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I beg to move,
That the Local Government Finance Report (England) for 2020–21 (HC 68), which was laid before this House on
It is my pleasure to follow the successful passage of the police settlement and to speak after a number of brilliant maiden speeches, to which I had the pleasure to listen. I gently say that although today is the 100th anniversary of Nancy Astor’s first speech as the first female MP, the first five female councillors were elected more than 10 years before that, in 1907, after the passing of the Act allowing female ratepayers to stand for local councils. It is always local government that gets there first.
It is my privilege as Local Government Secretary to work closely with public servants throughout the country who day in, day out deliver the local public services that we all rely on. These are the people who are improving people’s lives, ensuring access to vital services and helping some of the most vulnerable in our society. I saw this again in the past fortnight, with those who responded to the storms, just as they did during November’s floods. I am immensely grateful for their efforts and delighted to be backing them and their communities today.
Will my right hon. Friend congratulate the parish councils for the really important work that they do to look after flood victims? In Coton in the Elms, Willington, Egginton —goodness me, I need to say so many more—Repton and Barrow upon Trent they worked so hard to help their neighbours in the very difficult times during the recent floods.
I am absolutely delighted to agree with my hon. Friend. Serving on a parish council is an important role in local democracy. I give my praise, along with hers, to all those who serve on parish councils—including in my own constituency, where a number of communities were flooded very seriously over the past week—for the work that they have done to support their local communities as they begin to recover from the very serious floods.
It is because those individuals and the communities they represent matter to this country that today we are backing them with the best local government funding settlement for a decade. The settlement delivers a 4.4% real-terms increase in spending power for councils—£2.9 billion extra. It has been widely welcomed by the sector. It injects significant new resources into adult and children’s social care. It places councils on a stronger financial footing from which to build. It achieves all of that while protecting people from excessive council tax rises—the kind of regressive tax increases that we saw hurting working people year after year under the last Labour Government, during whose time in office council tax doubled.
I am staggered, to be honest, because I think that council tax is a regressive tax. Each adult in Newham has lost 50% of the grant that was given by the Government, in an area where more than 50% of our children live in poverty, in order to give to the Tory shires. Does the Secretary of State honestly think that is a fair settlement?
If the hon. Lady is concerned about funding for local public services, she will join me and my colleagues in supporting the best local government settlement we have seen for a decade. She says that council tax is regressive, so what happened under the last Labour Government, when council tax doubled? Under this Government council tax has fallen by 6% in real terms, while we have continued to deliver important public services.
I was determined to champion local government in September’s spending review. I want to thank those who responded so constructively to the two consultations we ran at the end of last year. We can be proud of what we have achieved, and particularly of how the settlement delivers for the most vulnerable in society. It secures £1 billion of new Government funding for social care, alongside the extra £410 million that we invested last year. That is a major new injection of funding that will help local authorities to meet the undoubted rising pressures on the care system, which we all see in our communities and in our own lives.
We will also be maintaining all funding going into the improved better care fund, at the same time as the NHS contribution to the better care fund rises by 3.4% above inflation to over £4 billion, in line with the broader NHS settlement. Alongside this, I am allowing local authorities responsible for adult social care to raise council tax by an additional 2% above the core referendum principle. That is a necessary step that is specifically targeted to meet demand and ensure that vulnerable people are supported.
Councils such as Durham County Council are being disadvantaged, because even if they increase their council tax by 2% to cover that element, it will raise far less than could be raised by some councils in the south, which have larger council tax bases. The demands on Durham County Council are far greater than those on councils in Surrey, for example, because we have fewer self-funders, so how can that be fair?
I will turn now to the specifics for the right hon. Gentleman’s constituency. This settlement will see a 7.1% increase in core spending power, and the additional social care grant for next year will be £12.8 million, which is a very significant increase. For the reasons he has just set out, we decided to apply an equalisation to the social care precept, which will ensure that those areas of the country with the lowest tax base will see more funding flow to them, in a redistribution of funding from those areas elsewhere in the country that, as he rightly says, have higher tax bases. We chose to do that at £150 million, which is more than has been done in previous settlements, precisely to answer the point he makes.
Local authorities in the top quartile of deprivation are seeing increases averaging £12.3 million next year. Does my right hon. Friend agree that this demonstrates that the Government have listened to the concerns of those local authorities that have been most hard-pressed in recent years?
That is absolutely right. My hon. Friend’s own local authority will see a 6.6% increase in its core spending power next year, as a result of this settlement.
Let me make some progress.
Taken together, these measures mean that the Government are making almost £6 billion available next year across adult and children’s social care. I appreciate that this is only the start. Fixing social care is one of the defining issues of our generation, which is why this Government will be commencing cross-party talks on social care very soon to get this right once and for all. We welcome hon. Members from all parts of this House to participate in those talks and to do so in a spirit of finding a consensus and of moving forward as a country.
I cannot help but feel concerned that, in spite of what the Secretary of State is saying, the reality around both planned cuts and cuts that will result from the so-called fair funding review will actually make my local authority more than £8 million worse off, when it has already had £200 million cut since 2010. What will that mean to the people—both adults and children—who rely on social care?
I do not doubt the hon. Lady’s sincerity in raising the question, but I do warn against unnecessary scaremongering. The reports that we saw in the press on the fair funding review were put out by the Labour party’s local government press office. They were not based on any actual numbers created by my Department. We have not even published the consultation yet, and so I would disregard them. In fact, the Local Government Association itself later went on to say that these figures are not reliable and are not something on which local councils should make spending decisions. We will proceed with the fair funding review, and I will come on to speak more about that in a moment. We think that it is right that we update what is undoubtedly an antiquated formula and that we base the funding of local public services more closely on the needs of local communities.
I am glad to hear that the Secretary of State is considering fairer funding. Getting fairer funding, as he will know, is very close to our heart in Leicestershire as we are near the bottom end of the table. One of the interesting things about Leicestershire is its sparsity and rurality. When it comes to making a new equation, will he be considering the fact that it may take a social worker, or some other service, up to an hour to move from Hinckley to, say, Twycross? Will that factor be included in future plans?
It will be, yes, and that is absolutely right. It is important that the new formula, when we bring it forward, takes account of sparsity, the cost of delivering public services in rural settings and the fact that there is deprivation to be found in shire counties, as there is in other parts of the country. I say that as a representative of the county of Nottinghamshire, with long-standing pockets of deprivation in former coalfield communities, all of which needs to be taken into consideration as we bring forward a better updated formula.
Another priority on which not just social care but so many other vital services rest is ensuring that councils have the stability that they need to plan ahead, and I believe that this settlement will help them to do that. It maintains all the grants from 2019-20 and increases core funding in line with inflation. Today, I am announcing a £40 million boost for the sector from the business rates levy account—extra funding that I know will be very welcome by the sector. I recognise that this is a one-year settlement, and I will be leading another push at the comprehensive spending review later this year to ensure that local services get the long-term funding that they need. This stability also gives authorities a platform from which to drive efficiencies and learn from the very best practice of councils across the country, and will act as a spur to improvement.
One of the ways in which the Secretary of State could give multi-year, almost permanent, guarantees about levels of funding is through a much more ambitious programme of devolution. Is it not time for an English devolution Bill, so that all councils have the fiscal powers that they need to meet the needs of their communities?
If the hon. Gentleman will give me a few minutes, I will come on to our ambitious plans for devolution. He will have seen in the Queen’s Speech that later this year we will bring forward a White Paper on English devolution, which we hope will build on the very good work done in recent years, including to establish Mayors across the country.
Today’s settlement is good news on many counts; it provides more money and more stability for councils, but above all, it is good news for local people. We are delivering the best settlement for a decade while keeping people’s council tax bills low. Under the Conservatives, council tax in England is 6% lower in real terms than in 2010. The average council tax bill increase in 2020-21 is projected to be below 4%. That compares to an average increase of 5.8% between 1997 and 2010. It was a Conservative-led Government who ultimately made sure that local people had the final say on their council tax bills, following years of tax rises under Labour.
I am not familiar with those figures, but I am sure that the hon. Gentleman will welcome the fact that through this settlement, we are providing a 4.4% real-terms increase in spending for councils, while keeping council tax as low as we can.
I am putting forward a controlled package of council tax referendum principles based around a core increase of 2%, with a flexibility of up to £5 for shire district councils. This strikes the right balance between giving local authorities flexibility to meet the needs of their local area and empowering local residents to veto excessive increases.
As we have heard in a number of interventions, we are also fundamentally changing how we allocate council funding, to deliver a fairer, more up-to-date, more transparent way of allocating taxpayers’ money. It must be right to explore how we can bring the increasingly convoluted and outdated funding formula into the 21st century, and how we can better link the funding of public services to the needs of individual local authorities. There is no question but that the fair funding review is a substantial piece of work. There are many different views on the way forward, which raise challenging questions that we will need to work through in the months ahead. We plan to consult widely on our proposals this spring, and to listen to the views that we receive. In that spirit, I hope that we in the House can work together to build consensus, and move forward to a better funding formula.
I am grateful to my right hon. Friend for mentioning the pockets of deprivation in shire counties; I could certainly take him to some in High Wycombe. He talks about fair funding; those of us on the fringes of our major cities have additional pressures, as people who need additional services come to live in our area. Together with the Chancellor, will he consider how we can ensure that the fringes of not just London, but all our major cities, are equipped to deal with the extra pressures that they face?
My hon. Friend makes an important point. Knowing something of his constituency, I think it is the perfect example of a part of the country where there is great affluence, but also significant pockets of deprivation. We need to ensure that funding for local authorities that provide public services is based on the actual needs of the community, not a formula dreamed up many years ago.
Forty-one per cent. of children in Birmingham are growing up in poverty. Nearly half a million Birmingham citizens live in some of the most deprived areas of Britain. Birmingham is on track for £784 million-worth of cuts to its budget. Its workforce has been cut in half. Children’s centres and youth centres are closing, with catastrophic consequences for the city. The Secretary of State referred to the Local Government Association’s assessment of the fair funding review on social care funding. Is it not the case that its assessment is that the current direction of travel will see money channelled from high-need areas such as Birmingham to lower-need areas like Surrey and Buckinghamshire?
That is not the view of the LGA. After the Labour party issued a press release suggesting something along those lines, the LGA gave the clarification that it is impossible to speculate because we have not published the figures; we have not published our consultation. So with great respect to the hon. Gentleman, he will have to wait until—[Interruption.] Well, it was the Labour group on the LGA. I am not going to base my views on the press releases of the LGA’s Labour politicians; I am going to base them on the reality of what we intend to bring forward in future.
On the serious point that the hon. Gentleman raises, we will be consulting in the spring, and that will address issues important issues such as that. I hope that he, Birmingham City Council and others who take an interest in these matters will participate in that consultation. We will of course listen to his views as we bring forward a better settlement that attempts to work for all parts of the country. The settlement that we are voting on today is a good settlement for Birmingham. It provides a 6.4% increase in funding, or £27 million additional funding, for social care.
Does my right hon. Friend agree that the problem in Birmingham is that the Labour administration simply cannot control a budget or deliver services properly? For instance, it spent £15 million on resolving the bin dispute, we have a budget for a bus depot that has gone from £2 million to £15 million, and £100 million for all three phases of the Paradise development was spent in the first phase. The problem is that Labour councillors cannot manage a budget.
What a refreshing change it is to have my hon. Friend in the House representing Birmingham in the way he does. He is absolutely right that Birmingham City Council has a lamentable record of delivering public services. It cannot even manage the bins in Birmingham. That is why we were forced to bring independent non-executive directors into the council to monitor its performance. I want to see it improved in the years ahead, and I am sure that he will be holding it to account very robustly in this House.
Let me turn to the broader agenda that we will be pursuing in this Parliament. A new approach to funding is an important moment for local government, but this is just the beginning of our ambitions for local democracy. I want to work with councils on the overriding mission of this Government, which is to level up all parts of the country. That means, at every level of government, from Whitehall to town halls, delivering on the priorities of the British people. It means building on the success of the devolution revolution that we pursued in the last Parliament with our regional Mayors, who already cover one third of the population of England and 50% of the population of the north.
I want us to secure more devolution deals like the ones raised by Gareth Thomas. We have already made progress since the general election in Sheffield. That deal is now, I hope, unlocked, and we will see the Mayor there assuming the full powers as soon as possible. We have also made progress with other important parts of the country, including Leeds and West Yorkshire—I sincerely hope that those deals will proceed at pace—and we are opening discussions with several other areas. Some seek the powers and responsibilities of the proven mayoral model to emulate the impact of great Mayors such as Andy Street and Ben Houchen. Others seek the greater ability to plan and to deliver strategically that comes with a combined authority or a unitary authority. We will support, encourage and incentivise each of those reforms in any part of the country that shares our determination to move forward.
I thank the Secretary of State for giving way again. I very much welcome the Sheffield city region deal, and I want to pay credit to the previous Northern Powerhouse Minister, Jake Berry, for the perseverance he showed in trying to get all the authorities in the city region together to do that deal. Does the Secretary of State agree that any powers that other mayors have must now be made available to my hon. Friend Dan Jarvis, Mayor of the Sheffield city region?
I happily join the hon. Gentleman in paying tribute to my right hon. Friend the Member for Rossendale and Darwen and others in this House, including the hon. Gentleman, who have persevered with that devolution deal, which at times seemed a forlorn cause but now appears finally on course to being fully implemented. We have made it clear that we will be offering all existing mayors the full suite of powers that are available to Andy Burnham as the Mayor of Greater Manchester, with the exception of the health powers that he exercises—I think there is widespread agreement that a degree of further thought is required before we roll out those powers in other parts of the country, but we are certainly not opposed to doing so once we have given that more time and consideration.
Our English devolution White Paper will look to spread the benefits of greater control to all parts of the country, and this is the right time to do it. At the start of a new Administration and at a moment of national renewal, we must seize the opportunity to reform local government and give more powers back to the public.
Levelling up means firing up our towns through our £3.6 billion towns fund, so that they can be engines of opportunity and growth. From St Ives to Stocksbridge, towns and their local councils are engaging actively in that, using the towns fund to attract private investment and invest in transport, skills, culture and technology.
It means pulling out all the stops to deliver 1 million homes over this Parliament and nurturing places that inspire pride and a strong sense of belonging. I firmly believe that we can build the houses that our country needs—houses of all types, including more affordable homes—while also building safer, greener, more beautiful homes in communities that foster neighbourliness and a true sense of identity. We will be asking a lot of councils. We will be asking them to deliver the housing need of their communities, and in some cases, to do so without encouraging needless urban sprawl or the ruination of the countryside and a loss of the green belt. That will mean that they will have to be ambitious and to develop brownfield land aggressively, as we are seeing in some of the best parts of the country. It will mean reimagining town centres and building upwards with gentle density.
No one can abdicate responsibility for meeting the acute housing needs of our country, and some councils are already leading the way in doing that. Last week, I wrote to councils that are exceeding the housing need of their communities to thank and praise them. I hope that more councils will follow their example, and we will support and incentivise councils in the years ahead to do so.
The investment that we make today is part of a wider picture of investment to renew communities and to address the priorities of the public, which we promised to do in the general election and for which we were lent the support of millions of people across the country, and we now need to repay the trust that they placed in us. We heard about some of that investment earlier today, with the recruitment of 20,000 extra police officers over the next three years.
It also means investing over £14 billion more in our schools between now and 2022—an extra £150 million a week and the largest cash boost in a generation. It means putting more money into our buses, with an extra £220 million in our national bus strategy and £5 billion for buses, cycling and walking, which will play an important part in the lives of all our constituents. It means upgrading our local roads, backed by £28 billion of investment, and more money for potholes. It means committing to fund the Leeds-to-Manchester route as the first stop on our journey to deliver Northern Powerhouse Rail. It means committing to High Speed 2—the spine of the country’s transport network—alongside radical improvements to local transport networks all across the country. It means investing £500 million in new youth clubs and services, and creating a £250 million cultural investment fund to support local libraries, museums and social and cultural capital in our communities.
Thanks to the almost £3 billion of extra investment that we are providing, this settlement will see constituencies in every corner of England getting more money next year, while protecting taxpayers. That means more money for the most vulnerable and the key public services on which we all depend, and a sound basis on which local government can build for the future with confidence. Let us get behind this settlement and allow that good work to begin today.
First, I want to thank our dedicated council staff, officers and our local councillors of all political persuasions and none, who over the past decade have had to contend with year-on-year budget cuts and a Government who have failed to take any meaningful action on the largest issues they face—the crises in children’s services and in adult social care. Yet our councils have ploughed on, and they have continued to innovate. They continue to provide good services for many of our local communities, because councils are the linchpin of our communities. They ensure the delivery of proper, cohesive, joined-up services with other agencies—whether housing associations, the police, leisure services or youth services—but it is crucial that our councils and our councillors are given the resources that they need, and that we do not cost-shunt from one area of the public sector to another.
As the Secretary of State will know, the finance settlement is one of the most important events in the local government calendar, so it was disappointing that the settlement this year was subject to delay and a degree of uncertainty because of the general election. It was also disappointing that the Secretary of State did not deliver the provisional settlement by way of the usual oral statement before Christmas, especially considering the cancellation of Housing, Communities and Local Government questions for almost six months.
It is at least pleasing to see the Secretary of State in his place today, after he survived the reshuffle before the recess we have just returned from. Reshuffles can be a tough business—a sigh of relief from the two survivors on the Front Bench facing me, but brutal for those who are moved or dropped. Who knows what will happen after
I am happy to recognise a local government finance settlement today that at last begins to move in the right direction and provides an overall uplift in spending power. This is an uplift, though, with some big provisos and assumptions. It must be considered in the overall context. Councils are at a low base after 10 years of reductions and cuts, and local authorities still face very significant pressures that this settlement does not address nearly enough.
Today the Secretary of State has offered what the Local Government Association has referred to as the “least worst” financial settlement since 2010. To be honest, after a decade of disappointment, it is easily done. In the past decade, funding for local government has fallen by 43%; since 2015 alone, it has fallen by 32%; and if we look at the Government’s preferred measurement, and include today’s settlement in full, we see that overall spending power is still 11% lower than it was in 2010. That is 11% less funding for our local public services, while residents continue to pay more every year for council tax and services are being cut. [Interruption.] The Secretary of State says it is a reduction; if council tax goes up every year, it is not a reduction for those people. Let me just say to him that the average band D council tax in England in 2010 was £1,439, in 2015 it was £1,484, in 2019-20 it was £1,750, and it is going up again this year too; those are increases in council tax however he tries to spin it.
We know that the cuts have not fallen equally across England. Labour-run authorities have seen their spending power fall on average by 14%, almost twice on average as much as the cuts forced on Tory-run authorities. I do not say that this is all political; it is a fact of geography, because areas like these are also often some of the more deprived areas that have the greatest needs in adult social care and children’s services, that have the greatest health inequalities, and that are more grant-dependent to fund services, because the property types in those areas mean that their council tax base is low, and that cannot be changed quickly or easily. But the difference between the figures for funding and spending power is also revealing, because it shows how much the Government have pushed the burden for funding local services away from the centre and on to local taxpayers.
In an ideal world of localism that is not a bad thing, but the playing field is not level and nor is the game currently fair. We are now in the bizarre situation where people are paying more for less, and that is unsustainable for the long-term viability of the local government sector, something I cherish, having been a councillor for 12 years before entering this House.
In order to achieve the Community Secretary’s stated 4.4% increase in spending power, residents will once again be forced to bear the burden of inflation-busting council tax increases. The Government’s plans are entirely predicated on this increase happening in every town and county hall—and that in itself is not a certainty—and so the “best settlement in a decade” boast from the Secretary of State depends on this happening, or the 4.4% that he quotes will not be reached.
Not only do we have a system that has been deliberately skewed to benefit certain parts of the country, but there are added pressures on certain councils, such as Durham and other northern councils, in terms of social care and looked-after children. With social care, we have fewer self-funders, and there are over 900 looked-after children in Durham, which should be compared with the figures for some other areas. That means that 60% of the budget is now being spent in just those two areas, and in some places—such as Hartlepool, I think—it is about 65%.
My right hon. Friend is absolutely right, because the people-based services—children’s services and adult social care—are services that most of our constituents never have to use and where they do not see the money being spent, but the things that they care about and think these inflation-busting council tax increases are going towards, the neighbourhood services, are the things that over the past 10 years have been squeezed and squeezed, and in some cases have disappeared altogether.
Let us be clear: I do not expect churlishness or hypocrisy from Ministers or Members of the governing party in the upcoming local elections if councils increase their council tax and the social care levy by the maximum amount, because this finance settlement that we are agreeing tonight requires these increases to happen in full in every town and county hall in the country, to meet the 4.4% claim that is being made. What we know is that one third of this year’s growth would come directly from the general council tax increases of the maximum of 2.99%, with an additional one-fifth of the whole figure of growth coming from the social care levy being charged at the maximum of 2%. That is over 50% of the funding growth that has been lauded tonight coming from local taxation, not Government. As we know, its spread is very unequal, so we do not expect to see Ministers boasting about this settlement and then criticising councils for putting up council tax in the same breath. This settlement also fails to move beyond the sticking-plaster solutions that have been offered in recent years.
Solace’s local government finance spokesman, Martin Reeves, has criticised the Government’s approach, saying:
“the constraints placed on these pots usually means the money is spent on dealing with existing demand, demand that is itself often a symptom of structural (and often longstanding) funding shortfalls elsewhere in the system.”
Rather than this reactionary approach to funding, we need to be dealing with a system that is at breaking point, proactively investing in reforms to improve outcomes, particularly for the more vulnerable people in our communities. The National Audit Office has warned that a continuation could
“undermine strategic planning and create risks to value for money.”
What I am speaking of today should not be any surprise to the Communities Secretary, because I am not the first person to raise concerns over the Government’s funding plans. Indeed, over one in 10 who responded to the Government’s consultation on the financial settlement objected to the way that the Government are increasingly using council tax to address the funding pressures the Government themselves have created, arguing that that would transfer the burden to local taxpayers. They argue, and they are right, that additional council tax flexibilities can have an uneven distributional effect, benefiting areas with larger tax bases while those with smaller tax bases continue to see gaps in their budgets grow.
Unfortunately, those same areas are often the ones that face the largest pressures on adult and children’s social care. For example, while Wigan has the potential to raise around £4.5 million from the council tax changes, Buckinghamshire can raise £12 million. For Wigan, that would barely let it break even on last year’s overspend as it managed increasing demand on care services, particularly caused by pressures in children’s services. Growth in demand is not slowing down, but the money to ensure that these essential services are in place is not coming from the Government and cannot be sufficiently raised in many parts of the country with the greatest call on these services.
A quarter of people who responded to the Government’s consultation were concerned, stating that the additional flexibility on council tax was not enough to meet the growing pressures on children’s services. One in five raised that concern in relation to adult social care. In 2018, the Local Government Association warned that the funding gap for adult social care alone will grow by £3.5 billion by 2025. Today it reported that over the past five years pressures on children’s services have pushed overspending to £3.2 billion. The number of children in care has grown by 28% in the past decade, and the number of children at risk of physical, emotional or sexual abuse or neglect has increased by 53%. I do not say that to make a political point. It should shame each and every one of us, on whichever side of the House we sit, that those most vulnerable children are being let down by a system that is broken.
The LGA has also warned that the funding promised in the finance settlement will not even be enough to cover the increase in costs from the rise in the national living wage from April. Even though demand continues to grow, councils will be forced to cut back on these services. This is not sustainable. I appreciate that there are no quick fixes. The Secretary of State knows my concern about the so-called fair funding review, but the figures that were used by the Local Government Association Labour Group were produced by the Tory-led LGA, whether he likes it or not. His Ministry was asked for clarification of whether or not those were in line with Government trends and thinking, and it gave its acknowledgement that they were.
I repeat my offer to the Secretary of State: we in the Opposition are willing to work with anyone who genuinely wants to fix our outdated and broken local government finance system, but it has to be genuinely fair and based on real needs. It needs to reflect the circumstances facing each local authority, including their ability to raise income, and it must properly take account of all kinds of need, including deprivation and health inequalities.
After a decade of decline and neglect, there is little surprise that the promise today of an uptick in spending power has largely been welcomed by the sector, and indeed, by us. We will not oppose the local government settlement. We will not oppose councils receiving any additional funding in today’s settlement, but let us be honest: this settlement, while welcome for a limited uplift, does not solve the financial crises faced by our town and county halls. It does not fix the two cost and demand-led services of adult and children’s social care, and it does not ease the squeeze on our hard-pressed neighbourhood services—all the things that our constituents think that their ever-increasing council tax bills go towards: the parks, the road repairs, the ground maintenance, community centres, street cleaning, libraries, street lighting and bins. There are also the contributions that are less tangible, such as the sense of place, community and local identity—the things that make us proud, or sometimes not proud, of where we live. All these things will continue to be cut or squeezed until or unless the funding crisis in children’s and adult social care is properly addressed and councils can start to rebuild our neighbourhood services again. Once we get to that place, that will be the time to welcome what is happening in local government. That will be the time to cheer. We will support the Secretary of State tonight, but let us get local government back to where it always should have been—at the heart of rebuilding our communities.
I am grateful to you for calling me to speak so early in this debate, Mr Speaker. For many years, local government in Suffolk has got a raw deal, with funding from national Government not taking proper account of the challenges that the county faces: a large and fast-growing elderly population, social deprivation that must be tackled in coastal communities such as Lowestoft, and the cost of delivering services across a large, often sparsely populated area, which includes thousands of miles of roads that have taken a real battering in recent years.
The good news is that this settlement is a step in the right direction, but a lot of work remains to be done to ensure that Suffolk gets a fair deal. County authorities such as Suffolk face a significant funding gap. The settlement reduces the gap, which is now 37% smaller than had been forecast. It buys time while long-term solutions are found to some of the significant challenges that we face and are then put in place. That includes long-term reform of social care for an increasingly elderly population and putting it on a sustainable footing. I acknowledge that this is a very difficult challenge, but in the next few months the Government must finally publish their proposals, and then we must seek a cross-party consensus on the best way forward.
In the short term, we need confirmation of how the £500 million potholes fund and public health funding will be allocated. We also need a review of the new homes bonus—it is welcome that the Government have committed to one. At the forthcoming comprehensive spending review, it is important that the Government provide long-term certainty to allow councils to plan sensibly and properly. That means funding settlements of at least three years.
Finally, the Government must press ahead with the fair funding review, which should ensure that Suffolk gets a fair deal in future. Research by the County Councils Network has shown that if counties such as Suffolk were funded at the national average, they would receive an additional £3.2 million a year. There has been talk of metropolitan areas losing out as a result of fair funding. For a one nation Government, it would be wrong to pursue such a course, but the CCN’s research indicates that when all elements of the fair funding review are considered, councils of all shapes, sizes and political colours should benefit from a fairer distribution of resources.
Local government is on a journey. This settlement is a move in the right direction, but it is only a staging post; it is not the final destination.
The Secretary of State is right that the spending review is better for local government and that it gives a spending power increase of just over 2% in real terms—I think that was the figure given—but that has to be put in context: it is actually a 5% reduction from 2015-16 and a 20% reduction per head of population in real-terms spending power since 2010. Those are the figures the IFS has produced. Local government has received bigger spending cuts than any other part of the public sector, and we have all experienced that in our constituencies up and down the country, whether they be urban, rural, large city or small town; they have all been hit disproportionately by those cuts.
At least we have some stability this year, as the financial officers in Sheffield have said. For the first time, they are not facing a package of cuts. They have welcomed the £10 million extra for social care, and the city has tried to maintain spending on social care for the elderly, looked-after children and people with disabilities, as have most councils up and down the country, but we know that this is really a one-year settlement, for obvious reasons, and that next time we will probably be looking at a multi-year settlement. Peter Aldous talked about the fair funding review, but that is not about an increased budget in total; it is just about redistribution. Somebody will lose out, unless the Government put more money in so that everybody gains. That will be the challenge that comes out of the review.
There is also supposedly the retention of up to 75% of business rates, and maybe some impact from the business rates review itself—who knows? These all major changes. The question is: is this year the lull before storm for many authorities or the beginning of better things to come? That is the test for the Government. Another test is: is austerity really over? That was the question the IFS asked in its comments about the spending review and the figures I quoted from its report. Is austerity really over? What do we even mean by “an end to austerity”? That is an even bigger question. Does it simply mean that local authorities will not have to make any more cuts in overall terms, or does it mean they will have resources to undo some of the cuts they have had to make?
To my mind, the answer has to be the second one. An end to austerity has to mean going back and putting more money into the services that have been so badly cut over the years. As councils have tried to protect social care, other services—my hon. Friend Andrew Gwynne very properly went through them—be they buses, leisure, libraries, street repairs or refuse collection, have been cut consistently by up to 50%. We cannot continue to see more cuts in those important services, and, moreover, we cannot continue without some restitution of the services that have already been cut.
I heard what the Secretary of State said about the review of social care and the need for cross-party debate and, hopefully, agreement. I am more than happy to join in with that, and I am sure that the Housing, Communities and Local Government Committee will be as well. We dealt with the issue in the last Parliament, and I think that our joint report provided a good basis for progress. Realistically, however, any significant change in social care funding will probably not happen during the current Parliament. What we need is more money put into the current system, at least for the foreseeable future.
Let me identify two areas of concern—apart from social care—that are having a real impact on my constituency and nationally. Like many MPs, I regularly raise road safety issues on behalf of constituents. One concerns the need for yellow lines at the end of Moor Farm Avenue, a road that leads from a private estate to the very busy Mosborough Moor. Those yellow lines would ensure that the corners—the junctions—were kept free of obstruction, so that motorists leaving the estate would have a better sightline to vehicles coming in the opposite direction. What has happened? The council’s response is that after years of funding cuts, it cannot satisfy all requests. That scheme is one of 1,600 on a waiting list in the city of Sheffield.
Another issue is the lack of a crossing outside Halfway Nursery Infant School. I have been campaigning for that crossing for 10 years. At present, it is dangerous for children and their parents to cross the road, but the council can fund only a couple of schemes a year in the whole city.
I wonder where the Liberal Democrats are tonight. I do not know whether my eyesight is failing, but I cannot see anyone on the Liberal Democrat Benches. However, they campaign locally, and every scheme is a priority, although when they were in government we experienced the biggest ever year-on-year cuts in local authority spending. But never mind: the point is that these schemes are important, and council funding for them has been cut by more than 50%.
The other day I read an important article in the Daily Mail—I am sure that the Secretary of State reads nothing else at his breakfast table. According to that article, the Food Standards Agency has doubled its estimate of the number of intestinal illnesses caused by takeaway and restaurant food each year, and 2.4 million cases of such illnesses are linked to food contamination. That, it says, is connected with the reduced number of local authority environmental health officers who carry out food safety checks. Another important service provided by local authorities has been diminished and run down, and, again, not making cuts is not enough: we need money for authorities to be able to reinstate those services.
I welcomed the Secretary of State’s comments about devolution. I think he has a genuine commitment to and enthusiasm for it. The Select Committee began an inquiry into the issue before the election, and I hope that we will continue that inquiry, because I think that, along with social care, this is an issue on which we can work to secure cross-party agreement.
Thank you, Mr Speaker. I am honoured to have been elected to represent not one but two cities as the MP for Cities of London and Westminster. Mr Betts mentioned that there were no Lib Dems present tonight. Well, they tried their hardest to take my seat with their golden boy. Maybe that is why they are not here tonight.
I would like to begin by paying tribute to my predecessor, Mark Field, who represented the seat for 18 years, serving both his constituents and the nation, particularly recently as Foreign Office Minister for Asia. I pay tribute to his work in the constituency, highlighting issues including policing, as well as in the Foreign Office, where he worked to expose the grave abuses of the Rohingya people by the Myanmar security forces. I would also like to thank Mark for his support for me personally before, during and after the election.
Part of my seat was established in 1298 and I am proud that, in the period of more than 700 years since it was established, I am the first woman to represent it. Cities of London and Westminster is home to the monarch, to the head of Government and to Parliament. It is home to the nation’s high street, Oxford Street, and to the cultural and entertainment powerhouses of Soho, the west end and Covent Garden. It is also home to the centres of the financial and legal professions in the City and Holborn. But most importantly, it is home to more than 130,000 residents, including myself. It has been my home for more than 20 years.
My constituency truly is a story of two cities. The City of London, which is in fact the smallest county in the United Kingdom, is home to 8,000 residents, half of whom live in the Barbican, and also to the country’s smallest police force. The City’s role as one of the world’s leading international financial centres is well established. Working alongside the City’s administrative arm, the City of London Corporation, I hope to build on the work that it has already achieved to strengthen business ties between the square mile and other prominent financial services hubs across the country, including Birmingham, Leeds, Manchester, Bournemouth, Cardiff, Edinburgh and Belfast. This is all part of the simple recognition that a vibrant, thriving City helps a globally successful UK, and that a globally successful UK helps a vibrant, thriving City.
However, there are some contributions from the City that hon. Members might not have heard about. For example, its City Bridge Trust is London’s largest independent grant giver, and it consistently awards over £20 million a year to tackle disadvantage in the capital. The City of London Corporation sponsors or co-sponsors 10 highly successful academies in neighbouring boroughs, runs 12 housing estates across the capital and looks after 18 major green spaces across London and the south-east of England, most notably Hampstead heath and Epping forest.
Hon. Members might know Westminster, the other city in my constituency, a little better. Westminster is home to many great cultural offerings, including the National Gallery, the National Portrait Gallery, Tate Britain, the Royal Opera House, the Royal Albert Hall and 30 west end theatres. I do hope that hon. Members from across the country will be able to take advantage of some of the cultural offerings in their time off, although I know that we do not get that much time off. [Interruption.] Not that I am complaining!
Perhaps the most famous of my predecessors in the Westminster side of the seat was Charles James Fox. Elected to this place in 1768, he held the position of Foreign Secretary three times in six months. He backed the American patriots and battled with the monarch, George III, over the American war of independence. He is said to have been one of the most radical thinkers in this House—a position I hope I can follow. He employed an interesting way to gain support in the 1780 election, encouraging Georgiana, Duchess of Devonshire, and her sister to secure him votes in exchange for kisses. I am not sure that I will be doing the same in 2020. [Hon. Members: “Go on!”] I note that a number of my constituents are in the Chamber.
I came into Parliament to campaign on the issues that most concern my constituents. First among these is rough sleeping. Earlier this month, I welcomed the Government’s announcement of increased spending for councils on rough sleeping. My constituency alone has been given an extra £3 million to help more people off the streets. Westminster sees more rough sleepers than the next three boroughs combined, and I am proud of the outstanding work done by its outreach teams every night of the year. This evening, over 500 beds will be available to those on Westminster’s streets, and 80% of those whom outreach workers come across do not spend a second night out. However, there is still more to do to persuade the other 20% to take the help and support on offer.
I thank our outstanding outreach workers, with particular thanks to Jenny Travassos, Rob White and Nik Ward of the Westminster City Council team, to Mick Clarke and everyone at The Passage in Victoria, to Petra Salva and the whole team at St Mungo’s, and to Dame Louise Casey. All of them have helped to provide me with a better understanding of the causes of entrenched rough sleeping and the possible solutions to improve people’s lives. The first step must be to repeal the archaic Vagrancy Act 1824, replacing it with legislation seeking the preservation of life and directly dealing with the main reasons for entrenchment, which we know are mental health and addiction.
Having been a council leader, it is wholly appropriate to make my maiden speech during a local government finance debate, and I remain a sitting councillor. It was as leader of Westminster that I honed my understanding of local government finance, which in turn led to my frustration at how the system is run and my recognising the need for wholesale reform. The clue is in the name: local government. If we are to ensure that the right and appropriate decisions are made to benefit local communities, we must give local authorities the freedoms and flexibilities they need to succeed.
This country remains far too centralist. Councils across England still depend too much on central Government funding. Our current system is too top-down when it really should be bottom-up, and I am not alone in that thinking. Having spoken to councillors up and down the country through the Local Government Association and sitting on the London Councils executive, I know there is huge appetite for reform. The Conservative leader of Westminster, the Labour members of Tower Hamlets and Hackney, the Labour leaders of Southwark and Camden, and the Lib Dem leader of Sutton are all at one on the issue.
Where to begin? The reform of council tax would be a good place to start. As a council leader, I felt frustrated and constrained by what I consider to be the least progressive and an unfair tax. Increasing council tax means an increase for everyone, no matter what band they fall into, so those on lower incomes pay disproportionately more. That cannot be right. When I became council leader, wealthier residents increasingly asked me, “Why can’t we pay a little bit more?” They appreciated that Westminster had the lowest council tax in the country while retaining excellent services, but they were still willing to pay a bit more to help more services. In a borough where over 2,000 properties are worth more than £10 million and where the occupants of, for example, One Hyde Park are charged £1,500 in council tax, compared with in excess of £200,000 in taxes for the Manhattan equivalent, there is a definite need for reform in this area.
Sadly, successive Governments have lacked the appetite for reform, so in 2018 I decided to introduce my own council tax reform and the voluntary Westminster community contribution was born. Band H council tax payers were invited to pay more, and the response was extraordinary, raising an additional £600,000 in the first year alone and nearly £1 million since it was started. We placed the extra money in a charitable trust and asked residents where they wanted it spent, with rough sleeping, tackling loneliness, and more services for children and young people benefiting. Proof, I think, that there is a willingness among those living in higher bands to pay slightly more. It is not a mansion tax, which I wholly oppose as it fails to address the real issue, but real reform to ensure that council tax is representative, proportionate and progressive.
I welcome this Government’s clear intention to support local government, and particularly the renewed emphasis on tackling rough sleeping. Now is the time for brave, bold reforms and for new thinking to ensure that those on the frontline in local government are given the freedoms they need and are calling out for to help their communities to thrive and to grow in a truly open, global Britain.
It is a pleasure to follow Nickie Aiken, who made a very thoughtful speech. There is lot of agreement on the Opposition Benches with her comments about supporting the outreach workers who are working with the homeless community and with her calls for the reform of council tax. I look forward to hearing more contributions from her in the very near future.
I did not feel the same joy and gladness on hearing the Secretary of State’s initial comments. It appears that, with the picture he paints of the promised extra money, not only are we expected to be grateful for what he is offering but we are expected to ignore the past 10 years of cuts, which is difficult when we see the evidence of it in every part of our community.
One fact I would like the Minister to address in his summing up is that there are now 848 looked-after children in Hull—the number has nearly doubled since 2010. I am sure he is aware, as I am, of the outcomes for children in care and how much lower they are than for children who are not in care. I am sure, therefore, that he will feel as disgusted and outraged as I do that early intervention and support were not available for those children, and I hope he comes to the same conclusion as me that the early intervention and support were not absent because Hull City Council and the social workers did not care but because they did not have the finances needed to fund them.
We have been placed in a situation in which services are left to reach crisis point before there is involvement. All the money is spent at the crisis end, with very little spent at the beginning to develop the early intervention that families and young children desperately need.
It is the same with adult social care. We wait until things get to the most expensive point, when vulnerable adults are left going to A&E services that cost society a lot more than providing the services and support from the beginning. That is because of the Government’s decision to pull money away from our local government.
We do not always acknowledge how local government has been at the front of the cuts under both this and the previous Government. Local government has had to face the brunt. It has had to face the complaints from people who are angry about the roads not being repaired in the way they want, about bins not being collected in the way they want and about problems with recycling. Local government sits there and takes the blame for problems that are not of its making; problems that have come from this building and this Government’s decision to pull away its funding.
The Government want us to be grateful, and they want us to thank them for offering us a little more money. Maybe that would be easier if they showed a little remorse for what they have done for the past 10 years and if they acknowledged that they made a mistake, that they cut too hard and too fast and that the outcome has been those 848 children who are now in crisis and being looked after because some of them did not get the support they needed earlier in life.
I hope the Secretary of State is sincere in wanting to develop a truly fair funding formula and is sincere about working with Opposition Members, because I fear that, if the Government continue down the path they already seem to be taking, we will see more cuts to areas with the greatest need as the Tory shires seem to get more.
I would like the Minister to answer questions on how this will be weighted. Indeed, I raised this with him at a recent all-party parliamentary group meeting, so it should not come as a surprise that I wish to raise it with him again. How will the need for adult social care be weighted in the fair funding formula? How will the need for children’s services be weighted? Will it take into account the number of adults who can self-finance? In Hull, only 11% of adults can finance their own adult social care. That is one of the lowest levels in the country. Is that going to be taken into consideration when the Government develop this fair funding model? We have to look at more than just what business rates are coming into the area; we need to look at the need as well. When working out the new funding formula, is any assessment going to be made of how dire some of the services have become because of the past 10 years of cuts? How are the Government going to work with the different council leaders up and down the country in developing this fairer funding formula? How are the Government going to work with other Members of Parliament, if they actually want to get this right and move forward together?
On that point of getting this right and moving forward together, the other thing I wish to spend a couple of moments talking about is devolution. The Secretary of State knows, because, again, I raised this with him personally, that I am concerned about what is going to happen to Hull City Council on the issue of devolution. He spoke about the fact that South Yorkshire has signed its deal off, and that the Leeds city deal is under development, but I ask him again: what is going to happen to Hull? He talked about the need for a strong economic and geographical area. If he is looking for a strong economic area, he would be looking at Hull City Council, East Riding of Yorkshire Council, North East Lincolnshire Council and North Lincolnshire Council as part of a Humber devolution deal, because it is one. If the Government want to make this into a political decision, different boundaries would be drawn. I want to know from the Government what the priorities are, because it appeared that the previous northern powerhouse Minister accepted the argument for that strong economic area and that that was his deciding factor when making decisions. What is the Government’s deciding factor? Is it the wishes of local leaders in the area or is it the needs of the economy in the area? What is going to take priority when those devolution deals are signed off?
Mention has been made of having different levels of power going to different devolved areas, but will that not partly depend on geography? How many powers would be devolved in a very small devolution deal, with an area comprising just Hull City Council and East Riding of Yorkshire Council, compared with something as huge as the Manchester area? What conversations have been had about that? What happens if this involves a local authority with no partners? How is that going to work? If the Government are looking at a greater Lincolnshire model, they will find that it is not a strong economic geographical area. I want to know what the priorities are: keeping council leaders happy or solving the economic problems facing our country? I would like to know about that.
In conclusion, there are things on which the Government can start to work more effectively with Members from across the House. One of them is devolution, because we have one chance to get this right. If we do not get it right this time, it will take a long time to sort this out. We had this problem with Humberside, years and years ago, as that did not work. That is probably why we have ended up in the situation we are in now. We have got to get this right and to do so we need to be looking at more than just the wishes of local council leaders. We need to be looking at the economy and what works for that particular area. The same applies in respect of the fair funding formula. If the Government are serious about levelling up across different parts of the country, they should work with the Opposition parties to develop a formula that takes into account the needs of each individual area. Otherwise, those 848 children that I mentioned at the beginning of this speech are only going to increase in number.
With a 7.1% increase for County Durham today in the local government finance settlement and a 7.9% increase in police funding, both above the national average, I am delighted that the Opposition are not voting against these measures, especially given that Andrew Gwynne wrote a letter to me just a few weeks ago saying that actually we were going to be facing cuts. It looks like quite the opposite is the case. I am looking forward to his letter outlining the increases we will be facing and welcoming the Government’s approach, especially given that Labour-controlled Durham County Council is still spending more than £50 million building a council headquarters on a floodplain, although this is a massively opposed by local people. I would quickly like to declare an interest in respect of the one point I would like to make in this debate.
I am going to be very quick today. I wish to declare an interest, in that I am co-chair of the all-party group on local democracy. I pay tribute to my hon. Friend Nickie Aiken, who said that she wants the most bottom-up approach possible when it comes to councils. As such, I urge my right hon. Friend the Secretary of State to reintroduce the Bill to exclude public lavatories from business rates. That is exactly what most local councils want. It would save Wolsingham parish council in my constituency £750 a year, and it would save local councils throughout the country more than £8 million a year.
In conclusion, I welcome what I hope is the start of levelling up, from both the Ministry of Housing, Communities and Local Government and from the Home Office in the form of the police settlement. I hope this is the start of things to come.
Coming from Harrow, where the local authority has seen its grant from the Government reduced by some 97% in eight years, it is pretty difficult for me to find much to cheer in the report. Harrow’s core spending power per head this financial year is estimated to be £170 lower than the London average and £75 lower than the average for the rest of England. In short, we are one of the lowest-funded boroughs in London and nationally.
Despite No. 10’s talk of levelling up, there do not yet appear to be any grounds for optimism that the Chancellor’s Budget or future spending reviews are likely to lift Harrow up to a level of spending power similar to our neighbours in Hillingdon, Hertfordshire and Barnet. To be fair to those neighbours and, indeed, to other councils throughout the rest of England, it is not as if any of them are hugely well funded either. Councils in England face an £8 billion funding gap by 2025. Inevitably, more and more councils are struggling to balance the books and more and more councils are using reserves to plug budget holes.
Tory Northamptonshire has become the poster boy for troubled councils everywhere. It is true that incompetence and an over-zealous approach to privatisation were two particular local factors that drove the bankruptcy there, but the reality is that all councils are having to divert money away from youth services, public health, parks and libraries to fund the most basic services, such as street cleaning, social care and homelessness, and even those services are stripped down to the bone. In the long term, that is not only a false economy but affects our constituents’ wellbeing and sense of contentment with life in modern Britain. It means that some of the most vulnerable—those who are desperately in need of care or skilled specialist support in schools—will not get the back-up that they need. In the 21st century, in one of the richest nations in the world, it is difficult to fathom why Ministers are so comfortable about that situation.
If we are really to give the towns and villages of England, and the counties and communities of our great country, the control and transformation of fortunes that so many are desperate to see, the revitalisation of local councils and devolution of more power more consistently, even to the least fashionable of our town halls, is a first essential step. That great slogan “Take back control”, which spoke to so many, did not for most, I suspect, mean taking back powers from Brussels merely to allow Whitehall and Downing Street to continue to lord it over the rest of the country even more.
In recent years, the pace of devolution in England has slowed. The term “northern powerhouse” was a wonderfully evocative turn of phrase, but the lack of funding that followed its invention rightly generated much scepticism. A new surge of energy, with real financial power being devolved to northern councils, seems overdue, even from my distant southern viewpoint. If that is what the Department’s White Paper is set to offer, that would seem to be some progress, but London and the London councils need the same and more, as steps towards a genuine transfer of direct power back to the people. We need a new settlement of powers to help London tackle its major challenges, such as growing inequality, ever-increasing poverty, the skills shortage, the climate and housing crises and even violent crime. All require the mayor, the Assembly and, crucially, local councils to have access to greater powers to create London-specific solutions to London’s problems.
London generates more wealth for Britain’s people and contains more of our citizens than any other part of the UK. Indeed, London generated a third of the UK’s total GDP in 2018, yet we still do not have full control over skills or even benefits budgets.
I do not question the need for Wales, Scotland and Northern Ireland to continue to benefit from the Barnett formula, but I do think that the people of Barnet, and indeed the whole of London, should have our own funding formula too. London is the most expensive place to live and work in the UK, yet our Mayor and Assembly do not have the power to legislate on such crucial issues here, whereas Scotland can do so through Holyrood. In any future constitutional settlement, the UK’s southern powerhouse—its capital city—should be given the same powers as our national friends in Holyrood, the Senedd and Stormont.
For example, why can London not have the same powers now as the Scottish Parliament? Clearly there is not the same national issue driving the debate about where power best lies, but I would argue that the size of our capital’s population and the scale of the challenges it faces demands similar treatment. Why not give London, through our Assembly and Mayor, the right to legislate on all housing and planning matters? Why not have the same income tax-varying powers that Scotland has? Why do Londoners have to beg Whitehall for action to tackle air pollution, when the Mayor and city hall should be given full control to put in place a joined-up strategy to tackle all the various triggers of the pollution challenge in London? Too many of the powers they need are still locked up tight in the great Departments of state just down the road from here.
Why can London not have more control over how our water and sewage services are delivered and what we pay for them? There are more people living in absolute poverty in London than anywhere else in the UK, yet London’s local politicians in the Assembly and in the form of the Mayor are not allowed to determine the London living wage. The right to greater devolution is one that all England deserves, but London is the southern powerhouse of our United Kingdom, and its continued success will be even more essential post Brexit.
I recognise that with Rory Stewart’s sleeping bag having more cut-through than Shaun Bailey at the moment, there will not be much immediate enthusiasm in No. 10 for shifting more power to city hall, but London’s success benefits the whole country. The home counties, in particular, benefit from London’s city state success. All those Tory shires benefit from Labour London, and vice versa. When London grows, so too does the rest of the country. The reverse is also true; when London’s problems inhibit our potential, in the end it is not just Londoners who suffer. It took more than 40 years to start building work on Crossrail. Given the demands on our public transport system, we cannot afford to waste another 40 years before work on Crossrail 2 gets underway.
Levelling up, city deals and the northern powerhouse are all indicators of the slow dance, in our own very British way, towards federalism. London has an essential role to play with the nations of the UK in recasting the Union for the 21st century. For too long our country has been seen as comprising England, Scotland, Northern Ireland and Wales. I have always thought that we needed to empower the towns and cities of England alongside Scotland, Northern Ireland, Wales, and London. There is growing recognition that, in order to secure the Union, the United Kingdom will have to reform and change. London cannot be ignored on that journey, and neither can the rest of England’s town and cities.
A better funding settlement than today’s shabby offering is long overdue, but a Government who want to defend the Union should also set out clearly and soon a package of legislative and fiscal devolution to turbo-charge the federal journey that our country needs to undertake.
The Secretary of State opened the debate by announcing that this is the best local government funding settlement for a decade. That would not take much beating when we consider what has happened over the past 10 years. In the previous debate, on police funding, I referred to the year-zero approach, because it is as though anything that happened before December 2019 was someone else’s fault and had nothing at all to do with this Government; as though they are a new Administration who are coming in to put everything right. But most of the Ministers now on the Front Bench voted for the austerity of the past 10 years, so it is with some chutzpah that they are now trying to convince us that they had nothing to do with it.
We also now have a key in-word, which we will hear a lot more of. Mr Holden mentioned it when he talked about “levelling up”. Well, it will take a hell of a lot of levelling up. I will come on to answer his points about Durham County Council in a minute, because he is clearly going to try to play dog-whistle politics, which does not surprise me at all. He welcomes this statement as though it means extra money for the county council. Yes, this settlement is for this year—it is a one-year settlement. I hope that when the council and the police commissioner put up the local government tax, he does not blame Durham County Council. To do that would be to abnegate his responsibilities, as he would be welcoming it in this place, but saying another thing in County Durham. I look forward to him supporting whatever difficult decision the police commissioner and Durham County Council have to make on the local council tax precept. No doubt, he will try to say something different locally.
This is a one-year settlement. We now have the so-called new fairer funding formula coming in, but we need to remind ourselves about what has gone on previously. Durham County Council has lost 40% of its budget in the past 10 years. That is £232 million. In the early days, when we had Eric Pickles as Secretary of State, this could all be done by cutting back on pot plants and getting rid of chief officers. Well, I am sorry, but I defy anybody who says that we can get 40% efficiencies out of an organisation and still deliver the same services, because we clearly cannot.
What we have had today is the Secretary of State saying that we will have a fairer funding settlement that respects need. That is not what the Government have been doing over the past 10 years. On every indication, the funding formula is seeing money being moved from areas of deprivation to areas of affluence. The National Audit Office has identified that. While Durham County Council has taken huge cuts, places such as Surrey and Wokingham have had increases in their core spending budget. We get to a ridiculous situation now where, if we look at 2019-20, core spending per dwelling for Durham is £1,727, whereas for Surrey it is £2,004. People might ask what difference it makes. It comes back to what we have heard for the past 10 years, which is not only that austerity is needed, but that, somehow, everywhere in the country is the same in terms of delivering services—whether in Surrey, in an inner-city metropolitan area or in County Durham. The two main drivers that are swallowing up most of the budget of counties such as Durham are adult social care and looked-after children.
My right hon. Friend is being very generous. He is making a terrific speech as usual. Does he agree that this issue, as he is describing it, is actually compounded by the deceit that, as part of the devolution of power and fiscal responsibility, these authorities would be able to retain more business rates, but the reality is that the Government do not want increases in business rates, and neither do businesses, because they cannot afford them. The reality is that those authorities will not be given those moneys in any event.
I will come on to business rates in a minute. I will give an explanation as to why, for example, Durham County Council is doing what it is doing with its headquarters. I would argue that it is a response to Government policy.
If we look at adult social care in Durham, we see that there are 3,295 people in home care, 3,151 in residential care, 736 in supported living schemes, and another 763 receiving direct payments. The difference between Durham and places such as Surrey is that we have a higher proportion of people requiring council support. As my hon. Friend Emma Hardy identified, we do not have a large package of support. We actually self-finance, and that makes a big difference in terms of the pressures on local councils.
The same is true if we consider looked-after children not just in Durham, but across the north-east. In Durham, we have 900 children in local authority care. As was said earlier, the number of looked-after children has increased by 20% in the last decade, but in the north-east it increased by 72% in the same period. Two councils in the north-east, Hartlepool Borough Council and Middlesbrough Council, have more than twice the national average number, and five times more looked-after children than Wokingham Borough Council. The new funding formula has to take that need into account. The idea that everywhere is the same is complete and utter nonsense.
The bigger debate, which has not really been had, is about the Government’s direction of travel over the past 10 years, which has been to reduce the amount of central Government funding to local authorities and to push the burden on to the local council tax base. Again, County Durham is at a disadvantage. More than 50% of our properties are in band A, so an increase of 1% in Durham raises very little compared to such an increase in more affluent areas with large numbers of higher-band properties. That will have to be taken into consideration. For true levelling up, there will have to be a complete reversal of what has happened over the past 10 years. If we get to a situation in which what a local authority requires is raised locally, councils such as mine will be at a huge disadvantage, certainly given the increase in the number of looked-after children and individuals in care in the area.
My right hon. Friend is making an excellent speech. Does he agree that the Government have to stop running councils into the ground with their cuts, and should instead invest properly to halt and reverse the real-world implications of their ideologically driven austerity policy?
That has to be what we want local government to do. The Chairman of the Select Committee, my hon. Friend Mr Betts said that, too. It is no good deluding people if, locally, more than 60% of the budget has been taken up by two areas. As my hon. Friend Andrew Gwynne said, most people do not have any visibility of that. When they pay their council tax, they see their bins emptied and environmental improvements, but if 60-odd per cent. of a council’s budget—I think the figure is higher for some councils—is going on two sectors, that will be difficult to explain to people.
A decision has to be taken about what proposals will be put forward on business rate retention. If it is not, the lack of the clarity that local government needs will create real problems for councils such as Durham County Council. There is an opportunity to grow the business rate. I will explain to Mr Holden why Durham County Council decided to downsize its headquarters and move to the centre of the city: to open up an area for investment and create up to 7,000 jobs in order to grow the council tax base. It is doing exactly what the Government want. In addition, it has moved jobs away from County Hall to places such as Crook in his constituency. I do not hear him arguing against moving county jobs to his constituency. Dog-whistle politics is fine, but he needs to look at the facts first.
I would be very happy if the county council was just downsizing its current office; what I do not understand is why the Labour-controlled county council is spending £50 million building a brand new centre on a floodplain. Why not just make better use of the current site?
Wait a minute. It was built in the 1960s, it is full of asbestos and it is very energy-inefficient. If he wants to put capital—public money—into it, fine, but it will not happen, because the money is not there, and what he suggests would cost a lot more than what has been proposed. In addition to that, the council is going to save somewhere in the region of £300,000 a year in running costs. In terms of trying to grow our council tax base in County Durham, that is what the Government want us to do. That is a good, prudent way in which the council is operating. As I say, if the hon. Gentleman is against jobs going to his constituency, please redirect them to mine, because I will have them. [Interruption.] Well, I just ask him to learn his facts. If he wants dog-whistle politics, which he obviously does, then fine, but let us see what is to the benefit—[Interruption.]
Order. If the hon. Member wants to intervene, he should intervene. I am not having continuous noise across the Chamber.
I am sorry, Mr Speaker—I never had this problem with the hon. Gentleman’s predecessor.
The Secretary of State referred to the grants on public health. Again, this issue needs to be addressed, because it is a driver of inequalities. In the police precept debate earlier, we talked about mental health and support for the most vulnerable in our community. The Advisory Committee on Resource Allocation came forward with a formula that meant that from April 2020 County Durham would have lost £19 million whereas Surrey would have gained £14 million. I say in a spirit of genuine co-operation with Mr Holden that I hope he is going to argue, and lobby his Government, to ensure that this inequality, which has been there for the past 10 years, will not continue.
Let me turn to the new homes bonus, which, again, disadvantages not only Durham but other councils. The top-slicing of the new homes bonus leads to a situation where, again, southern councils are gaining from this allocation and Durham and others are losing. That cannot be fair in any type of system. I therefore look forward to the new, radical approach that has been announced by the Secretary of State in arguing that we will level up these grants and the new formula will recognise need, because if it does genuinely recognise need, then the likes of County Durham will gain through this process. It is not acceptable to say that we can wash away the past 10 years as though they did not happen; they did happen. Without the fundamental question about what we want local government to do and how we want to fund it—
If the right hon. Gentleman wants to talk about a year zero starting last year, I wonder whether he would like to talk about a year zero starting in 2010—as if nothing was a problem then, when this country was borrowing £1 in every £4 it was spending due to the policies he had voted for since 2001.
I do not want to get off the subject, but the hon. Gentleman will have to try better than that, because I was a Member then, and I remember, for example, the investment in Sure Start in County Durham, in my constituency and his constituency. I remember the six new schools, two new hospitals and three new doctors surgeries that were built in my constituency—all that investment. With regard to this nonsense that Labour spent too much, he should look back to just before the crash. What were David Cameron and George Osborne, and their Front Benchers, doing then? They were not just matching our spending—they were calling for more expenditure. So if we were profligate, then they, frankly, were completely reckless. When I was a Defence Minister, if I had followed what they wanted to do then, we would have increased the defence budget by billions. What did they do when they first came in in 2010? They slashed it by 16%. So I shall take no lessons from anyone on the Conservative Benches about Labour spending too much, because the Conservative party at the time was calling for more. I was going to —[Interruption.] I will carry on if those on the Front Bench want me to.
The hon. Member for North West Durham cannot ignore the fact that his party, in coalition and in government, has been in power for 10 years. Decisions being taken now are affecting the lives of his and my constituents, and we must put those right. I am prepared to work with him to argue for more money for Durham County Council and others, but I will not get into the petty dog-whistle politics of his portrayal of Durham County Council.
I genuinely think that there is an opportunity here. If the Government get this right and follow through on a fairer funding formula, they will have my full support, but it must be fairer. There was a time when I was in local government that it was not only a proud achievement for many Labour politicians but it was something that the Conservative party was proud of too.
I am pleased to speak in this important debate, particularly given my long-standing commitment to this issue, after 14 years’ experience working in local government prior to entering the House—and what experience those 14 years, particularly the last 10, have given me, because since the Conservatives entered government in 2010, our local councils have been attacked and attacked.
A huge chunk of the austerity that started under George Osborne and continues to this day has fallen on local government, but let us be clear about why that has happened. It was not just because the Conservatives are ideologically wedded to slimming down the size of our state and stripping away our frontline public services in the process. It was also one of the most scandalous outsourcing exercises that this country has ever seen. Ministers knew that the services used by many local residents in their daily lives are more likely to be those invested in by their local council, rather than by central Government. That is why we have seen cuts hitting Labour councils the hardest—so that the Conservative party is able to point the finger of blame for the cuts that they have been relentlessly imposing on those of us who have steadfastly opposed them.
Every household that Enfield Council serves now receives the equivalent of £800 less than they did in 2010. Let us think about that figure—£800 per head. That money could be going into funding the local services that my constituents in Enfield North rely on and creating new ones as future challenges emerge. Instead, hard-working Labour councillors have been forced to choose between which services are the least worst cut.
After a decade of these attacks, when there is quite simply nothing else left to cut, essential services are at risk. Who does this hurt the most? It is not the people who are bolstered against financial changes; it is the families on housing waiting lists, and the kids whose youth clubs have had to close. It leads to the abhorrent levels of rough sleeping that we see on our streets.
But it is not just about the amount of funding allocated; it is about the way that money is reaching our areas too. Let us take public health funding, for example. Public health challenges are sometimes unpredictable, numerous and difficult to respond to. That is why it is vital that the funding received by local authorities to meet specific challenges fits the needs of our area at any one time—and yet the baseline public health funding for Enfield Council was set way back in 2013, which means that the amount of funding we receive completely ignores the demographic changes we have seen, our rising health needs and the worsening poverty under this Tory Government.
This is not merely symptomatic of a Government who are asleep at the wheel when it comes to the challenges that our communities face. It highlights Ministers’ willingness to flatly ignore these challenges and keep funding at a totally inadequate level to save money. While the Prime Minister plans spending splurges on bridges to Northern Ireland, communities like mine are left wanting, with community centres forced to close, social care on the brink and people begging on our streets. Those things happen as a result of political choices—the political choices of this Government. It is time that communities like mine in Enfield North got a fair deal, so that we can finally start properly addressing the immeasurable damage that has been done by this Government since 2010.
First, may I congratulate Nickie Aiken on what I thought was a really thoughtful maiden speech? It is quite telling when councillors come into this place. The experience and insight they bring, regardless of party affiliation, means that we are actually at one when it comes to the need for reform of local government. I very much welcome her contribution on that point.
I thank my hon. Friend Mr Betts, who is the Chair of the Select Committee, for the contribution he made and the insight he brings to this debate. He made it very clear, from information from the IFS, that we have now seen a 20% reduction in spending power since 2010. He asked the question that we all ask: if austerity is over, what does that mean in practice? Does it mean just that the funding cuts stop today, or does it mean that we will begin to rebuild what has been taken from many of our local communities since 2010?
My hon. Friend also laid out a statistic that was new to me—I was surprised by this, but perhaps I should not be so surprised—which is that 2.4 million cases have been linked to food contamination. No doubt a reduction in the number of our public health officials has played a part in that, but in England we are behind. In Wales, a takeaway has to display its food hygiene ratings on the door of the premises, as it does on online ordering platforms, in a way that a takeaway in England does not have to do. In addition to the need to rebuild our public health functions, we need to move forward and make sure we have mandatory food hygiene ratings so that people can make an informed choice about where they buy food.
As always, my hon. Friend Emma Hardy gave a real insight into the impact of cuts and austerity on her community. There are a staggering 848 looked-after children—almost doubling since 2010—with council services left at crisis point. There is a real tension: the Government have of course reduced the central grant and council tax is going up all the time, but the very councillors who are working to protect their community and their council often face the most criticism from local people for the very difficult decisions they have to make. That is a very difficult task for many.
My hon. Friend Gareth Thomas, as always, gave a London insight, painting a picture that we are not always used to hearing about in this place. We very much hear the story that London is thriving and the rest of England is really struggling, but we see real pockets of deprivation in this great capital that should shame us all. We are seeing every local authority really struggling to make ends meet and demand for services really going through the roof.
My hon. Friend also made the case, and I absolutely support this, for saying that we cannot believe that devolution in London has finished. The problem with devolution in England is that we look to London, and we discount it for the rest of England, believing that the job here is done, and it absolutely is not. If we look at devolution in our major cities around the world—New York, Tokyo and other places—we see real fiscal devolution and real law-making powers devolved to a local level, in a way that leaves London in the shadows. When we talk about levelling up, there is a need not just to talk about redistributing finance and capital investment, but about the powers needed across all our major towns and cities in this country to make sure that every community has the right to determine their own future.
My right hon. Friend Mr Jones was absolutely blunt in his assessment. It was interesting to hear the exchange across the Chamber on parts of that, but we can understand why tempers are so frayed on this fraught issue. How can it be right that 40% of a council’s budget—£232 million—has been taken away from local public services. In the midst of all that, when my right hon. Friend raises those issues and the impact on his community and reflects on the local authority’s difficulty in trying to balance the books, we have people who for reasons of cynical political game playing decide to make the local council the target, instead of laying the blame where it thoroughly deserves to be, which is of course with the Government who are pushing through those cuts.
My hon. Friend Feryal Clark, a councillor for 14 years, is also adding real quality to this place. We need more councillors coming here—maybe it should be a prerequisite of coming to this place, as perhaps then we would have a better quality of debate. The figure of £800 per person cut from that local authority is absolutely eye-watering. Although we bat around the numbers, as they are important, what this really means is that those essential services that make a place a decent place to live have been affected: the community centre is not open any longer; the library is now closed; the Sure Start centre that gave young kids the real start in life that they need is no longer there. A startling report today says that life expectancy is going backwards for women and is stalling for men. How can that be right? We are seeing a decrease that this country has not seen for 120 years. Why? It is because of the lost decade of Tory austerity. That cannot be right.
May I just place on record, as my boss my hon. Friend Andrew Gwynne did, a tribute to Jake Berry for the work he did as the Northern Powerhouse Minister? One thing that I enjoyed about the right hon. Gentleman was that he knew how to take a good rebuttal, and the exchanges that we had were fun and in good spirit and were a good challenge. He worked hard behind the scenes to try to make progress on devolution, and I hope that continues.
My final point is that we cannot afford to continue this pressure on council tax. We all know that council tax is out of date, and maybe next April, when council tax revaluations turn 30, we can have a big party and crack open the sausage rolls, the prawn cocktails could come out and maybe a bit of fizzy orange, or perhaps we should look back and recognise that there has been a collective failure on council tax revaluation and the need to modernise. Governments duck this because it is not popular, but we now have a system that is very unfair.
How can it be right that over the last five years we have seen council tax increase by a third in England? That is not right. What would happen if income tax was increased by a third in the same period? What would happen if national insurance was increased by a third in the same period? What would happen if VAT was increased by a third in the same period? What would happen if fuel duty was increased by a third in the same period? And, God forbid, what would happen if beer duty was increased by a third in the same period? There would be a riot in the Strangers’ Bar as we speak. But of course there is not a riot over the council tax increase. Why? Because we can defer blame down to local councils, but it is just not good enough. Today we see that low-income families have 8% of their household income taken for council tax while that figure is only 1% for higher earners. That cannot be right. It is hugely regressive and it is getting worse with every year that passes.
If the Government really want to address this, it requires maturity. It requires a forward view and it requires a clear strategy that has to be more progressive and up to date, and must reflect geographical variations. It must also recognise that council tax has its limitations. Of course property tax is very important, but it cannot take the burden of adult social care and children’s services, and it cannot be right that our ability to receive adult social care in older age is determined by a house value 29 years ago, any more than whether a child gets the care that they need to protect them from harm is determined by the same measure.
We need to grow up on this; we need to tackle it, and we need a solution that puts councils in the right place for the long term.
I agree with my hon. Friend. We need a separate funding stream for adult social care, as the two Select Committees recommended in the last Parliament. Also, my Select Committee recommended a review of council tax very much along the lines that Nickie Aiken recommended, but the Government just dismissed it in their response and said they were not minded to do a review of any kind. Does my hon. Friend agree that that is disappointing?
It is disappointing, but is inevitable in a way, because there would be winners and losers—and, let’s be honest, the winners would be the poorest who have less agency to mount a campaign and the losers would be the wealthiest, the people with agency who can mount a campaign in objection to it, and the major right-wing newspapers will also mount a campaign against it. It will be called the garden tax, the conservatory tax, the porch tax, or the driveway tax, but it will never be a tax that is actually deemed to be fair. But that is what this country needs; it cannot be right in England that we carry on with such an unfair tax system.
If the Government want to be mature—if they want to look long-term, if they genuinely want to take the politics out of this, which is probably what is needed—I am sure our side would be looking to contribute to that, but if they want to wilfully ignore the impact on low-income families and on many local authorities now not able to fund decent local services, I am afraid they can expect strong opposition on this side.
I thank Members from across the House for their contributions to the debate. Everybody here represents a constituency and a community that they are passionate about. We have heard many examples of public servants working hard to give back to the communities we represent. I know that many Members are proud of the services that local government provides, and I hope that this evening will be a chance for us all to back those words up with action. That means backing this settlement, which will give councils up and down the country the certainty they want and need. That is what today’s debate is about.
This is the best settlement for a decade. It puts a game-changing £2.9 billion back into the sector overall. It focuses on the priority area of social care, in which we are providing unprecedented investment. That means putting £1 billion of new funding into a social care grant, as well as continuing to provide the £410 million we invested last year and maintaining funding going into the improved better care fund. At the same time, we are allowing local authorities responsible for adult social care to raise council tax by an additional 2% above the core referendum principle to meet rising demand. That means the Government are making almost £6 billion available next year across adult and children’s social care, which is a measure of our commitment to the most vulnerable in our society. Outside of social care, we are giving local authorities stability for the year ahead by maintaining all grants from 2019-20, while increasing core funding in line with inflation. Today, the Secretary of State announced a £40 million boost to the sector from the business rates levy account.
We are proud that our settlement delivers on all those fronts, while keeping council tax low and giving people the final say on their monthly bills and the services they want to see delivered. The council tax referendum principles we have put forward today are expected to result in the lowest average increase in council tax since 2016, protecting taxpayers from unaffordable and unwarranted hikes to their monthly bills. This is a great package of support for local government and one that starts to deliver on the promise to level up services across the country.
It is not just through the settlement that we are investing in local services to deliver on this agenda. We have pledged £3.6 billion to level up 100 communities across the country through the towns fund; committed £250 million in funding for vital infrastructure that will unlock over 20,000 homes; created a £500 million youth investment fund to pay for top-quality facilities for young people; and pledged a crucial £2 billion to back-fill potholes and make our roads safer. That is what this Government are delivering—a new programme of investment and renewal in our infrastructure and our public services.
A number of Members from across the House raised adult social care. Mr Betts, the Chair of the Housing, Communities and Local Government Committee, raised a number of important points. We were grateful for his comments about the Select Committee’s willingness to work with us in the months ahead to develop a cross-party solution.
My hon. Friend Peter Aldous talked about the pressures on social care. We are acutely aware of the significant pressures councils face in the delivery of adult social care. We are hearing about that personally from councillors and council leaders up and down the country. The settlement put before the House today is a clear indication that the Government have not just heard those concerns but are acting decisively on them. For the coming financial year, we have given authorities access to almost £6 billion of dedicated funding. That includes £1 billion of grant funding for adult and children’s social care, on top of continuing existing social care grants.
The grant funding should not be viewed in isolation, however. As all Members know, councils pay for services in their area through locally raised revenue. That is why we have proposed a 2% adult social care precept, enabling councils to raise a further £500 million. That recognises the vital role that social care plays in supporting the most vulnerable people in society, while helping local authorities to meet the challenges posed by rising demand and pressures. In addition, the NHS’s contribution to the better care fund, which aims to increase health and social care integration, will increase by 3.4% in real terms, in line with the additional investment in the NHS in 2020-21.
Emma Hardy talked about the pressures on children’s social care and the need to work together on the new funding formula for local government. We can give her the commitment that we will work across the House on those issues. We will shortly start to release some of the figures to working groups, including council leaders. I am very happy to meet her and her neighbouring MPs to discuss the implementation of the formula to make sure that we do our best by the 848 children she spoke so passionately about. We announced the £1 billion for next year for adults and children, which can be decided according to local need, ensuring that councils under the most acute pressure receive additional funding and support.
Of course, the best way to improve outcomes for children is to remove the need for them to enter the care sector in the first place, which is why we have committed to a further year of funding for the troubled families programme. We are clear that that essential programme continues to provide intensive support for some of the most vulnerable families in our society. One of the Government’s first announcements was to confirm the £165 million to extend the programme for an extra year, so that more families can get access to early practical and co-ordinated help to transform lives for the better. This will provide intensive support for some of the most vulnerable families and place the programme on a stable footing for the future.
Anyone who has worked with the families and key workers on the troubled families programme will be aware of the incredible relationship that some of those key workers build with the families in helping them to turn their lives around. In the last five years, over 300,000 families have reported real improvements since joining the programme and around 28,000 people have moved off welfare and into work as a result of it. The multimillion-pound funding that we are providing will enable local authorities across the country to achieve even more in the year to come by helping up to 92,000 additional families.
One of the Government’s first announcements after being returned in December was to confirm the £263 million for local authorities to prevent and relieve homelessness in their areas through the Homelessness Reduction Act 2017 and this Department’s flexible homelessness support grant.
We had an absolutely incredible maiden speech from my hon. Friend Nickie Aiken. She started by praising her predecessor, Mark Field, for the work that he did—I join her in that—and told her story about how she was the first woman to represent the seat. She is clearly going to do an incredible job. She outlined the incredible historical, cultural, economic and heritage contribution of her seat and the incredible work of the City Bridge Trust, and she talked hugely passionately about the work that she has already been involved in on rough sleeping. It is already clear from my meetings with her and her contribution in the House today that she will be hot on this topic and on holding us to account as we look to end rough sleeping for good by the end of this Parliament. She also talked passionately about local government finance reforms. I know that we will be working closely with her to develop the review of relative needs and resources in the weeks and months to come.
On rough sleeping, of course it is unacceptable that anybody should be sleeping on the streets in modern Britain. That is why we have brought forward our commitment to end rough sleeping for good by the end of this Parliament from the previous commitment of 2027, and why we have committed £437 million next year to tackle homelessness and rough sleeping—an 18% increase on last year. Our rough sleeping initiative is working, with a 32% reduction in rough sleeping compared with what it would have been had the initiative not been in place, and a 19% direct reduction, but we know how much more there is to do. That is why we are investing £112 million in the rough sleeping initiative in the year to come to continue giving people the support that they need. That will fund over 6,000 beds and 2,500 staff to support some of the most vulnerable people to move off the streets for good.
Mr Jones made the pun of the day in talking about the bottoms-up approach to rate relief on public toilets. The Non-Domestic Rating (Public Lavatories) Bill would have enabled this, but the Bill fell when Parliament was dissolved. We will of course consider reintroducing the measure in due course and keep him updated on that.
Of course we are very happy to do that. We will be bringing the Bill forward at the earliest possible opportunity, and we are happy to continue to have those discussions.
Members also touched on the importance of supporting rural communities in the settlement. The rural services delivery grant, at £81 million this coming year is, again, the highest paid out to date. We completely understand the importance of supporting rural communities, which is why in the review of relative need and resources we have proposed the crucial area cost adjustment, which will include an adjustment for the additional service costs associated with sparsity, isolation and market size. All those factors will be accounted for in a robust manner.
As positive as this settlement is, we are well aware that it does not solve all the complex challenges that councils face or relieve all the financial burdens they are shouldering, but it will help local government to address the pressures that have arisen over time, and it will give us the chance to look at the system again and make long-lasting, far-reaching reforms that will better serve communities up and down the country. Next year, we will deliver those far-reaching reforms: we will publish our devolution White Paper and set out our plans to unleash the potential of every region and to further level up opportunity; we will hold cross-party talks on social care to get this crucial issue right once and for all; we will implement the fair funding review to find a fairer, more up-to-date, more transparent and simpler way of sharing out taxpayers’ money; we will review the future of business rates, involving local government and colleagues in the House every step of the way; and we will look again at how we incentivise councils to build the homes we need.
Alongside all of this, there will be the spending review, at which we will settle the resources for local government. We intend to return to a multi-year settlement process. There will be different opinions about the way forward on all these matters, but this new and reinvigorated Government will be bolder than ever with our reforms. Deciding the future direction for local government finance will be a collaborative effort, which is why we will shortly consult on projects such as the fair funding review. We are determined to work across party lines to fix the social care challenges we have heard so much about today from Members across the House. I look forward to working with Members, many of whom spoke with eloquence and passion about the importance of solving this matter in a bipartisan spirit, to find a way forward.
That said, today is not about the fair funding review, the future of business rates or the new homes bonus; it is about giving councils the confidence and stability they need to plan for the year ahead. Today we are voting on next year’s package. I hope that every Member who wants to see local government access this game-changing £2.9 billion; every Member who wants to see this 4.4% real-terms increase in core spending power and £1 billion of new funding for social care; and every Member who wants to give local authorities the certainty and stability they need will vote for the motions tonight.
Question put and agreed to.
That the Local Government Finance Report (England) for 2020–21 (HC 68), which was laid before this House on