Local Government Finance

Tom Pursglove Excerpts

Wednesday 7th February 2018 Commons Chamber

[Sajid Javid]

The hon. Lady suggests that the only way councils can access funds to provide social care is through council tax, which is absolutely not the case, as she knows. It is an important way to raise some of the funding, but an increasing amount is coming from central resources. For example, the £2 billion that was allocated in the spring Budget takes into account the ability of local authorities, including the hon. Lady’s, to raise money locally. It is right that we have that balanced approach, but I know that there is more to do on adult social care, and that funding alone will not help to fix the challenges. This long-term challenge requires a long-term systemic change. The publication of a Green Paper this summer on future challenges in adult social care will help set us on a path to secure that.

Finally, we are responding to calls for more flexibility over setting council tax. Local authorities will be able to increase their core council tax requirement by an additional 1% without a local referendum, bringing the core principle in line with inflation. This will enable them to raise revenue and meet growing demand for their services while keeping taxes low. Having done away with Whitehall capping, we have enshrined these checks and balances into the system. Under the Localism Act 2011, local government can increase council tax as it wishes, but excessive rises need to be approved by local residents in a referendum.

In addition, directly elected Mayors will decide the required level of precept by agreement with their combined authorities, and it will be easier for police and crime commissioners to meet local demand pressure under measures that I have agreed with the Home Secretary. They will allow for a £12 council tax flexibility for police services, raising an additional £130 million next year. We will, however, defer the setting of referendum principles for town and parish councils for three years, and we will keep that under review. In all, I want to see the sector doing everything possible to limit council tax increases and show restraint. I am keen to ensure that these freedoms are not abused, and I am sure voters are too.

My Department’s name recently changed to the Ministry of Housing, Communities and Local Government. That underlines our focus on fixing our broken housing market and getting Britain building, but I remain absolutely committed to the community and local government elements of our work. They are the foundations on which everything else stands. It is not enough to build more homes; we need to build better and stronger communities. Councils acting truly as local government and not local administration will help us to achieve that.

[Tom Pursglove (Corby) (Con)]

On the point about local government, will the Secretary of State confirm that this settlement will see real-terms increases for local government over the two-year period?

[Sajid Javid]

I can confirm that there will be a real-terms increase in resources for local government over a two-year period, rising from £44.3 billion in 2017-18 to £45.6 billion in 2019-20. I should clarify, however, that due to the additional £166 million that was announced this year, that is a real-terms increase over the two-year period rather than year on year.

We have listened to local authorities, and through this settlement we have delivered what they asked for, while at the same time keeping spending in check. We have delivered a real-terms increase in resources over the next two years, more freedoms and fairness, and greater stability and certainty for local authorities to plan and drive value for money. They, and the communities they serve, deserve no less. I commend the settlement to the House.

--- Later in debate ---

[Tom Pursglove (Corby) (Con)]

It is a pleasure to follow the hon. Member for Stoke-on-Trent Central (Gareth Snell), not least because he, like me, has local government experience in a shire county setting.

Rather like my hon. Friend the Member for Wellingborough (Mr Bone), it would be impossible for me not to speak about the situation at Northamptonshire County Council. It has been a very difficult week for local government in the county. I want to preface my remarks by saying that the vast majority of the staff at Northamptonshire County Council work tirelessly—day in, day out—on behalf of local people to deliver key public services, and no blame whatsoever lies with them for the situation in which we find ourselves.

It is no secret that we, as the seven Northamptonshire MPs, have been exceptionally concerned about the situation at Northamptonshire County Council for some time, and I appreciate the steps that the Secretary of State has taken to try to address those concerns. For example, there is the appointment of the inspector, who is currently conducting a thorough piece of work looking at what has gone wrong. As I said in the urgent question yesterday, I would welcome an interim recommendation from the inspector as quickly as possible, so that we can try to provide certainty for local people.

What is so frustrating is that, time after time, when Members of Parliament asked whether the county council would be able to balance its books, we were told, “Absolutely. You have nothing to worry about.” Such requests for clarification were made as early as last March and April and as recently as December. The responses were unequivocal—senior cabinet members at the county council were unequivocal in giving such guarantees—but we are where we are.

I believe that the concerns we have raised have been vindicated by the issuing of the section 114 notice. It is not just Members of Parliament who have raised concerns; 21 back-bench councillors now say that they have no confidence in the leadership. The independent LGA report is damning. It states that

“there is a very short-term focus on solving the financial problems of today… There is no financial strategy to deliver a sustainable position for the Council… The Council has a poor record of delivering its approved budget… Key decisions are not always taken in the understanding of the financial implications, risks and options… Financial information is not presented clearly and transparently… Decisions taken by the Cabinet need greater transparency… Some portfolio holders readily accept the information they are given without systematic and robust challenge.”

Those are damning findings. It is no secret that the inspector who is currently carrying out the thorough inspection of the county council is equally concerned.

[Michelle Donelan]

I echo my hon. Friend’s point about the governance of councils being important. Does he agree that structure is also important and that unitary authorities such as Wiltshire Council can prove very efficient?

[Tom Pursglove]

I am grateful to my hon. Friend for that intervention. I am keen to return to that point later in my remarks.

It is not good enough for cabinet members simply to shrug off all responsibility and try to apportion blame elsewhere, because there has to be accountability. The question we have to ask is this: why is it that many local authorities in similar circumstances—with similar settlements and populations—have managed to handle the challenges of recent years much more effectively than Northamptonshire County Council has? It would also be wrong to suggest that Members of Parliament and members of the Government have not tried to do our bit to help with those challenges, but being able to help relies upon the frank exchange of information and an honest dialogue. What has happened suggests that that has not been the case. At every opportunity, we have tried to help.

I welcome the commitment to a fairer funding review. It is a little rich for Opposition Members to talk down a fairer funding review, because we did not have one in 13 years of Labour government. Actually, Northamptonshire has been chronically underfunded, in local government terms, under Governments from both sides; we do not do well out of funding formulas relative to more metropolitan areas. I hope that the local government finance review will help address some of those anomalies.

I have talked regularly in the House about the cost pressures created for Northamptonshire County Council by unaccompanied asylum-seeking children. I welcome the Secretary of State’s announcement in December of an additional £18 million to tackle those cost pressures, and I hope that the county council will bid for some of the money; it will be entitled to some of it, because the cost pressures are acute.

It is also vital to note that the core spending power in the period up to 2020 is up by 7.6%, which is worth £31.1 million more. Members of Parliament have raised concerns, but the Government have also taken steps to help tackle directly some of the challenges. It is clear to me, as night follows day, that a fairer funding review in itself will not solve Northamptonshire County Council’s problems. I take absolutely no pleasure in saying any of this, but I will not moderate my remarks for party political convenience, because my primary concern in all this is continuity of service for the most vulnerable of my constituents.

Where do we go from here? We obviously need to wait for the inspector’s findings. I would like to see an interim report as soon as possible, because we need that certainty. I suspect that commissioners may well need to be appointed, because the failures are systemic and need to be dealt with robustly. We need to have a serious conversation in the county about the future structure of local government. To me, it seems clear that a two-tier model just is not financially viable in the current climate.

[Mr Bone]

My hon. Friend is making a powerful speech. He will know that we have very good district and borough councils—in fact, we share one. They have reserves and if we move to a unitary system—I think that is what will happen with two unitary authorities—what does he think should happen to those reserves?

[Tom Pursglove]

I suspect that my hon. Friend’s assessment of what the future structure might look like is correct. The reserves are very important. I am frustrated on behalf of the district and borough councils in the county that have managed their affairs properly, budgeted responsibly and put reserves away. I would like to see a model that protects those reserves for the individual communities in question. In my constituency, I think it right that the reserves that Corby Borough Council has responsibly accrued are spent on Corby and services there, and the same should happen in East Northamptonshire. That is exactly the sort of thing that we need to factor in.

I hope that councillors will engage proactively in the process of helping to shape the system. I do not want to see Government having to step in and impose a model. I want us in our communities to shape the system of local government for the future and councillors to take a very active lead in doing that. I agree that a committee structure would be the best way forward. I worked under a committee structure system. I always found it a good, constructive way to do business. It was good to have the input of opposition members and backbench members into the democratic decision-making process.

As I said, absolutely no gloss can be applied to any of this: the situation at Northamptonshire County Council is an absolute disaster. I welcome the Government’s commitments in the local government finance settlement. More can always be done and we should always keep the support that we provide under review. I look forward to hearing more about the support for unaccompanied asylum-seeking children, but in the county, we now have to focus on getting our local government back on a sustainable footing.