Local Government Finance

Tanmanjeet Singh Dhesi Excerpts

Wednesday 7th February 2018 Commons Chamber

[Alex Norris (Nottingham North) (Lab/Co-op)]

I came to this place having represented my community on Nottingham City Council for six years—something that I enjoyed greatly and that was a real privilege. However, being a councillor between 2011 and 2017 was quite a difficult proposition. We saw massive real-terms decreases in our funding every year as the Government downscaled their commitment to our city. That meant service cuts, council tax increases, and business rates being increasingly vital. It meant local people paying more so that the national Government could pay less. All this in pursuit of an austerity agenda that decimated demand in our local economy, leading to a historically slow economic recovery, and is now to pay for tax cuts of little social value.

I am afraid that is the picture we see again this year: spending cuts. I used to think—I do not know if it was a naive or an optimistic view of the world—that Ministers did not understand local government and that that was why there were cuts of such a scale. My hon. Friend the Member for Sheffield South East (Mr Betts), who is not in his place, said that local government has been targeted as much as anywhere else in the public sector. I thought that it was because Ministers did not understand it, and thought that the services were unimportant and wasteful. Actually, it is quite the reverse. Ministers target local government because they know exactly how it works. They know that hard-pressed councils like mine in Nottingham have to set balanced budgets, so if they pull a lever and say what the reduction is, they will get that reduction, to the penny, from local government, and they can go to their Treasury colleagues having done their job. They will have had none of the responsibility and will get all the benefit. What an easy cut to make!”

That would be bad enough, but these spending cuts have been incredibly unevenly distributed. Between 2014 and 2016—around the transition grant period—Nottingham households lost 250 quid each in spending power, while those in Windsor, to pick one area out of dozens that would fit into this category, lost just £34. But it was those very communities such as Windsor that benefited from the £300 million transition grant to help them to deal with the cuts. In Nottingham? Not a bean.

Inevitably—what else could it do?—that has led to council tax rises in my community. One of the poorest communities in the country, with the lowest discretionary spend, we will now again receive a near 6% increase in our council tax. We have a small council tax base, as others have mentioned, so that will be less helpful for us than it will be for other communities. Our gap in Nottingham starts at £33 million. The Secretary of State talks about increased spending, but the reality of the situation—I suspect it is the same for all hon. Members here today—is that my council will have to make reductions. If I tell my council leader that he has more money, he will tell me that he has to make a £33 million reduction in services. If he gets £6 million in council tax, that is still £27 million that has to come from elsewhere as we deal with the toxic combination of losing grant and having significant increases in demand.

We have heard a lot about demands in adult social care, which are important, but we should not forget children’s social care and the extraordinary pressures it creates. So for my community there will be service cuts. Lest people think that this is an efficiency issue, I want to share with the House the proposals in Nottingham—[Interruption.] I am glad the Chancellor has joined us: I will be able to make a personal plea. The proposals in Nottingham include job cuts in adult social care; reducing funding for weight management, smoking cessation and drug and alcohol services; reductions in youth services; reducing funding for the careers service; reviewing transport services for vulnerable adults; reviewing fees and charges for leisure centres and bereavement services; and increasing fares and reducing frequency on the Link bus services. We have our political differences, but I doubt that anyone would say that those are “nice to haves”.

More importantly, as well as being vital services in my community, those are all stitches in time that save nine. Every single one of those reductions will lead to an increase in spending in public services elsewhere, and that is why this settlement is an act of vandalism. It is short-sighted and ill-judged. But as we all know—and I suggest this is why the Secretary of State is so attached to the idea—my council will receive all the blame. It should not; it is doing an excellent job in impossible circumstances. The fault lies at the door of the Secretary of State.

As for the fair funding review, I have no problem with systems that are a generation old being looked at, but we should be clear when we talk about fairness. I know there is an enthusiasm for capitation, but we should be clear what that would mean for communities such as mine. I am happy to accept, and I almost hoped I would get, an intervention on that point.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

Does my hon. Friend agree that areas of high social deprivation end up bearing the brunt of cuts? In particular, in my constituency, the council has had to contend with £54 million in cuts, £12.4 million of which is to schools, thereby hampering the education of the next generation.

[Alex Norris]

I share my hon. Friend’s perspective. I know that he will work with his council to try to mitigate those cuts, but there is a point at which that becomes impossible. I am sure that in Slough, as in Nottingham—and, as we heard from my hon. Friend the Member for Birmingham, Northfield (Richard Burden), in his area—they have received reductions that are significantly over the national average. The reductions are not just ill conceived, they are unfairly distributed. When we look at the fair funding formula, we must look at that.

I have heard persuasive cases from Shropshire about the needs there. That is why we should look at hard deprivation indices to make our judgments, not special pleading or bartering for votes. We need hard figures that say where the need is greatest, because that is where the funding should go.

I have not been here very long, but I have noticed a couple of curiosities that have been in full force today. Earlier in the day, at Prime Minister’s questions, the Government Back Benches erupted with stories of how great things are going in Members’ constituencies and what a wonderful job the Government are doing. Fast-forward a couple of hours to this debate and suddenly we hear how hard-pressed those communities are and how much more money they need—and need now. As I have said, this is a zero-sum game, and the money would come from poorer communities such as mine. That is one of the odd spectacles.

We also often hear from Ministers at the Dispatch Box that the answer to public service issues is not more money, and councils should not just ask for more money. But then we have had a series of speeches this afternoon asking for just that. When the challenges are in better-off communities, the answer is always more money, but it is always less money for us. I come from Robin Hood country, and it is a sort of reverse Robin Hood. It is particularly galling to have lectures on the state of local public finances from communities that never put their council tax up, use that as a political article of faith and then say, “Look at the shortfall we’ve got.” We have always had to put our council tax up, because that is the only way we can hope to stay anywhere near in line with our demands. Those are our challenges. As we move to the fairer funding review, let us use fairness in its proper and most evidence-based form.

--- Later in debate ---

[Yasmin Qureshi (Bolton South East) (Lab)]

The financing of local authorities and local government has caused problems for many Governments over the years. It arises from the fact that parts of the country with a lot of businesses or a lot of rich people are able to raise quite a lot of money locally for some of the services that have to be provided. However, there are many constituencies and many parts of the country where that is not the case, where there are issues of deprivation and where there are issues that require money, and where local authorities are unable to raise the money from their constituents or from the local area. When national Governments decide how much money to give to different areas, it is therefore important that those issues are properly considered and addressed.

My constituency of Bolton South East is high up on the indices that judge poverty and health and education issues. The mortality rate is higher in my constituency than in the rest of the country. The number of people with a university degree is not in proportion with the rest of the country. The number of people who own their home is not equivalent to the rest of the country. On many issues and in many areas, the local council is not able to fulfil its obligations.

Having said all that, Bolton Council has been run by Labour for many years, and it is regarded as an incredibly sensible and financially prudent council—it has even received four-star ratings in the past. Despite that, there has been a 54% cut to Government funding since 2010. Those cuts are not acceptable. My local council is basically spending all its resources on its statutory obligations such as social care and services for the elderly and the young, including children in care, looked-after children and protected children.

[Mr Dhesi]

Does my hon. Friend agree that austerity just does not work? When we compound cuts to our councils and to the services that our residents so deserve and need with police cuts and cuts to other services, it leads to a bad situation becoming even worse.

[Yasmin Qureshi]

I entirely agree with my hon. Friend. I was going to make this point later, but I will make it now. I am not being party political, but I find it appalling and galling that the Tory councillors of Bolton complain that the council is not doing some of the things it needs to do—the hon. Member for Bolton West (Chris Green), a Conservative, recently complained to the local newspaper that the council has not filled the potholes. Well, the council cannot do those things because its grant has been cut by 54% since 2010. The council has to spend the money it has on vital services such as looking after our elderly and our children.

There is no money left for potholes or for environmental services. In some parts of my constituency young people cause a lot of social nuisance and a lot of problems, such as breaking car windows and breaking people’s doors and windows. The local authority is being blamed for all of that, and people are saying, “You are not doing anything.” The political parties, especially the Conservative opposition, try to put it on the council. But, again, the council does not have the resources. It is doing everything it can. Where it can find some money, it is spending on the local area to try to improve the roads, get street lighting and help look after those communities affected by crime. The council is spending its money, but it does not have enough to give. When the hon. Member for Bolton West complains about things, I always say that he should be going to his own Government and Ministers. He should be asking them for that money. We have had a 54% cut in our budget over the past eight years and they are the people responsible for the situation we are in. He should be going to them asking for that extra money—the same thing applies in respect of policing cuts. Since this Government came to power 30,000 police have been cut—