Local Government Funding: Birmingham

Steve McCabe Excerpts

Tuesday 13th December 2016 Westminster Hall

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I beg to move,

That this House has considered local government funding for Birmingham.

It is an absolute pleasure to serve under your chairmanship today, Ms Dorries. I asked for this debate because social care services in Birmingham are on the brink of collapse. Public libraries and parks are likely to become a thing of the past and children’s services, which we are supposed to be improving, are braced for swingeing cuts. This is no less than political vandalism; some people in our city are set to experience the most severe and catastrophic consequences of deliberate Government policy.

The core spending power of Birmingham is set to reduce by 5% at a time when some Tory-led authorities have received funding increases of almost 8%. Last February, the Secretary of State announced a hardship fund of transitional money worth £300 million for councils facing the sharpest reductions in grant, but not one penny went to Birmingham. It went to places such as Conservative-led Bromley, Conservative-led Kingston upon Thames, Buckinghamshire and Oxfordshire. How exactly does the Minister justify that state of affairs?

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

This is not the first year that Birmingham has experienced such a situation. There is a pattern and, on top of that, the councils that get a higher percentage increase also have a lower dependency on core funding. Birmingham is therefore being hit disproportionately year after year.

[Steve McCabe]

My right hon. Friend has anticipated a point that I will make later about council tax, but she is absolutely right: this situation is not new and there is a pattern.

The simple truth is that we are suffering from a legacy of unfairness in our city. Part of that dates back to the 2014-15 and 2015-16 settlements, and as a result the chickens are now coming home to roost on the Minister’s watch. Birmingham, the second city in the country and home to more than 1 million people, is also the second-hardest-hit by Government cuts in the whole country. How is that fair?

Most people would expect a Government Minister to acknowledge the special factors in Birmingham that ought to be taken into account: most of our properties, as I think my right hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) indicated, are in council tax bands A, B and C, which means that we have a lower council tax base than many other places. We are therefore more heavily affected by the withdrawal of Government grant and raise proportionately less from council tax or precept rises. We suffer from classic big-city issues. Infant mortality is almost 8%—almost double the national average—and life expectancy for men and women is eight and five years shorter respectively when we compare the most affluent and poorest areas. Birmingham is ranked No. 1 in the country when it comes to the total number of fuel-poor households. We should consider Birmingham’s predicament in that context.

This year we expect a £30 million shortfall in the social care budget; that is after the council has followed the Minister’s advice and slapped an extra 2% social care council tax precept on our long-suffering residents. Because extra funding from the social care precept is skewed towards more affluent areas until resources from the improved better care fund become available, we estimate that Birmingham will be disadvantaged to the tune of £98 million in terms of social care come 2017-18. An obvious crumb of comfort that the Minister could offer today would be to say that he will meet us to consider how resources from the better care fund could be used now to recognise the fact that social care spending pressures are being experienced now.

It is not just council services that are teetering on the edge of disaster as a result of deliberate decisions by the Government. Our police have suffered successive cuts to personnel and resources. Just the other day, the chief constable admitted that more than 170,000 calls to 101 went unanswered because of staff shortages. Our NHS is crippled by bed-blocking, rising waiting lists and the spectre of deficits, as well as a sustainability and transformation plan designed to further reduce access to some services.

I have no doubt that, at some point, the Minister will quote his estimate of the city council’s spending figure, as his officials did when they briefed the press earlier today. It is all very well to quote big-sounding numbers from spreadsheets, but what experience does he have of taking an enterprise that is responsible for over 1 million people and slashing its budget by more than £750 million? That is what the Government have done to Birmingham. Health visitors warn that the budget cuts are putting safeguarding at risk. Children’s centres are to be cut so severely that only those who can pass through the super-deprived gateway can expect any help or support. Nurseries, despite the Government’s care offer, are bracing themselves for closures and a massive reduction in services.

The council has almost halved its workforce. More than 12,000 jobs have been lost—those are real people and real jobs. Homelessness prevention services have had to be cut by so much that rough sleeping in Birmingham has quadrupled. On 29 November, a homeless man froze to death on the streets of our city on one of the coldest nights of the year. The Secretary of State for Communities and Local Government, the right hon. Member for Bromsgrove (Sajid Javid), who is not exactly unfamiliar with the city, said at the time:

“I think one person homeless is one person too many so you have always got to do more.”

As the Minister knows, the relentless period of cuts means that we have now reached the stage at which the council has to reconsider the Supporting People budget. I am sure he knows that the sole purpose of that budget was to fund accommodation-related support, particularly supported housing. In 2009, it was his Government who removed the ring fence on the Supporting People budget. We are talking here about homeless young people aged 16 to 25—about care leavers. Elsewhere in this building today, the Minister for Vulnerable Children and Families is telling Members about his seven principles for childcare, which he describes as the heartbeat of his plans. How will that work if there is no supported accommodation for those young people?

[Mr Jim Cunningham (Coventry South) (Lab)]

I congratulate my hon. Friend on securing this debate and I have every sympathy for what he says, because Coventry has experienced the same thing. Importantly, it was only some weeks ago that a private Member’s Bill was approved in this House and we were being assured that homeless people would be found accommodation. However, we never got a price tag put on that.

[Steve McCabe]

My hon. Friend makes a good point and he is exactly right. It is difficult to see how the Government can say they are doing a great job with the homelessness reduction legislation if its effect will be to impose more duties on local authorities that are unable to fund their existing proposals for Supporting People.

I am concerned about young people, older people with support needs, those with learning disabilities or mental health needs, and the victims of domestic violence. If there is a cut in budgets for Supporting People, all that help is at risk. It will lead to a reduction of provision and a further reliance on the costly unregistered and unregulated sector. Is that what the Minister wants? I commend the Birmingham pathway model for under-25s to the Minister. I understand that it is seen as a national exemplar and has been used to inform the work of his Department in establishing a framework for all other services for single homeless people. Why would he want to stand by and see it close down?

The Minister might want to remind me of the council’s failings and suggest that its members should put their own house in order, rather than complain to the Government. I acknowledge that Birmingham is under scrutiny. We have had: an independent review of education and the appointment of a Government commissioner for education; an independent review of children’s services and the appointment of a children’s services commissioner; and the Kerslake report into the structure and functioning of the council itself, and the appointment of a Government improvement panel to oversee the implementation of the recommended changes. How many meetings has the Minister had with those commissioners and members of the improvement panel since being appointed to his post? Does he consult them weekly or fortnightly? What is the frequency of the contact? Surely he cannot be defending this dire approach to our city’s future without reference to his own appointed experts. Would that not be tantamount to a dereliction of duty on his part?

We want a fundamental re-evaluation of spending needs to determine the funding levels of different local authorities, and we want a fair system, not a skewed or fixed one. We want recognition of some of the unique problems that confront Birmingham and an offer of some transitional support while that re-evaluation takes place. I can try to be helpful to the Minister, if he is in any kind of listening mode. I am not simply calling on him to give the city council more money. I am open to discussions, as are a number of my colleagues—any place, any time—to see what kind of partnerships, innovative approaches and pilot schemes might be available to help to ease the plight of our city and its people. As I have indicated, the Minister might like to consider bringing forward resources from the better care fund to recognise that pressures are being experienced now. I am open to suggestions about how that extra funding might be distributed. My concern is that those in desperate need get help. If the Minister has set his face against giving any extra money to the city council, I will accept an alternative approach to boosting the overall social care resource if he is ready to make that offer.

The Birmingham Social Housing Partnership has made a proposal to Government to pilot a locally administered co-investment model for supported housing, which would make possible the squeezing out of transactional costs. If agreed, it could be part of a national pilot for the delivery of supported housing. Can the Minister offer any comfort on that front today?

If we do not see some improvement in the financial situation facing our city, I predict dire consequences: the abandonment of the elderly, vulnerable and homeless; the full-scale closure of libraries, public parks and play areas; the second city reduced to a wasteland; and a breakdown of the social consensus on which the very basis of our community exists. Our city has had an extremely raw deal. I beg the Minister to treat these warnings seriously.

--- Later in debate ---

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

I begin with an apology on behalf of the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Nuneaton (Mr Jones), who is unable to be here to respond to the debate because of a personal issue. It is a pleasure to serve under your chairmanship, Ms Dorries, and to respond to a Westminster Hall debate for the first time as a Minister. I congratulate the hon. Member for Birmingham, Selly Oak (Steve McCabe) on securing this debate and for the passionate way he presented the issues facing Birmingham, as did, indeed, other Members who took part in the debate.

We should remind ourselves of the context in which local government operates. Many of the decisions that have been taken by Birmingham City Council have been taken locally and independently of central Government, although that is not to pretend that the Government have not had a role to play through challenging funding settlements, about which we have been quite honest over the years. We have been absolutely clear that, as councils account for a quarter of public spending, they, too, need to play their part in deficit reduction. No Member present went into the most recent general election offering more money for local government—that was accepted across the various parties.

We have tried to provide local authorities with a fair and sustainable financial settlement. Fundamentally, we have provided councils with a financial settlement that is broadly flat in cash terms, moving from £44.5 billion in 2015-16 to £44.3 billion in 2019-20. Over the course of this Parliament, council core spending will see a decrease of just 0.4% in cash terms. As a result, councils will have almost £200 billion to spend on local services. Birmingham’s average core spending power per dwelling will remain significantly higher than that for many other metropolitan authorities. We must remember that £1,983 per dwelling compares with £1,767 for other local authorities, and is higher than in Manchester and Leeds, which have had to manage similar issues.

Like many other Members, the hon. Member for Birmingham, Selly Oak raised the issue of social care, which is undoubtedly a massive challenge for the country given the changing demographics. The hon. Member for Birmingham, Hall Green (Mr Godsiff) asked whether I personally care about local government. I spent 10 years as a local councillor when some of the difficult decisions we are now facing started to be made. Over that period, which was not when we were in government but under a different Government, we saw councils start to change their intervention criteria substantially due to rising pressures. This is not an issue that has developed overnight. We have to be honest that it is a massive challenge for the country to deal with.

The hon. Member for Birmingham, Selly Oak, along with others, mentioned NHS funding. It is at a record level, although I do not for a moment pretend that that will necessarily deal with all the issues relating to the demographic shift—the increasing pressures, the increasing number of people going through the system, the cost of treatment, the number of people living with long-term conditions, and all the rest of it—that is putting huge pressure on the social care and health system. I do not for a moment want to pretend that the issues we are discussing are solely related to local government funding, or that they have developed overnight.

The Government are providing Birmingham with £77 million of new support for social care by 2019-20. Over the four-year period, assuming the social care precept is taken up, the figure will be £149 million, but of course I must put that in the context of changing demography and increasing demand. Many other countries in the west are trying to deal with the same issues. We have also delivered to Birmingham, and local government generally, guaranteed budgets to councils for 2016-17 and for every year of the Parliament. Birmingham is among the 97% of councils to have signed up to that. We are looking to have 100% retention of business rates by the end of the Parliament.

The hon. Member for Birmingham, Selly Oak mentioned the independent improvement panel. We have to put many of the decisions that are currently being taken in Birmingham in the context of a failure to deliver on the budgets that we passed and outlined. I welcomed the contribution of colleagues who said that they understood some of the challenges to have resulted from budgetary issues and management in Birmingham. The hon. Gentleman asked whether the Government had met the independent improvement panel. As it happens, I met one of its members yesterday, as Councillor Nick Forbes, the Labour leader of Newcastle City Council, was taking part in the independent financial review. As this is not my policy area, I have not met the other members of the panel, but I assure the hon. Gentleman that DCLG officials are meeting them regularly, and the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Nuneaton, has done so on several occasions as well.

[Steve McCabe]

I do not want to interrupt the Minister, and I appreciate that this is not his specific policy area, but when Ministers or departmental officials have met the improvement panel, have they heard the panel tell them that it is worried about the level of resources available in Birmingham?

[Andrew Percy]

The hon. Gentleman will understand that I have not been in the meetings so I cannot comment on their content. Needless to say, because I was meeting Councillor Forbes yesterday to discuss another matter, I had a brief conversation with him about the issues in Birmingham, but I cannot comment beyond that.

I could list lots of the other investment the Government are putting into Birmingham through local growth deals, which are having a significant impact and transforming people’s lives, but I want to respond to as much of the debate as possible rather than discuss overall investment in the region. The hon. Member for Birmingham, Yardley (Jess Phillips) made a powerful case about transition funding, which was also mentioned by other Members. Birmingham did not get transition funding for the simple reason that it had benefited from the 2015-16 change. The shire counties were the authorities hardest-hit by that change, so the transition funding was naturally focused on them.

The hon. Lady also mentioned school funding. I represent the third-worst—sometimes worst—funded education authority. If she wants to come to Goole in my community, she will also see very high levels of deprivation and huge challenges, but ones that we have to address with many hundreds—