Financial Sustainability (Local Government)

Steve Rotheram Excerpts

Tuesday 7th January 2014 Westminster Hall

[Steve Rotheram (Liverpool, Walton) (Lab)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Crausby. I congratulate my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) on securing today’s debate.

I was disappointed at the contempt with which the Minister dealt with my question to him in response to the statement on the local government finance settlement before Christmas. Liverpool’s settlement is so dire that I offered personally to fund two rail tickets for him and the Secretary of State, so they could visit my city and look at the books. If they truly believe that Liverpool has not done everything they say a responsible council should do to mitigate the cuts, surely the Minister should have bitten my hand off and accepted the offer. It is still open—to avoid confusion, I want to make it clear that it would not cost taxpayers a penny: I would fund it from my own pocket—so perhaps the Minister will respond.

The cuts to Liverpool’s funding are deadly serious. They deserve not light-heartedness or levity, but sombre deliberation and scrutiny. That is why I felt so strongly about the lack of an adequate response from the Minister in December. Far from being a good news story for local government, as he injudiciously claimed, his statement was a disaster for local government. He also argued that the cuts he announced were fair to all parts of the country. However, far from that being the case, they disproportionately hit core city regions—those least able to absorb their severity and those with lower levels of gross domestic product.

I want to concentrate on what that so-called good news day for local government meant for Liverpool. Unsurprisingly, but none the less shockingly, Liverpool city council was once again hit hardest. The latest cut of 5.5% will have a devastating impact on a city that is working tirelessly to pull itself up by its own economic bootstraps. Even the Prime Minister has recognised the work that Liverpool has done to cut out waste and restructure its services.

Indeed, despite the latest savage cuts, Liverpool’s entrepreneurial spirit is alive and kicking, and in a few months we will host the international festival for business on behalf of the UK. Hundreds of thousands of businessmen and women will once again be able to see our city and feel the warmth of our welcome. That will happen despite what the Government are doing to us, but our resilience is legendary. It is crucial to understand that Liverpool, like all the core cities, is asking not for handouts but for a fair local government settlement, so that when the Government wield their axe it will not be hit disproportionately.

[Mr Gray]

I have great sympathy when the hon. Gentleman speaks up for his wonderful city, but I feel uneasy about the way the debate is centred on how the cuts focus on poor areas and cities. Leafy, Conservative Wiltshire this year received 18.2% cuts; next year it will have 26.8% cuts; the year after that they will be 7%. We are going from a revenue support grant of £76 million down to one of £45 million. That is a great deal deeper than Liverpool’s.

[Steve Rotheram]

That is absolute nonsense. It is possible to pick individual statistics, but cumulatively the cuts and other Government policies have a disproportionate effect on my city. It is a greater effect than the hon. Gentleman could ever understand.

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

I do not know the source of the evidence cited by the hon. Member for North Wiltshire (Mr Gray), but I think the Audit Commission showed that one in 10 of the best-off areas suffer only a fraction of the cuts being suffered by the poorest 20% of areas in the country. Has my hon. Friend seen that evidence?

--- Later in debate ---

[Steve Rotheram]

I have, and I mean to refer to it later. I also have further evidence about how badly the Government have treated Liverpool. I understand what the hon. Member for Southport (John Pugh) said about years of dishonest argument, but that is not what we are talking about. At times that dishonest argument was about some authorities that thought they should get a greater increase than other authorities. We are now talking about savage cuts, not increases.

Not only is Liverpool’s cut the deepest; there are 38 other areas that will receive either a flat settlement or an increase in funding. How can that be fair? What happened to the Chancellor’s claim that he would not balance the budget on the backs of those in most need, or to the Government mantra that we are all in this together? Before some hon. Member intervenes with the inevitable argument that Liverpool will still receive above the national rate per capita, let me point out that the very fact that the city is struggling to meet its statutory requirements as a local authority gives credibility to the argument that further consideration of the funding formula is necessary to reflect socio-economic and multiple deprivation indices.

Perhaps the best description of the consequences for Liverpool of Ministers’ actions was from the shadow Health Secretary when he suggested:

“The Government do not understand, or they do not care, and they just rip up the fabric of an entire city. It is disgraceful.”—[Official Report, 18 December 2013; Vol. 572, c. 765.]

I could not have put it any better myself: it is managed decline, based on an inequitable formula that, at its core, is predicated on an ideological assault on the cities that no longer offer the Tories or Lib Dems any form of electoral support. It is not fair and it is not good news for local government.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

I wish, in a way, that the debate had followed the lines laid out by the hon. Member for Birmingham, Edgbaston (Ms Stuart) in an admirably even-handed and non-partisan way. Is it not true, as a matter of historical fact, that under the previous Government, heat maps were generated that specifically tied public funding to areas of actual and potential Labour support? That has been in the newspapers. We know that it is a well established fact, which has been well attested from other grounds. Should the hon. Gentleman not be properly recognising that in his remarks?

[Steve Rotheram]

Deprivation has always been recognised on heat maps and areas of the country are well known in that regard. I do not accept the premise of the hon. Gentleman’s question. If he is saying that money in the formula was given to those areas of greatest need, and that showed up on a heat map, yes, that is true, and quite rightly so—it should have been.

Some might argue that it is simply coincidental that Labour-controlled Liverpool, Labour-controlled Manchester, Labour-controlled Birmingham, Labour-controlled Sheffield, Labour-controlled Newcastle and so on are the hardest-hit councils, with, in some cases, cuts to their budgets of more than 50% over the life of this Parliament, while councils that benefit most are well-off, Tory-controlled authorities. Some might suggest that that is just a coincidence, but I do not buy that. The formula was designed to do exactly that.

[Jesse Norman]

Let me put on the record that the heat maps are not reflective of imbalances in deprivation funding at all. Let us take an example that is completely open and known to everyone, which is the scandal of the private finance initiative, in which 106 new hospitals were built at enormous cost. The vast preponderance of them were built around a model of funding that was for very large outpatient hospitals in major cities, and it was deliberately targeted on those cities. The result has been, at a time when health care has been moving to a much more localised, technology-enabled solution, a disaster for health care. We will find that these great hospitals, including the new one being built in Liverpool, struggle as a result.

[Mr David Crausby (in the Chair)]

Order. Interventions should be kept short.

[Steve Rotheram]

It absolutely beggars belief that individual Members of Parliament do not understand that every area is different. Areas that had infrastructure from Victorian times, hospitals that were literally falling apart and schools that leaked, needed intervention at that time—not in 15 or 20 years, when the country might well have been able to afford it. Intervention was needed.

I am no great fan of PFI, by the way, but according to the latest figures the Chancellor is signing off as many PFI contracts, worth as much, as the previous Labour Government did. Members really cannot have it both ways—be anti-PFI while not even standing up to their own Chancellor, who is signing off these huge contracts, including the one for Liverpool.

My right hon. Friend the Member for Leeds Central (Hilary Benn) said:

“Tough times do indeed require tough decisions”—

nobody would argue against that—

“but this Government, as they have shown time and again, from the bedroom tax to the top rate of tax and local government funding, take most from those who have least. That is unfair and unjust.”—[Official Report, 18 December 2013; Vol. 572, c. 746.]

A cumulative 52% cut to Liverpool city council will mean not only that it has to make staff redundant, which means even more human misery and an even higher benefit bill, but, as I have said, that it may not even be able to fulfil the requirement to deliver statutory services to the level that it has to date. In other words, keeping our libraries open will be virtually impossible. Services for the young and old will be decimated. Children’s centres will be affected. Street lights and roads will not be repaired at the same rate, and the legacy of our year as European capital of culture will be damaged, possibly beyond repair.

Perhaps the most devastating aspect of the whole debate is the fact that decisions continue to be made, by a Minister and his boss in a cold and calculated manner, that I know will detrimentally affect Liverpool’s history, heritage and traditions and adversely affect every man, woman and child in our city.

[Several hon. Members]

rose—