was an opportunity to have a flatter reduction over the four years. He did not give a final answer because, of course, that is a decision that will be left until the formal announcement, but he indicated—I agree it was not definitive—
Simon Hughes
Wait a minute; I want to deal with the question from the right hon. Lady’s colleague first.
The Secretary of State indicated that he was understanding of that point, and it is clear that the Government have done work to see if they can mitigate the effects of a more severe front loading. I, like others, will wait to see the outcome of that. I hope it will be possible to mitigate the effects. If it is, that will be a major achievement; if it is not, it is to be regretted. However, there are many good things about the settlement so far that was announced in the CSR, as there are also some proper concerns, one of which the hon. Member for Worsley and Eccles South (Barbara Keeley) rightly enumerated.
Caroline Flint
Part of the reason that the Opposition decided to use a whole day of Opposition time to debate this subject is that we think we should lobby and pressure the Government on it. I must ask the hon. Gentleman something. Would it not have been better if, instead of having the formula grant profile announced in the comprehensive spending review show a decrease next year of 10.7%, and then reductions of 6.4, 0.9 and 5.6% for the following three years, the Government could have spread the cuts evenly over that four-year period? They have created completely unnecessary mayhem and fear out there.
Simon Hughes
I say clearly to the right hon. Lady that, as I have indicated, I have argued publicly and privately that it would be better for the spending reduction to be spread more evenly. I have been into the Department to make that case. A parliamentary committee of Liberal Democrats from both Houses has collectively made that case, and it includes people who have been leaders of local councils. I understand and share the view that it would clearly be easier for local government to manage a gradual reduction than sudden and bigger reductions in the first two years, a small reduction in the third year and then an intermediate reduction. There is no disagreement on this issue between the right hon. Lady and me, and there is not much disagreement between councils of all colours around the country, which are making that point to the Government. I hope that the Government and Ministers in the Department for Communities and Local Government have been able to make some progress on that point, given that they obviously have to start with an announcement made by the Chancellor which reduces their flexibility—we will doubtless hear when the settlements are made.
Joan Ruddock
I do not know where the hon. Gentleman’s local authority lies in the indices of multiple deprivation, but mine is the 39th most deprived in the country. I say to him that there is a need for him to advise the Government on how to create fairness between boroughs such as ours and the Prime Minister’s local authority, which has been cited and is in the 5% least deprived areas in the whole country.
Simon Hughes
The right hon. Lady would expect me to be sympathetic to that point and I have acted in the past few weeks on that very issue. I have been in to see Ministers; I went to see the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Hazel Grove (Andrew Stunell), and civil servants to discuss exactly that issue. I believe that it would be wrong if all the funding currently given to councils, including the working neighbourhoods fund, which was a top-up in order to assist deprived communities, was not taken into account as the starting point for the calculation for the next grant. I have also argued that it would be inappropriate for there to be a greater decrease in percentile terms for authorities such as hers and mine, which have significant deprivation, than for smaller authorities, just because we happen to have had a larger amount of public money before. I have been given reassurance that an upper and lower percentage reduction will be common across all local government—a band above and below which the reduction cannot happen—and that there is a likely inclusion of at least some, although I hope all, of the other funding, not just the core formula grant.
I understand the point that the right hon. Lady makes, and she would expect me to go into bat for deprived communities, because I represent a borough that has a higher deprivation index than the next-door borough of Lewisham—I believe that is the case. Relative deprivation is not a competition we are proud of, but this is something we have to deal with. Of course one of the things that we have to do is try to get a fair settlement that reflects the needs of and deprivation in all the local authorities in that settlement. Again, I can tell her that I have been doing the job that she, my constituents and my local authority, although it is run by Labour, would expect me to do, just as I would have done when my local authority was run by my colleagues.
Simon Hughes
I will not give way, as the hon. Gentleman has intervened several times in this debate and I want to press on.
It is not just local government that is important; I want to pay tribute to councillors, of all parties, who serve in local government and to many extremely good officers in local government. It contains some brilliant officers, some less brilliant ones and, as in any walk of life, some people who may not be in their right vocation. Southwark council has some excellent officers, and I pay tribute to them and thank them for their courteous and regularly helpful service.
We know the background to today’s debate: we have to deal with a huge economic legacy of the combination of international problems, the banking crisis and the previous Government’s policies. We know that we have to save public money and we know that local government has to bear its share. I note that the Department for Communities and Local Government has imposed on itself a larger percentage reduction in its funding than it is asking local government to bear.
There will also be good things in the settlement, according to the comprehensive spending review. For example, it is clear that there will be additional money— £1 billion a year—for personal social services, in order to deal with the fact that there are more older people and people are living longer. That is a good thing. There will also be far fewer ring-fenced grants—90 will reduce to 10—and that is a good thing for most local councillors, who want to have that choice. In addition, a set of local community budgets will be trialled around the country. We should be positive about those good things.
The Government have to take two other things into account. The first is that some councils have much more reserve than others. The second is that some councils have the ability to raise much more money through council tax than others, because they serve much richer communities. Those background considerations are absolutely relevant.
Mr Marsden
On that specific point about revenue-raising ability, does the hon. Gentleman agree that this is why, regardless of philosophical arguments about dedicated streams, the severe attack on area-based grants for councils with significant areas of deprivation has been so devastating?
Simon Hughes
That is why a debate has taken place in which some of us have been trying to discuss a formula that is fair. Some bits of funding that are nothing to do with the local government funding settlement will still go to “affluent” and to “less affluent” areas. Such funding cannot be affected by it, which means that those areas will continue to get public money because it is protected in other ways.
I hope—I was going to say this at the end of my speech, but I will say it now—that one of the things that this Government can achieve, given that they are already a Government of two parties, is to work with the Labour party to try to get a more settled, agreed formula for distributing money to local government. Of course the cake size will vary, but the way in which it is divided between county and district council, and between unitary authorities, metropolitan boroughs and London boroughs, is always the subject of terrible struggle every year and has never been entirely satisfactory. This is neither coalition policy, nor Liberal Democrat policy, but I see no reason, given that we have set up an Office for Budget Responsibility to give independent advice, why we could not have an office that does that sort of job for local government and seeks to offer independent advice as to what the formulae should be. That would take that issue out of the inevitable political bartering, which does not, in the end, necessarily produce the right answer. This involves a terribly complex set of issues and I hope that we can find a better way of doing it.
I wish to make a final generic point and then say a couple of specific things relating to today’s agenda. I know that the Government have met and heard from the Local Government Association and London Councils, which are both cross-party bodies. I shall put on the record the LGA’s five considerations, which I share. I have dealt with one, which is the desire for a reduction, if possible, of the impact of front loading. My right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith) has touched on another, which is the desire for an increase in capitalisation limits.
I raised that issue with Ministers the other day. The Government have set aside £200 million to pay for potential redundancy in local government. I understand exactly what the Secretary of State said, which was that we hope that many of the job losses will come through natural wastage and other things, not enforced redundancy. My noble Friend Lord Shipley managed well a reduction in staff when he was a council leader in Newcastle, working with the unions, in a way that mitigated all the worst consequences—that is how it should be done. There are good models for doing that, and they are very much supported by the TUC and its member unions. I have had good and authoritative reports that the real figure is much more like the one that the right hon. Member for Don Valley (Caroline Flint) and I have used and, thus, the total bill may be nearer £2 billion, or thereabouts, than £200 million—that clearly needs to be addressed. It is no good our thinking that local authorities can necessarily find the money that they will need if they are to reduce their staff costs.
Sir Alan Beith
It is perhaps worth reiterating that some authorities could meet a larger proportion of the redundancy requirement out of reserves and that others, through no fault of their own, are not in that position—I mention Northumberland as an example.
Simon Hughes
I remember—my right hon. Friend alluded to this fact—that the situation in Northumberland, which went through an enforced change in its local authority nature, boundaries and so on, was more difficult. Others are in difficult situations, too.
The LGA’s third point concerns accounting for what it calls “missing grants”. There is uncertainty about more than £1.1 billion of specific grants on which councils rely and where the Government have yet to announce future funding levels. I do not know whether the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), can tell us when he winds up whether those announcements can be made at the same time. The sooner they can be made the better.
The fourth point concerns fees and charges that are set centrally, such as licensing fees, which have often been shown to be inadequate in covering the full cost of the related services and I ask the Government to deal with that across Government. There are many sub-issues with fees and charges. I hope, for example, we stop the nonsense of having differential fees for burials depending on which side of a boundary one lives—[Interruption.] This is a serious point. People who happen to have moved across a boundary, having lived all their life in one authority, find they have to pay, say, 10 times as much to have their late husband or wife buried. Those things are offensive nonsense and we need to deal with them.
The last point is that we need fair grant distribution. That is where I make the strongest plea, alongside the right hon. Member for Don Valley. We must ensure that all the funds that have come from Government to local government this year are the starting point for the calculation for the next year. I have been reassured that things are moving in that direction and I want them to move completely in that direction over the next few days.
London Councils makes similar points. Southwark, like Lewisham, is a borough that has had the protection of a floor and cap, as many authorities have had to. Southwark, like London Councils, argues that funding floors should be set at the highest possible level to prevent cuts falling disproportionately on the local authorities with the highest need. That is important. Those points have been made, by and large but not exclusively, by authorities that are not Conservative-run, but authorities run by the Tories are in that boat, too, as well as authorities where there is a joint administration.
Let me make a final couple of points. Also included should be any other local authority funding that has been cut, if for understandable reasons. For example, in Southwark there was the Aylesbury private finance initiative for our largest estate, which was due to be rebuilt. Because that work had not started, the Government have said that they cannot advance the money. I understand that argument, but it needs to be taken into account as part of the picture. I make a specific plea on that point.
I am conscious that the Government will go down the road of returning business rate control to local government. That is a good thing. I am very conscious that in the localism Bill, which I think is coming into the public domain this week, the Government will give much more discretion to local government on how it raises and spends its money. That is a very good thing. I have always argued that the Department that looks after local government should stand up to the Treasury so that local councils can have the power of general competence, including total general financial competence. For example, they can then borrow against their asset base—their housing stock in the case of Southwark—without having to go to the Government cap in hand to get permission. The Treasury’s hand has been unnecessarily authoritative. I understand why, but in any other parts of the world local council spend does not count in the same way and in the same accountancy column towards public sector borrowing requirement totals.
I have a couple of messages to give local councils through the Government. Again, I shall reflect some things that have already been said. Councils must be careful not to pick on the voluntary sector when times are hard for them. It is easy to do that. It is easy suddenly to decide to take all or the bulk of the money away from organisations that are not in-house. Sometimes, councils must reduce their own management and costs. That might be a more effective way of dealing with reductions than taking money away from the voluntary sector, where local authority funding contributes towards a larger whole. I hope that there will not be any such abuse of the relationship. Voluntary sector organisations are often valuable partners and they need to be given as much support and encouragement as possible.
Siobhain McDonagh (Mitcham and Morden) (Lab)
I agree with the hon. Gentleman, but does he not think that that is the basis of the debate? If the cuts are early and quick—if they have to be decided in three months—people will go for the easy options rather than the restructuring, because the restructuring will take longer to come into effect. Cutting a voluntary sector budget is almost immediate.
Simon Hughes
I will not dissent from that. I am trying to act in a spirit of consensus and I hope that we will be careful. To put it bluntly, there are both good and poor voluntary sector organisations and although I am not saying that they should not have their grants checked and revisited regularly, the good ones need protection. There is sometimes scope for rationalisation in the voluntary sector. In Southwark, the three pensioners’ organisations are becoming one. That should have happened a long time ago—I argued for it—and it will make them a stronger body. I also make a plea that non-statutory youth services should be particularly protected. Colleagues on both sides of the House have argued for that.
Local government must get the message that it should not be paying anybody more than the Prime Minister. It is very simple. Salaries have been ridiculous and unjustified. It has been everybody, and it is not the fault of a council of any particular colour. They have been following each other into this competitive game. To put it bluntly, nobody in the public sector needs to earn more than about £150,000 a year. I am sorry, but I have a really hard-line view about this. We need to start to scale down the ridiculous salaries. If the public sector behaved properly, perhaps we would have some morality in going to the private sector to say that it should not pay such ridiculous salaries either.
Times might be hard, but I ask local government please not to sell off the family silver, which it might live to regret. I am having a local spat with my local council leader because Southwark council has decided that it wants to sell off the three historic metropolitan borough town halls. That is unnecessary. The buildings could be reconfigured and kept in use and they would be far better places and venues that would be far more valuable than the alternatives that have been mentioned.
I have followed the example of the hon. Member for Blackpool South (Mr Marsden) in being positive about trying to find a way of doing things much better in the future. We need common agreement on how to decide the formula. I hope that we will minimise redundancies in all cases, because nobody wants any more redundancies than there should be. I hope that when we get the settlement—probably next week—there will be the maximum collaboration between the major parties to try to ensure that where there is still unfairness, we seek to persuade the Government to make adjustments between the provisional settlement and the final settlement so that the latter is better. This will not be an easy time for local government—no one is pretending that—but I hope that today’s debate will mitigate that and that we can all encourage Ministers in the Department to ensure that they win as far as possible every remaining battle they have to fight with the Treasury.
Steve Rotheram
I shall be interested to see whether the hon. Gentleman will allow me to intervene, as I have allowed him to do.
Liverpool city council has established that the in-year cuts announced by the Government in May will have a more than £20 million impact in its ongoing annual reductions. Almost half of this will come from the 2010-11 area-based grant programme, the very programme designed to support deprived communities according to their needs. Funding for a programme to reduce health inequalities by reducing smoking will be cut by 48%. The local enterprise growth initiative, which the hon. Member for Bermondsey and Old Southwark (Simon Hughes) spoke about, focuses on increasing entrepreneurial activity. It will lose 14% of its moneys.
The transitional employment programme, which supports the long-term unemployed back into employability and employment, will see a 13% cut in its funding. The working neighbourhood fund, which has been mentioned by other speakers, was introduced under the previous Government to tackle worklessness in deprived areas. It has been done away with altogether, depriving the city of £3.5 million this year alone; and another £3.5 million of cuts have been made in area-based grants which directly affect children and young people.
The Government have been consistently slick in their assurances that the delivery of key services need not be adversely impacted, that the vulnerable will be protected, and that the Government are serious about job creation, tackling the skills deficit and getting people back to work. That is starting to sound like a load of old guff.
Simon Hughes
The hon. Gentleman’s city, Liverpool, is a fantastic city. Whatever our differences, our two parties have run it over the years and they have both contributed to it being the great city that it is. I am not speaking for the Government, but I know that they are keen to try to pull together all the effects of spending changes from all Departments as they affect a city or a region, so that none ends up with an unfair or unnecessarily severe burden. That is a tall order. It has never been done before, but the Government are trying to do it, and I hope that people such as the hon. Gentleman and I will work together with the Government to ensure a fairer spread of funding decisions across the—
Madam Deputy Speaker
Order. The hon. Gentleman knows that interventions should be brief. It is not his role to mediate—not in the Chamber, at any rate.
John Woodcock
My hon. Friend makes a very good point. His remarks illustrate that, with the top slicing of the formula grant and if the cuts are front-loaded—the Minister is welcome to make the announcement about that today and end the speculation—it will pretty much guarantee that the most deprived areas of the country, which most rely on extra support, will bear the greatest burden of the cuts.
Simon Hughes
On the voluntary sector grant, if the hon. Gentleman looks at the record, he will see that I did not say that such a situation would be outrageous. I was simply asking councils to be careful not to turn all the heat on to the voluntary sector, rather than looking first at themselves.
John Woodcock
The hon. Gentleman is quite right. I was actually paraphrasing the Secretary of State, who I believe said that local authorities would rue the day that they cut voluntary sector grants. I am sure that they will be delighted to hear how they should be balancing their books, given that the cuts are being front loaded so that a great proportion will fall in the next year.
According to the SIGOMA model, Barrow borough council, which covers the majority of my constituency, will receive a proportional cut in funding in the next financial year that will be exceeded by the cut in funding to only two other local authorities. Despite being in the top 30 most deprived council areas, according to the 2007 indices of multiple deprivation—and if the modelling is even close to accurate— Barrow borough council can expect to lose around 20% or up to 25% of its central Government funding next year. Relatively wealthier local authorities will have levels of cuts imposed that are far less than those that might be inflicted on Barrow borough council.
Although this is an Opposition day debate and many Labour Members have spoken with great passion about the huge damage that could be wrought on their constituencies, Government Members should be clear that this is not simply a partisan issue. Councillors from all parties are concerned about the potential cuts. I hope that the Minister is aware of a letter from the Conservative leader of Barrow borough council—perhaps he will confirm whether he has received it—who I think has written to him or to the Secretary of State to express his concern at the disproportionate cuts that will hit Barrow severely if what is proposed is followed through next week.
Andrew Percy
I am not sure how I am supposed to respond to that intervention, but I suspect that it has served its purpose. However, the hon. Gentleman’s Front Benchers have told us absolutely nothing about what they intend to do. They cannot have a serious debate on any subject regarding public spending unless they come forward and say what they would do. All we know is that their plan is to protect local services. Is that still the case? If so, something else would have to be cut: is it to be schools or the health service? They have no credibility. It may get them a few cheap headlines, but it will do nothing to contribute to the debate about how we tackle the very serious deficit which this country faces.
Simon Hughes
It was unfair for the hon. Gentleman to be asked a question about what I said, so I had better give him the answer, which lies in something that he said earlier. He will know from his city council experience that when one is not running the show oneself, one has to work with others—by definition, one cannot get all one’s own way. That is fairly obvious.
Andrew Percy
Absolutely. That is what we should be doing on an issue as important as this. We should all be working together on the whole way that local government is structured to try to change it for the better.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I am grateful for the opportunity to speak in this very important debate. I will echo many of the sentiments of my hon. Friends and of many council leaders of all political persuasions up and down the country.
The speed, depth, spread and front-loading of the Government’s cuts to local government funding are unfair and unjustifiable. The devastating impact that they will have on the most deprived communities in our country, including many in my constituency, demonstrates that the coalition’s pledge to
“ensure fairness is at the heart”
of its decisions is as phoney as the Liberal Democrats’ pledge not to increase tuition fees.
The Government are using the deficit as an excuse to pursue their ideological aim of shrinking the state and destroying public services on which ordinary people rely. The Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), certainly got it right when he said in the House on 10 June:
“Those in greatest need ultimately bear the burden of paying off the debt”.—[Official Report, 10 June 2010; Vol. 511, c. 450.]
The Government are balancing the budget on the backs of the poorest in our society, something that the Chancellor said he would never do.
In October’s spending review, the Chancellor announced cuts to local council funding of £5.6 billion. Although that in itself might seem like a shocking figure to anyone listening to the debate, the biggest scandal of those cuts is in the detail. DCLG figures show that far from the cuts hitting all communities across the UK equally, some councils will not see cuts to their budgets. In fact, they will get an increase in funding.
Over the next four years, the worst-hit councils will be in some of the most deprived cities and communities in the country. Hastings, Burnley, Blackburn, Hull and Barrow, and Liverpool city council which covers my constituency, are all in the most deprived 10% of councils in the country, and those councils will have their funding cut by at least a quarter, some by as much as a third. That, as we learn from the figures available from the Library, is while two of the least deprived councils in the country, West Oxfordshire and South Cambridgeshire, will have an increase in funding of up to 37%.
It cannot be a coincidence that every single council forecast to see an increase in its funding of between 27% and 34% is Conservative-controlled—and that at a time when my constituents are learning that Liverpool city council estimates that the city will be hit with £1 billion of cuts over the next four years. I repeat that figure: £1 billion. It simply is not fair. That follows the 9% cut to our area-based grant that Liverpool sustained earlier this year, before the Budget—the largest of any core city across the UK.
My hon. Friend the Member for Liverpool, Walton (Steve Rotheram) articulately outlined the raft of cuts that Liverpool will sustain, which are in the process of being instigated. The truth is that we are not all in this together. The Government have a plan for unfair cuts that will support areas where it is electorally beneficial and hit those where it is not.
The Chancellor would have us believe that after the Government have cut back the state, making thousands redundant, the private sector will be there to move in and clean up the mess. If only it were that simple. The Government underestimate the relationship between the public and private sector. Far from increasing private sector demand, cuts to local government will damage small and medium-sized enterprises that rely on local authority contracts. Some £20 billion of the local government procurement market goes to SMEs, and the Federation of Small Businesses has stated that many small firms rely on public sector contracts for 50% to 60% of their turnover.
In addition, the cuts will reduce consumer demand. In some parts of Merseyside, 60% of the work force rely on the public sector for their income. For every £1 that a local government worker earns in Liverpool, they spend 70p in the local economy. When public sector wages are taken out of our local economy, we will see local businesses close, a spiralling welfare bill and public services under strain because of underfunding. It is bad economics and bad government. The Government are hitting the poorest hardest and tearing the fabric of our society. What this country desperately needs is jobs and growth, and what the Government have chosen to do will lead to misery and despair for people right across the UK, particularly my constituents.
Simon Hughes
I was perplexed when the hon. Lady said that the Library had stated what the outcome of the review was. I have just read the Library note again. She is entitled to her express her concerns, but she cannot suggest that the decisions have been made when we have not had the announcement yet. We have not even had the provisional announcement. Please will she just back off from all this shroud-waving stuff?
Luciana Berger
The figures have been arrived at from the comprehensive spending review, which is freely available to everyone in the House.