Local Government Funding: North-East — [Sir David Amess in the Chair]

– in Westminster Hall at 2:30 pm on 1st March 2016.

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Photo of Jenny Chapman Jenny Chapman Shadow Minister (Education) 2:30 pm, 1st March 2016

I beg to move,

That this House
has considered local government funding in the North East.

It is a pleasure to serve again under your chairmanship, Sir David. I am grateful for the opportunity to have this debate, which I applied for so that I could set out the impact of the local government funding settlement on my constituency and give colleagues from across the north-east the opportunity to make clear to the Minister the consequences for their constituencies of the decisions that he and his colleagues have made.

I welcome the Minister—I am glad that he is here to listen—but I am disappointed. I think it would have been appropriate to have the northern powerhouse Minister, James Wharton here, given his stake in the region. His constituency lies in the north-east so his constituents will also be subject to the effects of the Government’s decisions. It would have been good to have the opportunity to tell him how we feel. However, I notice that the Minister is making notes and I am sure that he is all ears and will take back the clear message that we will be sending via him.

May I just tell the Minister a little about the north-east? If his colleague was here I would obviously not need to do this. We are very proud of the north-east. We love the north-east.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Education)

Well, my mum is from Kent but I know bugger all about it. [Laughter.]

I want to convey to the Minister that we are incredibly proud of our region. Everyone who lives in the north-east is proud of it. We have a strong industrial heritage and we have an exciting future ahead of us. We are hard workers. We have a beautiful landscape and a wonderful coastline. We have vibrant cities and world heritage sites. We are keen to see the region progress and grow as we know it can, but that needs the support of a Government who understand the north-east, and I do not think that that is what we have.

Alongside all those wonderful things in the north, we have some challenges. I want to say a few things about ageing, and I know that the Minister might also want to refer to it in his response. Life expectancy is lower for men and women in the north-east than anywhere else in the country. For boys born between 2012 and 2014, life expectancy at birth was highest in the south-east and lowest in the north-east. For girls, it is the same: life expectancy is the highest in London, where they will live until they are 84, and the lowest in the north-east, where they will live only until 81. Men in the north-east who get to 65 can expect to live to 78. My dad did not get to 65: he grew up in South Bank in Middlesbrough—somewhere the Minister’s boss knows well, I think—and he died at 48 from heart disease. Lifestyle absolutely was a factor. For women, life expectancy at 65 is highest in London—they will live another 22 years there—and lowest in the north-east, where they will live only another 20 years.

The strategic review of health inequalities in England post-2010—the Marmot review—concluded that health inequalities stem from avoidable inequalities of income, education and employment, and that they are not inevitable and can be reduced. I think that local authorities have a key role to play in that reduction.

Let me give some examples. According to IPPR North, transport spending in the north-east is £5 per head compared with £2,600 per head in London— 520 times less. There are 33 projects in the pipeline for London and the south-east compared with just three in the north-east. The Government need to look at how they evaluate projects and decide where to invest. Our transport infrastructure, including and the quality of rolling stock, in the north-east is clearly not good enough compared with that in other parts of the country.

According to the latest Office for National Statistics report on unemployment by region, it is highest in the north-east at 8.7 %. The largest decrease in UK workforce jobs in the last three months of 2015 was in our region—we lost 26,000 jobs. According to the Department for Education’s “NEET Quarterly Brief”, the proportion of 16 to 24-year-olds not in education, employment or training is highest in the north-east, at 20.1%—that is 59,000 young people. According to the Joseph Rowntree Foundation, average wealth in property and assets is lowest in the north-east, where it is half that in the south-east, and financial wealth is four times greater in the south-east. Those are real issues of inequality and opportunity that we think that local authorities are well placed to assist in addressing.

According to the Department for Education, the north-east and the north-west jointly have the highest rate of looked-after children, at 82 per 100,000. The lowest rate is in outer London, the east and the south-east, so we bear the brunt of that burden too. According to the 2011 census, the day-to-day activities of 22% of people in the north-east are limited by a long-term health problem or disability, compared with 18% for England and Wales—remove Wales and the figure is probably even lower. The census also shows that 11% of people in the north-east provide unpaid care for someone with an illness or a disability—a figure that is higher than the national average—and that the north-east has the highest proportion of socially rented accommodation, at 15%.

The point I am trying to make is about need. The Government do not take sufficient account of the varying degrees of need across the country, and councils serving communities with the highest levels of need are not being supported.

Photo of Catherine McKinnell Catherine McKinnell Labour, Newcastle upon Tyne North

My hon. Friend is making a powerful speech and I congratulate her on securing an important debate. I would hate to pre-empt her, but while she is setting out clear examples of where the figures in the north-east are higher than in the rest of the country, I want to say that one of the most shocking things is this: the Government’s own figures show that councils’ spending power per household between 2010 and 2020 will fall by the highest amount in the north-east—by £465.51 per head, compared with £154.07 in the south-east. My hon. Friend is setting out the picture of why the north-east requires additional spending and those figures stand in stark contrast.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Education)

My hon. Friend has just encapsulated my argument, neatly making the point that I am sure all Labour Members present will be making to the Minister. We feel strongly that we could, with the right support and the right collaboration with the Government and our local authorities, make a real difference to those numbers. Things were going in the right direction—that is what we are trying to get across—but we cannot do it on our own. We know that all Governments fiddle with the formulae to suit their political ends—I am not naive about that. We called for the debate because this Government are doing that in such a blatant manner.

In my home town of Darlington, residents are united in their disgust at what the Government are doing to our town. In a borough of some 100,000 people, almost 9,000 have already signed a petition initiated by my trusty local newspaper, The Northern Echo. The petition reads:

“The Northern Echo is calling on the Government to reconsider its funding formula which has led Darlington Borough Council to implement savage spending cuts that threaten the fabric of the town. These cuts affect not only the most vulnerable but will impact on every corner of the borough.”

It is unusual to find a local paper quite so squarely in support of the local council, and how right The Northern Echo is. I am so proud that that historic campaigning title is based in my constituency and is campaigning for fair funding for the north-east. It used to give the Labour Government a hard time, too, but it is completely clear that the decisions that this Government have made are disproportionately and unjustifiably harming the people of the north.

Photo of Phil Wilson Phil Wilson Labour, Sedgefield

I congratulate my hon. Friend on securing this debate. I represent part of the rural area of Darlington borough. Will she explain how unsubtle the funding formula for local government has become? Surrey has received £24 million of the £300 million transitional grant, but Darlington Borough Council is facing cuts of £20 million to £22 million.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Education)

It is extraordinary, and the debate on the funding settlement that we had in the main Chamber brought it home to anyone who still thought that the Government were acting fairly. Government Back Benchers were saying, “I was going to vote against this, but now we have got our transitional funding I think I will go through the Lobby with the Minister.” It was completely bare-faced. One might have thought that the Government could have been more subtle.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Innovation and Skills), Shadow Minister (Culture, Media and Sport)

I congratulate my hon. Friend on securing this debate and on making such a powerful speech. I am sorry to interrupt it, but I do note that she is unlikely to be interrupted by any Members on the Tory Benches. On the point about the £300 million two-year transitional fund, 83% went to Tory-run councils. As she said, councils such as Darlington and Newcastle are receiving the most vicious cuts. How can that possibly be reconciled with any desire to support and grow a northern powerhouse?

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Education)

It cannot. The northern powerhouse as a concept is being roundly rubbished across the region. The Minister might like to take that back to his colleague. It is becoming a joke, and it is not a joke that I take any pride in. I want there to be a northern powerhouse. I am proud of my region, and I see its potential. I want a Government who are genuinely prepared to support it, and the northern powerhouse is nothing but a slogan. It is nonsense; it does not mean anything; it is hollow. He needs to take that back to his colleague and come back with a real strategy that works with local people, looks at skills and transport infrastructure, and works properly with combined authorities, rather than just handing them some delegated responsibility without any resources to do anything meaningful that will transform anyone’s life. People are losing faith and what little confidence they ever had in the Government’s intentions to do anything of any purpose in our region.

Photo of Phil Wilson Phil Wilson Labour, Sedgefield

My hon. Friend mentioned transport infrastructure, and she will be aware just as much as I am of the effect that the public transport cuts have had in Darlington borough. Some communities that I represent in the borough, such as Brafferton and Sadberge, no longer have public transport, which is affecting places such as Hurworth, Heighington, Middleton St George and Piercebridge. That just goes to prove that to energise a local community, public transport is necessary for those who cannot afford a car to get to work.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Education)

I completely agree. I am aware that while we are meeting here, the High Speed Rail (London – West Midlands) Bill Committee is also meeting. If the Minister takes one thing away from this debate, I would like him to take this point about buses. The number of people in the north-east who rely on bus services far outweighs those who need a train to commute to work. Their services are being decimated. Councils are no longer in a position to financially subsidise bus routes. The bus companies are under no obligation to provide the services that we so desperately need and communities are being cut off. That is already happening—it has already happened to areas of my borough.

Photo of Anna Turley Anna Turley Shadow Minister (Cabinet Office)

I appreciate my hon. Friend raising the issue of buses. Support for bus services is a critical issue in my area. When I go out talking to people, I find older people having to get taxis to hospital or to doctor’s appointments. I find people on the minimum wage having to get taxis to work because they are isolated and cut off. That is in rural areas—yes, those of us on this side of the House have them in our constituencies too.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Education)

Although my hon. Friend was being a little tongue in cheek at the end, she makes a very good point. In the debate in the Chamber, we heard many Government Members telling us, “There is rural deprivation, too, don’t you know?” Actually, in the north-east we have many rural areas. I have them just outside my constituency. The county of Durham is predominantly rural. Government Members were being insulting and patronising when they tried to explain to us that they had deprivation in their parts of the country too. The difference between our rural areas and the ones they were talking about is that ours tend to vote Labour.

Let me turn to the dry numbers and their impact—I will be talking about Darlington; other colleagues will talk about their constituencies. The reduction in Government funding in real terms between 2010 and 2020 will be £44 million, in the context of a net budget of £87 million. The provision of statutory services costs £87.5 million. The council has been able to fund £2.5 million of discretionary services a year for the next four years by using all its available revenue balances. Balances that have been wisely saved are now being used to protect front-line services, and what happens after that? That is what I would like to know.

What do the numbers mean in the real world? Darlington is a historic market town. It was the birthplace of the railways. We have got good schools, affordable housing, good rail transport links and a fierce sense of identity. We are proud of where we live. We are innovators. We have developed everything from steam locomotives to story sacks for pre-school kids. We survived the worst of the ’80s Tory Government through a diverse economic base, but these new challenges are not like anything we have previously had to endure.

Darlingtonians are a frugal lot. We like our council tax low and we like our council to make the money stretch as far as possible. Darlington was among the first authorities to share back-office services with another authority. We innovate. The joint project with Stockton cut costs by a third—equal to £15 million over 10 years. Darlington also provides services to other councils, such as Richmondshire, and to academies across the north. The council is soon to provide information and communications technology to Northumberland County Council. It is not just sitting back and waiting for the Government to supply. It is a good, innovative, lean authority. Darlington has only two libraries, and they are both to go. Cockerton will shut entirely, and the historic Crown Street library, which was a gift to the town from the Pease family, will be moved into the town’s only sports centre, the Dolphin Centre. No one knows what will become of the library building. The Dolphin Centre is about to get increasingly busy, as all our children’s centres are to be moved in there as well. It is children who are likely to bear the brunt of the unjust funding decisions.

Charities across the north-east are warning that local government funding cuts are “hacking away”—their words—at services specifically aimed at children. Funding for early-help services in the north-east is expected to be cut by 73%. How short-sighted and stupid can you get? The “Losing in the long run” report, published by Action for Children, the National Children’s Bureau and the Children’s Society, says that children and families will be left without the early support that often stops their problems spiralling out of control.

The services I am talking about include children’s centres, teenage pregnancy support, short breaks for disabled children, information and advice for young people, and family support. Those services, although vital, are not statutory. I find myself hoping that someone will apply for a judicial review to determine exactly what a service for young people and children, or even a library service, should look like. What does the law say a library service really is? Otherwise we will continue to see provision eroded until it resembles the barest skeleton of something that could be described as a service. We are seeing reductions in provision precisely when need is rapidly rising. The Government say they accept the need for early intervention, but they cannot do anything else when the evidence is so strong.

Darlington is also being forced to offer its covered market for sale. I am working with traders to try to find a solution, but that is by no means certain of success. Support for the voluntary sector is going as grants are removed, which means threats to services that are heavily in demand, such as those for older people. My citizens advice bureau is losing out, and the tiny amounts of support for arts and welfare organisations are going. The excellent Gay Advice Darlington will lose, and local charities are fishing in an ever-diminishing pond for donations and grants.

I am working hard to help. I do not want to give the Minister the impression that I am simply standing here wanting somebody else to fix all our problems. I know colleagues will be working hard in their constituencies to assist too. Out of this necessity—who knows?—there might come the invention needed to create new and better, stronger organisations that are less dependent on the council for help. That might be true for some—I am confident that for some it will be—but overall the picture is bleak. Our street cleaning, parks maintenance and grass verge cutting are all provided to the barest minimum standards. My beautiful town is having its heart ripped out, Minister, and the pain is being felt in homes across the borough and the entire region.

To undermine the very organisations capable and responsible for providing such work by gratuitously removing support from authorities with the highest need for it is shameful. The real insult to the people of the north has come in the form of the hideously blatant, politically motivated divvying up of the £300 million emergency funding, which went predominantly to Tory areas. The Secretary of State for Communities and Local Government, Greg Clark, offered a ray of hope to local authorities. He told them they would have to make more cuts between now and 2020, on top of those already imposed, but he did at least promise to provide £300 million over the next two years, so that they had a bit more time to make changes.

There is money for Greater London boroughs such as Bromley, which received £4.2 million of transitional support, and some county councils also do all right—Buckinghamshire receives £9.2 million and Oxfordshire gets £9 million—but there is nothing for Darlington, or for Durham, Newcastle, Sunderland, Gateshead, North Tyneside and South Tyneside. Northumberland will receive £600,000 extra, as well as £4.2 million from the rural grant.

Photo of Catherine McKinnell Catherine McKinnell Labour, Newcastle upon Tyne North

My hon. Friend is making a powerful point. The Minister clearly said that that money was granted to Northumberland because of lobbying from his Northumberland MPs. Is she aware that Middlesbrough, Knowsley, Hull, Liverpool and Manchester, the five most deprived councils in the country, have received nothing under the grant, while Hart, Wokingham, Chiltern, Waverley and Elmbridge, the five least deprived, collectively received £5.3 million? The difference is stark.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Education)

It is indefensible, as my hon. Friend says. The Minister really needs to reflect on the decisions he has made. While those councils and the residents in those areas will benefit from the additional money, it is the looked-after children and the older people—the people who rely on council services in our region—who pay the price, and that is wrong.

Photo of Phil Wilson Phil Wilson Labour, Sedgefield

I do not know whether my hon. Friend is aware, but revenue spending per household in Darlington from 2011-12 to 2019-20 will be reduced by £1,642. In Durham the figure is £1,600 and in Gateshead it is nearly £2,000. Does that not prove how brutal and unsubtle the cuts are for the north-east of England, when we compare them with what is happening in the south?

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Education)

Absolutely it does—I have the same numbers here, which I am happy to give to the Minister.

In a previous debate, the Minister tried to imply that Darlington was getting £2,000 a year extra. If he makes that same claim again, he is completely wrong. I have checked, double-checked and triple-checked with my director of finance, and the Minister is completely wrong. I advise him not to say that again and to ask his officials to get back to the local authorities and find out what the actual numbers are.

Photo of Ronnie Campbell Ronnie Campbell Labour, Blyth Valley

I feel a little embarrassed coming in here when Northumberland is getting £600,000. However, I am told that it will all go to the rural area of Northumberland where two Tory MPs sit.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Education)

At least there is some consistency in approach between the Government and their local representatives. This was a straightforward bribe to Tory MPs threatening to vote against the Government’s financial settlement for local authorities and it worked. Members have spoken openly about being persuaded to support the Government’s plans following the receipt of transitional funds. This is the worst kind of pork-barrel politics I have ever seen.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Environment, Food and Rural Affairs)

The Minister might start to talk about the wonderful devolution deals that we are about to get in the north-east of England. In the Tees valley, we get £15 million a year for 30 years, whereas Aberdeen gets twice that over half that period. That will not save us, will it?

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Education)

No, it will not. I really wish the combined authority well, and I will work hard to support it, because we need to make these things work. However, I am not overly optimistic about the impact of that initiative on the outcomes for the people I represent. I do not know how to put this politely, in the phrase that I am looking for, but it is too little, it is peripheral and it is not widely supported in the community. We are having a mayor for a place that, to most people who live in my constituency or my hon. Friends’ constituencies, does not really exist, so we are not putting all our hope in that particular initiative.

The Government have taken support away from areas that need it most and that are least able to make up the shortfall through business rates or council tax increases—areas, most shockingly of all, whose only crime is to be guilty of voting Labour.

Photo of Iain Wright Iain Wright Chair, Business, Innovation and Skills Committee, Chair, Education, Skills and the Economy Sub-Committee, Chair, Education, Skills and the Economy Sub-Committee 2:58 pm, 1st March 2016

It is a pleasure to serve under your chairmanship again, Sir David. I congratulate my hon. Friend Jenny Chapman on securing this crucial debate.

My hon. Friend is right to say that the provision of good local services can make or break communities. Everybody benefits from good local provision, and many people rely heavily on having access to council services. They can be a civilising force for good: keeping the streets clean, providing a pleasant and safe local environment, helping to spread knowledge and culture through the provision of libraries and arts services, and keeping the vulnerable safe through high-quality and caring adult and children’s services. In my area of the north-east, where economic activity and prosperity are perhaps not as advanced as in other areas, the provision of good local services is needed more than ever. Such provision requires adequate funding for local authorities, but it is fair to say that in this debate and elsewhere the Labour party have demonstrated conclusively that good, adequate funding for local services in the north-east simply is not happening.

Areas of deprivation have suffered more cuts to council funding than more prosperous areas. Inner-London boroughs, metropolitan areas and, yes, councils in the north-east have seen disproportionately harsh cuts. In the last Parliament, Hartlepool Borough Council’s grant was reduced by 40%. In the 2010 index of multiple deprivation, Hartlepool is the 24th most deprived local authority out of 354 areas in Britain. That is an improvement from the IMDs of 2007 and 2004, in which my borough was, respectively, the 23rd and 14th most derived local authority, but we still have enormous challenges in Hartlepool, as we do elsewhere in the north-east.

Given the austerity programme since 2010 and the severe knocks to the local economy brought on by crises in the oil and gas and steel industries—we had an important debate on the steel industry in the Chamber last night; the Minister responsible for the northern powerhouse could not be bothered to turn up to that either—further deprivation in my borough and elsewhere is inevitable. I see it every day in desperate correspondence from my constituents.

Photo of Iain Wright Iain Wright Chair, Business, Innovation and Skills Committee, Chair, Education, Skills and the Economy Sub-Committee, Chair, Education, Skills and the Economy Sub-Committee

Yes, but before I do, I pay tribute to my hon. Friend for the work she has done for the steel industry. Her area, like mine, has suffered enormous rises in unemployment. In Hartlepool, unemployment is two and a half times the national average; I dread to think what it is in Redcar.

Photo of Anna Turley Anna Turley Shadow Minister (Cabinet Office)

I appreciate my hon. Friend’s tribute to our area’s fight. Does he share my dismay that although it is nice of the Government to give us £50 million towards retraining and reskilling, that will not even come close to covering the £90 million our local authorities have lost over 10 years? The local authorities would have been in a far stronger position to react to a crisis had the Government not stripped them to the bone.

Photo of Iain Wright Iain Wright Chair, Business, Innovation and Skills Committee, Chair, Education, Skills and the Economy Sub-Committee, Chair, Education, Skills and the Economy Sub-Committee

My hon. Friend is absolutely right about services having been stripped to the bone: there is nothing left to cut. Local authorities can really only consider what they can manage to do and the minimum amount required of them in respect of statutory services.

Along with other local authorities, Hartlepool had a tough deal in the last Parliament, but it is going to get tougher in this one. Hartlepool Borough Council was established when unitary authority status was granted 20 years ago. The coming financial year is set to be the most difficult that the borough has ever faced, with a budget that is £8.274 million less than last year, representing a year-on-year reduction of 19.6%. That reflects the combined impact of a further £4.474 million cut in Government revenue support grant, which is a year-on-year reduction of 19.7%, and the permanent reduction in the rateable value of the nuclear power station—the Minister has heard me discuss this before—which reduces business rates income by £3.8 million year on year, in perpetuity, equating to a reduction of 19.4%. Over the lifetime of this Parliament, to the year 2019-20, Hartlepool faces a combined settlement funding assessment cut of 27%. Every single local authority in the north-east will experience cuts, from 35% in Northumberland to 25% in Sunderland. By the end of this Parliament, Hartlepool, and local authorities in the north-east in general, will have experienced nine consecutive years of funding cuts. That is unprecedented.

My hon. Friend the Member for Darlington mentioned further pressures on health and education, where we have challenges in our region. Will the Minister comment on public health funding budgets, to which further cuts will be made over the next four years? Additional cuts will be phased in at 2% in 2016-17, 2.5% in 2017-18, and 2.6% in 2018-19 and 2019-20. On top of that, from 2017-18 the Government will cut £600 million from the national education services grant, which equates to a cut of 74% over the lifetime of this Parliament. That will have enormous effects on how local authorities can help education provision in the north-east.

From 2017-18, the national schools funding formula will also affect the council’s revenue budget—perhaps not directly, but it will have a negative impact on Hartlepool’s schools and reduce the public funding available in my borough. That will mean that the local authority will have to step up to the plate and try to provide further help, which it cannot provide because it does not have the available resources.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Environment, Food and Rural Affairs)

When I head towards my flat in the evening, I see all this tremendous building in London. One of these blocks of flats is 50 storeys high and is probably generating millions of pounds in additional council tax—certainly hundreds of thousands. We would have to build on almost every single square foot of land in Stockton to generate that sort of income, which is a further illustration of how the south has it good in being able to generate cash but we do not.

Photo of Iain Wright Iain Wright Chair, Business, Innovation and Skills Committee, Chair, Education, Skills and the Economy Sub-Committee, Chair, Education, Skills and the Economy Sub-Committee

My hon. Friend and constituency neighbour makes an important point about something that I was going to come to. The 100% retention of business rates does not help the north-east and will not help the finances of local authorities in the region. Whereas Westminster City Council, for example, could pave its pavements with gold, we in the north-east will suffer enormously as a result of the 100% retention of business rates.

The switching off of the nuclear power station in my constituency for reasons of health and safety, which was quite right, means that my local authority is incredibly vulnerable to the loss of business rates. Given the make-up and structure of the north-east economy, large manufacturing businesses could end up putting local authority finance under further pressure as a result of the lack of help. Nowhere has that been exemplified more than in the closure of the SSI steelworks in Redcar.

Photo of Anna Turley Anna Turley Shadow Minister (Cabinet Office)

Redcar and Cleveland Borough Council has lost £10 million of business rates a year. On top of the impact of the cuts on services, we have lost a huge amount of business rates. If that is how the Government see the future, it is going to be deeply unfair for areas such as ours.

Photo of Iain Wright Iain Wright Chair, Business, Innovation and Skills Committee, Chair, Education, Skills and the Economy Sub-Committee, Chair, Education, Skills and the Economy Sub-Committee

My hon. Friend is right. Will the Minister respond by telling us how that will be addressed? In theory, the 100% retention of business rates is a good policy, but in practice it will further devastate local authority funding in the north-east. What sort of redistributions or transitionary arrangements will be put in place for areas such as Hartlepool or Redcar to prevent that from happening?

I want the Minister to answer directly one key point. In the previous Parliament, the coalition Government had a policy of council tax freezes. Hartlepool was the only authority in the Tees valley that implemented a frozen council tax regime for five years. Can the Minister confirm that, as a result of Government policy, that is now at an end? Is it now the Government’s formal position to ensure that council tax will go up by 1.9%? With the social care precept adding another 2%, that will mean that, starting from April, council tax payers in Hartlepool and elsewhere will face a rise of 3.9%, which they cannot afford to pay. Is the Government’s policy producing that?

In conclusion, my area has faced devastating cuts to local authority services in the past few years, but we ain’t seen nothing yet given what is going to happen during this Parliament. We are going to see the vulnerable become ever more vulnerable and our potential going unfulfilled and unrealised as a direct result of the gerrymandering in the Government’s policy on council tax funding and allocation. It is a disgrace and the Government should think again to make sure that our areas can thrive.

Photo of Sharon Hodgson Sharon Hodgson Shadow Minister (Education) 3:08 pm, 1st March 2016

I congratulate my hon. Friend Jenny Chapman on securing this important debate. She made an outstanding speech and has given her parliamentary colleagues from throughout the region the opportunity to make the case for our local authorities, which have been hardest hit by the Conservative Government’s spending cuts. She has also given us the chance to lobby the Minister and perhaps bring about the same outcome that we have heard was achieved by the Minister’s Conservative colleagues in Northumberland. If we can secure the same outcome as they did, this will have been a very productive debate indeed. I will not hold my breath, though.

The Prime Minister’s intentions for the north-east are well documented, going well back before the 2010 general election.

Photo of Helen Goodman Helen Goodman Labour, Bishop Auckland

Does my hon. Friend agree that one of the questions the Minister must answer is why none of Durham, Darlington, Hartlepool, Stockton, Sunderland or Newcastle benefited from any of the Government’s rural funding? My constituency covers 300 sq km and the neighbouring constituency in Durham is the same size, yet we got none of the extra rural funding. Given the levels of deprivation, we would like an explanation of why that is the case.

Photo of Sharon Hodgson Sharon Hodgson Shadow Minister (Education)

I hope the Minister will explain. Perhaps the special circumstances are that, unlike Durham, Northumberland has two Conservative MPs. The unfairness speaks for itself.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Environment, Food and Rural Affairs)

I do not know whether my hon. Friend is correct in assuming that it is something to do with Tory MPs. We have a Tory MP in Stockton—the Under-Secretary of State for Communities and Local Government, James Wharton—and we got nothing.

Photo of Sharon Hodgson Sharon Hodgson Shadow Minister (Education)

That says more about that Minister. His lobbying was obviously not as successful as that of his colleagues in Northumberland.

The Prime Minister is on the record saying, in an interview with Jeremy Paxman before the 2010 election, that the north-east and Northern Ireland are the two areas where his planned public sector cuts would have the greatest impact. True to his word, when he walked into Downing Street in 2010, propped up by the Liberal Democrats, he began implementing some of the deepest and most devastating cuts our region has ever seen. I would hazard that they are even worse than the cuts under Margaret Thatcher, which I never would have thought possible.

Here we are again: councils in some of the poorest parts of the country are having to cut services back to the bare bones. The fat went long ago. In most of our region, especially the coalfield communities, some of which I represent, there was for many years trepidation about what the Conservatives would do if they were ever in power again. It is with no surprise or pleasure that we gather here to point out that the Government have truly lived up to those dire expectations. After six years of belt-tightening, Opposition Members listened with disbelief as the Secretary of State for Communities and Local Government stood at the Dispatch Box last month and announced a local government settlement of £300 million of transitional funding, 85% of which will benefit Tory councils that have not faced anywhere near the funding cuts meted out to Labour councils. Labour councils are expected to tighten further and add a few notches to an already worn-out belt. If that were not already impossible, it certainly is now.

Not a penny of the funding that was announced is directed at the majority of councils in the north-east, where unemployment is the highest in the country at 8.1% and poverty remains a persistent issue. Some of the poorest communities in the country are paying for 36% of the Government’s austerity measures. Social care is a burgeoning issue for many of them, especially given that the people who use social care will bear 13% of the cuts.

Tomorrow, my local council, Sunderland, will pass its budget for the 2016-17 financial year. It must find £46 million of savings this year and a total of £110 million by the end of this Parliament, on top of the £207 million that it had to find during the last Parliament. That means that the council has a total of £290 million to spend by 2020, compared with the £607 million it had in 2010, before the Conservatives came to power in 2010. That is less than 50% of its pre-2010 budget. That is not trimming, belt-tightening or streamlining; it is an attack—a full-scale assault. So much for the rhetoric of a northern powerhouse. Northern poorhouse, more like.

Of the £290 million of spending power that Sunderland has left, £182 million is reserved for statutory adult social care and children’s services. The remaining £108 million will have to pay for all other services, including waste collection and disposal, libraries, museums, housing, business investment, and sport and leisure. Those wide-ranging services need proper investment to be suitable for public access, but with such a small budget for those services, it is obvious that the council will struggle to maintain the high standard that our local communities deserve and expect.

Significant cuts will also have to be found within the needs-based funding elements, including children’s services. An 8% per annum cut is expected in the early intervention budget on top of the 50% cut to early intervention services since 2010. Children’s services and early intervention are such important areas. If funded correctly, they can mitigate greater costs further down the line by preventing children from becoming adults with multiple issues. The Government’s policy is so short-sighted.

No doubt the Minister will talk about devolving the collection of local business rates. Labour supports that policy in principle, but in practice it will further ingrain unfairness into an already unfair system. He may also talk about the 2% increase in council tax to fund social care as a means for councils to bring in additional funding. For low-tax councils such as Sunderland, such measures will not bring in the funding they require to continue to provide the local services that we rely on. It is estimated that the 2% for social care will bring in only £1.5 million for Sunderland, but our local social care demands are approximately £3 million. Where does the Minister think the additional funding should be found? This is one of the greatest public policy crises that we face in this country. For Sunderland, the prognosis remains bleak for the near future. There is no respite or support on the horizon from the Government.

Photo of Catherine McKinnell Catherine McKinnell Labour, Newcastle upon Tyne North

My hon. Friend is making a powerful speech about the ingrained inequalities, which the Government’s policies will deepen. Is she aware that Newcastle City Council estimates that the 2% council tax precept will raise £1.4 million a year, whereas it faces a spending shortfall of £15 million? It is a simple mathematical calculation, and it does not add up.

Photo of Sharon Hodgson Sharon Hodgson Shadow Minister (Education)

I often wonder whether the Government’s calculators and experts stop functioning when it comes to some of these numbers. They seem to have dyscalculia—numerical dyslexia—when working out the sums for the north-east, but they are not troubled by it when working out the sums for the rest of the country.

Photo of Ian Mearns Ian Mearns Chair, Backbench Business Committee, Chair, Backbench Business Committee

I apologise for being late, Sir David. I have been chairing the Backbench Business Committee. The 2% rise for social care will raise about £1.4 million in my authority, yet of the £300 million cuts mitigation fund that the Secretary of State established, £300,000 is going to the north-east of England, all of which is going to Northumberland. Some £114 million is going to eight shire counties surrounding London, all of which are Conservative-controlled. No formula can explain the rationale for that.

Photo of Sharon Hodgson Sharon Hodgson Shadow Minister (Education)

The only rationale is political bias. That is what we are trying to highlight. It is obvious what has gone on; the figures speak for themselves. The Secretary of State’s brazen audacity in outlining the cuts at the Dispatch Box last month and the brass-necked nature of that announcement beggar belief. It shows how little the Government care. He knew that it would be seen through, but it did not bother him.

We have heard time and time again about the deep unfairness of the Government’s financing of local authorities in the north-east and other unitary councils across the country, but Ministers still do not understand the impact it will have on the most vulnerable in our communities. It cannot be ignored any longer. I hope that the Minister will heed our words. We are a strong, collective voice from the north-east arguing for fairer funding. I hope he will assure hon. Members present that he will take our concerns back to his Department and the Secretary of State to ensure that he reconsiders the devastating, short-sighted decisions of his Department on our region. I am sure that the Secretary of State will understand—as we have heard, he is a local lad from Middlesbrough. If he does not get it, what hope have we got? The Eton boys in Downing Street never will.

Photo of Kevan Jones Kevan Jones Labour, North Durham 3:19 pm, 1st March 2016

It is a pleasure to serve under your chairmanship, Mr Amess. I congratulate my hon. Friend Jenny Chapman on obtaining the debate.

There was a time when the Conservative party believed in local government, and it had a long tradition of supporting it. My hon. Friend Mrs Hodgson highlighted the effect that the Thatcher Administration had on our region, but one thing that Margaret Thatcher did not do was devastate local government as the present Government are doing. Many people in my constituency say “They are as bad as Thatcher”. No, they are worse than Thatcher. They do not believe in the state as we do. They take the view that local government should just deliver statutory services. As my hon. Friend the Member for Darlington eloquently outlined, that is what the people of Darlington will end up with—an authority with the ability to deliver just statutory services. Everything else that we have for generations taken for granted that councils should deliver will go by the bye.

What makes it worse is that the Government are in the most blatant way allocating funding to pacify voices within their own party. I am not sure that it will pacify them for long, because I do not know how they will protect the areas in question in the long term, given the reductions that the Government still have in line—a cut of some 56% for the Department for Communities and Local Government. However, at the moment that is clearly what they are doing.

Where, in the core spending and transitional arrangements, are the lowest reductions being made? What are those very deprived areas? They are Surrey, Hampshire, North Yorkshire and Devon. We have a ludicrous situation of North Yorkshire getting a 2.5% increase and Surrey a 1.5% increase in core spending. A 2.5% increase in our core spending in Durham would mean an additional £10 million of funding. On the figures for core spending powers and cuts in 2016-17, Durham will have minus 4.1%, Newcastle minus 4.4% and Sunderland minus 4.3%. Surrey will have a 1% reduction and my favourite place, Wokingham, a 0.4% reduction.

I think it has been the understanding of all Governments, irrespective of political make-up, since the second world war, that need has to be taken into account. The idea that it is possible to equate the health problems and social deprivation of the north-east and, I must say, inner-city areas in parts of some London boroughs and the north-west with pressures in Surrey and Wokingham, is nonsense. In the figures for the final settlement for 2016-17, the core spending per dwelling figure for Durham county council is £1,608; for Surrey it is £1,661. It may be thought that that is not much higher, but no account is taken of the demands of an ageing population in Durham, and its higher unemployment and social care needs. If the district councils in Surrey are taken into account, the core spending per dwelling figure goes up to more than £2,000. I am sorry, but it cannot be right that one of the wealthiest parts of the country is getting more expenditure than some of the most deprived communities.

The rural indicator was a measure that the Government brought in to try to compensate for rurality. There could not be a more rural county than County Durham; but what did it get out of it? Not one penny. I do not object to Northumberland, which includes the constituency of my hon. Friend Mr Campbell, getting some extra funding; but why did that county get it? It is because it has two Conservative Members of Parliament. We are now in a situation where funding is allocated on the basis of what the local electors decided. The Government are punishing electors in the north-east for voting Labour. We would expect that in a totalitarian dictatorship, not in a democracy such as ours.

Photo of Ronnie Campbell Ronnie Campbell Labour, Blyth Valley

Could we press the Communities and Local Government Committee to have an inquiry, covering the whole gamut of this issue?

Photo of Kevan Jones Kevan Jones Labour, North Durham

I would welcome that, but I remind my hon. Friend that this lot do not care. What they did in the previous Parliament shows that. They are small state Conservatives who frankly do not give a damn about the north-east, because it means nothing to them electorally.

One of the biggest needs of, and pressures on, most of our councils is social care. The Government have announced that councils can charge 2% extra on council tax. That will raise a lower amount in Durham than in Surrey, because about 55% of properties in County Durham are in band A. The idea that that is a panacea that will answer the social care issue is not true. My hon. Friend Catherine McKinnell demonstrated the problems that Newcastle City Council faces, and the situation will be duplicated in all north-east and inner-city councils, which have huge pressures on them.

Photo of Ian Mearns Ian Mearns Chair, Backbench Business Committee, Chair, Backbench Business Committee

We have done the mapping in my local authority, and if we cut 100% of all the services by 2021—refuse collection, grounds maintenance and everything that councils do—we will still have to make cuts in adult social care and children’s services to balance the books, once revenue support grant has been totally removed and the impact of the localisation of business rates kicks in.

Photo of Sir David Amess Sir David Amess Conservative, Southend West

Order. Before the hon. Gentleman responds, I remind the House that three hon. Ladies still want to speak, as well as the Opposition spokesperson and the Minister who will respond. The debate finishes at 4 o’clock, so I hope that colleagues will bear that in mind.

Photo of Kevan Jones Kevan Jones Labour, North Durham

My hon. Friend Ian Mearns makes a pertinent point. We will end up with councils that deliver core statutory services, and even then they will be under pressure.

When Sir Eric Pickles was Secretary of State, he argued that somehow we could make the savings by having fewer pot plants in council departments, or by cutting staff numbers. I must tell the Minister that every council in the north-east has made back-office efficiencies. That will not enable them to meet the figures. For example, from 2011 to 2020 Durham will have lost £288 million from its budget. It is ludicrous to think we can make that up. I am sorry that the Secretary of State is not here; previously he has accused councils of hoarding large balances, but that is a way of diverting attention. I will explain the situation in Durham. It has £220 million in reserves. However, only £30 million of that is actual reserves, in the sense of the 5% that, when I was in local government, local councils needed. The rest is allocated for other things, such as redundancies and things that will take place against a budget of more than £865 million. Let us knock on the head the nonsense that northern councils are awash with large reserves. As my hon. Friend the Member for Darlington demonstrated, they are down to the bone. The other thing is that reserves can be used only once. The Government’s idea about a way of somehow mixing revenue and capital is economically illiterate.

I want to finish on devolution, because we will no doubt get a load of guff from the Minister about it. The devolution being put forward for the north-east is a devolution of responsibilities without the cash to go with it; £30 million is on offer for the north-east so-called mayoral model. If the cuts to public health funding go forward as predicted, Durham alone will lose £20 million a year.

I noticed last week that a Conservative, Mr Jeremy Middleton, announced his candidacy for mayor of the north-east. Strangely, he said:

“I won’t be asking people to vote for me because I’m a Conservative. I’ll be asking them to vote for me because I’m the right man for the job.”

I had a look at his website this morning, and he has also said that through negotiation with Whitehall he will deliver

“a fair financial settlement with similar public funding per head as Scotland”.

I challenge him to state why he has sat quietly for the past six years without saying a single thing about local government finance being butchered in the north-east. He is a friend of the Chancellor, a former Conservative candidate—he thankfully failed in the by-election against my hon. Friend Mr Wright—and has been an apologist for this Government. I ask the people of the north-east to remember that when and if we actually get this ludicrous situation with a mayor.

I am fully supportive of the idea of devolution, but devolution of responsibility without the funding, which is what this is, is not the way forward. Councils in the north-east are facing a crisis and there is only one explanation. It lies with the Government who are protecting their own areas in a party political way while not giving a damn about Labour-voting areas in the north-east of England.

Photo of Sir David Amess Sir David Amess Conservative, Southend West

Order. I am having to impose a time limit of three minutes, which is unsatisfactory. I ask colleagues to resist making interventions.

Photo of Julie Elliott Julie Elliott Labour, Sunderland Central 3:31 pm, 1st March 2016

I congratulate my hon. Friend Jenny Chapman not only on securing this debate, but on her moving speech that set the scene of the reality of life in north-east.

Due to the Chancellor’s cuts, local government funding will drop by a quarter in real terms by 2020. I will not go through all the figures again, but the Prime Minister’s area of Oxfordshire will see a funding increase, as will Hampshire and Surrey. The disparity in funding between southern Tory areas and northern Labour areas represents the most blatant political manoeuvring that I have seen or read about in the western world. In succeeding to buy off potential Tory rebels with the transitional pot of money for rural areas, the Government are hitting my constituents, and those of my hon. Friends, very hard. Sunderland has had to make savings and reductions totalling £207 million since 2010-11, and it is projected that it will be required to make further reductions totalling £115 million by 2020. That is a total of £322 million over a 10-year period. Given that the council’s gross budget was £784 million in 2010-11, the reductions equate to 26% to date and 41% by 2020 when compared with the starting budget.

The cuts will be exacerbated by two elements of the local government finance settlement. The first is business rates. My hon. Friend Alex Cunningham outlined the reality of the difference in what business rates can raise, and I am still waiting for a Minister to explain to me and my constituents how that will be done in a fair and reasonable manner. The TUC’s Frances O’Grady said that

“by devolving business rates without any national safeguards, regional inequalities will get wider”.

They will. Adult social care is the other area, and it is a massive problem under this regime. Sunderland City Council has lost £207 million from its budget in the past six years and is braced for further cuts of £115 million by 2020.

I wonder what the Minister can say today. I wait with bated breath. The political shenanigans of the budget settlement will bear heavily on the people of the north-east, the people I am proud to represent as a Labour Member, and the people I care about. The Opposition will not let that happen without a fight and without exposing exactly what this Government are doing.

Photo of Emma Lewell-Buck Emma Lewell-Buck Shadow Minister (Communities and Local Government) 3:34 pm, 1st March 2016

It is a pleasure to serve under your chairmanship, Sir David. I also congratulate my hon. Friend Jenny Chapman on securing this important debate. Is it not about time that this Government admitted that plans for the so-called northern powerhouse are just empty rhetoric? A recent report from the Joseph Rowntree Foundation shows that 10 of the UK’s most struggling cities are in the north. The Government are driving a greater wedge, not building the promised bridge, between the north and south. Not a single town from the south of England is among those struggling areas.

Council spending power per household has fallen by £74 in the South Tyneside Council area, which is significantly higher than the £43 average fall in spending power across English councils as whole. My council was also one of the eight authorities in the north-east to receive no transitional funding whatsoever, yet the Government have managed to find the money to offer a bribe to MPs representing wealthy southern shires. South Tyneside has suffered a 45% budget cut since 2010.

Many people will know that I was a councillor between 2010 and 2013 before coming to this place. I was a cabinet member on the council and cannot begin to stress how painful it was to sit surrounded by paperwork and job titles and agonise over who may be losing their job or what service might be axed next. I wonder whether the Minister has ever had to stand face-to-face with vulnerable and elderly people and their families and witness the total despair on their faces when they are told that their care package was being cut or that their care home was closing, because I have and I remember it well.

The chief executive of the Chartered Institute of Public Finance and Accountancy says that the next few years are going to be “so difficult” and “so tough” that councils will be in total deficit. Is the Government’s final aim to make councils bankrupt? That is the direction in which they are heading. It is the wrong direction. The 2015 index of multiple deprivation shows that South Tyneside’s overall deprivation score rose by just over 10% since 2010, the largest percentage increase of any single area. My constituents in South Shields are proud, competent, hard-working and skilled, but they have been let down by this Government, who just do not understand or care about the issues that the north faces.

The Tories are not devolving real power to our communities with the northern powerhouse initiative; they are delegating cuts. The Chancellor once said that a true powerhouse requires true power, but we know and he knows that if we take away the money, we take away that power.

Photo of Anna Turley Anna Turley Shadow Minister (Cabinet Office) 3:37 pm, 1st March 2016

It is a pleasure to serve under your chairmanship, Sir David. I pay tribute to my hon. Friend Jenny Chapman. She made a passionate and eloquent speech in the Chamber during the previous debate on this subject, but I think she has excelled herself. I am grateful for the opportunity to have this debate today.

I was going to set out some of the context and background regarding the north-east but, due the fact that colleagues have done so far more eloquently than I, as well as the time limit, I will not. There are so many great things about the north-east, but I am fed up of having to stand up and wave bleeding stumps and plead about our poverty. People in the north-east have too much dignity and too much going for them for us to do that. The Government have put us in a situation where we have to explain things to them, but they do not understand the challenges we face.

Public services in the north-east should have faced far less substantial cuts than other areas of the country to enable us to tackle the disparities that colleagues have set out, but that is not what we have seen. Instead, the north-east has experienced disproportionately high cuts to local authority budgets. As my hon. Friend Mr Jones described, the impact is most keenly felt in non-statutory services such as young services provision. Redcar and Cleveland has levels of drug and alcohol problems that are higher than the national average and it has double the rate of self-harm. We need preventive services for older people, support for those with disabilities and special educational needs, smoking cessation programmes, enterprise support teams and transport subsidies. All those services are vital in supporting people to live healthy, active lives or to get into work or education.

One of the great things in the region is the strength of our community and voluntary sector, which delves deep into the most deprived communities and gets to the parts that the state so often cannot reach. However, cuts to council budgets have meant that their grants have been slashed—so much for the big society. More vital services are being cut to the bone in the areas of greatest need.

It was clear from the debate on the financial settlement that the Government are not interested in any form of redistributive approach to local government finance that sees money go to where it is most needed. They are not interested in the principle that historically disadvantaged areas need support or at least a level playing field or the principle to which they paid lip service in 2010 that the broadest shoulders should bear the heaviest burden. They are quite content to have a settlement that has seen the 10 most deprived areas facing cuts 18 times higher than the 10 least deprived. They are quite content to be totally shameless by acknowledging that transition money was basically a bung to Tory areas where MPs were threatening revolt—we heard that from the Government’s own MPs during the debate.

Some Government MPs were not quite so honest and tried to claim that some kind of formula lay behind the unfair and unequal distribution of funding, and some that it was because their areas had an ageing or rural population. Let me tell the House about age in the north-east: 17.1% of the north-east’s population is over 65 years old, compared with 16% in the rest of England, so we have a higher proportion of ageing people. The north-east is also well above the national average of people accessing social care: 29% more people access home care services, 41% more access day care and 100% more access short-term residential care. This is heartless, shameless, pork barrel politics, which does a disservice to the Government and this place.

Photo of Steve Reed Steve Reed Shadow Minister (Communities and Local Government) 3:40 pm, 1st March 2016

I congratulate my hon. Friend Jenny Chapman on her brilliant, passionate and humane speech, which illustrated what the cuts decided by the Government mean to the people of her beautiful town, the rest of the north-east and, indeed, the rest of the country.

What is clear from the debate is that the Government have betrayed the north-east. The people of the north-east are decent folk. They are looking simply for fairness, not for favours, but the Government’s approach has been desperately unfair. The north-east has suffered some of the highest cuts in the country, but those communities were offered next to nothing from the transitional relief fund, which the Government made available a few weeks ago.

Here is what happened. A number of Tory MPs representing far wealthier areas than the north-east suddenly realised that their communities would start to feel the same pain that other parts of the country had been suffering for the last five years. People such as David Cameron’s mum got up and complained about what the Tory Government were doing, because they saw their services were at risk.

It is worth digging into the term “services”, because what it means is people’s quality of life. It means services such as Sure Start children’s centres, libraries, street cleaning, keeping the street lights on, filling in potholes, fixing pavements, giving young people things to do that keep them from getting into trouble, providing care for older and disabled people, and providing bus services to rural areas whose populations would otherwise be stuck where they live and unable to get out to enjoy their lives or to go to work. That is what services are—real things in real lives.

When some Tory MPs representing wealthier areas realised what was coming their way, the Government decided to buy them off. The Government set up a £300 million fund, but they did not give that money to the areas that had suffered the biggest cuts; they sent it to the areas that had suffered the fewest cuts. The only way the Government can justify their false claim to have helped the hardest hit with that money is to pretend that every single cut that happened before 2015 did not happen—but it did, and people throughout the country know that it did. Eighty-five per cent of the money went to areas run by the Conservatives; barely 5% went to areas run by the Labour party, despite the fact that the Labour areas have far higher levels of deprivation and have suffered far higher levels of cuts over the past five years.

My area of Croydon is, I grant, some way from the north-east. It has had 17 times more cuts than Surrey, but Croydon lost a further £44 million with barely any relief funding. I thought that was appalling, but the north-east has suffered even more. Durham, which had 27 times more cuts than Surrey, got nothing; Sunderland had 36 times more cuts and got nothing; South Tyneside had 37 times more cuts and got nothing; Newcastle had 41 times more cuts and got nothing; and Hartlepool had a swingeing 42 times more cuts than Surrey and got nothing at all. The whole of the north-east got next to nothing out of the settlement—nothing but cuts, cuts and more cuts.

Only weeks before important council elections, the Tories gerrymandered millions of pounds to wealthy areas such as Surrey to buy off dissent from their Back-Bench MPs. I use “gerrymander” advisedly: for the avoidance of doubt, I mean the misuse of public funds to advantage the Tory party. It is as simple as that, and it is a disgrace to our democracy.

I will touch briefly on social care. The Government approach to underfunding social care is to underfund the services and then to localise the blame for the cuts that will inevitably follow for some of the most vulnerable people in our community. Here is how the Government do it: they underfund social care, they hand over responsibility for it to councils, and they tell them to put up council tax by 2% a year, partially to plug the funding gap. That still leaves a £1 billion funding black hole for those services. Earlier, we heard about the case of Newcastle: a 2% council tax rise raises £1.4 million, but the shortfall in funding for these services is £14 million. The Government hope that councils will get the blame for the cuts and council tax hikes that were designed in Downing Street.

Finally, I want to look at council tax rises, because the 2% Osborne tax is not the only thing that will happen. The figures that the Government sent out to councils last month in spreadsheets from the Treasury included the assumption that there would be not only a 2% rise for social care, but a further council tax rise of 1.75% on average every year for the next five years. By 2020 that adds up to a 20% council tax hike. That is the Government’s assumption and what they are planning.

The truth is that we get the worst of all worlds with the Tories: we get cuts in services that people rely on and we get hikes in council tax that hurt the low-paid the most. The Government are damaging every community in the country, but the north-east is among the hardest hit—£24 million of extra funding for Surrey; next to nothing for the north-east of England. Whatever happened to the one nation Tories? The Tories have been too ashamed to show their face in the debate this afternoon, and they should be too ashamed to show their faces anywhere in the north-east.

Photo of Marcus Jones Marcus Jones Parliamentary Under-Secretary (Department for Communities and Local Government) (Local Government) 3:46 pm, 1st March 2016

As always, it is a pleasure to serve under your chairmanship, Sir David. I congratulate Jenny Chapman on securing the debate. It is my pleasure to be able to respond and I thank hon. Members for their valuable contributions.

I recognise that councils throughout the country have been fully dedicated to improving local services in a very challenging environment. It was absolutely right that we listened to local authorities and to Members of this House during the local government finance settlement consultation. We have done our utmost to ensure that the settlement is right and fair for all. The distribution of funding has recently been discussed at length in this House, alongside the overall level of resources available to local government. The hon. Lady called today’s debate to discuss local government funding for the north-east, but it is important to place that in the national context of what the Government are working to achieve.

Local authorities account for a quarter of all public spending, so it has always been clear that they would have to play their part in reducing what was the largest deficit in post-war history. Last autumn, the Government’s spending review set out clearly how savings must be made over this Parliament to ensure that we finish the job of eliminating the remaining deficit and what that will mean in terms of overall council funding. In real terms, councils will be required to save 6.7% over the spending review period. At the 2010 spending review, a reduction of 14% was announced, so the pace of spending reductions has slowed significantly for this Parliament, as the Institute for Fiscal Studies has acknowledged.

In cash terms, when we look at the overall core resources available to local government in the finance settlement, core spending power is virtually unchanged over the spending review period. Councils will receive £44.5 billion in 2015-16 and £44.3 billion in 2019-20. Furthermore, we have tried to be as fair in regard to distribution as possible, making reasonable assumptions that understate the maximum resources available to councils. For example, in line with the Office for Budget Responsibility, we assume that council tax will increase with inflation, not by the referendum threshold of 2%. If we had assumed the maximum figure, more than a quarter of a billion pounds extra in resources would have been available. We have been clear: yes, further savings are required, and councils have recognised that, but we have taken important steps to help councils make those savings.

Photo of Kevan Jones Kevan Jones Labour, North Durham

I do not know what colour the sky is in the Minister’s world. What is fair about north-east councils—Durham, Newcastle and others in the figures I read out—having 4% cuts in their budgets this year when Surrey has less than a 1% cut in Wokingham’s cut is even less than that? How can that be fair, given the demands on services faced by Durham compared with places such as Surrey? Is it just a coincidence that 85% of the councils who gain from his transitional arrangements happen to have Tory MPs?

Photo of Marcus Jones Marcus Jones Parliamentary Under-Secretary (Department for Communities and Local Government) (Local Government)

The average spending power per dwelling for the 10% most deprived authorities is about 23% more than for the 10% least deprived authorities in this coming year. Opposition Members have mentioned several times an assertion about the transitional grant. The grant was based firmly on the local government finance settlement, the consultation we undertook and the responses from the consultation. There were a significant number of responses and a call for some sort of transitional grant to support those areas that had lost the most central Government grant compared with the amount expected based on the old redistribution formula.

Photo of Anna Turley Anna Turley Shadow Minister (Cabinet Office)

The Minister has been generous with his time, but what does he say to his own MPs who stood up in the Chamber and admitted that they got the money because they threatened to revolt?

Photo of Marcus Jones Marcus Jones Parliamentary Under-Secretary (Department for Communities and Local Government) (Local Government)

There are MPs from my party who represent very wealthy areas and others who represent less well-off areas. I say to Mr Jones that not all of our Members are from Surrey; my party would not have been able to win a general election based on a cohort of MPs from Surrey. MPs in my party come from a wide swathe of the country. The transitional grant was based not on where MPs come from but purely on the response to the local government settlement. It is intended purely to mitigate the most significant changes in funding for the authorities that had the greatest proportion of loss from the revenue support grant.

Photo of Ian Mearns Ian Mearns Chair, Backbench Business Committee, Chair, Backbench Business Committee

Does the Minister accept that even though the revenue support grant is due to be withdrawn completely, in the meantime the Government have written out any concept of addressing need? Local authorities such as mine in the north-east of England do not have the capacity to raise taxes locally because many of the properties in our area are in the lower bands, so the band D national median is meaningless.

Photo of Marcus Jones Marcus Jones Parliamentary Under-Secretary (Department for Communities and Local Government) (Local Government)

That is why generally, as I said, the areas that have been referred to in the debate that are receiving transitional grant generally had a higher reduction in revenue support grant than areas such as that represented by the hon. Gentleman. He and a number of his colleagues have taken a dim view of the north-east in relation to its ability to move forward as an economy and create business rate revenue and additional council tax.

To take the constituency of Mr Wright, for example, thanks to the business rate retention scheme during 2014-15 there was a 14.6% increase in revenue. To pick up on a point he made, we will move to full business rate retention in 2020, but before that there will be a consultation on how we deal with redistribution. We understand and accept that in some places significantly more business rates are collected than in others.

The approach we have taken in this historic settlement is aimed at supporting those areas with the greatest pressures and providing councils with the certainty they need as we move towards a system of greater devolution. The settlement allocates funding on the basis of the core resources available to local authorities, taking into account councils’ business rates and council tax as well as their revenue support grant. It ensures that councils that deliver the same set of services will receive the same changes in core funding for those services.

Photo of Marcus Jones Marcus Jones Parliamentary Under-Secretary (Department for Communities and Local Government) (Local Government)

I will in a moment. That is fair and that fact was recognised by Middlesbrough Council in its response to the consultation on the settlement.

We have also provided councils with unprecedented levels of certainty. Our historic offer of a four-year settlement answers calls from councils to allow them to plan over the long term, giving them the certainty required to create greater efficiencies. That has been welcomed by councils across the country, including those in the north-east such as Durham County Council and Newcastle City Council.

Photo of Marcus Jones Marcus Jones Parliamentary Under-Secretary (Department for Communities and Local Government) (Local Government)

I have already given way; I am going to make some progress.

Councils now have the opportunity to smooth their path over four years, using reserves where necessary and if they so wish. Even so, we have not made any assumptions that councils will use reserves in any published figures. Despite giving this opportunity, we have made no assumptions that councils will use their reserves in any published figures.

The settlement also responds to the clear call from all tiers of local Government and from many of my colleagues in the House to recognise the priority and increasing cost of caring for our elderly population. As such, we have made up to £3.5 billion available by 2019-20 for adult social care through a dedicated social care precept of up to 2% a year and the improved better care fund. That is significantly more than the amount asked for by the Local Government Association and the Association of Directors of Adult Social Services. We have proposed that the additional better care fund money should be distributed to complement the new council tax flexibility, so more will go councils that can raise the least from that flexibility. We will, however, consult colleagues in local government on that in due course.

We have also prioritised housing. The new homes bonus was due to come to an end, but it has been a useful contributor to the increase in planning permissions being granted. Payments since its introduction in 2011 total just under £3.4 billion, reflecting more than 700,000 new homes and conversions and more than 100,000 empty properties brought back into use.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Education)

On a point of order, Sir David. Is it not convention in Westminster Hall to allow time for the person who secured the debate to reply? I believe it is.

Photo of Sir David Amess Sir David Amess Conservative, Southend West

I was rather hoping that there might be at least 30 seconds for the hon. Lady to reply.

Photo of Marcus Jones Marcus Jones Parliamentary Under-Secretary (Department for Communities and Local Government) (Local Government)

I will certainly do that for the hon. Lady; I intended no discourtesy. Finally, in 2016-17 the core spending power per dwelling in the north-east region is £1,820, which is 3.9% higher than the £1,750 figure for the south-east.

Photo of Jenny Chapman Jenny Chapman Shadow Minister (Education) 3:59 pm, 1st March 2016

When you said 30 seconds, Sir David, I did not think you meant that literally.

That was an obtuse, lacklustre, disembodied reply from a Minister who showed no interest in the concerns we raised. We need to ask the National Audit Office to take a look at this, because the political manoeuvring that has led us to where we are would frankly make even a Liberal Democrat blush. When that is combined with the cuts to fire, police, health and education that our region is experiencing, it is disgraceful.

Motion lapsed (Standing Order No. 10(6)).