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District Councils - Motion to Take Note

– in the House of Lords at 11:40 am on 19th October 2017.

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Moved by Lord Greaves

That this House takes note of the future availability of resources for the provision of District Council services in two-tier areas.

Photo of Lord Greaves Lord Greaves Liberal Democrat

My Lords, in moving this Motion, I should first remind the House of my registered interest as deputy leader of Pendle Borough Council. This Motion is about district councils—the 201 non-metropolitan or shire districts that exist in areas where there are also county councils, in two-tier areas. Shire districts have become the Cinderellas of local government, in many ways the forgotten ranks, or the poor bloody infantry, yet they are vitally important as the foundation of local democracy in their areas. According to the District Councils’ Network, they deliver 86 out of 137 essential local government services to more than 22 million people, 40% of the population of England. They cover 68% of the country by area and represent the diversity of England, ranging from former county boroughs and urban areas of acute deprivation to attractive and prosperous county towns, university towns and cities, coastal towns, small towns and villages and much of the richness and diversity of the English countryside. They are a kaleidoscope of old and new communities, rich and poor, growing and stagnant, towns and countryside and suburbs and hamlets, and include much of the English coast.

Districts collect council tax on behalf of themselves, the counties and the other precepting authorities yet, for every pound they keep for themselves, more than £5.50 goes to the county councils. So in that sense they are the poor relations. Yet when people refer to “the council” it is usually the district, borough or city council that they are thinking of—whatever they call themselves. It is much more local at that level; it is the town hall where people are more likely to know, see and hear from their councillors. The district provides many of the most local services, which are now becoming known as “neighbourhood services”. In my view, they could do more; it is time for a devolution of powers and services from counties to districts, where the districts can do it more locally and better.

District council services include refuse collection and recycling; local leisure facilities; parks and open spaces; street cleansing; town centres; planning, development and regeneration; environmental health; licensing; support for local advice services; community safety; anti-social behaviour, and much more. It is at the local level where issues are dealt with that really matter to people in their street, town and community, yet when it comes to finance, district councils have been in the front line of cuts in government funding and in their ability to raise money locally. The District Councils’ Network reports that, based on the 2017-18 settlement data from the Department for Communities and Local Government, 146 out of 201 district councils—that is 72%—will face a negative revenue support grant position by 2019; that is, the districts will be sending support grant to central government.

This year, the core spending power of shire districts is being cut by over 5%. The settlement data on core spending power shows that districts are hit far harder than other categories of council. Other councils show increases in the core spending up to 2019-20, but for districts this year, the figure is minus 5%, then minus 4% and then minus 1%. That is unsustainable and cannot go on.

The Government will say that the new homes bonus has come along to rescue the situation. This was introduced in 2011 and provided councils with a payment for each new house occupied, equal to its council tax, in each year for six years. In two-tier areas, 80% went to the districts. The bonus was funded by top-slicing the total local government grant settlement—it was not new money—and helped to offset the cuts in districts’ grants. However, there were unintended consequences—notably a large shift of funding from northern regions to London, the south-east, the south-west and the east of England. That is a different issue from this debate as it affects all councils, but it is an important one. This year the funding has been top-sliced again to provide extra money for social care, and in two-tier areas that has meant moving money from districts to the social care authorities—that is, the counties. It is being paid only for five years instead of six, and from 2018-19 it will be paid only for four years.

There is a new threshold of 0.4% of the housing stock. If your area has not built more than 0.4% of its housing stock as new housing in a year, no new homes bonus at all will be paid for that year. That is already affecting a lot of districts and is likely to affect more. This threshold removed over £70 million of spending from district councils this year, and the threat is that this will get worse in the future. As an example, in my own authority of Pendle, the year-on budget for paying for services is being cut by around half in real terms between 2010 and 2020. Government support is already down by about 60%. The budget plans for the next three years involve a cut of £4 million on a net budget of £13 million—a gross budget of £23 million. We have already cut £7 million since 2010 and the position is devastating. This is all being forced on these councils by government policies, changes to government support, financing systems and the council tax cap. This is not a time to discuss national government policy but simply to report the effect of it on a council such as this.

So far, like most districts in the country, we have coped in a fairly miraculous way. However, staffing has been stripped to a skeleton service and there is a high level of stress among staff working three or four days a week but doing the same amount of work they did when they were working five. The number of people in offices has been reduced from, say, five to three—again, trying to do the same amount of work. In our case, we have offloaded services to town and parish councils and voluntary groups as best we could. But now, like many districts, we are down to the bone. Basic neighbourhood services are at risk: services such as refuse and recycling, the maintenance of parks and open spaces, street-sweeping, the ability to go and remove litter—all that kind of thing. There is the threat of closing a swimming pool and a sports centre and removing the grant to the CAB.

Burnley, next door to us in East Lancashire, forecasts that £3.8 million has to be cut from the budget in the next three years. Harrogate, which is just over the border, over the hills in Yorkshire, is now in a position where there will be no direct grant at all from the Government from next year. It says that there is acute pressure on non-statutory services, pressure to close a swimming pool and reduce the quality of parks and gardens. When the quality of gardens in Harrogate is reduced, something is seriously wrong.

Guildford’s current shortfall is manageable but it is having to pick up the tab as Surrey County Council withdraws from funding local services and Guildford has to take them on. I have a quote from a colleague in New Forest District Council—so in the south of England:

“I would say that the New Forest District Council has been forced into nearly a decade of ‘managed decline’ in which services have been reduced or stopped completely. We are nearing the point when all the authority does is collect household waste and determine planning applications. It is a distressing state of affairs for all of us who value public services”.

On Colchester:

“With Colchester’s rate support grant due to go negative next year to the tune of £400,000 having come down from over £12 million we have had to make a lot of savings”.

The council wants to build council houses but due to the cap on HRA—housing revenue account—borrowing,

“we had to scrap plans to build 50 Council Houses”.

There is a huge tale of woe from South Cambridgeshire District Council, which reports that it cannot get suitable and experienced planning officers—there is a chronic shortage—and it is failing to carry out its proper duties there. It says:

“We no longer have a designated conservation officer, tree officers, environmental officer, economic development officer … or community support officer. Consequently we lack strategies which we once had, e.g. climate change mitigation, economic development”.

It points out that the sheltered housing wardens who visit people in their homes have been removed and,

“replaced by estate managers who just look after the fabric of the schemes”.

Inevitably, that results in more bed-blocking.

The Association for Public Service Excellence—APSE—reports that spending on neighbourhood services across local government has fallen by more than £3 billion over the last five years. Cuts in funding and wide variations between authorities in funding services are,

“changing the very nature of local government”.

Its excellent report in April, Redefining Neighbourhoods: A Future Beyond Austerity?, which bangs the drum for neighbourhood services, says that the total expenditure in the period it covers fell by 13%; and in the most deprived fifth, environmental and regulatory services are at minus 13%, while the least deprived fifth of local government increased by 4%. Expenditure on planning and development services in the most deprived fifth is down by 42%, and in the least deprived areas it is up by 2%. It says:

“Innovation will not solve the funding crisis”,

and that the answer to the social care funding crisis is not to transfer money from other vital services, especially those at local level that have a huge prevention effect. It says:

“This analysis provides compelling evidence the time has come for a robust defence of neighbourhood services”.

Of course, district councils are the places where neighbourhood services are most important. Do the Government agree with that?

The Institute for Government, in a report which is due to be published in about 35 minutes, makes similar points, and points out that spending on local neighbourhood services have fallen by around a quarter since 2009-10. Spending on waste collection is down 18%; on food safety it is down 20%; on open spaces it is down 23%; on culture and heritage it is down 26%; and on sports and recreation it is down 34%. The very fabric of local services is being eroded and people at national level seem to be blind to what is going on.

The King’s Fund report, The District Council Contribution to Public Health, points out that every £1 invested by district councils in preventive services can save the wider public sector up to £70. There is a suggestion that there should be a 2% prevention precept for district councils to match the social care precept for county councils, which of course in county areas does not raise as much as it does in unitary areas because the district part of the precept is not included in that.

Then there is economic growth, which the Government will tell us is the answer to all the problems. It is what we all want to see. District councils are the key to local growth, yet economic development powers are discretionary and little support is provided by the Government at this level. Districts are often effectively excluded from the system for distributing government funding via local economic partnerships. In Lancashire, the local economic partnership has two representatives out of 10 from the 12 districts on the county-wide LEP. The districts are marginalised, yet in areas with strong districts, such as Lancashire, it is they that provide local knowledge, initiatives and drive.

Therefore, I call on the Government to recognise that, at the very local level in which the districts are involved, if they want to build new council houses, unblock the beds, keep the streets clean, help people to live fitter and healthier lives, keep our food safe and have decently maintained local communities, the time has come to look at districts and to treat them better. The pressure is building. It is almost at breaking point and I do not think that people will accept the situation for much longer. Will the Government please respond?

Photo of Baroness Maddock Baroness Maddock Chair, Lord Speaker's Advisory Panel on Works of Art 11:57 am, 19th October 2017

My Lords, I am very grateful to my noble friend for introducing this timely debate on district councils. I begin by declaring my interests. I am a vice-president of the Local Government Association, the vice-president of a fuel poverty charity, National Energy Action, and I am president of the National Home Improvement Council.

I shall confine my remarks to just a few of the areas that district councils are responsible for and shall also reflect on where district councils have been completely abolished in the north-east of England.

As my noble friend said, there are now just over 200 district councils—considerably fewer than when I joined this House over 20 years ago. Where they remain, they are responsible for all matters pertaining to housing in their areas. It is generally agreed that we have a housing crisis, so restricting finance and financial freedoms to district councils at this time seems particularly perverse.

Along with their responsibility to ensure sufficient housing in their areas, district councils are responsible for planning and building control. Again, it seems perverse not to recognise that this is an essential part of providing homes, but at the moment district councils are not able to cover the cost of these services—indeed, they are prevented from doing so.

As we have already heard from my noble friend, planning departments are severely underresourced. In fact, local taxpayers are subsidising planning services by about 30% because the planning fees set nationally do not cover the full costs. When will the Government progress their commitment to allow councils to increase planning fees by 20%? Indeed, there are calls for them to rise by more than that and to increase by 40%.

In recent days—my noble friend referred to this—the problems of bed-blocking have once again been in the news. District councils do not run social services but they are responsible for social housing. Indeed, at one time, there were numerous sheltered and extra-sheltered housing schemes run by local authorities, with on-site wardens and other help. However, cuts in local authorities’ budgets and their ability to raise funds have severely reduced the number of such good schemes. Some of the housing associations have taken this up. My own aunt lived in one such extra-care scheme in West Sussex.

One of the reasons many elderly people cannot get back to their homes after recovering from illness is that they need home adaptations: things like flat-floored showers, wider doors and other access facilities. These, of course, are the responsibility of the district councils. I am grateful to the District Councils’ Network for some figures about the value for money it can provide in this area and how it can help the National Health Service:

“By adapting 100,000 homes to meet the needs of older people, districts could save the NHS £69 for every pound spent … By improving 100,000 homes to protect older people from the cold weather districts could save the NHS £34.19 for every pound spent”.

The average cost to the state of a fractured hip is a bit over £28,500. This is nearly five times the average cost of a major housing adaptation—which runs at about £6,000—and 100 times the cost of fitting hand and grab rails to prevent falls.

Another important area—it is dear to my heart—where district councils have duties pertains to energy efficiency in the homes in their areas. They still have a duty under the Home Energy Conservation Act 1995— which I am proud to have seen through in another place rather a long time ago now—to collect information about the energy efficiency of homes in their areas and to suggest solutions for improvement. However, I regret to say that successive Governments have failed to enforce these requirements or to use this Act to its full potential in any way.

Councils do have powers, however, to enforce minimum housing standards relating to excess cold. There are several pieces of legislation on this matter, but it is often the case that local authorities are not really aware of some of the things that they can do. Once again, enforcing regulations in these areas falls to overstretched environmental health and trading standards departments. Will the Government commit to looking at how they can allow councils to get more funding—particularly by returning the fines that councils levy when they find problems—to support more proactive work? On several fronts, failure to fund district councils properly goes against the other aims that we have heard from the Government, many of which we agree with: more homes, quicker discharge from hospital and fewer cold homes.

I would now like to spend a few minutes reflecting on the reduction in the number of district councils. Central government has consistently driven an agenda of cutting the cost of local government through “efficiency savings”. Across the board—and my noble friend referred to this—local government has risen very well to this challenge; indeed, there is evidence that it has risen more successfully to the challenge than central government departments. This has happened despite often being given new responsibilities with poor funding that dries up after a few years.

Different Governments have attempted local government reorganisations as part of efficiency savings, but at what cost to local democracy and to services? Nowhere has this been more obvious to me than in my home area of Northumberland. In 1997, there were six district councils and one county council, with 239 district councillors and 67 county councillors. In 2009, we had a change imposed on us by the then Labour Government, which reduced us to 67 councillors to cover the whole of Northumberland. This is an area 50 miles north to south and, in the south, at least another 50 miles east to west. To travel from Berwick to Hexham is 100 miles. This year, we had the council count in Hexham and people were running about Northumberland in the middle of the night to get there.

There was a consultation and a vote on how local people wanted the reorganisation to happen. The people voted in favour of two districts, one in the north and one in the south—they recognised that we needed fewer small councils. However, this was ignored, and the Labour Government gave us one, with just 67 councillors. The effect on local democracy and the control of local services has been devastating. It might have been mitigated to some extent if town and parish councils had been given more powers.

As the whole area was not parished, new councils had to be set up, in particular in the south-east but also in the town of Berwick-upon-Tweed, where I live. However, the development of the town council does not make happy reading. There were town clerk resignations, councillor resignations, inquiries about bullying and the most appalling behaviour by some councillors on social media. Many people have been completely put off wanting to be councillors, given all these things working against them. It is very difficult to find people who are able to take on the role of county councillor, in particular in Berwick, where you have to travel 50 or 70 miles to meetings. That is pretty difficult to take on if you work full-time or run a business.

Engagement by the community, particularly with council services, is also extremely difficult. The development of electronic communication has helped but in my part of the world we have a predominantly older population who tend not to engage with modern technology. Earlier this week, when the House was talking about Islamophobia, there was much discussion about community cohesion. Changes such as I have outlined do not help communities to engage with those who provide the local services and with each other.

As we heard from my noble friend, the ongoing financial constraints for district councils clearly work against many of the stated aims of the Government: building more homes, ensuring new and existing homes are more energy efficient, providing housing with care for our ageing population, and adapting homes for our ageing population. These last two would definitely help alleviate bed-blocking. Will the Minister explain why the Government seem unable to have policies and actions that work together, rather than against each other, in achieving their aims? Why have the Government failed to understand the role of district councils in aiding their agenda by providing good local community services? Why do they continue to reduce the finance to district councils, which provide very good services in line with government objectives? I look forward to hearing from the Minister on these very important matters.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice) 12:08 pm, 19th October 2017

My Lords, I refer to my local government interests as a Newcastle councillor and vice-president of the Local Government Association. The fact that I live in Newcastle tempts me to suggest to the noble Baroness that she should look again at the map and the distance between Hexham and Berwick. She may be right that they are 100 miles apart if you go via Newcastle, but she will find that it is possible to take a slightly more direct route. However, we are not discussing the geography of the north-east.

I commend the noble Lord, Lord Greaves, for securing the debate but am disappointed, if not entirely surprised, that there has been no recognition of or apology for the Lib Dem role for five years during its partnership with the Conservatives as an accessory to the battering that local government sustained.

Councils across the country and of different political complexions have sustained unprecedented losses of support, with district councils suffering a 40% cut in their three prime services: planning, housing and culture. The total runs into billions. As I have had occasion to mention many times, in Newcastle alone the shortfall will be £280 million a year by 2020. How does this fit alongside the Government’s proclaimed housing policy? For that matter, how many properties do the Government think will be built as a result of the recently announced £2 billion for new council housing? Where will the 20,000 to 25,000 new homes be built and how will the money be allocated? Specifically, what proportion is envisaged for district councils, only 20% of whose income comes from government grants? Given the pressures on them, that figure is simply inadequate.

Do the Government recognise that councils are subsidising planning services by 30% because the nationally set fees do not cover the costs? That is a particular problem for district councils. Will the Government take the Local Government Association’s advice to increase fees for planning applications by 20%, and allow an experiment with a higher increase to test whether that would help improve the process? Above all, will the Government enable councils, including district councils, to borrow to build, and remove the borrowing cap, recognising that such borrowing, creating assets, should not be included in the public debt?

The 44% rise in homelessness in the last few years, accompanied by a 102% rise in the number of rough sleepers, also needs tackling. Such difficulties are not confined to major cities or unitary authorities. District councils face many of the same problems—not always to the same degree, of course; nevertheless, that is a real problem for them, as it is for the rest of local government. Many district councils struggle to support local transport schemes. Will the Government fully fund such schemes?

Everyone now recognises that social care funding is inadequate. District councils have a significant role, albeit an indirect one, in supporting healthy communities. As the noble Lord, Lord Greaves, pointed out, the King’s Fund estimates that every £1 spent by district councils in preventative services, such as home adaptations, leisure and environmental policies, can result in a public expenditure saving of £70. That is a huge return on that investment—an investment that district councils are finding increasingly difficult to make.

There is also concern about changes to the new homes bonus, which will make it more difficult for district councils, in particular, and others, to deliver much needed new housing. The King’s Fund report on the district council contribution to public health, both direct and indirect, has made 10 recommendations, including involving district councils in improving the relationship between clinical commissioning groups, counties and districts, and a wider collaboration over health economics, with greater district council investment in environmental health services and health impact services. For that to happen, appropriate funding will have to be provided. Will the Government implement those recommendations and ensure sufficient funding is available? Ultimately, they will save the health service a great deal of money.

In an Answer to a recent Question of mine, the noble Lord, Lord Prior, revealed that there are 278,000 domestic, and 200,000 non-domestic, privately rented properties with an energy performance rating below E. Some landlords may be exempted from the requirement to upgrade their property’s performance rating on the grounds of cost, but as yet, the Government have no estimate of the numbers. Inevitably, some of those properties will be in district councils. When the Government consult on making energy regulations more effective, will they look specifically at the situation in those councils?

There is as yet no clarity on how the changes in business rates will be implemented. Can the Minister enlighten us as to the approach, especially to ensuring an equitable distribution of business rates across the local government world? That is a hugely important concern of local authorities, many of which are likely to be able to raise exiguous amounts from local business rates. Has the recent revaluation affected the current distributional picture in relation to districts in particular, and all local authorities in general? What is the Government’s approach to ensuring there is some measure to redress imbalances between different authorities? Perhaps I can take this opportunity to ask the Minister about the sixth report from the Secondary Legislation Scrutiny Committee on the Draft Regulation of Social Housing (Influence of Local Authorities) (England) Regulations—a somewhat prolonged title, not untypically. In particular, will the Minister look at the involvement of local government in that respect?

We have before us an issue that runs right across local government: its capacity to meet and fulfil needs, many of them important both to individuals and communities. All types of local authorities have an interest in there being a proper reflection of their needs in the local government finance system.

Reverting for a moment to my previous point, on changes in board membership of social housing bodies, I do not expect the Minister to have an answer at his fingertips today, but will those proposed changes adversely affect local authorities, including districts, bearing in mind that the committee expressed doubts about the failure to have a formal consultation, including with tenants, on that set of regulations? In a way, it illustrates a somewhat cavalier attitude towards local government as a whole; but district councils in particular, with their interest in housing, will certainly need some assurances in that respect.

I believe Members will make a powerful case on behalf of district councils. I am sure they would agree that a similar approach needs to be adopted across the local government scene. We await the forthcoming local government finance announcement, which presumably will come just before Christmas. It will be interesting to see the extent to which the Government are prepared to change those policies—at least as much as they are apparently now prepared to change some of their other policies in the light of the recent general election results.

Photo of Lord Shipley Lord Shipley Liberal Democrat 12:16 pm, 19th October 2017

My Lords, I remind the House that I am a vice-president of the Local Government Association. I am grateful to the noble Lord, Lord Beecham, for reminding us that some of the things the Liberal Democrats did in the period of the 2010-15 coalition Government were very much in the interests of local communities. Indeed, he accuses us of being an accessory to the cuts of 2010-15, but it all depends on what is being counted. The noble Lord can sometimes be selective in his facts, missing out certain things that are relevant. What is relevant is that the National Health Service was protected locally by that Government, as were our schools’ budgets. In addition, the pupil premium was introduced by that Government, which enabled a lot more money to go into schools in disadvantaged parts of the country. That Government also introduced several years of council tax support to keep council tax bills down for individual council tax payers.

It is the case, not just in local government, that cuts were made that were higher than we would have liked. There are other parts of public spending where cuts were made because of the crisis produced by the banking collapse and the failure of the Labour Government in those years to address some of its consequences adequately. As the noble Lord will also be aware, the Government have been running an annual deficit ever since 2008, causing the country’s debt as a whole to continue to rise. However, let us not engage any further in tit-for-tat.

I was reminded by my noble friend Lady Maddock of the situation in the north-east of England, where we have only unitary councils. I have personally been very supportive, where there is local demand, of introducing unitary councils, as long as two factors are in play: that communities are generally supportive of the geographical size of their unitary council; and that town and parish councils are properly empowered to provide a focus for the explanation of local need to the unitary council, but also for the provision of some services. I find myself agreeing in very large measure with what my noble friend said; she covered a number of the practical problems that can be caused in a large unitary, such as Northumberland, extremely well.

My noble friend Lord Greaves said that district councils were the Cinderellas of local government, that they were in the front line of cuts and that the fabric of local services was being eroded. The Minister should look carefully at the evidence base for this, because I have come to the conclusion that it is true. That is because district councils do not spend a lot of money—I am grateful to the Library brief for providing the information. Local government spends in total some £94.5 billion and district councils spend just £3.1 billion of that—approaching 3.5% of the total.

For a sector of local government to have to cover so many of the services that my noble friend Lord Greaves described seems a tall order on total spending of that kind, yet district councils provide some 60% of local government services in their areas—that is going by the defined number of services that local government provides overall. There is a mismatch between the amount of money they spend and the number of services they are required to provide, which explains why, in some district council areas, the cuts imposed have a greater impact on some services, particularly on housing support.

District councils tend to provide universal neighbourhood services rather than individual services. Individual services in adult social care, for example, are provided by another tier of government. As my noble friend Lord Greaves said, the provision of such local services is gradually reduced to the point where only the basics are done.

However, another factor about district councils should be borne in mind. I concede that there are district councils in urban councils, but district councils tend to cover the more rural parts of the country, where populations are lower and services may lie a considerable distance from where people live, increasing household costs. It is not just a function of council tax levels; it is also a function of how far away a service is that somebody wants.

It is incumbent on all district councils to make themselves as efficient as possible. Sharing services, particularly back-office services, matters. There are some examples of where that is done very effectively. There are areas where becoming a unitary council may be an obvious step to take, underpinned by strong parish and town councils. However, that may not be the right approach for all areas, as I would be the first to concede. There is a big problem about money, in both relative and absolute terms. I read in the District Councils’ Network brief that two-thirds of district councils will face negative revenue support grant by 2019-20, but they share with other councils uncertainties around business rates, about their powers to raise council tax and about reduced spending power generally—as the National Audit Office has made clear in recent studies. District councils claim that they have been affected by worse settlements than other councils in terms of their core spending power. All I ask the Minister to do is look carefully at that and at whether further clarification can be secured.

We have heard today about the 2% prevention precept proposed by the District Councils’ Network. It is a very interesting suggestion.

Years ago, I helped to introduce a business improvement district in Newcastle-upon-Tyne, which had to be voted on by all the businesses within the area of that district. It works only if people understand what they are paying additional tax for but, when they do, it can be a huge success—as it has been, I believe, in our case. There is a 2% precept for adult social care, as we have been reminded, but another idea that the Minister should look at very carefully is how a 2% prevention precept might work. It would need a clearly defined set of outcomes against which success can be assessed. One example might be in housing support services and, in particular, in tackling homelessness, because the spending reductions that have occurred in housing support services in district councils are at almost 50% in the last few years.

As we have heard, district councils can do more on housing, affordable homes and social homes for rent. I am aware that quite a number of district councils have not been replacing homes that they sell. One reason is that they need adequate fiscal freedoms to allow them to do so, by using right-to-buy receipts, lifting the borrowing cap for the housing revenue account and through generally greater certainties on government policy. Some of this will, I presume, be clearer when the Government’s Green Paper is published. Overall, I hope the Minister will reflect carefully on what is being said. There may be an opportunity in the Budget, or in the settlement itself, to ease things in respect of those services that the general public see as universal, which are used by very large numbers of people but which are, at the moment, suffering unfairly and taking away public services that people value.

Photo of Baroness Pinnock Baroness Pinnock Liberal Democrat Lords Spokesperson (Communities and Local Government) 12:26 pm, 19th October 2017

I thank my noble friend Lord Greaves for enabling this debate and I remind the House of my interests as set out in the register as a councillor in a metropolitan council and as a vice-president of the Local Government Association. Three themes seem to have emerged in this debate so far about district councils and their resources. They are fairly obvious and straightforward: financial resources, the impact the cuts have had on services, and the impact on local democracy.

In 2014, the National Audit Office produced an important analysis of the impact of the severe cuts in government funding to local government. I hope that the National Audit Office will be able to update this analysis because it has provided the clearest independent picture yet, using evidence from district auditors and others, of the financial state of local councils. In the report, the NAO states that by 2015 district councils had lost 37% of their government grant. This has had a serious impact on local services, as has been illustrated in other Members’ contributions. The NAO said that spending on housing—largely on adaptations and support services—had reduced by 17%, along with a 24% cut in planning services and a cut of 16% in transport and highways. Fundamental and vital local services have seen very serious reductions in expenditure. Efficiencies are one thing but cuts of this order are another thing entirely.

I have a couple of examples of what the future holds for district councils, from looking at the government figures on the DCLG website where there is a very helpful spreadsheet of core spending per household for every council in the country. I have picked out two from the Somerset area. Mendip District Council faces a further 12% cut in available funding over the next three years. South Somerset District Council, which has £263 per household this year, will have £231 per household by 2019. We are talking about a constant drip-drip of cuts. Any business will tell you that constantly making cuts on that scale ends up in only one way, which has been described by other speakers. There are real impacts on very important services that affect people’s lives. For example, there are huge changes to waste collection—people might have to pay for bulky waste collection, leading to more fly-tipping—and to disabled adaptations, as we have heard, which enable people to live independently for longer. These are small investments with very big returns, not just financial but on people’s lives with, obviously, local health services having to help more people as a consequence.

Those are the financial cuts and some of their impacts, which have been clearly articulated by others. I want to point to the impact on communities. These constant cuts belie the value and importance of communities to our national well-being. Funding cuts have a more insidious effect because people in areas of the country that are remote from London equate the Government with London and feel that if they live in the north of England, the Lake District, Somerset or north Nottinghamshire, it is London which neither understands nor cares about them. They know that the support and services they value the most are not there any longer because of London. That feeling is not good for the well-being of our country and certainly does nothing to help promote vital, robust communities.

District councils in particular feel that their voice has been lost. They are no longer able to have a say about what happens to their local services because the cuts are being imposed by government on the local authority without it being able to influence that one jot. That has undermined local democracy itself. We have heard about the pressure to centralise local councils in Northumberland. The pressure to collaborate, to make efficiency savings and to centralise services does not always end up with reduced costs but it definitely results in a great feeling of remoteness and a strong feeling that London does not understand. That may not be the case but it is what people up and down the country feel, and we ignore that at our peril.

At its very best, local democracy provides leadership and vision. Undermining that leadership and vision because of the constant pressure of having to cut important services results in communities having a sense of inadequacy, frustration and anxiety. None of that is good for the health and well-being of local people. Unwittingly—some would say that it was with purpose—successive Governments have cut funding so heavily that the very existence of some councils is being put into question. It is not me saying that but the National Audit Office and we ought to take it seriously.

I am sure that the noble Lord, Lord Bourne, has enormous influence on his colleagues elsewhere in the Government. We are at a crisis point. Further cuts to local government will result in the crisis that we have already seen in social care extending to children’s social services. It is beginning to happen in that area and it will extend to other important services delivered by district councils. I hope that the Minister will be able to put his considerable pressure and influence on government to reverse the cuts predicted in the three-year spending plan that was agreed last year and say, “Enough is enough; local people need and deserve these services”. Cutting them further will only harm individuals and communities.

Photo of Lord Kennedy of Southwark Lord Kennedy of Southwark Shadow Spokesperson (Housing), Opposition Whip (Lords), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Home Affairs) 12:36 pm, 19th October 2017

My Lords, I refer the House to my interests in the register, as a councillor in the London Borough of Lewisham and a vice-president of the Local Government Association. I congratulate the noble Lord, Lord Greaves, on securing this debate. He has raised the important issue of the future availability of resources for district councils in two-tier areas. We have received some excellent briefing notes, which have been helpful for me in the preparation for this debate, from the Library of the House, the Local Government Association and the District Councils’ Network. I thank them all very much for what they have provided.

We quite rightly debate local government matters a great deal in this House. Local government delivers a huge range of services and, as the noble Lord, Lord Greaves, told us, district councils deliver 86 of the 137 essential services to more than 22 million people, or 40% of the population in England, covering 68% of the country by area. They also approve 90% of the planning applications and enabled most of the housing completions in their areas last year. They collect the council tax and, as the noble Lord also said, are the councils with which local residents often identify most. That gives the House some idea of the scale of what district councils do and cover.

There are particular issues that affect local government funding, which I want to go through. First is the impact of changes to the new homes bonus on district councils. The introduction of the 0.4% baseline threshold for that bonus removed funding of over £70 million from district councils in 2017-18, which was passed to adult social care authorities. We have a social care crisis and the Government need to address it with new, additional funding, recognising that we are all living longer—which is good news. Medical advances mean that conditions can be treated more successfully but that could mean a greater draw on resources over a longer period. We need ideally to get to a place where there is an agreed settlement on adult social care funding.

The Government learned an important lesson at the recent general election: that the proposals they put forward then were not fit for purpose and contributed to the loss of their majority in the House of Commons. The “robbing Peter to pay Paul” strategy, which is in effect what the Government have done recently in respect of the new homes bonus, is not a sustainable solution and anyway, it provides nowhere near the level of resources required to solve the problem. Can the Minister confirm what plans the Government have in respect of the new homes bonus in future years?

As other noble Lords have said, district councils provide a number of services that, if delivered adequately, can have a very positive effect on the public purse generally. The old adage that prevention is better than cure works here as well. Keeping people active for longer through keep-fit classes, swimming and plans to encourage more walking has positive effects on people’s health and fitness and helps to combat other problems, such as loneliness. Not only are we living longer but the number of people who live alone is increasing. Aids and adaptations to homes can keep people in their own homes longer with consequential savings to the public purse, as I mentioned earlier. Can the Minister tell the House what weight is given to the spending of money that assists with prevention rather than cure when the Government are deciding on levels of grant and the funding of programmes? How is that done or is it not done at all?

Housing is an area of concern to the whole House. The Minister referred to it as “our broken housing market”. Some of the actions the Government have taken, no matter how well intentioned, have not helped the situation. The 1%-a-year compulsory rent cut is just taking money out of the system. The housing revenue account borrowing cap and the time limitation on spending right-to-buy receipts suppress district council delivery of much-needed new homes. We also need finally to scrap any notion that any councils will be forced to sell high-value assets to fund the right to buy for housing association tenants. That should be funded direct from government. Perhaps the Minister can update us on what is happening here.

My noble friend Lord Beecham raised housing and the provision of new homes following the recent announcement of additional funding. It would be helpful if the Minister would tell the House the number of social homes on social rents as opposed to any other form of tenure that will be provided as a result of this funding.

Local government can do more. District councils can do more to deliver the Government’s aim of providing new homes, but they have to be enabled to do so. I lived in the east Midlands for many years, and I have a reasonable knowledge of the district councils there, of all different political persuasions, which often moved from Labour to no overall control to Conservative and vice versa. They would rise to the challenge if they were allowed to. They are places such as Corby Borough Council, Broxtowe Borough Council, High Peak Borough Council and City of Lincoln Council.

We have to move on from re-announcing previous announcements from the housing White Paper and elsewhere, as we saw yesterday in the Statement that the Minister presented to the House, which was previously announced in the housing White Paper in February this year.

There are new requirements to deliver welcome reforms in dealing with homelessness. When it came before the House earlier this year, we all supported the then Homelessness Reduction Bill. Our only issue is the adequacy of the funds available. This will be a much bigger pressure for London boroughs, but district councils in two-tier areas near unitary cities such as Derby, Leicester and Nottingham may have additional unfunded financial pressures in future years as a result of the new obligations. That needs to be addressed.

Planning fees are another area that needs action from the Government. This has already been referred to. Council tax payers are subsidising developers as the low level of nationally set planning fees does not cover the costs. I am well aware that the Government announced in the housing White Paper that local authorities can increase their fees by 20%, but I think they should go further by committing to allow every council the flexibility to increase their fees by up to 40%, to be invested back in the planning service, and also by quickly allowing some pilot schemes for local fees setting which are fair and transparent. I do not want councils to be making a profit but I want them to be able to recover their full costs. That would allow district councils to use other precious resources, which are presently subsidising the planning process, to be put to better use locally, helping with economic regeneration, improving the high street, supporting other measures to support healthy living and supporting housing growth. Again, if the Minister would address that in his remarks it would be most welcome.

The noble Baroness, Lady Maddock, made reference to the situation in Northumberland. I am not sure about the particular issue that she spoke about but I would say that consultation, and listening to its results, is important and should influence the decisions made.

There is no doubt that the noble Lord, Lord Shipley, is right that the coalition Government, which he supported, did some good things, but it also did some not so good things as well as some things that I opposed and which caused great damage—the LASPO Act and legal aid funding, for example. I do not blame the Liberal Democrats at all for joining the coalition; in fact, they had a duty to do so. It was the only serious coalition on offer, looking at the maths in the House of Commons. Equally, though, the Liberal Democrats have paid a heavy price for being in the coalition and making pledges that they broke, none more so than the broken promise on student fees, which I am sure has had a salutary effect on the noble Lord and his colleagues in his party.

In conclusion, I thank the noble Lord, Lord Greaves, for initiating this debate. I think I am right that all the speakers are or have been local councillors, and that is reflected in the quality of the contributions that have been made. The Minister has a number of important points to respond to and update the House on.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth Parliamentary Under-Secretary (Northern Ireland Office), The Parliamentary Under-Secretary of State for Communities and Local Government 12:46 pm, 19th October 2017

My Lords, I thank the noble Lord, Lord Greaves, for moving this debate and outlining the importance of district councils, the range of services that they cover, the area coverage and the trusted, familial and responsive nature of district councils, as well as for the energetic way in which he always represents the best interests of Pendle, which came across again today.

In trying to set the scene for this debate, I have to say that even I noted perhaps a slight tension, a frisson, between the opposition parties—a hint of disagreement from the noble Lord, Lord Beecham, for example, which was uncharacteristic. Let us reflect on where we are with this. I do not think there is any question that we would all wish to spend more in local government but we all have a responsibility, which came across earlier this week, on intergenerational fairness. At the moment, we are still running a considerable deficit. There has been a lot of talk of cuts and so on, but noble Lords should cast their minds back. As the noble Lord, Lord Shipley, referred to, when the coalition Government came in in 2010 there was a dreadful financial position. That has been ameliorated, but we are not out of the woods yet. Those parties and individuals who understandably want to spend more money have a duty to tell us where that money would come from. Would it come from increased borrowing, taxation or a combination of the two?

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth Parliamentary Under-Secretary (Northern Ireland Office), The Parliamentary Under-Secretary of State for Communities and Local Government

I think I heard a murmur that it could come from cancelling Brexit. If people are suggesting that, they had better tell us how they are going to go about doing it. There are some serious fundamental issues lying behind any increase in spending.

That said, we have councils up and down England providing essential services to millions of people. I know district councils in particular are at the front line of our democracy; they play a vital role in our society. As I say, they are familial, trusted and, obviously by their very nature, local. They are responsible for providing housing, collecting local taxes, protecting our environment and shaping our community. District councils provide these services, and they are services that people value and depend on on a daily basis.

I am grateful to some noble Lords for indicating that there are ways in which local government can save money, and indeed has done, by the merger, sometimes voluntary, into unitary councils. The noble Lord, Lord Shipley, referred to this. Sharing back-office functions sometimes makes sense. The noble Baroness, Lady Pinnock, mentioned, perhaps critically, rationalisation of waste collection. This is often a sensible way to save money, not something that is necessarily bad news. We have to look at what is proposed.

We also need to put it in context. In the 2015 spending review, the Government delivered £200 billion for local government—a significant amount—and in 2016 we provided an unprecedented four-year financial settlement offer, which 97% of all local authorities accepted. We did this because local government was asking for certainty, and we recognise the need for that; that is absolutely right and fair. The settlement will see a modest increase in funding in cash terms—in cash terms, I acknowledge—over the period covered and, as I said, we still face a challenging national debt which is at nearly 90% of our GDP. Nevertheless, the settlement is designed to ensure that councils have the right level of funding for the most important services that they offer. The noble Lord, Lord Shipley, referred to the challenge of rurality. The settlement includes a dedicated grant worth more than £260 million for rurality.

We are in the second year of that multi-year offer, and we recently published a consultation on our approach to the third year. This includes—something that was touched on—a commitment to continuing the reforms to the new homes bonus, as laid out last year, and the social care challenge. The noble Lord, Lord Kennedy, rightly recognised the size of that challenge. He said that it might lead to increasing costs; I do not think there is any doubt about that, as it certainly will. He is absolutely right that we should welcome the fact that people are living longer, but it means additional costs to the health service and social budgets. That represents a challenge, which the Government are looking at, and we will bring forward proposals on how to face it. I think that there is recognition around the House that this problem is faced by the country, and we need to square up to that challenge as a country. I am sure that we will be able to work together on it.

The new homes bonus—to return to it—has been successful so far. It has allocated more than £6 billion, reflecting more than 1.2 million new homes. People have referred to the importance of new housing, and I will deal with some of the specific issues raised later. The council of the noble Lord, Lord Greaves, Pendle, is set to receive more than £4.5 million over the course of the Parliament, around 13% of its total core spending, but we need to explore every possible option to support the creation of even more homes for our communities. The Government continue to be committed to incentivising local authorities to support housing growth in their areas; it is something we value. This is why we are currently consulting on a methodology for reducing payments for new homes where planning permission is later granted on appeal. That seems to us to be the right thing to do. Decisions on any changes will be made in light of this consultation, and, as I said, we will be bringing forward our proposals.

When it comes to increasing our country’s housing supply, we stand behind local government. The new homes bonus is one way in which we do this, but there are others, and we know that we need councils to continue to deliver. We have introduced our new £2.3 billion housing infrastructure fund for all councils to bid into, and we have already committed more than £1.7 billion of the home building fund, which will deliver more than 100,000 homes and create thousands of new jobs.

We are also engaging in bespoke deals, which are progressing in, for example, Leeds, Manchester and the West Midlands. I think a specific question was asked about the £2 billion additional money that has been announced. I said earlier this week, I think, but I am happy to restate it, that we will be bringing forward our specific proposals as to how that money is to be spent and, of course, a great deal of it will be on social housing. We will publish those proposals.

District councils play a particularly vital role as local planning authorities, and reference was made to planning departments. The noble Baroness, Lady Maddock, the noble Lords, Lord Beecham and Lord Kennedy, and others spoke of the importance of ensuring that we deliver on the 20% increase, which was referenced in the housing White Paper. I apologise for again restating a policy that has already been announced, which is something I was criticised for, but I have been asked what we are doing on it and I can say that we will be delivering on that 20% additional fee by the end of the year. That has been broadly welcomed, and I am glad that we are able to deliver on it. All planning authorities have accepted and confirmed that they will ring-fence the additional income for investment and planning. We are also, as noble Lords will be aware, consulting on options to go further and to allow an increase of another 20% for those authorities delivering on their housing need, thus coupling additional money for planning departments with increased housing supply, which I know is something noble Lords understandably are keen on.

Reference was made to energy efficiency by the noble Baroness, Lady Maddock, and I know she does great work on this—we engaged together on this area when I was in a previous role on climate change—and the noble Lord, Lord Shipley, also talked about energy efficiency standards. I will ensure that a copy of this debate is passed to BEIS, which leads on energy efficiency, but much is happening through product regulations and through the action of the market on things, such as cars and so on, in reductions of carbon. We published last week The Clean Growth Strategy, setting out proposals for decarbonising all sectors of the economy, so that is happening, too.

Looking to the future, we have ambitious plans for the local government funding system. Questions were asked about this. We are committed to our manifesto pledge to give councils even greater control of the money they raise locally. We will press on with these reforms to increase business rates retention. I think it was the noble Lord, Lord Beecham, who asked about smoothing mechanisms to make sure there was a fairness element. Of course, that will be inherent in it.

I know from the current retention scheme that Pendle benefits, as does Lancashire generally, from the Lancashire business rate pool. Pendle is forecast to increase its business rate income above its baseline level by more than 10%. This year, Lancashire’s business rate pool members will have an estimated extra income of £9.8 million. We want to increase further that reward for growth.

In September, we published a prospectus for a new tranche of pilots for 100% business rates retention. I urge members to participate in that—applications for the pilots close on Friday 27 October, which is a week tomorrow, and there are five spaces. We launched the prospectus, as I said, in September, and that would be for 100% business rates retention, so it may well be of interest to district councils. From next year, successful applicants will run alongside the current five pilots. These authorities will be able to keep even more of the growth in their business rates income, with no impact on the rest of their funding. They can use that growth to invest or spend on services. Our pilots will be invaluable in testing our reforms to ensure an outcome which delivers for the whole of England. So those pilots are extremely important.

We have recently relaunched our steering group, looking at how we progress business rates retention beyond the current level independently of those pilots. My department co-chairs the steering group with the LGA to look at ways to move forward without primary legislation. We can certainly achieve much by secondary legislation, and we will come forward with suggestions and publish them. We are analysing more than 200 responses to a further consultation on business rates retention, and I want to thank those who participated.

I shall touch on two related matters, if I may, which are not directed specifically laser-like at local government finance but which certainly have an impact on it. One of those is coming up next week—the Committee stage of the Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill, which is related to relief for fibre. It has broad support throughout the House. There are some issues that we will need to work through, but it is something that will help. Just to take Pendle as an example, it currently has only 0.05% full-fibre coverage, so that is something that Pendle and many other areas would expect to benefit from.

Many of the contributions were in the context of the north, so I should also mention the opportunities that are provided by the northern powerhouse, which is particularly the case in Lancashire. We have created a network of growth hubs—for example, Lancashire’s hub has over 3,000 local SMEs and has created more than 1,300 new jobs in its first three years. It has run in tandem with growth investment into the Lancashire local enterprise partnership. So to get the full picture, it is right that we look at those things as well, and at specific local projects. The Burnley-Pendle growth corridor, for example, has funding of £8 million for a transport and highways improvement scheme. We want to unlock growth in all sorts of ways—some through local government and some elsewhere.

I shall turn briefly to the fair funding review, which I think was not touched on. I should like to set out where we are on that review and in that cycle. It is going to redesign the way in which we determine local government’s relative needs, and set new baseline allocations. It is over a decade since the current formula was looked at thoroughly; indeed, some parts of it date back to 1991. Since then, the demographic make-up of many areas, such as those we have talked about, including Northumberland and Pendle, has altered radically. An ageing population, as the noble Lord, Lord Kennedy, said, means demand for different services has shifted within areas. We are entering a world in which local government spending is funded by local resources, as I have indicated, with business rates retention, not through central government necessarily.

The fair funding review will consider how to introduce a more up-to-date and more transparent needs assessment formula. We need to make sure that it works for all local authorities, wherever they are. Rural councils, for example, or areas which struggle with higher levels of deprivation, will have unique needs that have to be met. That has to be recognised. To get this right, we are working collaboratively with local government at every step of the way. We have a strong relationship with the LGA, with which we chair a working group, which is progressing matters. Last year we conducted a call for evidence, which drew over 200 responses. We plan to consult again soon, and we will make sure that it is a thorough, evidence-based review. It should be fully effective by 2021.

There were some specific questions from the noble Lord, Lord Beecham, to which I shall respond in writing—and I shall copy other noble Lords in. As is my customary practice, I shall ensure that a circular letter is sent around to noble Lords to pick up any points that I miss, with copies also placed in the Library.

We recognise the vital and ongoing importance of district councils. We wish to work with district councils; they are our partners, and we have shared ambitions with them. We recognise the challenges, and I fully recognise and wish to place on record the debt that the Government have to our partners in working with us to ensure that we continue to bear down on some of the costs involved while providing excellent services. There are challenges but, as I have indicated, there are mechanisms that we are looking at in terms of business rate retention and some of the specific funds and matters to which I have referred. As I say, the fair funding review will help to equalise within different councils some of the distortions that currently apply.

With that, and with the assurance that, if there are any other points that I have missed I shall certainly pick them up on the write-around, I again thank the noble Lord, Lord Greaves, for bringing this important topic to the House and airing it as effectively as he has done.

Photo of Lord Greaves Lord Greaves Liberal Democrat 1:04 pm, 19th October 2017

My Lords, I am grateful to the Minister for his reply, and to everybody who took part in the debate. I was a bit disappointed that more people did not take part, as I thought that lots of Peers would come from district areas and would be lobbied by their local councils. Perhaps we need to organise that a bit better.

The noble Lord, Lord Beecham, suggested that I should apologise for things that happened during the coalition. Whether or not any apologies are due, I am not sure that I am the right person to ask.

I am grateful to my noble friends Lady Maddock and Lord Shipley for talking about housing, which I had deliberately left to them.

I was disappointed that the Minister did not respond on the proposal for a 2% prevention precept for districts. I just want to say briefly why it is a fair thing to do. In unitary areas—London boroughs, mets and unitaries—the 2% applies to the whole of the council tax levied by the council. In shire areas, it applies only to that proportion of the council tax that comes from the county precept; it does not apply to the proportion of the council tax—10% or 15%, whatever it is—levied by the district. That means that people in shire areas are paying less 2% precept, in a sense, than people in unitaries, because they are paying it only on the proportion that goes to the county and not on the proportion that goes to the district. Therefore, it is perfectly reasonable—even though I would be one person who would have to pay a bit more—that in shire areas, two-tier areas, the district ought to be able to pick up their share of the 2% and apply it to preventive measures. Having said that, in my own authority, the total would be less than £50,000 on 2%, not a huge amount of money and not a great pot of gold. But it would be useful for districts to be able to do that. It is not an additional imposition on council tax payers in district areas compared with the rest of the country. That is an important point. Perhaps the Minister will go away and think about it, and it is something that he could write about.

The Minister seems to be getting a bit obsessed with Pendle—I do not know why. I made it quite clear that, in so far as I talked about Pendle in my speech, I was just using it as an example of a type of area. I talked about lots of other areas, too. However, if the Minister is really so interested in Pendle, perhaps he would like to come and see for himself and talk about some of our problems, and we can explain to him what they are. If he would like to do that, I would very happily, together with colleagues in east Lancashire, across the councils, organise a meeting for him with three or four east Lancashire districts, which all have the same problems. We could explain to him why, probably in four years’ time, the contribution of the new homes bonus in some or all of those districts will be zero. No matter what we do, given our resources, we are probably not going to meet the conditions that the Government are laying down for the number of new houses that would then have to be built. I issue that invitation publicly.

It only remains to me to move the Motion and thank everybody again for taking part in the debate—although I am a little disappointed that the Minister gave a general reply about local government finance and did not focus on specific district issues, in particular on neighbourhood services. They are becoming more and more a matter of concern and the subject of members’ reports, and they are coming up to a crisis point in many areas. Having said that, I promise that the debates will continue.

Motion agreed.