[Relevant Documents: Second Report of the former Housing, Communities and Local Government Committee, Session 2021–22, Local authority financial sustainability and the section 114 regime, HC 33; and the Government Response, CP 543; Oral evidence taken before the Levelling Up, Housing and Communities Committee on
The three motions on local government finance will be debated together.
I beg to move,
That the Local Government Finance Report (England) 2023-24 (HC 1015), which was laid before this House on
With this we shall discuss the following motions on local government finance:
That the Referendums Relating to Council Tax Increases (Principles) (England) Report 2023-24 (HC 1016), which was laid before this House on
That the Referendums Relating to Council Tax Increases (Alternative Notional Amounts) (England) Report 2023-24 (HC 1017), which was laid before this House on
Today we are confirming the major parts of the settlement announced in December: greater funding for local government, greater stability for councils, greater certainty in their ability to plan, and greater space in their ability for future reform, responding to what local councils have asked us to do. We know that local government has faced significant challenges in recent years: the pandemic and its incredible local response to that, the Russian invasion of Ukraine and the challenges that that has brought for prices, the cost of living and inflation, and, more broadly, global inflation, which has fuelled the cost of living. We know that that has had an impact across society, and that includes the tremendous work that our colleagues in town halls and council chambers up and down the land have done throughout. I am hugely grateful for all their efforts to continue to deliver for their communities in difficult circumstances.
The Minister talks about the terrible circumstances in Ukraine and the events of the last year, but he must recognise that the scale of the cuts since 2010 have been devastating for our local authorities, which have had to consider closing libraries, swimming pools, leisure centres and so forth. Can he confirm that it is in fact more of a long-term problem and that we need greater investment in our public services?
I am grateful to the hon. Lady for outlining her concerns. She tempts me into a wider discussion about the financial policies of the previous Labour Government and the coalition over the last 13 or so years, which have been discussed at length here. I was a councillor in 2010, and I know that where I was a councillor the money was not in the right place then, so 2010 should not be seen as a panacea for the effectiveness and efficiency of local government.
None the less, we are dealing with a specific challenge this year, and there is a significant improvement in the local government funding provided as part of this settlement. In recognition of those exceptional pressures, we are confirming funding from the taxpayer totalling almost £60 billion for local authorities in England for the next financial year.
It is important to acknowledge, as this House confuses it on occasion, that political debates are always about much more than money. However, using that calculus, we are confirming an additional £5 billion in core spending power for 2023-24, a new one-off funding guarantee that ensures that every council will see a minimum 3% increase in its core spending power before decisions are made on raising council tax locally, plus £2 billion in additional grants for adult and children’s social care for the coming financial year.
Taken together, they represent a significant increase that will allow councils to deliver the vital local services upon which we all depend and that responds to councils’ request for greater certainty and greater space to reform in the years to come. That is in addition to the billions already available to local government through the levelling-up fund and other regeneration and infrastructure funding, which is helping to boost growth, jobs and opportunity, as demonstrated only a fortnight ago in the additional funding announced for more than 111 local infrastructure projects across the UK.
I thank the Minister for giving way; he is very kind. Is he aware of concerns that the revenue support grant does not reflect updated population statistics, which will have a severely negative impact on constituencies such mine in Salford? Our population has increased by 15.4% from 2011 to 2021. How do the Government propose to address that glaring deficiency in the plan?
The hon. Lady raises an important point: a number of the formulas in place in local government have been in place for a number of years. There is always the question, which Governments of all parties have debated and discussed over many years, of when it is the right time to reform and when it is the right time to offer stability. I would be happy to talk to her in more detail about particular challenges that occur in the north-west with the changes in the census, but, as a principle this year, given the requests of local government, we have chosen to prioritise stability and certainty, which councils have asked for.
The Minister talks about levelling up, and I do not want to go into the pain he had last week on that, but there was a report yesterday in the Financial Times that the Treasury has stopped his Department doing any further capital spending because it is concerned about value for money. Could he comment on that?
The Treasury certainly has not stopped anybody doing capital spending; we need only look at the amount of money going out of the Department for Levelling Up, Housing and Communities and supporting communities such as my own in Chesterfield and North East Derbyshire, through two town deals and the levelling-up funds. That demonstrates this Government’s commitment to levelling up across the whole country, all through the year.
I thank my hon. Friend the Minister for the recent funding from the levelling-up fund that will benefit projects across my constituency. In addition to core funding, we have had transforming cities funding and coastal communities funding—a huge amount of money has gone into local government, above and beyond the core spending grants. Furthermore, as our right hon. Friend the Secretary of State knows, local authorities now predominantly do not fund schools, which are directly funded by the Department for Education. Can my hon. Friend confirm that the uplift in funding will allow local authorities such as mine to concentrate on core functions that the public expect, such as filling in potholes and cleaning the streets?
That is exactly the intention behind what we are confirming today. Local government does a brilliant job every single day all across the land, and we are seeking to give it the tools to continue doing that and space to reform in the coming years.
I will make a little progress and then I will happily give way to more hon. Members.
Throughout, we have been mindful of the squeeze on household budgets and how it is being felt more acutely in some places than in others. That is why money is going to the communities that need it most and why, alongside that, we are providing councils with £100 million-worth of further support to help the most vulnerable households with council tax increases and cost of living pressures. It is also why we are striking a fair balance between giving councils the flexibility to make local decisions to meet local pressures and support the most vulnerable, and continuing our general policy of protecting local taxpayers from excessive tax increases, in line with our manifesto commitments.
The Minister is very kind. After 13 years of Tory austerity wreaking devastation in my city, £75 million-worth of cuts are expected this year, putting vital services such as the benefits maximisation team under threat. Those are the very services he talks about—the ones that have kept people alive during this time. At the moment, one in three people in my city lives in food poverty. The ideological underfunding of councils such as Liverpool’s is becoming a national scandal. Does the Minister agree?
No, I do not agree. I encourage hon. Members from the Liverpool area to focus on the fundamental problems that are occurring in their councils and on the reasons why the commissioners are in Liverpool City Council at the moment.
My apologies; I have not yet given way to the Chair of the Levelling Up, Housing and Communities Committee.
I thank the Minister for his apology. My right hon. Friend Mr Jones asked a pertinent question about the story in the FT yesterday, and he did not really get a full answer, did he? It did not say that the Department had been stopped from spending capital money; it said that the Department had been
“banned from making spending decisions on new capital projects without specific permission from the Treasury, after concerns were raised about the ministry’s ability to deliver value for money.”
That is a pretty damning intervention by the Treasury. Is it true?
I would not believe everything written in the press. As we do all the way through the year and through all these projects, we work very closely with the Treasury, and we ensure that we are achieving the ultimate objective, which is to level up communities such as those represented by Opposition Members, by me, and by my hon. Friends on the Back Benches
I will make a little more progress and then I will happily give way to a number of colleagues.
We have also set a core referendum principle of up to 3%, plus 2% for the adult social care precept, for both 2023-24 and 2024-25, alongside wider flexibility. We expect councils to balance the financial needs of local residents at this challenging time with support for action to keep our streets safe and the delivery of key services—that is, to continue doing what they are so good at.
That very much includes services to protect the most vulnerable. We are all too aware of the pressures on, and the concerns about, social care services. That is why this settlement ensures a significant boost in that area, through about £2 billion in additional grants for social care in 2023 and 2024, including £300 million—distributed through the better care fund—to get people out of hospital on time and into a care setting; £1.3 billion for adult and children’s social care, provided through the social care grant, on top of the roll-over funding from 2022-23; and the £400 million additional adult social care grant announced in the autumn statement. That will be combined with the retained £162 million distributed in 2022-23.
On the point about focusing on the things that councils do best, Warrington Borough Council has borrowed more than £2 billion and is now acting as a lending house to commercial businesses in the north-west of England. It has bought office blocks, supermarkets and an energy company that went bust, and it has invested in banks. Is that really what local councils should be doing? Does my hon. Friend agree that it is time that we looked carefully at the indebtedness and the risk to local taxpayers?
My hon. Friend raises an important point. In any system where councils have the opportunity to do things, the vast majority will do the right thing—achieving and focusing on the basics that my right hon. Friend Conor Burns mentioned a moment ago. However, at times councils may not do the right thing. The Secretary of State has been clear that when councils do not do the right things, we will hold them to account. We will also seriously examine any local council if there is a suggestion that there may be a problem; I know from discussions with my hon. Friend Andy Carter that we are currently undertaking activities in his area.
I want to finish the point about social care. I am pleased to announce that today we have published an explanatory note about social care funding, setting out more detail on the different social care grants provided for through the settlement. We absolutely recognise that some councils find it easier than others to generate income from council tax to fund social care, so we have equalised that against the adult social care precept since it was introduced. We will continue to do that in 2023-24.
I thank the Minister for giving way; I appreciate it.
First of all, the Minister tells us that local authority care spending will be increased by 9.2% in 2023-24 in cash terms. The Government are assuming that every council will raise its council tax by 5% without a referendum—previously, we could not raise it by more than 1% without a referendum. Then this afternoon, the Minister stood up and said that he expected councils to help us honour a manifesto commitment to keep tax increases low. He is saying that we should raise care spending on the one hand, and taking the credit for that, and then telling us not to collect it and keep taxes low.
The main issue I want to raise is social care; the Minister cannot get away from this, and I know he understands what is going on.
Order. Interventions should be brief. The hon. Lady’s interventions are longer than some speeches I have given in this Chamber.
I am grateful to Ms Rimmer, who has a long career in local government; I defer to her knowledge and experience. I absolutely accept what I think she was about to say about social care: that there is challenge. I have acknowledged that in my speech today. We have also come forward with a significant amount of additional support over the winter and beyond, and given greater certainty about what is coming.
I come back to the hon. Lady’s first point. Given her experience in local government and her leadership of her local council over such a long period before she came to this place, she will acknowledge and understand that the job of Government is to provide the flexibility for local areas to do what they do best. With that flexibility comes choice. The Government have a long-standing manifesto commitment to try to limit council tax rises, and given what I have just seen in the debate about policing—a succession of Opposition Members standing up to highlight the challenges—we think we are striking an appropriate balance.
I turn to the consultation itself. Following the consultation on the provisional settlement, we have listened carefully to the issues raised. We thank each of the 150 people who responded from across the country. We have listened and responded. We ask councils to check the accuracy of the home building data that they have returned to us and in response we have increased new homes bonus allocations by £630,000. We recognise the cost pressures of serving all populations, but a strong case has been made to us about those in rural areas. Last week, my hon. Friend Chris Loder led an important debate on rurality, and I thank him for doing so.
We have increased the rural services delivery grant by £10 million, to take it to a total of £95 million. We said that we would release unused contingency back to the sector through the services grant, which goes to all authorities. We have done that, increasing that grant by £19 million. Following local failings that have left them with unprecedented financial deficits, we have also agreed to requests from Thurrock, Croydon and Slough for the flexibility to raise additional council tax. This is not a decision that the Government have taken lightly. The historical behaviour of those three councils has been poor, leading to significant financial mismanagement, and that is not acceptable. However, each council has been clear that, given the scale of their budget deficit, additional increases are necessary to support their financial recovery, on top of the support that the Government have already provided and that may further need to be provided in the future. Equally, the Government are clear that the councils have failed to operate with the necessary leadership and propriety and should take action locally. The failings in each council are deep-seated, and alongside agreeing to this request, the Government will continue to work through the commissioners and panels already in place to oversee the councils’ wider recovery.
On the issue of mismanagement, may I suggest it is much better to have prevention than cure? We do not want Bournemouth, Christchurch and Poole Council to get into a situation that results in 15% increases because of mismanagement. That is why I am grateful to the Government for initiating an assurance review that will start soon, as I understand it, and for intervening to prevent the council from engaging in what was described by my right hon. Friend Greg Clark, the predecessor of the current Secretary of State for Levelling Up, Housing and Communities, as “a dodgy deal”. My constituents much appreciate what the Government have done to save them from that.
As my hon. Friend has indicated, we are shortly to begin an assurance review of governance arrangements within Bournemouth, Christchurch and Poole Council, and we look forward to seeing the outcome of that.
On the point about mismanagement, I note that the Minister is yet to mention the disastrous mini-Budget from last autumn, which pushed inflation to the highest rate in 40 years and has wiped out the benefit of a lot of the additional funds he is talking about. What message does he have for my constituents under St Albans City and District Council and Three Rivers District Council, who are each facing an approximate 22% cut in real terms since 2015 in their local budgets?
My message to the very discerning residents of St Albans and elsewhere is not to listen to this attempt to conflate the challenges that occurred, which we accept and have acknowledged, with the wider global issues that have been evident for many months. Most people, having watched the news, would acknowledge that, rather than having the rather one-dimensional response, if I may say so, shown in the hon. Lady’s question.
These changes address many of the issues raised during the consultation. We also know that certainty and stability to plan ahead is another priority for councils in these challenging times. That is why, just before Christmas, we published a policy statement that outlines a two-year blueprint for local government finances, and it is why we have confirmed that, based on the stability and certainty that was asked for, we will not be going ahead with the business rates reset during this spending review period. We will be delaying reforms on charging for adult social care until at least October 2025.
There is certainly more to do to simplify the funding landscape and to reduce the associated burden of bureaucracy on councils. In that spirit, we are combining the £400 million in additional adult social care funding announced by the Chancellor in the autumn statement with the market sustainability and fair cost of care fund, and we are also rolling in four grants worth more than £200 million to the settlement.
On the question of clarity for local authorities, can the Minister confirm why we yet again have a one-year settlement for local authorities? This is the fifth successive one. Why do we have no confirmation as to whether the new homes bonus will continue in 2024-25 and why are this Government yet again kicking the pebble down the road on much-needed adult social care reform?
I welcome the hon. Gentleman to his place. He brings long experience in local government, and I look forward to working with him in the coming months. To answer his question directly, this is the first time in a number of years that we have published an outline of what local government and those working in it can expect beyond the immediate financial year. In as many circumstances as possible we would like to be able to offer more extensive understandings of where funding is going, and that is why, responding to the requests for certainty, we have published a policy statement. We hope that it has been well received in local government—certainly the feedback I have received is that it has—as providing greater and longer-term understanding of what is likely to come in future financial years.
Strong, accountable local leadership that delivers high-quality, cost-effective services has never mattered more in this current climate. That is why today’s settlement is a recognition of the challenge and a response to difficult circumstances. It seeks provide the tools and space to deal with those circumstances. It is a significant settlement that seeks to balance the many different demands on Government, but acknowledges that local government has a vital role to play in the year to come and has done before. This will provide additional funding to deal with difficulty, additional space to improve, transform and make things more efficient, and additional time to better plan for the challenges and opportunities to come. We know that local government will use it to boost their communities and to level up for the long term, as it always does. I commend the motion to the House.
It is clear that, in every corner of the country, from coastal towns to rural communities to dense urban areas, our constituents are being short-changed by this Government. Their local authorities have been starved of funds since 2010 and, instead of offering them revival, the Government are content to watch regional inequality worsen and to pit city against city, town against town and village against village in a bidding war, with winners and losers picked out by a Department with almost no transparency.
In reality, everyone loses under this Government, apart from maybe non-doms and personal protective equipment contractors. To compound this “Hunger Games”-style bidding war disguised as levelling up, consecutive Ministers have made bigger and bigger cuts to Government funding for local authorities, to the point where councils have been left with no choice but to raise local taxes to fill the void.
Let us look at the local government finance settlement. As with most things that the Government tell people that they should be grateful for, the devil is in the detail. Let us look at where the 9.4% is really coming from, because the majority is coming from local taxpayers. They are the same people who have had their mortgages increased because the Tories crashed the economy; the same people who were paying through the nose for gas and electricity while the Tories refused to implement a windfall tax against energy companies making record-breaking profits; the same people who are seeing council services slashed across the country. And today, Ministers are asking them to pay £6 billion more in council tax for it.
On top of that unfair and unsustainable approach, this also threatens to widen the levels of regional inequality even further, with the Chancellor’s plans to raise council tax bringing in more than £80 a household in Surrey compared with just £39 a household in Hull and Manchester. That makes a mockery of levelling up.
Since 2010, the core funding for councils has reduced by £16 billion, but council tax bills have been forced up by more than £15 billion. Those are the hard facts, no matter how much Ministers want to spin this. In the middle of a cost of living crisis, when nearly 4 million children are living in poverty, I am frankly fed up of hearing the Chancellor and various Ministers spinning out the tired old mantra that they are taking difficult decisions, because they are not. They are forcing the difficult decisions back on to local authorities and the cost of crashing the economy back on to taxpayers locally. That is passing the buck, dodging the difficult decisions—
Those are the kind of difficult decisions that the people we represent are forced to take. The Secretary of State chunters from a sedentary position about taking back control; he has had control taken off him by his own Treasury.
Even when this Department actually gets around to taking some decisions, there are huge questions over how effective they are. Even their Conservative colleagues are asking whether they are getting value for money from Levelling Up Ministers, and the rest of the country is asking that question as well. To top that off, it has been reported that the Prime Minister does not even trust the Secretary of State to make the financial decisions for his Department, adding yet more bureaucracy to an already cumbersome system. If the Tory Government cannot be trusted by, well, the Tory Government, should they still be in government? We are at a ludicrous new low where the Treasury does not trust the Department to spend its money wisely, so why should anyone else, especially local authorities? We are at a ludicrous new low where the Treasury does not trust the Department to spend its money wisely, so why should anyone else, especially local authorities?
This is not the first time the Department has been warned over how it is spending taxpayers’ money. Just last year, the National Audit Office criticised the Department, saying that,
“it doesn’t know whether billions of pounds of public spending has had the impact intended.”
To be honest, how could it, since hardly any of it has actually been spent? In November, a freedom of information request revealed that £243 million, or just 5%, of the entire levelling-up fund—for projects such as transport hubs, cultural centres, green spaces and all these things—had actually been spent.
To cover for this Conservative Government’s failure to deliver funding to the parts of the country that need it and for the last Conservative Chancellor crashing the economy, the result is what we see before us—getting local taxpayers to pay the price again, and making local authorities take the flak again.
It is worse than that, is it not, because the levelling-up process is costing local taxpayers as well. For example, in round 2 County Durham put in five bids, and it is estimated that working up those bids cost £2 million. It was told it could put in five bids, only for the goalposts to be changed once they were in and to be told that if it had got one bid in round 1, it would not get anything in round 2. It is not just about the inefficient way the Government have allocated money nationally; it is costing local authority taxpayers’ money to be part of this fiasco of a process.
I thank my right hon. Friend for that intervention and, unfortunately, he is absolutely right. Councils across the country have spent £27 million in a cost of living crisis bidding for levelling-up funds—£27 million—only to not know whether they will win or lose, or be told why they have won or lost.
When will this Tory Government stop using local authorities as their political shield and face up to their own failure to deliver? It does not have to be this way, and to be honest, none of us has the option of more of the same. Local government shows time and again how innovative, productive and trusted it is to deliver the change our communities need. It just needs to be empowered to do that. Councils should not have to go to Ministers with a begging bowl for individual projects. These are some of the worst aspects of centralised policy making I have ever seen. It is, frankly, insulting to local government, local communities and the people we seek to serve.
Under a Labour Government, there will be no more pitting councils against each other for pots of cash. Local areas need and deserve to be treated as equal partners, so Labour would deliver multi-year financial settlements for local government, ending the one-year sticking plaster approach of the current Tory Government and allowing councils and communities to plan properly and make genuine efficiency savings. We know that the only way to achieve growth is to power the economy everywhere, so Labour will undertake a great rebalancing of power, with wealth, security and opportunity spread across the whole country. We will deliver that, we will bring forward strong local authorities that deliver strong public services and, wherever people live in this country, everyone will be better off.
Since 100 Saxons gathered around the stone on the edge of my village in the Elloe wapentake, local authority—or, we may say, local government—has informed the character of civil society. The link between the exercise of authority and local need lies at the heart of that democratic infrastructure that we call local government. Of course, since those days local government has metamorphosised, and from the seventh to the 11th centuries counties emerged. They remain fundamentally important, and I say to my right hon. and hon. Friends on the Front Bench that we must never lose sight of the salience and importance of county government. Cities, of course, have had their own particular forms of local government. However, the essence of the relationship between the exercise of authority and a locality from Saxon times onward remains intact—it is as relevant now as it was then—with the connection between people and those who wield power, and the ability of those people to hold others to account for the decisions they make.
As local government has metamorphosised and developed over time, the cost of local authorities has grown and the way they are financed has changed. The comments made in the opening salvo from Sarah Owen, which I thought was characterised by feistiness and brevity—a rare combination in this place, where people are often feisty and sometimes short, but are rarely both—were sadly ignorant of the fact that the change she described has happened over a very long period of time. Long gone are the days when most of the money that local authorities spent was raised locally. There is a good argument for that. One could argue that the very essence of local government that I described a moment or two ago, requires a direct link between money gathered from local people and how it is spent. That direct accountability was once rooted in local government, but for a long time—we are talking aeons, certainly going back to well before I was a county councillor in Nottinghamshire—local authorities have depended to some degree on grant funding from central Government. We could unpick that—
I am just reading the figures and I think the right hon. Gentleman is wrong. About 60% of local government funding as a whole comes from council tax, so it is raised locally.
That is why I said it is a mix of grant funding from central Government, and money raised locally. I was making the case that we could move to a model where all funding was raised locally, and thereby improve the accountability of decisions made in that locale. The problem with that is that the tax base in different places is so widely different that we would have to find some way of transferring money from one part of the country to another. That is exactly why we ended up where we have, with an arrangement under successive Governments of all political parties, made over decades, that copes with the fact that we simply cannot raise everything locally because we need to mitigate for those differences.
Does the right hon. Gentleman agree that one good way we could give local authorities a way to raise money would be to remove the Government-imposed cap on fees that local authorities can charge big developers when they put in applications? At the moment, my constituents in St Albans are subsidising big developers to the tune of £3 million a year because of the cap that the Government impose on those fees.
I cannot comment on the specifics of St Albans or the question, but it is absolutely right that local authorities should put the interests of local people above the interests of soulless, heartless corporate institutions, including developers, that might ride roughshod over those local interests. I spend a good deal of my time as a Member of Parliament fighting unsuitable developments in my constituency, including onshore wind turbines, solar panels on greenfield land, and all kinds of other elements of urban or suburban sprawl into the open countryside. I hold no candle for developers, and that is a well-known fact in my locality.
Moving back to the matter in hand, the Government have chosen over a long period to fund local authorities and top up what they can raise locally. The trend that has emerged in my time in politics has often been a grant-funded process, and that local authorities have bid for particular chunks of money in particular circumstances. I share the view that that has disadvantages —uncertainty, and perhaps inconsistency—but it also has a profound advantage because it sharpens minds and focuses attention on what is really required. I was delighted that through the levelling-up fund I was able to work closely with South Holland District Council to put forward a bid, which was successful, to deliver a new leisure and wellbeing centre in the heart of Spalding in my constituency. Working with the local authority and refining that bid was an extremely valuable exercise. It was educative and a real opportunity for me as the Member of Parliament to engage with local councillors and officers of the council, to get that bid in in a highly competitive field, and to win.
I appreciate that not every bid succeeded, and far be it from me to comment on those who did not, but I think that was a useful process. As I say, it obliged us to work together, but it also obliged us to make sure our bid was fit for purpose. There are some virtues to that approach, although I accept that one would not want to fund the whole of local government through a series of competitions and bids. That has not been a recent change but something that has prevailed for a long time.
The problem I want to address with the Minister, which I hope he will deal with when he winds up, is that as we have a mix of locally raised funds and central Government support, which sometimes takes the form of particular competitive bids, it is important that we recognise the challenges faced by rural counties such as Lincolnshire, both at county and district level. Some of those challenges are too subtle to fit neatly into the models developed by central Government.
For example, sparsity is of profound importance in delivering public services in my constituency and my county. A sparse and scattered population makes it very difficult for public services to be accessible and effective, unless the funding is adequate to recognise the challenges that sparsity brings. It is all very well to say that Lincolnshire is well off in particular ways. I chose to live there, represent a seat there and bring my children up there, so of course I think it is a glorious place to be, but it is quite difficult for local people to access the services they need to sustain their wellbeing, and difficult too for the local authority to deliver services in a large, rural county such as Lincolnshire.
I gather the police funding formula is being revised and there will be a consultation. That has taken long enough—I have been fighting the battle for 26 years—but, none the less, it is good news that it is coming. When we look again at the funding formula for local government, the issue of sparse and scattered populations needs to be taken into greater account. That applies to other things too: ambulance services are a good example, I have already spoken of policing and I could name many other services that are hard to deliver in such circumstances.
May I also mention drainage? Again, the subtlety of the subject may be lost on some Members, but in an area such as Lincolnshire, unless we are perpetually drained through the good work of the internal drainage boards, we risk severe flooding, given the topography of my constituency and, indeed, the whole of the fens. I have met the Minister with colleagues from local government to discuss the subject, again working in partnership with local representatives, and I have also spoken to him personally. I know he is looking at the issue. Extra fuel costs have made drainage difficult in the short term, but in the long term we have to look at local authorities that levy a drainage rate on behalf of the drainage boards and face a burden that is not commonly faced by places with a different character and topography.
I raise those two matters with this pitch, bluntly: I want a fair funding deal for Lincolnshire. I recognise that people from all parts of the country are represented in the Chamber who will make a case for their own locality. Although Lincolnshire has many virtues—too many for me to name—it is peculiarly and particularly disadvantaged by its geography, demography and topography. Those challenges will be met only with a funding formula that is sensitive and sophisticated enough to identify those peculiar and particular needs.
I give notice through you, Mr Deputy Speaker, to the Minister that today I launch my campaign for fair funding for Lincolnshire. I hope that, far from that campaign falling on deaf ears, the Minister and the Secretary of State will have their ears pricked up and, when they consider matters more carefully, will respond by not just listening but acting on behalf of the people of Lincolnshire, who deserve a fair deal.
Mr Deputy Speaker, if I struggle to speak during this debate it is not because I am speechless at the generosity of the Minister’s settlement this year; I just happen to have quite a bad cold. Anyway, on to the facts at hand.
First, I accept the point that this is a better settlement than in previous years. It probably could not be as bad, with the circumstances local authorities were in. It probably means that the level of cuts we experienced in previous years will not be repeated in all authorities, but that the cuts that have been made will not be restored. There are particular issues with swimming pools and leisure centres that, as we see it at present, the Government are just not going to address. The energy costs are enormous and it will be a major challenge to the health of our citizens if we do not sort out that particular problem. Most authorities do not have the reserves they had three or four years ago. If they do get into difficulties, there is nowhere to go. That is simply the situation. Authorities that have been prudent and spent their reserves over the years are now in a very different position.
That is against the background—I do not think this can be challenged—of local government having the worst cuts of any part of the public sector since 2010. Local authorities in the poorest areas have had bigger cuts than those in richer areas. The Government will say that they had more grant to cut. Well, that is true, but they had more grant because they actually needed it. They had greater needs and fewer resources to draw on. The other change is that social care funding now takes up about 60% to 70% of local government funding. Local authorities have prioritised it and they are right to do so. But even that means that many people who would have had social care in 2010 do not now get it because the criteria have been tightened.
Look at the rest of the services: the cuts to buses, libraries, parks, street cleaning and environmental services have in many cases been up to 50%. We can see that. We can see the libraries have been shut. We know we are going to get a massive round of bus cuts again in South Yorkshire come April. The grant is not there from the Department for Transport, as far as we know, and there is no possibility that councils can replace it from their own resources. The rest of the services, aside from social care, have smaller resources from a smaller pot. That is simply the situation they are left with.
They are the services, of course, that the vast majority of our constituents rely on. Most people do not get social care. They think it is right that people who need it should get it, but they themselves do not get it. What they see is a large increase in council tax once again and they are getting less service for more money. That is a real worry—I have made this point before—for the future of our local democracy. If people feel they are getting a bad deal—that they are paying more and getting less—at some point there will be a reaction from local communities. That reaction will probably be against their local councils, as opposed to the national system which puts councils in that particular place.
We know there are other major challenges. On social care funding, the extra money is welcome, although some of it is coming from council tax. I accept the point that the social care grant has been adapted to try to reflect the fact that authorities with the greatest ability to raise money through council tax have had less money than those who cannot. I accept that there has been an attempt to equalise that, but nevertheless the Health Committee, when the Chancellor was its Chair, along with the Levelling Up, Housing and Communities Committee, produced figures from the Local Government Association and others showing a gap of around £13 billion. A bit of extra money now, taken from the money that should have gone into the Dilnot reforms, is not a long-term solution. So much of this funding package is short-term solutions, because there have been long-term issues.
My hon. Friend mentions social care funding. What is his view on the fact that the overall package for child and adult social care is £2 billion, yet last week we received the Government response to the MacAlister review, which shows that some £2.6 billion is needed to right the current issues in the children’s social care sector and ensure that our most vulnerable children are safe and secure?
My hon. Friend makes a very good point. Many of us can slip into speaking just about adult social care. We recognise the challenges of an elderly population. People growing older is a good thing—some of us may have a personal interest in that—and people with learning disabilities are living longer, but the biggest percentage increases in demand for care over the past few years have been in children’s social care. That important point is often overlooked, so my hon. Friend is absolutely right to raise it.
On big issues such as social care, we need a discrete source of funding. We cannot carry on muddling away at trying to fund social care from the current package of funds available to local councils. That is not my view, but that of the Local Government Association: its Conservative chair and the leader of its Labour group have both said that we cannot sort out local government finance until we get a solution to social care funding.
Council tax is taking more of the strain—it now represents up to 60% of local government funding. It is not a great tax, is it? The Secretary of the State has one great redeeming feature: when he comes before the Select Committee, he is actually quite honest in his answers, at least most of the time. [Laughter.] He accepts that there are challenges and problems. He was very honest when we asked him whether he thought council tax is regressive: he said yes, and passed the parcel to the Minister to do a review of council tax.
We look forward to seeing that review, because council tax is a major challenge. It is based on 1991 valuations, and the amount that people actually pay rises nowhere nearly as quickly as the value of their house. It is a regressive tax and it enables richer areas to raise an awful lot of money for every percentage increase. Those are challenges that any future Government will have to deal with—I put a marker down for my Labour Front-Bench colleagues, too.
Business rates are not fair. We have had a Government review, but everyone knows that they are simply not fair at all for high streets versus digital companies. The business rates reset has been put to one side. Has there been any impact assessment on which councils are benefiting from that and which are not? I suspect that councils that have done quite well with development over the past few years have probably raised their tax base anyway and are now doing quite well out of the fact that the reset has not happened. It would be interesting to see some figures on that.
I turn to the fair funding settlement. I think it was Greg Clark who announced the fair funding review, the first time he was Secretary of State. We are still waiting. I know that there have been problems, including covid, but work could nevertheless have gone on. That ties into the point that my hon. Friend Andrew Western made about having just a one-year funding settlement with no long-term plan.
The current grant arrangements are based on data that in some cases is nearly 20 years old. That cannot be right, it cannot be fair and it cannot be reasonable. I recognise the challenge for any future Government once we get into fair funding reviews: one person’s fair funding is another person’s unfair funding, because the same amount of money is being moved between areas. It works best when funding is going up, because even areas that lose in relative terms do not face an absolute loss. There are big challenges there.
Those are the issues that are being ducked: council tax reform, business rates reform, fair funding and the long-term funding of social care.
It is always interesting to hear from the hon. Gentleman. Long-term funding matters too for things such as infrastructure, and in my county it is about roads. Lincolnshire’s roads carry an immense amount of the food that services the whole country—many of them were de-trunked by a previous Labour Government, of course. We need long-term funding of the kind he describes to secure our roads, as well as for social care.
The right hon. Member is absolutely right; it is about being able to plan ahead. Councils need certainty about what is coming to them.
That point ties into a related issue: the housing revenue account, which is not often talked about. We heard in the Select Committee the other day about the enormous challenges that will result from the surveys that the Secretary of State has rightly asked councils to carry out, as has the Regulator of Social Housing. We will see some very big numbers come out of those for some of our worst social housing to be put right. It is not just about a bit of plastering here and a few repairs there; it is about regeneration and, in some cases, complete demolition and rebuilding.
The Chair of the Select Committee is making an excellent speech. Does he agree that there are also questions to be asked about the scope for councils to build new housing, given the enormous demand from residents? People want trusted landlords and they want the quality of council stock, but the ability of councils to build that housing is very limited at present.
My hon. Friend is right. Apart from a housing revenue account with limited headroom, councils are facing pressures to build new homes and pressures to make existing homes more energy-efficient, to make them safe and secure and, in particular, free of mould and damp, and also to make them safe and secure in relation to the challenges post-Grenfell. They cannot do all that with the money they have, and the same is true of housing associations, which are in exactly the same position. We need a real, proper debate on those matters.
The settlement is better than it might have been, but it does not actually improve the present situation following several years of biting cuts in important services—and, by the way, perhaps when the Minister winds up the debate he will tell us what has happened to the public health grant, because that is very important as well.
In challenging circumstances, the Government have come up with proposals that are broadly acceptable and will enable local government, on the whole, to function properly and to deliver a wide range of services for the benefit of local communities. This is vitally important, because it is local government that best understands the needs of local people and is best able to ensure that funding delivers the benefits for which it is intended. There are some drawbacks to the settlement, which I shall briefly outline; and there is also the need to carry out that much-needed review of the funding formula, about which we have already heard and which, indeed, has been talked about throughout my 13 years in the House.
As a member of the all-party parliamentary group on coastal communities, my hon. Friend will be well aware of a report by Pragmatix Advisory that draws attention to the need to change the local government funding formula to better reflect deprivation and the needs of coastal communities with strategic, long-term, sustainable funding, and to see projects to the end. Does he agree that the Department must consider that as we move forward?
The short answer is that my hon. Friend has a crystal ball, because she has anticipated the conclusion of my speech, and we have been reading the same report.
In the circumstances, as we have heard, some might liken this settlement to a sticking plaster, but I would suggest that it resembles a bandage more, and that in itself reinforces the need for a fundamental overhaul.
Let me now comment briefly on the settlement’s drawbacks, which the Government should seek to ensure are not repeated next year. First, as others have said, this is the fifth one-year settlement in a row. Such short-termism makes it very difficult for councils to plan properly, to deliver world-class local services, and to fully implement key policies such as levelling up. I therefore urge the Government to come forward with a multi-year settlement next year. We have heard that they have made a start, but let them finish delivering that particular strategy.
Secondly, as we have heard, rural areas continue to get a raw deal, notwithstanding the fact that wages in those areas are invariably lower, the cost of living is higher, and it is much more expensive to deliver services. In this context, it is very disappointing that the increase in the rural services delivery grant has been wiped out for rural district authorities, as it is linked to another grant which reduces by equal measures. That makes it more difficult for authorities such as east Suffolk to deliver vital services such as waste collection, recycling and planning. I suggest that next year, the existing formula should be applied in full, without dampening.
Thirdly, the additional funding for children’s social care will help to tackle the most immediate pressures, but it is insufficient to invest in preventive and early help services, nor to invest in the workforce or additional homes needed for children in care. Moreover, it falls short of the £1.6 billion required simply to maintain current service levels. As I have mentioned, there is a need to review the local government funding formula. One of several reasons that the review remains outstanding is that the debate on whether it should take place, and what changes should be made, has been conducted in a way that pits rural communities against urban communities. The result is stalemate—nothing happens, to the detriment of areas where a better funding formula is urgently required. As we have heard, nowhere is that more needed than in coastal communities all around England and the UK, including in the constituency that I represent.
Coastal communities such as Lowestoft face significant challenges: a higher proportion of children living in workless households; household incomes £3,000 on average per annum lower than elsewhere; disabled people less likely to find work; people facing greater health challenges and inequalities, including shorter life expectancy, obesity and higher rates of depression. Those challenges are exacerbated by the fact that in coastal areas, funding must go further and stretch that extra mile. There is a higher cost of delivering services: the population is much older, and in the holiday season there is a need to provide services for visitors.
It should also be pointed out that there is enormous potential in coastal communities that properly funded local government services can help unlock. That includes jobs in the low-carbon energy sector, sustainable fishing and leisure and staycations. Therefore, the local government funding formula must be urgently adjusted to better reflect the needs of coastal communities. I urge the Government to commit to doing that straightaway, so that for 2024-25, coastal communities that have been forgotten for far too long finally get that fair deal that they need.
May I start by joining the Minister in paying tribute to all those people who work in local government? As a former councillor, I know the tremendous work that they do, but it does not get much recognition and we need to put that on the record.
As Members know, I speak in these debates every year. It seems like groundhog day today, because we are back exactly where we have been every year in the last 13 years. We have a system that has seen the central Government grant cut over successive years since 2010 and moved on to local council tax payers. The Minister said that 2010 was not perfect; from County Durham’s point of view, it was £244 million a year more perfect than it is today. That is a direct result of the money taken from the council each year by the slow reduction of the central Government grant over the years, which has been pushed on to local council taxpayers.
We have had the slogan “levelling up”, which I am told the Government are now not supposed to use because they need to find some new way of expressing this, but while we were having all the publicity and showbiz around the levelling-up grants—I will come to those in a minute—what we have seen in local government funding is exactly the opposite. We have seen the moving of resources away from areas such as County Durham to more affluent areas of the country. That is because of the way the formula is constructed. The Government are taking a political decision—let us be honest, it is a direct political decision—to reduce council tax support to areas such as County Durham. The present Prime Minister even admitted in his leadership campaign that it was a deliberate policy to do that, so there is honesty there if nothing else.
This is creating real problems for the ability of councils in places such as County Durham to fill the gap with local council tax increases. That is because in County Durham, 58% of our properties are in band A. We always quote band D, but band A is important. County Durham’s ability to raise any additional funding is therefore limited. Raising council tax there by 1% raises £3.8 million, but raising it by 1% in Surrey will raise £8.9 million. The effect of that over a period of time has seen wealthy areas such as the constituency of the Secretary of State in Surrey increasing their spending powers while deprived areas such as County Durham have seen them decline. That has not been done by accident.
I hear Conservative Members saying that they want a new funding formula—well, yes, but this has been going on for 13 years. Levelling up was the great thing, but it has done exactly the opposite; the problem is that it was a slogan that was used mainly around capital projects. There is a difference between what is being bid for in most cases—namely, capital—and the money that is being taken away from day-to-day revenues and running costs, which as my hon. Friend Mr Betts said, puts pressure on those core functions that local councils cannot avoid providing, such as social care and looked-after children. The cake that is left is very small.
There is a bidding process which, as my hon. Friend Sarah Owen said, basically involves someone in Whitehall deciding who gets what, and we have clearly seen where some of this money goes and the reasons why. The latest round was a complete farce. In County Durham we had one successful bid, worth £20 million, in round 1. I am sure it was just a coincidence that it happened to be in the constituency of the Under-Secretary of State for Levelling Up, Housing and Communities, Dehenna Davison. We put five bids in for the second round, only to be told, once they were in, that the rules had changed and that if we had had a successful bid in round 1, we would not even qualify for round 2. Why did officers in Durham County Council have to waste an estimated £2 million of local taxpayers’ money working up bids that were never going to be seen? We now hear —the Minister did not correct me or my hon. Friend the Member for Sheffield South East on this—that the Treasury is getting a bit wobbly about whether this is a good way of spending money.
This money is supposed to make a real difference, but it is not. Even if we get it, most of it is capital and will not make a real difference to the core funding that councils need for projects such as roads. Added to that, the last Conservative manifesto talked about the great dividends from Brexit and the fact that no one would be worse off without the European regional development funding. If we had stayed in the European Union, County Durham would have been in one of the new assisted areas, and over the next five years we would have had £155 million in European funding. At the last count, we have £30 million, which has to be spread over the next five years. That is a clear broken promise, and it is a complete distortion of what has actually happened in practice.
Why does that matter? It matters because funding programmes such as DurhamWorks, which has done fantastic work to get people who are not in education, employment or training into employment and training, will fall over in September because there is no money left. Such projects, which have made a real difference in many parts of the country, will have no money at all. Councils might be able to make a capital bid for, say, a new leisure centre, but the cost of running it will fall on local taxpayers. It is a double whammy. Councils such as Durham County Council will lose out not only because their ability to raise funds from local taxpayers is limited compared with other areas but because the other vital money is not there either.
The devolution agenda—or the devolution con, as I call it—means that the new North East Combined Authority mayoral deal will get £1.4 billion over the next 30 years. County Durham alone has lost £240 million in central Government funding since 2010, plus the £155 million of European funding that we are not receiving. That £1.4 billion over 30 years is a drop in the ocean. Every other member of the combined authority has had cuts to real-terms spending of between 25% and 35%. Ministers trumpet the mayoral deal as a great deal for the north-east, but it pales into insignificance compared with the money that has been taken away over the past 13 years and that continues to be taken away.
Again, it is even worse in County Durham because of the incompetence of the coalition that is running Durham County Council. The coalition jumped on the bandwagon of the mayoral deal at the last minute because it could not argue or put forward a case against it. Over the next three years, Durham will have no extra transport funding at all. Is this a great deal? No, it is not. It is a con to think that the deal will change things and make a real difference locally.
In addition, my constituents have had no say on whether they want an elected Mayor to represent the area from Berwick right down to Barnard Castle. It annoys me that Conservative Members argued in the 2004 referendum on north-east devolution that it was important people had a say, but this Government have not allowed anyone to have a say on any of these reorganisations.
The other outstanding issue is public health. We were promised a new public health funding formula, which has been kicked down the road. There is still no indication of where it is going. Under the proposed funding formula, County Durham was going to be the biggest loser in the country. Funding formulas make a real difference. We talk about levelling up, so it is astounding that, in the world’s sixth wealthiest economy, life expectancy has gone down, not up, in County Durham over the last 10 years. The idea that levelling up is more than a slogan is disproved by the facts on the ground.
Unless we put effort into public health, life expectancy will continue to go down. The point at which people need more care from the health service is dropping and is now about 58 years old. These things need to change. Health inequalities in places such as parts of County Durham have an impact on other services, so investment there would be good investment. For example, if we look at mental health, we see policing being used as a last resort.
Another issue that has been raised are the two pressures on the services that have to be provided. There is a lot of concentration on adult social care—my hon. Friend the Member for Sheffield South East was right about that—but the other big one is looked-after children. Durham County Council has more than 1,000 children in looked-after care. These are not options that can just be forgotten about; the council has to do this and look after these individuals and their families. Without some recognition that areas such as County Durham have a huge problem with this, it is not going to move.
The other issue to address, which again has been raised, is rural buses. The bus recovery grant finishes at the end of March. If that goes and is not replaced, the north-east will end up with rural services to parts of County Durham and Northumberland just being taken away. Does local government have the ability to step and support that? No, it does not, so the Government must examine that urgently. I understand that the Transport Secretary is not keen on an extension, but if that does not happen, it will have an effect.
People say that this settlement is more generous than those in years past, but the moving of the cost of raising and supporting local government on to local taxpayers continues. For example, Durham County Council this year will be putting its council tax up by the maximum, 4.99%, it is making savings and it is taking £10 million out of reserves. That is ironic because, as I reminded those in the coalition of chaos currently running the council the other day, their leaflets in the run-up to the last county council election condemned the then county council for having large reserves and blamed it for putting the council tax up to the maximum. But they are doing both: they are spending the reserves and putting the council tax up to the maximum. A bit of honesty needs to be had as to the reasons why. If we had not got that cushion that the Labour administration put in, we would certainly be in a worse space this year than we would be if we could not have access to it.
We hear this stupid argument that we can just look at the reserves and keep dolloping them in for one year. That is just a sticking plaster for one year and it cannot carry on for future years. As I say, the chaos ensues. The council is making some strange decisions. Despite all the austerity, the problems it faces on the budget and the maximum council tax, it is now going to provide a new multimillion-pound arts centre for the city of Durham, with running costs of up to half a million pounds a year. We must ask whether it has its priorities right. It is trying to cover this by trying to suggest that this is a new home for the Durham Light Infantry collection, which is nonsense, because most of it has already been reallocated to the new history centre. The incompetence of the administration there, alongside the pressures resulting from this settlement, mean that, again, council tax payers in County Durham and the poorest are going to suffer the worst.
The funding formula does need to be looked at, but the Government also need to be honest: their levelling-up agenda is a con, as we see when we look at what has happened over the past 13 years in places such as the north-east, where money has been taken away. What has been trumpeted as great new levelling-up money to the north is, frankly, as I said earlier, a drop in the ocean compared with what has been taken away.
It is always a pleasure to follow Mr Jones; I am sorry that every Member except me was on their phone. I hope to be a little more entertaining and, shall we say, to come at this from a different perspective. If I have this correct, Durham Council had £29 million last year from the revenue support grant, compared with Dorset, which had zero, so it might be worth his while going back to his local council and others to ask them a few questions about that, rather than the Government.
I rise this evening to make the case for rural England, and West Dorset in particular. I am conscious that, 12 months ago, a number of us were in this place when we last debated such a motion. I am delighted to support the comments of my hon. Friend Peter Aldous, particularly in respect of rural areas. It is very clear that a disparity exists both in this motion and the report before us. It is not necessarily the disparity that some share; it is very clearly, in my mind, one that exists between rural and urban areas, and it is important that we fully digest that.
Rural areas will receive £111 per head less than their urban counterparts , according to the settlement funding assessment, yet rural residents often pay on average £110 more in council tax than those in urban areas. We get 13% less per head in social care support overall, which means that, on those few points alone, we have real issues to contend with, especially in constituencies such as mine.
It is worth noting that London, as an authority area, gets £236 million more in Government grant than the formula says that it should. I appreciate the comments made last year and more recently about the funding formula—it is very difficult to change it—but it feels to me that it might not be as difficult to change in one direction as it is in another. In the interests of parity and fairness, it is important that we understand why it is easier to adjust it in an upward direction in some cases, but not in others.
The rural services delivery grant is very relevant to me as a representative of a rural area. My hon. Friend the Member for Waveney made mention of that earlier, and I echo his comments. In 2022-23, rural councils were able to budget a spend of only £67 per head on so-called discretionary services. That is totally unacceptable, especially when we compare that with urban areas, which have a spend of £131 per head. That is primarily because, in constituencies such as mine, two thirds of the council’s income goes to support those in adult and child social care, which is a huge amount, partly because the average age in Dorset is so high.
The services that we have in Dorset are more expensive to deliver, which is partly because of our sparse geography and a number of other issues. What is relevant here is that if England’s rural communities were treated as one distinct region, in the same way that mayoral authorities and others are, the need for levelling up would be singularly greater than in any other area in the country. That is an important point to note.
I mentioned this earlier, but I reiterate the key point: local authorities are not just here to empty bins. There is an increasingly difficult issue with adult social care, and it is growing. We have also heard about transport, which I understand faces great upcoming difficulties. I understand that there is no solution to bus funding locally from
In fairness to my hon. Friend Lee Rowley and my right hon. Friend Michael Gove, I am somewhat delighted that we have taken a step forward on revenue support grants. I remember we were at zero this time last year. We have taken an enormous stride forwards—£654,000—which is an important and welcome step. I should say, however, that some of that has been cancelled out in other ways, which means our net effect is even smaller than that.
The primary issue I have in Dorset relates to council tax, which is where we are picking things up. For many years, we have had a zero-revenue support grant, which has meant the council having to fund important and crucial services through council tax. That is why our average band D level is the third highest in the country—£800 more than what some constituents of hon. Members in this Chamber pay. That is a huge amount, particularly because when we take care of people who have moved into or retired to Dorset, that has an associated social care requirement. That points even more strongly to the need for local government funding mechanisms to be reformed and adjusted.
There is a perception—I have heard it in this debate and others—that the south-east and the south-west are well off compared with the north and the north-east. That is absolutely not the case. My hon. Friend Richard Drax, who is not able to be here, and I share an area in Weymouth and Portland that is the worst area for social mobility in the whole country, according to the Social Mobility Commission. When we look at the situation with council tax and the comments made earlier about how people in poverty, particularly urban poverty, struggle in this area, we have to ask ourselves: why does rural hardship not matter in the same way? We on the south coast, particularly in Dorset, have a good number of difficult issues to contend with, and that makes it hard for us to justify the situation with council tax and the revenue support grant.
I kindly ask my right hon. Friend the Secretary of State for Levelling Up, Housing and Communities to consider a few things, and I would be delighted to hear in the wind-ups about whether he can make some progress. I hope that he will expedite the reviews that we have talked about for some time, whether that is the formula for revenue support grant funding or other ones. I am particularly keen to meet him, along with the leaders of rural councils in England, to discuss how we can make real progress on sorting out this enormous disparity and unfairness in how the formula supports urban areas much more than rural ones, and I do not think we should have that challenge. I would be pleased to hear whether he would agree to such a meeting. Finally, I would be grateful to hear what commitment he might offer us in Dorset on better support for rural communities to address the issues we face.
The Government’s latest local government finance statement represents a continuation of underfunding of our local councils and widening of inequalities. We know that, since 2010, councils have lost 60p out of every £1—an estimated £15 billion cut from council budgets by this Government. Even if we focus on the past five years, analysis suggests that only eight of 151 local authority areas have not experienced real-terms cuts since 2018, even once levelling up funds are factored in.
People in Luton have suffered those cuts, with £160 million stripped out of Luton council’s budget over the past 13 years of Conservative Government. Cuts have decimated our local services, from youth services to bus routes to social care, and there is no solution to the sustained Government underfunding on the horizon. Further cuts to the tune of more than £7 million still need to be made in 2023-24 to balance the budget, and it is working people who will pay the price.
Instead of offering the fair funding that councils need to sustain their work, funding that takes account of need, councils are being in effect forced to raise council tax by up to 5% in many areas. Luton council is left with no choice but to do that, but at the same time council tax bills will see a further increase in the police precept, since, just like Luton council, Bedfordshire police has suffered from sustained underfunding through a broken police funding formula and has had to set the police precept at the maximum.
Due to the Tories’ self-inflicted financial crisis, helped by their crashing the economy last autumn and their 13 years of failure on the economy, the Government are once again passing the burden on to council taxpayers. That will deepen regional inequalities, as many councils such as Luton will receive less than wealthier councils due to their lower council tax base, despite facing increasing demands and needs. Increasing the burden on taxpayers is not a solution to the long-term pressures faced by councils, particularly in areas such as social care that are in desperate need of reform.
During these challenging economic times, every penny spent matters. Our communities deserve more long-term certainty and money spent closer to home. I noted that at the beginning of the debate the Minister made a proud point of having been a councillor—well, so have I. I am very proud to have been a councillor, but, having been a councillor, I understand the importance of public health and the responsibilities that make such a difference in our communities.
Research from the Health Foundation has shown that the public health grant has been cut by 24% in real terms per person since 2015-16, with the largest reductions hitting areas of service such as drug and alcohol services, tobacco control and sexual health. To reiterate a point made earlier, can the Minister tell the House when the public health grant allocation for 2023-24, due this April, will be announced? Yet again, that uncertainty has a detrimental impact on councils’ budget-setting process and puts at risk those hugely important, often preventive services.
I will finish by congratulating my hon. Friend Sarah Owen on her excellent opening remarks in this debate. Labour will empower our towns, cities and regions to build strong local economies that support strong local services.
Listening to this debate and the earlier one on the police grant—I have been in the Chamber for several hours listening—has been a fascinating exercise in politics. Those on the Government Front Bench have made valiant efforts to claim that the aggregate made available for policing and local government has been splendid, while almost every single Back-Bencher on the Government side made a different argument, that the formula is not working. That argument was first made in quite a crude way by the right hon. Member who is now the Prime Minister, when he said they were going to stop money being shovelling into deprived areas—that was the expression he used—in order to look after places such as the one where was speaking, Royal Tunbridge Wells.
That is the problem Conservative Members face: how do they reconcile their embrace of austerity with the fact that their constituents are now suffering because the austerity has bitten deeper and deeper? Their answer is to say, “Well, it’s the formula that’s wrong.” But the truth is that the aggregate sums available for policing and local government are the problem; austerity itself is the cause of the problem. I have now heard two speeches from Chris Loder in which he made similar points about the formula.
The point that I was making earlier, which I will make again, is that the formulas that we have been dealing with have often favoured Labour-led councils and Labour police and crime commissioners in funding the issues that Labour-led authorities face. We in Conservative areas, however, have had zero revenue support grant, zero in other areas, and we were lower to start with. I just wanted to say to the hon. Gentleman that, no, that is not what I said. It is important that he notes that.
Well, we will let people read the record and see what conclusions they arrive at. The hon. Gentleman’s case was based on rurality. I represent a rural constituency with 23 villages. The problem for my constituency, and perhaps for his as well—I listened to what he said, but it is not for me to say—is not rurality but deprivation. That is the core problem.
The Prime Minister let the cat out of the bag when he said, “We’re going to stop shovelling money”—to use his expression—“into deprived communities and put it elsewhere”. That was the truth, and it is what the Minister and all his Back-Bench colleagues are valiantly trying to avoid addressing by developing arguments about their constituencies all being special cases. The truth is that our services have been radically underfunded.
This has not happened by accident; it is deliberate, as my hon. Friend says. It is always interesting to hear—as we did in the previous debate on policing—about x amount of money per head. The key thing is that since 2010, the need element that he is referring to—certainly for things such as public health grants—has been taken out of the formula.
My right hon. Friend is absolutely right. We need indices that reflect the need that communities experience. Those indices should then be translated into a formula that provides some kind of social justice.
I represent a rural community in what was once the mighty Yorkshire coalfield, which heated, lit and provided power for our country. It helped to create the wealth that is now in the hands of a very few corporations and rich individuals. The hard-working people in that community were brought to their knees by a Government decision that left us in a really deprived position. It is not our normal practice to get up and whinge, and that is not what I want to do today. I want to make the political case that we have got this wrong; that the Government are wrong.
Although I was the leader of the great city of Leeds for a number of years—under Mrs Thatcher—let me refer to the situation in Wakefield, which is my home council. Local government was difficult in those days; it is almost intolerable to be part of it now—I speak with experience. Wakefield Council, which is a great Labour council led by Councillor Denise Jeffery, has had major cuts. I think £2 in every £5 has been cut since 2015, in a community on its knees. I will illustrate that point in a moment or two. This year, it looks as if there will be another £14 million of cuts. How is that for a Minister who is trying to celebrate the amount of money that he says he is giving to local government? In the meantime, we will have to raise council tax. If I remember to, I will make a point about raising council tax in a moment or two.
Huge amounts of money—tens of billions of pounds—have been taken out of local government across the whole country, in all communities, and Tory MPs are no doubt finding the squeeze as tough as it has been in our areas for the last 13 years and beyond.
My hon. Friend is making an excellent speech. Does he agree that the same enormous pressures on families struggling to get by in the most awful cost of living crisis apply in every region of the country? My area, Reading, is in the south-east, but many people there are struggling to get by and suffering from the same dreadful cuts.
I entirely agree. I am not making a special point about former coalfield communities, but they were treated particularly badly by a previous Conservative Government and have never been allowed to properly get back on their feet.
I want to take one council service—education—to illustrate an important point that I would like the Government to think about, although I do not expect particularly progressive decisions from them. In my district, the cuts to school funding over the years have been £400 per pupil—£400 less for every child in my community since the cuts began. People might say, “Well, we’ve all had to take a little bit of austerity”, and we have. But look at the educational results in my constituency—we have also heard about this in Reading, North Durham, Luton and elsewhere.
The number of people in my constituency with NVQ level 4 or higher is 22%; in the Prime Minister’s constituency, it is 42% and in London it is 59%. There is massive educational underachievement in some communities across the country, including the one I represent. Yet there are these cuts. What happens with a community that has underachieved educationally? I will tell the House: wages are in decline. I refer again to my constituency, but I am making a general, national point: the average wage there is £495 a week—£12,000 a year less than the average worker earns in London, or £5,000 a year less than the average across the nation as a whole. That is a consequence of underinvestment in education because of the cuts. Funding cuts feed through to poor education results and then to low wages and underinvestment in business.
The final link in this chain is social mobility. If a large population is not achieving its full potential because of underinvestment in education, social mobility begins to collapse. The hon. Member for West Dorset was talking about social mobility in his constituency. The Government created a mobility index, which shows that of the 533 seats in England, mine is the 529th least socially mobile. How can it be that statistically a child born today in my constituency will die younger than those elsewhere, live in poverty and be very unlikely to make it up the so-called social ladder? There is a continuum of effects from underinvestment in a community that has been suffering from deprivation for a long time.
The situation is this: austerity has gone too far and too deep, and it is impacting on communities. We have heard people across the House talking about their constituencies, as I have partly done about mine, and then trying to make a special case. I do not want to make a special case; I want to say that the Government’s indices are wrong. It is true that the formula is incorrect, but the bottom line is that we have underprovided for social services, public services, education and all the other services that councils should provide. The aggregate is too small, and the Government should accept that. It would be better to hear that than what we are hearing now as some sort of good news.
My final point is this. I can speak on behalf of my constituency: in two weeks, I will have been first elected 27 years ago. I know what my people think. When they hear the now Prime Minister saying, in a swaggering tone, “On behalf of prosperity, and in the face of deprivation, we have shovelled money into communities like mine”, they think it is unfair, unjust, cruel and untrue. I predict this: when the local elections come in May, people are not going to believe it is the Labour council’s fault that the council tax has gone up. They will know where the responsibility lies. It lies with this Government, and mark my words they will pay a price in May this year.
Earlier, the Minister spoke about the necessity for stability, but does he realise that to achieve that, local authorities need long-term financial settlements? Those long-term settlements need to be built to address inequalities in the regions, to start to repair the damage caused by years of austerity and to support local authorities to ensure that high-quality services can be built and maintained, because that improves outcomes in both health and education as well as housing standards. We have had a big debate about black mould, and a number of properties in Blackburn suffer from damp. We had a programme called housing market renewal, which was supposed to be for 15 years, but in the first week of Tory Government, that programme was stopped. Bidding for competitive bids is expensive and does not provide stability. Passing the burden to council tax payers, as with the police precept, does not provide stability, particularly when so many people are struggling with the cost of living.
Local authorities have essential plans to build economic growth in the UK. We have had 26% cuts in spending power, on average, from 2010. In Blackburn, that is nearer 50%. Once again, the poorer areas are suffering more. We also need to measure the impact of the cuts, because the loss of that resource means that buses have been cut, which reduces employment opportunities and health. We have less street cleaning, fewer libraries, poorer services for open spaces and play areas and pressures on children’s services and adult social care.
I am sorry that the Secretary of State’s wings have been clipped, but the Treasury needs to understand that to grow the economy in this country, the Government have to invest in local authorities. Time and time again, we hear Ministers say what a wonderful job local authorities do. Blackburn was pretty amazing during covid, and that was because Blackburn with Darwen Council, led by an excellent councillor, Phil Riley, knows how to bring people together, and people in Blackburn like to support each other. However, when things are constantly being taken away, it makes it very difficult.
The last Labour Government invested in Blackburn, and the stats will prove that health improved, employment statistics, educational outcomes and transport links improved. We opened Sure Start centres, giving every child a good opportunity and a good start to life. Austerity has seen the decline of Blackburn and places like it, and it is only by long-term investment and a clear strategy to rebuild communities that they will come back. People cannot open a mortgage if they are on a 12-month contract, and they cannot go and get a car with a loan. How will we build the future that the Government claim they want if we do not support basic services? Every Government Minister says that local government is best placed to deliver, but if local government is going to deliver, the Government need to put their money where their mouth is, and stop putting things on the backs of council tax payers.
We are sick and tired—tired of the press releases, tired of the spin, tired of the same old con tricks. To listen to the language in these press releases, people would think that Ministers were handing out largesse, a gift, for which cash-starved local communities should be grateful. To listen to the Minister opening this debate, they would think that they were living in some kind of parallel reality where our well-funded councils were able to pay for every service that our residents need. It is a nonsense.
Once again, buried in the small print, is the catch: if people want compassion and care for the elderly in their community, if they want clean streets, libraries and parks, if they want choices and chances for their kids, they will have to pay more for it. Consider for a moment handing families struggling with the biggest fall in living standards on record £6 billion council tax bill. Families in band D will see their council tax rise above £2,000 for the first time ever.
I am old enough to remember when the Conservative party believed in low taxes. I am old enough to remember when they said that people who worked hard should keep more of their money. What would the 2010 version of the Secretary of State make of the spectacle of a Secretary of State handing a £6 billion council tax bill to families at a time when taxes are already at a generational high?
The good news for people who are lucky enough to live in an area controlled by a Labour council is that their council tax bill is £335 less on average this year than the bill of those who live in a Conservative council-controlled area—that is 20% less. Let us never, ever hear again from Conservative Members that theirs is the party of careful stewardship of our economy, low taxes, and siding with working people. They have blown themselves out of the water.
Let us cut the spin. The Secretary of State’s party has taken £15 billion from our communities since they were elected and he has voted through every single measure. By 2021, a full decade after the Conservatives came to power, English councils’ core spending power was 26% lower in real terms than it was when they started. The reality of that is youth workers laid off, with the bond between a young person and the only adult they trust—a lifeline—broken for some of our most struggling young people. The clubs and the pubs where a pensioner would go to spend time with other people and get a hot meal, and sometimes have their only conversation in a day, have been boarded up. We are talking about boarded-up high streets and the antisocial behaviour that plagues our town centres in places that have so much pride, so much potential.
All that ambition has been wasted because of this Government, so do not tell us to be grateful for a small refund on the money that has been taken from us systematically for more than a decade. This is the original con trick—handing us a fiver while nicking a tenner. It is not just those of us in the Opposition who are saying it. I was really struck by the fact that not one contribution from Government Members, many of which were very thoughtful and very fair, welcomed the settlement. Sir John Hayes rightly said that he was launching a campaign for fair funding for his community. That is the job of a good local MP—standing up and fighting for their communities—but why is it always a fight with this Government?
The Conservative chair of the Local Government Association called this settlement “disappointing” and said that it “continues to hamper” councils’ “financial sustainability”. The Conservative leader of Fareham Borough Council says “there is nothing here” that will help his council. And Tory-controlled Norfolk County Council says that it will mean
“some tough decisions in Norfolk”.
As my hon. Friend Sarah Owen said, tough for who? They are tough for some of the poorest people in the country who are struggling the most, and guess who pays the most? Yep, you guessed it: the places that were already falling further behind.
Thanks to this sleight of hand, this con trick, it is precisely the places that the Conservatives promised to level up in 2019 that are again getting the thin end of the wedge. If they raise council tax by 5% in the north-east, they get £52. If they do it in the south-east, they get £66. This is the question that the Secretary of State has to answer, if he is going to stand by this plan and this approach: why does he think that people in Surrey deserve better-funded services than people in Bishop Auckland? This is not so much levelling us up as razing us to the ground, and driving a coach and horses through his own strategy to level up the country.
I have heard Ministers make a plethora of excuses for the mess they have created over the last few months. I have heard them blame Putin, I have heard them blame the bond markets, I have heard them blame the Labour party, I have heard them blame the Bank of England and I have heard them blame “society”. I am sure that, after this week’s events, the Secretary of State might also privately add the Treasury to that list.
However, it is genuinely extraordinary to witness the spectacle of a Secretary of State undermining himself. He said that long-term funding matters, and in December his own Department said that that was crucial to the ability to plan for the future. A full 12 years after his Government ended the three-year funding settlements, that was a welcome admission, but where is it? While we are on the subject, as my hon. Friend Rachel Hopkins rightly asked, where is the announcement on the public health grant? It is absurd that councils have to budget without having any idea what the budget is. This is the fifth one-year funding settlement in a row—the one-year funding settlements about which he himself has delivered a devastating critique. Boy, will he be livid when he finds out who was responsible for delivering them!
Councils are critical—the Secretary of State knows, they know—in making the long-term strategic decisions to invest in and grow their local economies, but that is undermined today by the very Minister who is meant to be their champion. It is that sort of short-term, sticking-plaster approach that has led us to this point, where universally across these Benches not one single Member has got up to welcome the announcement today.
With levelling-up funds thrown at us like “The Hunger Games” and councils forced to go cap in hand to Whitehall—the begging bowl culture excoriated by the Conservative Mayor of the West Midlands—councils are competing with each other while Ministers sit behind their desks. They took a full year to pick winners and losers, and to decide who was getting new picnic areas and traffic lights in communities in this country. They then changed the rules of the game and pulled the rug out from under us, and, as my right hon. Friend Mr Jones said, wasting our time and wasting our money.
The Government have form on this. It was not just that they had already decided that many of the councils—those spending the millions of pounds handed over to consultants to get over the many hurdles and through the many hoops that this Government had set up for them just to get small amounts of their money back—were not even eligible while the process was still ongoing, but that this comes hot on the heels of a month-long scramble to put in bids for investment zones that went straight into the bin. What are this Government doing? They are wasting our time.
Imagine what we could do with a Government who matched the ambition of people in every part of Britain, or who could trust our Mayors and councils—hell, who could trust themselves—as well as our business and college leaders and our frontline workforce to harness the skills, assets and potential in their own communities. We in the Opposition are angry because we know how much better this country can be. In the three years since this Government were elected on one promise alone—to level up the country—they have crashed the economy, wiping out the value of the funds on offer. Geographical inequality—their goal was to tackle it—has widened and the transport network is in chaos. The Secretary of State cannot even appoint a single levelling-up director, a job he created. Taxes are at their highest level in decades, and today he has come here to say that he is forcing them up again.
The cost of everything in this country is going up, but the one thing that this country can no longer afford or can least afford is more of this Tory Government. This is it: this is the plan—that they come to this House and tell us that they are going to pass the buck and abdicate leadership to local councils to load the cost of their decisions on to hard-working families and leave a broken system untouched. This country can be so much—so much—better than this. In every community in this country, despite the mess they have made and everything they have broken, hope burns brighter than ever before. If they will not match the ambition of the British people, we will, and the sooner that they get out of the way, the better.
This has been a passionate, at times, but also thoughtful debate, and I thank every Member who spoke not only for the degree of ardour they displayed on behalf of their communities, but for their command of detail in laying out the challenges that everyone in local government faces.
Like speakers on both Front Benches—indeed, I think every speaker did this—I wish to thank those in local government, council workers and elected representatives, who work so hard on our behalf in every community. Our democracy depends on them. As the Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley) pointed out, those in local government have faced unprecedented challenges in recent years, not just with the covid pandemic and the response to the public health challenges that that provoked, but also because of the way the war in Ukraine has meant not just inflationary increases, but new demands on them as we welcomed to our hearts and into our homes Ukrainian refugees in record numbers. Local government has been asked to step up, and has shown leadership, commitment and the very best of public service.
A number of speakers pointed out the essentially unsatisfactory nature of the way that local government finance is allocated, due to the complexity of the formulas over time. Indeed, the Chair of the Levelling Up, Housing and Communities Committee pointed out the way that a number of historical kinks in the architecture of local government finance mean that any Government face challenges in ensuring that money is distributed as effectively as it might be. I will not weary the House by going through the formula for tariffs and top-ups of business rates, which are on page 20 of the report, but for anyone who wants to look at them, we can all see how complex that system is.
Within that context, in this year’s local government report we have been able to increase core spending power overall by £5.1 billion, secure an additional £1.7 billion of additional grant funding, ensure additional support for adult and children’s social care, ensure a minimum 3% increase in core spending power for every local authority without the need for council tax increases, and ensure that the most deprived local authorities receive a 17% increase.[This section has been corrected on
I thank Members from my own party for their comments. My right hon. Friend Sir John Hayes, and my hon. Friends the Members for Waveney (Peter Aldous) and for West Dorset (Chris Loder) are all highly effective advocates for their constituencies. My right hon. Friend the Member for South Holland and The Deepings reminded us of local government’s history, and the vital importance of the institutions that safeguard our communities. He made a point consistent across the Benches, which is that rurality needs to be a key feature when thinking about local government funding. That is why in the settlement that he laid before the House, the Under-Secretary of State for Levelling Up, Housing and Communities, my hon. Friend the Member for North East Derbyshire, increased the recognition of rurality in the way we distribute funds.
I acknowledge that, as my right hon. Friend the Member for South Holland and The Deepings, my hon. Friend the Member for Waveney and—particularly powerfully—my hon. Friend the Member for West Dorset pointed out, more is required to be done. Indeed, the name of my hon. Friend the Member for West Dorset is never far from the lips of the leader of Dorset Council, Spencer Flower, as an object of praise for his assiduity in pressing the case for his constituents. I am more than happy to say that his persistence and passion has not gone unnoticed, and I would be delighted to meet him and the representatives who he would like to come to the Department to discuss the concerns he has specifically raised. I also extend that invitation to my right hon. Friend the Member for South Holland and The Deepings and my hon. Friend the Member for Waveney.
My right hon. Friend the Member for South Holland and The Deepings made a point about internal drainage boards and the challenges they face—[Interruption.] I will come to Labour Members in a moment. We will ensure that internal drainage boards are supported for the work they do. My hon. Friend the Member for Waveney pointed out the particular challenges faced by coastal communities, and they are at the heart of many of the strategies in the levelling-up fund and the levelling-up White Paper that we are bringing forward.
I am extremely grateful to my right hon. Friend for that invitation. As an hors d’oeuvre to what will be the main course of the meeting, may I again mention road funding, and the relationship between roads and the rest of the country? Where a service such as haulage is provided, taking food across the nation, that should be reflected in the settlement.
My right hon. Friend makes an important point. I will be returning to that question, with the Transport Secretary, as we look at potential devolution for Lincolnshire, in order to ensure that transport is a critical part of that.
Talking about devolution takes me to some of the concerns expressed by my good friend the hon. Member for—
Mr Jones—that’s fantastic. A knighthood should be coming as well. I am a great admirer of the right hon. Member, and he was a doughty opponent and critic of the devolution deal that we just secured in the north-east. While he makes the case against it, better than anyone I have ever heard, it is still the case that the deal was welcomed across the north-east. We had Labour leaders joining forces with Conservatives and Liberal Democrats to support a deal that secures and levers in an extra £1.4 billion for the north-east.
I know that Durham Labour was opposed to it, but it is the case that Conservatives, Liberal Democrats and independents across County Durham, and indeed Labour leaders in Gateshead, South Shields, Newcastle and North Tyneside, have welcomed the deal. We must hear more.
I am sorry but that is not true. At a meeting in December, three Members of Parliament who represent the Minister’s own party, the Liberal Democrat leader of the council, Conservative and independent council members were vehemently opposed to a north-east deal and wanted a county deal. The only reason they jumped on the bandwagon at the last minute was because he gave an ultimatum that they either did that or did not get anything.
However persuasive I think the right hon. Gentleman is, he clearly thinks I am even more persuasive. In this mutual admiration auction, all I can say is this is a deal that was universally welcomed across the north-east, but not by Durham Labour, which has, in the right hon. Member, a brilliant advocate.
One of the reasons why there is not a Labour council in County Durham is because the voters voted it out at the last election, because they were scunnered by the way in which those councillors, at the height of the pandemic, thought an appropriate use of public money was to have a 3,500 square foot roof terrace on their new £50 million county hall. If only County Durham had the right hon. Member leading its Labour group, then Durham Labour would be doing even better.
Jon Trickett, for whom I have enormous respect, is a brilliant local MP and a distinguished former member of the Cabinet and the shadow Cabinet. He made a series of points about the neglect of coalfield communities. I understand absolutely the point he makes. That is why visiting the Coalfields Regeneration Trust, at the invitation of Stephanie Peacock, was one of the welcome first invitations I accepted in this role.
I say to the hon. Member for Hemsworth: let us work together in order to make sure that we can do more. Denise Jeffery, the leader of Wakefield Council, whom he mentioned, welcomed the levelling-up funding that we gave to Wakefield over all as good news, and education is improving across Wakefield. There are some outstanding academies, including Grove Lea in the hon. Gentleman’s own constituency, that deserve support. Of course he will always ask for more funding, as we all will for our constituencies, but we should all celebrate the progress we are making.
I also want to celebrate the richly entertaining speeches from the Opposition Front Bench. Sarah Owen made the case that it was terrible that additional funding was coming from taxpayers, which prompted me to think, “Where else is additional funding that the Government distributes going to come from other than from taxpayers?” She then tried to suggest that it was a terrible thing that the money came from local taxpayers. That must be news to the leader of the Labour party, who in January, in his marvellous “take back control” speech, said that the core of a Labour Government at some point in the future—who knows when?—will be greater fiscal freedom: in other words, more local taxation. Obviously there is something there that we can only describe as a creative tension.
The hon. Member for Luton North went on to attack us for parsimony in the distribution of money and, in the same breath, said we were forcing councils to have a plethora of funds with which to deal—on the one hand we were being mean; and on the other hand overgenerous. The shadow Front Bench lamented the lack of poetry in local government finance, but I am afraid the hon. Member for Luton North brings poetry to local government finance, in particular the words of Walt Whitman:
“Do I contradict myself? Very well then I contradict myself…I contain multitudes.”
And there were multitudes of something in her speech.
The approach from the Labour party, which I can politely describe as wanting to have one’s cake and eat it, is one that covers up the vacuum at the heart of its approach. While we have been working with local government to provide, not just in this settlement, a more sustainable funding with a determined effort to ensure that deprivation is addressed with a shift of resources to those communities that need it most, the Labour party seeks refuge in rhetoric and positioning, rather than engaging with the reality of the complexity of making sure that local government funding works for those who serve us so well. That is why I commend this settlement to the House.
Question put and agreed to.
That the Local Government Finance Report (England) 2023–24 (HC 1015), which was laid before this House on