Local Government Finance (England)

John Bercow Excerpts

Wednesday 13th February 2013 Commons Chamber

[Several hon. Members]

rose—

[Mr Speaker]

Order. Given the extensive interest in taking part in the debate, I have imposed a time limit of seven minutes on Back-Bench contributions. That will be subject to review, depending on progress.

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[Robert Neill]

Durham is in the unitaries. I was glad to hear recognition of local authorities as among the most efficient parts of the public sector. That may have something to do with the political control of the majority of local authorities. In reality, this settlement is not just about the important level of funding for this year and next year, but about setting a course that rewards local authorities that think outside the box.

An important point to make about that is that it is slightly depressing to hear, in a number of interventions from Opposition Members, the mantra, “We are worried about the cliff edge; we need to rebuild the base.” With respect—I say this from my experience, for what it is worth, in local government and from my period as a Minister—that is a profoundly misguided approach to adopt. The world of public service delivery is changing. Simply rebuilding the base on its old basis is not the answer. The base will never be as it was before, because the way we do things will never be as it was before. We are seeking to give local authorities the flexibility in their funding arrangements to find new ways of using their budgets, not simply saying, “Let’s get back to the old levels of money and the old way of doing things.” That was the mentality that got us into this mess in the first place. On the contrary, through the initiatives announced by my hon. Friend the Minister to reward efficiency much more—I hope we can look at what more we can do in future—we are giving local authorities an incentive to work together. It is not about how much local authorities get; it is about how they use it.

To give one example, I have mentioned in the past the London borough of Tower Hamlets—that well known local authority—which, among other things, manages to spend £1.2 million on eastend life, its information newspaper, which contains restaurant reviews, the football scores and other things that are entirely germane to local council services in its area. No doubt Opposition Members will say, “Oh, what’s £1.2 million here or there?”—that is not the sort of money they are interested in—but let us contrast that with my borough of Bromley, which has never run a municipal newspaper in its life, but which, when it needs to, simply takes out an advertising wraparound with the free sheet. I can tell hon. Members that Bromley has been done: it is appointing a shared director of public health, because part of the important ongoing work on public health funding—to which the right hon. Member for Leeds Central referred—is aligning it more closely with social services and adult social care funding. That is what Bromley is doing: it is working with a Labour council next door on joint procurement of IT services. Bromley is also looking at joint working on its legal and library services.

Those are the things that sensible councils across the country are and should be doing. To sneer at that and say, “Oh, this is just ‘50 ways to insult people’” indicates a mentality that I have not seen in public life since King Charles X of France was evicted from the Tuileries by the mob in the warm-up for “Les Misérables”. At the end of the day, they have not moved on and they have lost—

[Mr Speaker]

Order. We are grateful.

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[Mr Speaker]

Order. In order to try to accommodate the remaining colleagues who wish to contribute, the time limit on Back-Bench speeches has now to be reduced, with immediate effect, to five minutes.

[Dan Rogerson (North Cornwall) (LD)]

I am very grateful to you, Mr Speaker, for calling me to speak in this debate. I had hoped to be called in the debate that was held a couple of days ago on the specific issue of rural funding, so many of my remarks will concentrate on that issue and how it affects places such as Cornwall.

It is a pleasure, in a sense, to follow the hon. Member for Denton and Reddish (Andrew Gwynne), who made a passionate plea on behalf of his constituents, as we would expect from any MP. However, I get frustrated with hearing time and again how deprivation is in urban areas; how all the indices, which have been around for some time, to pick up on the real deprivation in urban areas are the only justification for spending; and how we should be looking at this formula and the settlement, and tilting it even more towards urban areas. Those areas have, in fact, historically done much better than areas such as mine.

Cornwall is not what some people might think it to be; it is not a leafy playground full of people wandering around with huge amounts of cash in their back pocket. In reality, it is one of the most deprived parts of the country. Wages are lower than they are in most parts of the country. Even after the accession countries joined the European Union, we are still receiving structural funds to try to help our economy get out of the state it is in. The objective 1 programme existed in many other parts of the country, such as south Yorkshire, but its successor, the convergence programme, is still delivering in Cornwall. After what the Prime Minister told us on Monday, it looks as though it will continue.

Cornwall needs support and investment, but the formula is stacked against it. We often discuss sparsity, on which the hon. Member for Beverley and Holderness (Mr Stuart) has done a great deal of work. The hon. Member for Workington (Sir Tony Cunningham), the hon. Gentleman and I have worked with many other Members on both sides of the House to raise the issue with Ministers.

The funding formula is a very involved beast, but sparsity is one of the factors that has not been fairly reflected over the years. To the Minister’s credit, he has listened to us, and the Under-Secretary of State for Communities and Local Government, my right hon. Friend the Member for Bath (Mr Foster), has also looked at the issue. I hope we can make progress.

The issue is compounded by similar formulae in other areas of public spending. We are rightly looking for ways for local government and health to come together to share costs and investment in services, whether social care or health, but those formulae also clobber areas such as Cornwall. Even when the formula shows underfunding, we have the wonderful damping process, so we never get to where we should be.

I understand the reason for damping. Everybody understands that if an area is shown to be overfunded for whatever reason—population changes, for example—compared with some point previously, and another area is underfunded, we need a period of transition to get things right. What seems to have happened over the years, under the previous Government and before, is that the process never achieves what we set out to do; damping is at such a high level that we do not move in the right direction to resolve the problem.

Cornwall has done what it can to be more efficient. We adopted the unitary local government model, which was painful because there was a lot of cultural and structural change to get seven local authorities down to one, and there were job losses too, but if we had not been through that process we would have been far worse off. We have good local town and parish councils that are taking on responsibility for some services that the county council provided—the things that visitors to Cornwall expect, such as public toilets—but without much revenue.

Council tax has historically been higher in rural areas, while there is also an additional element levied by local councils. In areas such as mine, we have low wages, historically high council tax in some parts—

[Mr Speaker]

Order. I appreciate that the hon. Gentleman is happy to be speaking, but a number of Members have withdrawn from the debate, so I am putting the limit up again. The hon. Gentleman has a couple more minutes if he wants them. He is not obliged to use them, but he can if he wants.

[Dan Rogerson]

I hope my contribution did not put off so many Members that they left the Chamber, Mr Speaker.

Local councils will face pressures too, so we need to look at the amount they add to council tax. There are particular pressures on rural areas, as the Government acknowledged in their consultation last summer, but although they looked as though they were moving in the right direction we have yet to see the fruits of that labour.

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[Catherine McKinnell]

The Minister is well aware that he is talking at cross purposes with what I am setting out, which is the impact over the next three years, not in the next financial year. I hesitate in case it is out of order to say that it is very disingenuous for the Government to present these figures in a way that does not match up—

[Mr Speaker]

Order. The hon. Lady should not attribute an unworthy motive to the Minister. Therefore I feel sure that through her dextrous use of language she can find another word to make her point.

[Catherine McKinnell]

Thank you, Mr Speaker, for keeping me in order. There is clearly a difference of opinion about the impact of the cut and the period we are talking about.

Yes, Newcastle still has spending power per household of £2,522, which is over £700 more than the £1,814 per household in Wokingham, but Newcastle is more deprived and has higher needs. Newcastle has 550 looked-after children, compared with 70 in Wokingham. That is 101 looked-after children per 10,000 children in Newcastle and 20 per 10,000 in Wokingham. Newcastle has nine times the cost of statutory concessionary travel owing to high numbers of poorer pensioners travelling in the city, and Newcastle has fewer people able to fund their own social care, greater homelessness needs, higher council tax support needs and a lower council tax base.

I am sure many of my hon. Friends have already highlighted similar differences between the settlement in their authority and those in other—predominantly Conservative—local authorities, which are not seeing the same level of spending cuts. Local authorities are having to slash front-line jobs and close Sure Start centres, libraries and many other vital services as a result of these unfair and disproportionate cuts.

I must return to a point I raised with the Deputy Prime Minister yesterday regarding some Liberal Democrats in Newcastle who are campaigning against the impact of the cuts. Once again, I would extend a welcome to any Liberal Democrat MPs who want to join us in the Lobby tonight and vote against this unfair settlement. Otherwise, they have no place campaigning against the impact that will result if it goes through.

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Question agreed to.

[Mr Speaker]

I have to announce a correction to the result of the deferred Division on the draft Universal Credit (Transitional Provisions) Regulations 2013. The Ayes were not, as previously stated, 284, but 280. The Noes were 190s, so the Ayes have it.