Local Government Finance

Part of the debate – in the House of Commons at 7:14 pm on 5th February 2019.

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Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton 7:14 pm, 5th February 2019

It is a pleasure to speak in this debate, and I warmly welcome the Secretary of State’s remarks. This is of course the fourth year of a longer term framework for local government funding, and the key element is the need for a fairer funding formula. We also need to deal with some of the underlying pressures for local authorities, particularly the time bomb that is adult social care. An extra £10 billion of funding for adult social care to 2020, including £650 million committed by the 2018 Budget, will go a long way to help in the short term. In the longer term, we need the fairer funding formula underpinned by the business rates retention pilots. I am delighted to see that North Yorkshire County Council has been entrusted with one of those pilots.

The fairer funding review and the spending review that comes with it are vital. If fairer funding is simply a redistribution of money—moving money from one local authority to another—it will be difficult for some authorities. We must learn the lessons of the fairer funding review in education, and fairer funding must come with extra money in the pot generally, to make it possible for some local authorities to manage as we redress the balance and make things fairer.

The present situation is unfair. Nine out of the 10 best funded authorities per capita per year are in London; they have about £1,000 spending power per person a year. In North Yorkshire we have £770 per person a year, despite the fact that a much larger proportion of that £770 is made up of council tax. We are contributing more but getting less in services. As my hon. Friend Peter Aldous pointed out, central Government grants to local authorities to inner-London councils are £437 per person per year, for metropolitan boroughs they are £319, for unitaries they are £225 and for counties £153. Andrew Gwynne cannot talk about unfairness and avoid those figures. We must move to a fairer funding settlement.

I pay tribute to my neighbour, the Under-Secretary of State for Housing, Communities and Local Government, the hon. Member for Richmond (Yorks) (Rishi Sunak), who has looked at this issue and tried to simplify the system. Simplicity is the ultimate sophistication, as da Vinci said many years ago. My hon. Friend is right to try to simplify this and make it fairer. We must take on board many of the comments that have been made to make sure that the funding formula is fairer in the future.

Adult social care is putting more pressure on my constituency than any other issue and we need to take a more strategic approach to its funding. The Select Committees on Housing, Communities and Local Government and on Health and Social Care had a long joint inquiry on this and came up with a simple recommendation—to emulate the German system of social insurance, which involves a social care premium. It is a simple, scalable and sustainable solution. It is a small amount that everybody pays—everybody pays something so nobody has to pay everything. That is the key to it. It was introduced in Germany in 1995 to replace a system of local government funding, and it has been incredibly successful. It was a unanimous recommendation of those cross-party Select Committees.

The key element of the system is not the small amount people pay in, but how they get the money out. If someone is defined as in need of social care—a young adult or someone in later life—they can take it in the form of local authority provision, third-party provision or as a cash settlement every month which can be paid to a neighbour or loved one, be it daughter, son, nephew or whatever. It also helps to strengthen the social fabric by making sure that people are looked after by those who love them most and understand their needs the most. It is something that we should adopt, and I hope it will be in the Green Paper that is expected shortly.