Local Government Funding

Debate between Simon Hughes and Luciana Berger

Monday 6th December 2010 Commons Chamber

[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.