Local Government Finance

Stephen Williams Excerpts

Tuesday 10th February 2015 Commons Chamber

[The Parliamentary Under-Secretary of State for Communities and Local Government (Stephen Williams)]

We have had 13 Back-Bench contributions to the debate. Most of them have been thoughtful and reasonable, with Members standing up for their constituents, as our electors would expect. We have heard a lot about different areas, including the reinterment of Richard III in Leicester and the lollipop people, if I may put it that way, in Birmingham. We heard about cities and counties. The speech I found most enjoyable was that of the hon. Member for Birmingham, Edgbaston (Ms Stuart), who addressed not only the history of her great city, but the future vision. There may be a face-off between her and my hon. Friend the Member for Beverley and Holderness (Mr Stuart) as to who can milk the cow most productively. As someone who grew up in a Welsh village surrounded by sheep, I will not offer any rural contribution.

What we heard from the Opposition Benches was long on what problems there are and how awful the position is, but had very little recognition of the fact that one of the reasons for the current difficulties is the situation that we inherited in 2010. A couple of Members looked through that rear-view mirror and were in almost complete denial about that legacy. That might have been understandable in 2011 or 2012, but at this point in the political cycle, 90 days before the country goes to the polls, we expected to hear more of the vision that the hon. Member for Birmingham, Edgbaston spoke about—the solutions to funding local government in the future.

Thanks to this Government’s policies of stabilising the economy, getting the public finances under control and rebalancing the economy, we are now seeing a better future for this country. Local government, like every part of the public sector, has made a significant contribution to getting to where we are. As my right hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) said, councillors from all parties should be congratulated on that. The Government continue to need to make difficult decisions to put the public finances on to a sustainable path. In that context, it is inevitable that councils, which account for a quarter of all public spending—this year they will spend about £115 billion-worth of taxpayers’ money—will have to operate with reduced budgets.

Let me assure the House that, contrary to claims that have been made, in this settlement, like those before it, councils with the greatest needs and the highest demand for services still get the most funding. Indeed, the 10% most deprived local authorities in England receive 40% more spending power per head than the 10% least deprived. Several questions were asked about different authorities. Let me take the top and the bottom as examples. Hackney is the most deprived local authority area in England, and its spending power per dwelling will be £3,706.89, while Hart—I am putting together the district and county services and comparing like with like—will receive £1,854.57. At the top and the bottom, we can see that need is still reflected within the system.

[Mr Betts]

Under the Government’s projections, in two years’ time, Sheffield, Liverpool, Manchester and Newcastle will have lower spending power per head than Wokingham. Is that fair?

[Stephen Williams]

That would indeed seem rather odd on the face of it, but we are talking about the settlement now, not making projections about the future. What happens in future will be a matter for the next Government, in whatever configuration they are, and we will have to see where we are at that point.

Several hon. Members talked about additional resources for rural authorities. We recognise the challenges that those authorities may face in delivering services to their communities. My right hon. Friend the Member for Mid Dorset and North Poole and my hon. Friends the Members for Beverley and Holderness and for Newton Abbot (Anne Marie Morris) made a powerful case. We have listened, and that is why, for the ongoing settlement, we are adding £15.5 million for the most sparsely populated rural areas. My hon. Friend the Member for Beverley and Holderness said that poverty is found in rural areas as well as in urban areas. Indeed, the only area of the country that still has objective 1 funding from the European Union is Cornwall—not one of our big cities.

[Mr Graham Stuart]

I am grateful to my hon. Friend for his comments about rural areas. Labour Members have not said anything about unemployment. In the shadow Minister’s constituency, there has been a drop in unemployment of more than 60%. In Liverpool, Riverside, the figure is more than 45%. Contrary to what the hon. Member for Birmingham, Northfield (Richard Burden) said, long-term unemployment is also down in his patch. That is the reality that underlies this debate. That is what the Government are doing, though Labour Members said that there would be 1 million more unemployed. We have had to fix the mess that the previous Government left behind.

[Stephen Williams]

That is absolutely right. Contrary to the predictions made by the shadow Chancellor, in particular, that unemployment would sail to over 3 million and we would have disorder in the streets, it has in fact fallen dramatically, certainly in my constituency of Bristol West, where it is dramatically down on the 2010 figures.

We are providing an additional £74 million to support upper-tier authorities to help them to respond to local welfare needs and to improve social care provision. We have deliberately shifted the emphasis from keeping councils dependent on grant to providing them with the tools they need to grow and shape their local economies. For Britain to prosper, every part of the country needs to fulfil its potential. That will not happen if councils remain entirely dependent on Whitehall. We have set up a system that rewards councils that go for growth: those that are supporting businesses, attracting investment, and helping to create jobs. Councils that are open to new business will see the benefits of that growth through a retention of their business rates. Those that support new house building are rewarded through the new homes bonus. Many councils, of all parties, agree that these measures are having a positive impact on their ability to deliver better outcomes in their areas.

That is not all. Contrary to the impression that we are somehow drawing the heart out of local communities through this funding settlement, we have to see it in the context of resources that have been given to local areas. For instance, £12 billon is being given to local enterprise partnerships in England to spend on local economic priorities. Those growth deals will help to train young people, create thousands of new jobs, build thousands of new homes and start hundreds of infrastructure projects. We will have had six rounds of the regional growth fund, spending £2 billion helping innovative businesses to grow, and through the £90 million coastal communities fund, which also helps rural authorities, we are investing in jobs and growth in our coastal towns.

As well as growing their economies, the best authorities are transforming the way they do business. We are supporting them as they do so, achieving real savings and, importantly, improving outcomes for the people who use local services.

In November, we announced the latest round of successful bids to the transformation challenge award. We will provide about £90 million to support 73 projects that will improve services and ultimately save the public sector more than £900 million. Councils must demonstrate a readiness to learn from each other and from projects proven to develop change elsewhere.

We are committed to helping local places deliver more integrated local public services that improve outcomes for everyone. A good example of that is the better care fund in relation to health and social care. Initially we had hoped that £3 billion would be pooled locally, but we were pleased to see the figure increased to £5 billion. Several Members said that that was double counting, but that £5 billion, spent by the NHS and local government, is overseen by health and wellbeing boards, with local councillors taking the lead in shaping integration between social care and the national health service.

There can be no doubt that councils are rising to the challenge. Every council has issued a balanced budget this year. The majority of residents remain satisfied with the way their council runs things, which is testament to the great skill that authorities have shown; I pay tribute to them for all their efforts. Councils continue to have significant spending powers—as I have said, they have more than £112 billion this year—but they must satisfy local taxpayers that they are using every pound of their money to best effect to deliver efficient public services.

Finally, to rise to the challenge put down by the hon. Member for Birmingham, Edgbaston, I think that all three main parties in England are moving at different paces. My party probably got there first, in coalition, and our coalition colleagues have also embraced localism and regional growth. We see a strong future for local government—with cities driving their local economies and counties having the opportunity to do so, too—with more powers, more responsibility and an end to the situation where England is the most centralised state in Europe.

Question put.