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Local Government Finance

Part of the debate – in the House of Commons at 12:40 pm on 5th February 2020.

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Photo of Andrew Gwynne Andrew Gwynne Co-National Campaign Coordinator, Shadow Secretary of State for Communities and Local Government 12:40 pm, 5th February 2020

I reiterate what I just said: it is for the Conservatives to come forward with their proposals. We will view those in the round with other ideas and see whether we can reach a consensus. I know that there are different views on both sides of the House about a system of insurance, but I am not personally in favour of that. I think that actually the easiest and quickest way to resolve the social care crisis in local government is to make sure that we fund social care through local government.

I want to come on to the issue that could make the situation that I have set out even worse for many of the same local authorities that are already at breaking point. The research from the Local Government Association has exposed the so-called fair funding review for what it really is: a cynical plan that risks leaving more sick and vulnerable people without the care they need. If implemented in the way that the LGA has calculated—and MHCLG apparently told the LGA that its assumptions were along the lines that the Ministry is going—then funding for social care for older people is due to drop in London, the west midlands, the north-east and the north-west, while the south-east and the south-west will see an increase in many areas. For young adults, the largest decreases will be seen in the north-west, the north-east, Yorkshire, the east midlands and west midlands, while the south-east and east of England will see some of the largest increases.

This research from the Tory-led LGA has shown that many of the areas that voted for, and put their trust in, the Conservatives for the first time in 2019—the so-called red wall seats—will see some of the largest cuts to social care funding if the plans go ahead in the way that has been outlined. Indeed, three quarters of those red wall constituencies—the seats that gave the Prime Minister his majority—will see millions of pounds of funding diverted from their hard-pressed councils to another part of the country. The LGA Labour group estimates that that is £300 million of funding that will be funnelled from less affluent councils to the more affluent communities.

But even worse than both those factors is the effect that there will be on the most deprived communities. The 10 most deprived local authorities in England will see, on average, a 13% cut, while the wealthiest communities in England will see their budgets grow by 13%. This model was devised back in 2014 at the height of coalition austerity; perhaps it was then politically expedient for the Conservatives to divert funds to leafy Tory shires at the expense of more deprived metropolitan and urban communities. But given that the Prime Minister’s claim that austerity is over, divvying up an ever-shrinking pot differently is so last Parliament—in fact, it is so the last two Parliaments before the last Parliament—and it is certainly no longer politically expedient.

Last week, I wrote a letter, with council leaders, to the red wall Members on the Government Benches, urging them to speak out against a plan that will see cuts to adult social care—one of the largest cost pressures facing all local councils, particularly those in deprived areas. I know from some of the responses that Government Members have given to the press that the calculations from the LGA have been dismissed as speculation. I say to those Members that this analysis was produced by the cross-party LGA and was released officially to support councils as they plan their budgets in the coming years. The analysis that the LGA produced was also informally shared with MHCLG, whose officials privately confirmed that the assumptions in the analysis are sound.

This new research is also consistent with what we already knew. Last year, researchers in Liverpool warned that removing deprivation from the funding formula would see the 20% most deprived areas lose £390 million a year. The Institute for Fiscal Studies has warned that removing deprivation from the formula would likely hit councils in inner London and most other urban areas, like Manchester, Birmingham, Newcastle, Bristol and Kingston upon Hull, where deprivation tends to be not just concentrated but over-concentrated. The IFS states that

“proposals by the government to base assessments of councils’
needs for spending on services like homelessness prevention, public transport, waste collection, libraries, and planning on population only would shift funding from councils serving deprived areas to those serving more affluent areas.”

It has also warned that the evidence base to justify this decision is weak.