Local Government Finance (England)

Steve Reed Excerpts

Wednesday 10th February 2021 Commons Chamber

[Steve Reed (Croydon North) (Lab/Co-op)]

I start by echoing the Secretary of State’s praise for frontline council workers and others involved in delivering frontline public services, including volunteers. They really have done a tremendous, heroic job in supporting communities through the unprecedented circumstances of the past year.

Last November, the Chancellor of the Exchequer told councils that he would

“increase their core spending power by 4.5%.”—[Official Report, 25 November 2020; Vol. 684, c. 829.]

The Communities Secretary followed suit, telling us that English councils would see a

“4.5% real-terms cash increase in core spending power”—[Official Report, 17 December 2020; Vol. 686, c. 431.]

What they did not make quite so clear was that those funding increases were based on the assumption that council tax would go up by 5%. To be clear, in the Treasury spreadsheets, that is an assumption, not an option.

It is hard to believe, but this Conservative Government have chosen to clobber hard-working families with a council tax hike after the Government’s incompetence left the country facing the worst crisis of any major economy. Household budgets are under pressure like never before. Millions of people are fearful for their job security. Millions have seen their incomes plunge. Millions more families are using food banks or going into debt just to survive, and now, thanks to the Government, families are being forced to pay the price for Conservative failure with a council tax hike made in Downing Street.

We know that Government Members have been coached to say that councils have a choice in this, but with social care by far the biggest factor driving up councils’ costs, there is no real choice at all. Councils that refused to implement the Tory council tax hike would have to cut social care for older people in the middle of an unprecedented health crisis that is primarily affecting the same older people.

Let us not forget that because a council tax increase raises less money in poorer areas, the Government are deepening the postcode lottery for social care, instead of ensuring that every older and disabled person gets the care they need, wherever they live. The Government are not levelling the country up, in the way the Secretary of State just described. Instead, they are pulling it apart.

We know the Government recognise that there is a social care crisis, because the Prime Minister admitted it on the day he entered No. 10 Downing Street. He boasted that he had a plan to fix it, but no one has seen a dot or a comma of it ever since. All we have seen are sticking plasters while the crisis rages on and more and more older people are denied the care they need and deserve. The Government’s failure is simply increasing the pressure on our NHS when we should be doing all we can to protect it.

Last March, the Chancellor told councils that he would fund them to do “whatever it takes” to get communities through the pandemic. On the back of that promise, councils set to work correcting the Government’s failures on personal protective equipment distribution, contact tracing, shielding and much more, but the Government did not repay those costs. Instead, they left councils facing a £2.5 billion funding black hole. That is not my figure; it comes from the Conservative-led Local Government Association. If the Government had not broken their promises, there would be no need to plug the gap now with a council tax increase.

Perhaps the Government could not find £2 billion to prevent a council tax rise because they had already stuffed the money into their friends’ pockets. Despite stark warnings from the National Audit Office last November, the Government have handed out £2 billion in crony contracts to companies with close personal links to senior Conservative party politicians. More than 500 companies were fast-tracked for covid-related contracts simply because they had relationships with Conservative MPs. That made them 10 times more likely to secure contracts than other businesses that could well have done the job better.

The chairman of Clipper Logistics donated £725,000 to the Conservative party. He was rewarded with a £1.3 million contract to set up an Amazon-style PPE distribution network. Instead of the next-day delivery service that care workers were promised, they had to wait so long to receive any PPE at all that town halls had to pay to go out and find their own. Then there is Randox, which pays the Conservative right hon. Member for North Shropshire (Mr Paterson) handsomely to act as an adviser. The Government gave Randox a contract worth half a billion pounds last year to provide covid tests, but they were so defective that 750,000 had to be recalled.

Serco, of course, is responsible for the Prime Minister’s “world-beating” test and trace system, which is so world-beating that the Government’s Scientific Advisory Group for Emergencies described it last year as having only a “marginal impact” on reducing the spread of the virus. It never worked properly, but it cost £22 billion. Serco’s chief executive is the brother of a former Conservative MP and his wife has donated thousands of pounds to the Conservative party. The company counts among its former senior executives the current Minister for Health. The Government handed Serco a £108 million contract for a failing system that could have been run better by directors of public health for a fraction of the cost, and then Ministers rewarded that catastrophic failure with another £57 million contract for “management services support” at testing sites. This is not the behaviour we would expect in an advanced democracy such as our great country; it is the wilful incompetence and endemic cronyism that we would expect in a tinpot dictatorship.

The Government are simply wrong to force councils to hike up council tax after their own mistakes led this country into the deepest recession of any major economy. Not only is it unfair on the families forced to pay the price of Tory failure, but it is economically illiterate, because hitting people with tax rises in the middle of a pandemic makes them tighten their belts and stop spending, when we should be rebuilding confidence to promote economic recovery.

The Conservatives’ priorities are wrong, which is why Labour will not vote for their Tory tax hikes today. They should be helping families manage hard-pressed household budgets, not stuffing billions of pounds into the pockets of Tory party donors. They should be fixing the social care crisis, not forcing hard-working people to pay more but get less as social care is cut back even harder. They should be promoting economic recovery on our high streets, not choking off spending with tax hikes at a time when families are struggling simply to make ends meet. But it is still not too late. I urge the Government to think again, scrap Rishi Sunak’s council tax bombshell—

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. The hon. Gentleman must refer to the Chancellor of the Exchequer as the Chancellor of the Exchequer or as the right hon. Gentleman, and not refer to him by using his name.

[Steve Reed]

I absolutely agree. I urge the Government to think again, scrap the Chancellor’s council tax bomb- shell, stop stuffing billions of pounds into Conservative party donors’ pockets and stand by their commitment to support councils and communities to get through this crisis.

[Madam Deputy Speaker]

I am sorry to have stopped the hon. Gentleman in his peroration, but it is really important in these times, when things are not normal in this Chamber, that we stick to the highest standards, and I thank him for immediately putting right his phraseology. It was not a great mistake, and I am grateful for his support.