I will not give way just now.
In the past decade, local government in England has lost 60p out of every pound that the previous Labour Government invested in our communities, in local services, in the glue that binds our communities together. The estimates debated today will sadly offer no relief to local government. The only major change from last year in the funds for local government is for business rates relief. Although it is welcome that the Government are compensating local government for that policy, it is necessary only because the Government have refused to undertake a fundamental review of business rates for which many have called. I am proud to say that the next Labour Government will conduct such a review.
Although the Minister can speak today about increases in local authorities’ spending power in this year’s settlement, it is all smoke and mirrors. Any increases are possible only if all councils increase their council tax by the maximum possible, which would mean eye-watering, inflation-busting tax increases for ordinary households. Council tax now equates to 7% of the income of a low-income family, compared to just 1% for a high-income family. That is not only unfair, but economically incoherent. The poorest areas, those that need the most resources to cope with the growing demands on children’s services and adult services, will never be able to raise the money they need. My right hon. Friend the Member for North Durham made the point that far less is possible in those areas than in the more well-off areas of the country.
I do not make that point to argue that we should be robbing some areas to fund others, but the fact is that all councils are now struggling and I would guess that that is not lost on the Minister. I hope that he will now be interested in solutions to the problem, because there is a growing chorus of concern from those on the Government Benches behind him. We are seeing a reverse redistribution of funding: a shift away from spending on local services that is based on need and deprivation.
Let me just remind the Minister that, while the Tories have in some cases actually seen spending increases, nine out of the 10 areas that have seen the largest cuts are Labour controlled: Hackney, £1,406 less per household in spending power between 2010-11 and 2019-20; Newham, £1,301; Tower Hamlets, £1,264; Knowsley, £1,057; and Southwark £1,014. Those are eye-watering numbers. Then we look at the other end of the scale: Maidstone, a £678 drop; Tewkesbury, £5.31; Vale of White Horse, £4.12; Tonbridge and Malling, a £4.18 increase; Stratford-on-Avon, a £7.45 per household increase; Uttlesford, a £7.66 increase; Horsham, a £15.68 increase; Wokingham, a £39.31 increase; and the Isles of Scilly, a £336.78 increase. That just is not fair. Not one council that has seen an increase in spending power from 2010-11 to 2019-20 is a Labour council.
What was in this year’s funding settlement? Unfortunately, I am not able to speak today about what the funding situation will look like next year because nobody knows—no one on the Opposition Benches, no one in local government, not even the Minister. Councils would normally have started their budget setting planning process, but they remain completely in the dark about how much funding they will have next year. The Government’s intention was to implement a fair funding review and to increase the percentage of business rates retained locally from April 2020, but the Tory leadership contest has thrown that plan up in the air. As the Chief Secretary to the Treasury told the Lords Economic Affairs Committee earlier this month:
“The plan was to launch the spending review just before the summer recess…I would suggest that’s unlikely given the current timetable of the Conservative leadership election.”
If that is not the case, I recommend that the Minister use this opportunity to set the record straight. I know that everyone in local government would welcome clarity. We need that certainty. Is there going to be a spending review? Is it going to be for four years? Is it going to be for one year? The Minister needs to give clarity.
What we do know from a survey published today by the Local Government Association is that one in three councils is worried that it will be unable to provide the statutory services by the end of this Parliament. That would include services such as: preventing homelessness; ensuring that vulnerable children are safe; ensuring quality of life for all adults; and dignity in old age. We know from the same survey that year-on-year cuts and an unprecedented rise in demand for these services have resulted in one in five councils being concerned that it will not be able to balance the books this year.
In closing, I would like to repeat the words of the Conservative Lord Porter, who said earlier this month:
“If the Government think the policy going forward is to spend all your reserves, and then we will find some new money…after you have spent all your reserves,” the Secretary of State is going to have to
“explain to the public why those people died because the money was not available…
It is always about understanding the cost of everything and the value of nothing.”
Never has a truer word been said. That is the reality, and I genuinely hope that the Minister, whom I respect greatly, will get a grip on his two leadership want-to-bes and insist that they start to fix the decade of neglect and cuts that our communities and local government have endured.