Local Government Funding: North-East

Steve Reed Excerpts

Tuesday 1st March 2016 Westminster Hall

[Mr Steve Reed (Croydon North) (Lab)]

I congratulate my hon. Friend the Member for Darlington (Jenny Chapman) on her brilliant, passionate and humane speech, which illustrated what the cuts decided by the Government mean to the people of her beautiful town, the rest of the north-east and, indeed, the rest of the country.

What is clear from the debate is that the Government have betrayed the north-east. The people of the north-east are decent folk. They are looking simply for fairness, not for favours, but the Government’s approach has been desperately unfair. The north-east has suffered some of the highest cuts in the country, but those communities were offered next to nothing from the transitional relief fund, which the Government made available a few weeks ago.

Here is what happened. A number of Tory MPs representing far wealthier areas than the north-east suddenly realised that their communities would start to feel the same pain that other parts of the country had been suffering for the last five years. People such as the Prime Minister’s mum got up and complained about what the Tory Government were doing, because they saw their services were at risk.

It is worth digging into the term “services”, because what it means is people’s quality of life. It means services such as Sure Start children’s centres, libraries, street cleaning, keeping the street lights on, filling in potholes, fixing pavements, giving young people things to do that keep them from getting into trouble, providing care for older and disabled people, and providing bus services to rural areas whose populations would otherwise be stuck where they live and unable to get out to enjoy their lives or to go to work. That is what services are—real things in real lives.

When some Tory MPs representing wealthier areas realised what was coming their way, the Government decided to buy them off. The Government set up a £300 million fund, but they did not give that money to the areas that had suffered the biggest cuts; they sent it to the areas that had suffered the fewest cuts. The only way the Government can justify their false claim to have helped the hardest hit with that money is to pretend that every single cut that happened before 2015 did not happen—but it did, and people throughout the country know that it did. Eighty-five per cent of the money went to areas run by the Conservatives; barely 5% went to areas run by the Labour party, despite the fact that the Labour areas have far higher levels of deprivation and have suffered far higher levels of cuts over the past five years.

My area of Croydon is, I grant, some way from the north-east. It has had 17 times more cuts than Surrey, but Croydon lost a further £44 million with barely any relief funding. I thought that was appalling, but the north-east has suffered even more. Durham, which had 27 times more cuts than Surrey, got nothing; Sunderland had 36 times more cuts and got nothing; South Tyneside had 37 times more cuts and got nothing; Newcastle had 41 times more cuts and got nothing; and Hartlepool had a swingeing 42 times more cuts than Surrey and got nothing at all. The whole of the north-east got next to nothing out of the settlement—nothing but cuts, cuts and more cuts.

Only weeks before important council elections, the Tories gerrymandered millions of pounds to wealthy areas such as Surrey to buy off dissent from their Back-Bench MPs. I use “gerrymander” advisedly: for the avoidance of doubt, I mean the misuse of public funds to advantage the Tory party. It is as simple as that, and it is a disgrace to our democracy.

I will touch briefly on social care. The Government approach to underfunding social care is to underfund the services and then to localise the blame for the cuts that will inevitably follow for some of the most vulnerable people in our community. Here is how the Government do it: they underfund social care, they hand over responsibility for it to councils, and they tell them to put up council tax by 2% a year, partially to plug the funding gap. That still leaves a £1 billion funding black hole for those services. Earlier, we heard about the case of Newcastle: a 2% council tax rise raises £1.4 million, but the shortfall in funding for these services is £14 million. The Government hope that councils will get the blame for the cuts and council tax hikes that were designed in Downing Street.

Finally, I want to look at council tax rises, because the 2% Osborne tax is not the only thing that will happen. The figures that the Government sent out to councils last month in spreadsheets from the Treasury included the assumption that there would be not only a 2% rise for social care, but a further council tax rise of 1.75% on average every year for the next five years. By 2020 that adds up to a 20% council tax hike. That is the Government’s assumption and what they are planning.

The truth is that we get the worst of all worlds with the Tories: we get cuts in services that people rely on and we get hikes in council tax that hurt the low-paid the most. The Government are damaging every community in the country, but the north-east is among the hardest hit—£24 million of extra funding for Surrey; next to nothing for the north-east of England. Whatever happened to the one nation Tories? The Tories have been too ashamed to show their face in the debate this afternoon, and they should be too ashamed to show their faces anywhere in the north-east.