Local Government Finance (England)
Debate between Steve Reed and Graham Stuart(8 years, 9 months ago)
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Mr Reed
What is really worrying is that the Secretary of State does not seem to understand what is really going on in councils and in public services across the country.
Even Tory MPs were terrified of what voters would make of all this, and they threatened to vote it down. On Monday this week, the Secretary of State came to the Chamber with a fix to head off the rebellion. He announced he had found £300 million down the back of a sofa—he would not tell us where it had come from—and then handed nearly all of it to the wealthiest Tory councils as a sweetener just weeks before the council elections. Some 85% of the money will go to Tory-run areas and barely 5% to Labour-run areas, despite the fact that those Labour areas have suffered far bigger cuts since 2010. Whatever happened to the one nation Tories? What about the northern powerhouse? If the word gerrymander did not already exist, we would have to invent it to describe a fix like this.
Graham Stuart
The hon. Gentleman is making a powerful speech, but I think that it is factually incorrect. As he will know, rural areas tend to have the oldest populations, yet when this Prime Minister came to power, there was a 50% premium going to urban councils with much younger populations. Whatever the future might have held for them, they were not old then and they did not have the need. Rural areas did and his party did absolutely nothing.
Local Government Funding: Rural Areas
Debate between Steve Reed and Graham Stuart(8 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Steve Reed (Croydon North) (Lab)
I congratulate the hon. Member for Beverley and Holderness (Graham Stuart) on securing this important debate through the Backbench Business Committee. It is a critical topic. I look forward to hearing the Minister’s responses to the many excellent points that have been made across the House.
I represent Croydon North, which is perhaps not the most rural constituency, but at heart the debate is about fairness, and that is a matter that concerns us all, wherever we represent in the UK. The most unfair aspect of the Government’s spending review is how they have targeted the biggest cuts on the poorest areas. They have placed the greatest burden on those least able to bear it. Our rural communities are among those that have been the hardest hit.
There are real issues of poverty in rural areas. We have heard Members talking eloquently about those issues during the debate. Households in rural areas are more likely to be in fuel poverty than those in urban areas. People living in rural communities find it harder to access key services such as schools, hospitals and shops. As my hon. Friend the Member for Workington (Sue Hayman) said, often that is because of poor, limited public transport. Housing costs are spiralling out of many people’s reach, yet despite all that the Government’s latest spending plans do little to address the growing pressures on rural communities.
Social care has been referred to in the debate. It is a particular problem. The proportion of older people is higher in rural areas than in urban areas; I was impressed by the comments by the hon. Member for Thirsk and Malton (Kevin Hollinrake) in that respect. That means these communities will be hit the hardest by the £1 billion funding gap in social care that the Local Government Association, which is Tory led, estimates still remains. That is assuming that every council in the country levies the Chancellor’s 2% council tax precept, and that is not a foregone conclusion.
Families in rural areas spend almost £800 more than the national average on transport. Under the Conservatives, rail fares have gone up by almost 25%, yet complaints about train services are rising in all parts of the country. Services in rural areas are often unreliable, where they exist at all, and rolling stock is often out of date.
Fares have gone up by 27% since the Prime Minister first entered Downing Street, yet fewer than half of all small rural settlements have a regular bus service. Rural communities should be able and should have the power to regulate their own bus services, as London can, helping to ensure that the right services are available at the right fare.
Low pay is endemic in many rural communities. The gap between urban and rural wages has grown by £1,000 since 2010, yet the Government have abolished the Agricultural Wages Board. Research shows that, after London and Oxford, starter homes are least affordable in rural areas. Housing costs are soaring while the Government have allowed rural wages to decline. Now, to make things worse, the Government are forcing councils to sell off what little affordable social housing remains.
Cuts in funding have had detrimental effects on all sorts of services. We have seen youth services close in rural communities. Communities have been plunged into darkness when councils have been forced to switch off street lighting during the night. Neighbourhood policing has been decimated to such an extent that Her Majesty’s inspectorate of constabulary has reported that car crime has been all but decriminalised, and cuts in vocational training and further education mean that people are unable to develop the skills they need for taking up employment opportunities in rural communities.
Graham Stuart
The hon. Gentleman is making a powerful speech; it is incorrect in only one way. Earnings have not dropped in rural areas; they simply have not grown as fast as they have in urban areas, such has been the economic success of this Government. The case he is making illustrates the need to close the gap between urban and rural areas, whatever the Treasury sets as the overall budget. Is it now the Labour party’s official policy to reduce and close the gap in spending power between rural and urban areas?
Mr Reed
The hon. Gentleman is right to say that there is a decline in wages relative to the cost of living in those areas. The Labour party is looking for fair funding across the Government, and I will say more about that later if he will allow me.
Pulling all that together, we are seeing a toxic cocktail of rising fares for worsening public transport, inaccessible public services, demand for services rising faster than funding, fewer good job opportunities, falling wages and soaring housing costs. People are being priced out of living and working in rural areas.
Cities and Local Government Devolution Bill [Lords]
Debate between Steve Reed and Graham Stuart(8 years, 11 months ago)
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Graham Stuart
My hon. Friend has had a fair crack and I am going to sit down.
Mr Steve Reed (Croydon North) (Lab)
This group includes a number of new clauses and amendments, so I want to focus primarily on those in my name and those of my hon. Friends, although I will also touch on some of the others as I go along. I do not want to detain the House for too long and there is quite a lot of ground to cover, so I shall try to romp through it at a reasonable pace.
New clause 10 proposes votes at 16. The Government seem to be a little confused on this issue: the Secretary of State has said that there is a debate to be had; the Minister for the northern powerhouse says there is not; and the Prime Minister is against it altogether. Yet we know that the Government are considering it for the European Union referendum and that they supported it for the Scottish referendum.
There are more than 1.5 million 16 and 17-year-olds in the UK. They can get a job or an apprenticeship, get married, pay taxes and join the armed forces, but apparently they are not responsible enough to be able to vote for their local councillor to take decisions about the local services in the area where they may well have bought a home and live with their family. The Bill is the ideal place to bring about change. Incremental change is how the British constitution develops, and allowing votes for 16 and 17-year-olds in local elections seems to me to be a good place to start.
The Electoral Reform Society argues that lowering the voting age will improve registration rates. Nearly 90% of eligible 16 and 17-year-olds registered for the Scottish independence referendum, and a high proportion of them took part in it. Research in other countries suggests that the turnout rate for 16 and 17-year-olds is higher than that for 18 to 34-year-olds. Establishing the habit of getting involved and voting in elections at an early age makes a lot of sense if we want people to continue voting throughout the rest of their adult lives. The Scottish referendum set the precedent. It is unreasonable to extend the vote in one part of the Union and not in another. Local elections suffer from low turnout, so that is a good place to start, but if the Minister thinks that this is not the time to introduce the change, perhaps he can answer the question: if not now, when?
On new clause 11, the Government have been very unclear about plans to devolve fire and rescue to mayors or police and crime commissioners, but we know that the Home Office is pushing for it and it is included in the Greater Manchester devolution deal. Our new clause calls on the Secretary of State to publish a review of how the Bill affects fire and rescue services. As we have seen over the weekend, and as we heard in the flooding statement earlier, the fire and rescue service is doing an incredible job, despite extremely severe cuts that have limited its capacity and reduced the number of jobs by almost a third. The cross-party Local Government Association believes there is “no pressing need” for police and fire services to merge. Any changes of the kind being considered will heighten public concerns about safety. The new clause would simply add a level of scrutiny and oversight to the provisions, so I hope that the Secretary of State and, indeed, the Minister will welcome and support the proposal.
Since 2010, local government has faced cuts of 40%, and last month’s spending review imposed a further 56% reduction in central support to councils. We know there will be changes to business rates once they are localised, and we were promised details in the autumn statement about how an equalisation mechanism would work, but no such details were given. Councils have simply been left to plan their future budgets in the dark, despite cuts on a scale that they have never been asked to deal with before. The LGA has warned that local authorities are struggling, and that is even before the spending review hits them. Lord Porter, the Conservative chair of the LGA, says:
“We know we’ve got probably 12 or 14 councils that are very close to the edge now.”
They need to know what is going to happen to them in future if they are going to be able to avoid falling off the edge of that particular financial cliff.
The funding settlement is deeply unfair. The 10 most deprived communities have suffered cuts that are 18 times higher than those made to the least deprived communities. Councils with the highest rates of children in care have suffered cuts that are three times higher than those made to councils with the lowest number of children in care. Although Labour councils are disproportionately hit by the cuts, they are also the ones that are protecting front-line services. Tory councils have shut half their youth services since 2010.
The unfair funding settlements are made worse by England’s local government finance arrangements, which are among the most centralised anywhere in the industrialised world. Councils lack the freedom to innovate so that they can spend on local priorities. Even London, which currently is more devolved than anywhere else in the country, is reliant on central Government funding for three quarters of its revenue. That is far higher than 30% in New York and just 25% in Berlin. London is the world’s greatest city, and yet this Government insist on keeping it on far too tight a financial leash. The Communities and Local Government Committee concluded that local authorities in England
“have limited control over local taxation and, as a consequence, rely…disproportionately on central Government funding.”
Our new clause 13 does not prescribe a particular settlement, but calls on the Secretary of State to publish plans for a package of fiscal and financial devolution that addresses three areas. First, on business rate retention, councils need an equalisation mechanism to ensure that those communities with the least capacity for economic growth are not left to sink. Labour supports the localisation of business rates, but it has to be done in a way that incentivises areas to grow, without penalising areas that have less capacity to do so at the time or in the future.
Ministers promised at the Dispatch Box that details of the equalisation mechanism would be made available during the autumn statement, but that did not happen. It still has not happened and we have not been given a date by when it will happen. We simply cannot allow rich communities to get even richer while everywhere else struggles to provide basic services. The new clause calls on the Secretary of State to introduce an equalisation mechanism to ensure that the least well-off are not hammered by the change.
Graham Stuart
The hon. Gentleman, as an expert in this area, will be aware that people in rural areas are on average poorer than people in urban areas. He will also be aware that his Government—the Government of his predecessors—left a system in which there was 50% more support per resident in urban areas, which are wealthier than rural areas, than in rural areas, and that it is more expensive to deliver services in rural areas. It is no surprise that we are not seeing the same reductions in services in rural areas as in cities, because such services do not exist in the first place. His party left it that way. Are Labour Members now committed to a fairer system?
Mr Reed
The hon. Gentleman seems to support my case for a fair equalisation mechanism, which I am pleased to hear.
Secondly, on greater local control over tax rates and discounts, England has one of the most centralised funding arrangements anywhere in the world. Whitehall takes the key decisions on council tax, which means that it is barely local at all. The previous Secretary of State capped rises, while the Chancellor is now encouraging councils to push up council tax to make up for his cuts. Labour wants the Government to publish plans to introduce greater local freedom over tax rates, banding, valuation and discounts.
Thirdly, on multi-year finance settlements, every successful organisation needs to be able to plan for the future, and local authorities cannot plan complex services without knowing what level of funding is available to pay for them. As powers are devolved from Westminster, local authorities need to know that they have the resources to exercise those powers properly. Local enterprise partnerships could operate more effectively if they had longer-term funding streams. Indeed, the regional development agencies, which LEPs replaced, could make single, three-year funding agreements, while LEPs have access to a smaller budget, with too many small funding pots and with constraints on their use. We want to make sure that combined authorities do not suffer from the same problem. Our new clause 13 calls on the Secretary of State to publish plans to allow for multi-year funding agreements, which would give combined authorities the resources and time to ensure financial stability, and allow them to make better long-term decisions about local services.
On new clause 14, we welcomed in Committee the proposal that new sub-national transport bodies must consult adjoining authorities before taking decisions. On transport, the Government have recognised that the devolution of powers to combined authorities concerns neighbouring authorities that do not wish to, or cannot, join a combined authority. That is an important principle, but it extends to areas beyond transport, and the Minister’s response to our amendment in Committee was disappointing. The Minister said it was not “necessary or appropriate”, so perhaps he will reconsider and support this new clause. For example, local authorities on the periphery of the Greater Manchester combined authority have concerns about health service decisions that will affect them, but which they are unable to influence. We want to give them the right simply to be consulted. If the Government are prepared to concede that such authorities should be consulted on transport, then why not on health or other key services?
Whatever the Government say, they are imposing mayors by making them a non-negotiable condition of devolution for metropolitan areas. We believe that the spirit of devolution demands that local areas should choose their own model of governance instead of having it imposed from the centre. If areas want a mayor, that is fine, but it should also be fine if they do not want a mayor. Government amendment 7 and related amendments are disappointing. They will allow the Secretary of State to impose a mayor on a combined authority even if one or more constituent councils do not want one. It is no surprise that the Local Government Chronicle wrote about amendment 7 under the headline, “Boost to government powers to impose elected mayors”. The Government are acting in opposition to their own claims to support local decision making in that respect.
If the powers are agreed to this evening, they must be used with extreme caution. Where a potential combined authority is divided on the details of a deal, which it may well be, local co-operation must be the preferred way forward. I would welcome a statement by the Minister or the Secretary of State to that effect. Our amendment 58 would reintroduce the change made in the Lords, stipulating that devolution deals cannot be made dependent on having a mayor. That view has support from Members on both sides of the House, as we have heard again this evening.
On amendment 59, we discussed the general power of competence earlier. The Localism Act 2011 introduced the general power of competence, which was intended to give local authorities more power and freedom to innovate. That is a good idea, but LGA research shows that the power is
“limited by significant constraints set by central government”,
and that local government needs far more independence from interference by central Government. The constraints the LGA identifies are financial, structural and regulatory. Our amendment encourages the Secretary of State simply to review the power of general competence to learn how to make it more effective and to encourage greater take-up than the disappointing level so far.