I beg to move,
That this House
has considered local government funding.
It is an honour to serve with you as Chair, Mrs Main.
I start with the wide-ranging responsibilities of our local government. In much of the work that I do in Westminster and in my constituency of Colne Valley, I find myself mentioning local government funding. On the Select Committee on Education, it comes up when discussing alternative provision, support for children with special educational needs and disabilities, education, health and care plans, and school funding more widely. It comes up in speeches and questions on issues such as adult social care, finance, carbon emissions and homelessness, as well as in discussions with colleagues and constituents. The work that local government does covers a broad range of important areas, and affects our constituents’ lives in so many ways.
Our local authorities are responsible for public health, support for people with learning disabilities and physical and mental health conditions, and public health programmes, such as those on sexual health and smoking cessation. In education, they support schools, deliver early years education and adult learning, offer youth services and support community engagement. They are also responsible for children’s services, local democracy, highways, waste management, libraries, museums, galleries—the list goes on and on.
On Saturday, I was with a number of Unison members and frontline workers who work in local government. Despite the horrendous cuts of £330 million to my local council, they are doing a brilliant job, but they are now telling me that local government is on its knees. Does my hon. Friend agree?
I do agree. I hear the same thing from Unison members—that they have worked so hard and are so committed to delivering services, but they are now crossing red lines where it is not possible to continue.
It is because the work of local government is so widespread that the effects of the cuts have been so far-reaching. The impact has been seen across services and across our country. We know that deprived areas have been hit the hardest, and that Labour councils are due to see falls of 28% on average, compared with a 19% fall for Conservative local authorities. Nine of the 10 most deprived councils in the country have seen cuts of almost three times the national average of £255 per household. Too often, there is a blame game with local authorities, when it is central Government who have cut funding and shifted the burden onto local communities.
Does my hon. Friend agree that it is not just cuts that are having a severe impact on local authorities, but the additional pressures and demand from all the disabled people who have lost access to benefits, from rising homelessness and from the shameful buck-passing of Home Office responsibilities? With no recourse to public funds, families—
It is absolutely true that cuts are being made in a time of rising need. We are now at a point where all councils are feeling the pain, and we have even seen one of the Government’s own councils effectively declare itself bankrupt. By 2025, it is predicted that local government will face a funding gap of almost £8 billion.
How did we get here? In the name of austerity, round after round of cuts have been dealt to local authorities. Between 2010 and 2020, local authorities will have seen reductions of £16 billion in core Government funding. Adult social care, children’s services and homelessness support have been pushed to breaking point. Other services, such as youth centres, museums and libraries, have just closed.
Would my hon. Friend join me in congratulating Wigan Council on winning council of the year? How much more it could have done had it not had its funding cut by £160 million.
I congratulate Wigan Council, and all the council workers who have helped to deliver such success, especially in such trying times.
The situation has occurred in spite of the incredible hard work being done by councillors and council workers across the country. I have seen that first hand, not just as an MP, but as someone who is married to a local councillor. I have seen the hours and the commitment that is put in to support the frontline of government, to build communities, boost life chances and make a difference to everyone’s day-to-day life.
In 2018, Unison surveyed council workers and found that 79% are not confident about the future of local services. In my constituency of Colne Valley, 90% of council workers surveyed said that budget cuts in the past two years have had an impact on their ability to do the job as best they can. Can we just think about that figure? Some 90% of the workforce lack confidence in their ability to deliver their service.
I would like to share some feedback from someone in my constituency who worked supporting children and families in children’s centres, but now described that work as “destroyed”, and the positive outcomes of the work as “overlooked”.
The hon. Lady is absolutely right to point out that the impact is felt beyond council staff and workers, and particularly on children and families. Will she reflect on the fact that in 2008 there were fewer than 60,000 children in care and that today it is more than 75,000? At the same time, since 2008, there has been a 49% cut in early intervention—
I was a headteacher and a teacher for 34 years, and as a member of the Education Committee, I know the impact on children’s services and their ability to cope. My constituent described how low-level support for families had been removed, leaving them to reach crisis point before they received help. With less staff to react to crises, they have been running themselves ragged firefighting. They said:
“I rarely see the public now, but when I do bump into people I used to help, they think I’ve let them down. They feel alone, and I feel responsible.”
We can see the dedication of our council workers, and I know how they feel. As I have said, I was a headteacher at a school in a deprived area with a Sure Start centre attached. Properly funded multi-agency working supported children and families so that they did not end up needing as much support from public health services and other areas.
Does my hon. Friend agree that the cuts that have been made so far have been exacerbated by the lack of a real tax base in local government and too much central Government interference?
I believe that devolved local governance, with local knowledge of the needs of local communities, is really important, and we have lost that.
Early intervention was cost effective in my previous career, and it transformed people’s lives. They were not left to go through the stress and trauma of reaching crisis point. It is better for the health and wellbeing of our communities to have that support in place, but Kirklees was forced to make savings of nearly £200 million over the past nine years. Over the next three years, the council has to find a minimum of £38 million in savings. That has detrimentally affected my constituents’ lives.
In particular, there are significant and growing pressures on high needs in Kirklees. The Government have acknowledged that Kirklees is the second most underfunded council in the high needs block of the dedicated schools grant.
One of my constituents has been in contact with my office for some time about their two children, who have been diagnosed as being on the autistic spectrum. They have been trying to establish appropriate support for their children through education, health and care plans. It has not been straightforward. Cuts to funding mean that the local authority is struggling to give the family the necessary support.
The pressures are also visible in housing. Another of my constituents, who lives in local authority housing, has been subject to verbal abuse and harassment from their neighbours. They have applied to move, but the housing provider has not been able to facilitate relocation because it does not have suitable places to move them to. It has been able to offer only additional security measures to reassure the constituent. Local authorities and local government workers are doing what they can, but they do not have the resources to do what they need to do. Hard choices have had to be made to protect care for the most vulnerable.
I know that these stories will sound familiar to many hon. Members today. Sadly, such stories are by no means unique to my constituency. But there is an alternative; it does not have to be like this. In Finland, local government has a lot of autonomy, and there is a greater level of responsibility for policy and delivery in areas such as education, healthcare, social services, planning and infrastructure. Decision making is closer to the people and seeks to be responsible for their needs. In Finland, policy is geared towards commitments to provide housing where it is needed, support those who cannot care for themselves, and provide accessible low-cost childcare to families.
Finland has also trialled a universal basic income. Policies are focused on delivering positive outcomes for citizens on health and wellbeing, and on reducing inequality. Marking those policies as priorities is important and effective. For the second year in a row, Finland has been named as the world’s happiest country, which cannot be a coincidence. There are some real lessons to take forward from countries such as Finland, which could be used to inform the way local government operates in the UK.
Labour is investing in delivering effective and positive change for local government, our communities and the families within them. The next Labour Government will genuinely end austerity and put an end to this crisis. At the last election we pledged £8 billion for social care. We also pledged an additional £500 million a year for Sure Start and early intervention services, to reverse the cuts that have closed centres across the country and to ensure that all children have the best start in life.
I congratulate my hon. Friend on securing the debate today, when we are all thinking about and debating Brexit, and on recognising the impact on services of cuts such as the 50% cut to central Government funding for Newcastle City Council. I want to mention one additional service: litter. It is an issue for my constituents, and children are writing to me to ask why their environment is covered in litter—
It is a pity that do not have better representation on the Conservative Benches.
I was talking about Labour’s vision for how things can be. We will properly fund public health services, establish a new national target to narrow health inequalities, and prioritise the health and wellbeing of every child, which is very dear to my heart. We will give councils £1.5 billion extra for general council services, too. Although that additional funding is important, we have made a commitment to place local government at the heart of our work, giving local councillors a direct voice in central decision making through our local government commission.
To fix our broken political system, where people are left feeling disconnected and disillusioned by politics, we need to put local people and communities at the heart of decision making. Showing local people that Whitehall works for them is the first step in addressing this problem. I want this to be what local government does and is seen to be doing by the public: building inclusive and cohesive communities, providing accessible care for all who need it, and supporting vulnerable people to promote their life chances.
I applied for the debate to request that the Government rethink the approach to local government funding and make urgent changes to address the crisis facing our councils.
Absolutely; I completely agree with my hon. Friend. It speaks for itself that we do not have representation on the Government Benches.
“Discontent arises from a knowledge of the possible, as contrasted with the actual.”
We know that it does not have to be like this. The public want to see change, and Labour is prepared to deliver it.
It is a pleasure to see you presiding today, Mrs Main, and to follow my hon. Friend Thelma Walker. She made a fine opening speech, and I congratulate her on securing this important debate. Attention has already been drawn to the imbalance of numbers in attendance, which speaks volumes. It is not rocket science to work out why, but perhaps the Minister, who is an honourable gentleman, might comment on the numbers attending the debate as well as responding to it.
I will make only a short contribution and refer to one briefing from my local authority of Tower Hamlets, and from our excellent mayor, John Biggs, and the very respected cabinet member for resources, Councillor Candida Ronald. Colleagues will know that Tower Hamlets is one of the poorest boroughs in the country, but it has a rich past, with the Tower of London, Cable Street and the docklands. It has an exciting future as a key part of London’s regeneration engine.
Tower Hamlets Council voted to support the “Breaking Point” national campaign, which was set up to call for the Government to properly fund local authorities. Tower Hamlets core funding this year is £148 million lower than in 2010, which is a staggering reduction of 64%. Since 2010, around one third of the council’s staffing posts have gone. Future cuts mean that Tower Hamlets must save a further £44 million from its budget over the next three years. Will the Minister advise us how that might be achieved?
While the council has faced cuts from central Government, our borough’s population and demand for services have continued to grow. Like other councils, Tower Hamlets continues to face a crisis in adult and children’s social care and special educational needs funding. Demand is increasing. Last year alone, the council received almost 4,000 fresh requests for adult social care support—up 8.7% on the previous year.
At the Tower Hamlets full council meeting on
“putting frontline services at risk.”
An important consideration is the how austerity has hit other local services such as policing, and the effect on the council’s priorities. We have lost more than 200 police officers from the streets of Tower Hamlets. The council’s response was to step in and invest £3 million to pay for some of its own officers. Regrettably, that is just one area in which Tower Hamlets Council was forced to cover the gap created by this Government, but it cannot be expected to replace everything.
On fair funding, Tower Hamlets responded to the Government’s consultation and raised the following concerns. The first is that it has less emphasis on deprivation. Secondly, it fails to factor in the impact of additional population, which is key in Tower Hamlets, where more than 200,000 commuters travel to each day. Thirdly, fair funding has a notional approach to council tax income and does not give an actual figure, which would significantly penalise authorities that have worked hard to keep their council tax rates low. Finally, the cost of homelessness and temporary accommodation does not adequately form part of the formula, which will impact on high-cost areas, especially London.
Even Tory councils are struggling to cope. It is well known that Northamptonshire County Council effectively declared bankruptcy last year. Nationally, councils now face plugging a further funding gap of £7.8 billion by 2025 just to keep services standing still and meet additional demand. I hope the Government accept that there is a crisis, even if it is not geographically universal. The Government might claim that the era of austerity is over, but it is not even in sight. We need them to step up and recognise that this is a problem.
I congratulate my hon. Friend Thelma Walker on securing this debate. In a former life, I was a local councillor and cabinet member so, believe me, I know at first hand about local authorities’ opportunities and challenges, which she outlined.
Stockton Council has been ambitious and forward-thinking, and has delivered projects that some said were not possible. It partnered with Hilton and built a hotel in the town, which will complement the reopening of the 2,500-seat Globe theatre, just a short walk away, next year. Our high street won the rising star at the Great British High Street awards in 2016, which is a testament to the effort put in by councillors and staff to make our corner of the world a better place to live. The area has been a beacon for Ministers, a Select Committee and countless others, who came to see those successes for themselves.
My council has been required to deliver savings of about £45 million by the end of this financial year. Like other authorities, it faces an unprecedented growth in demand, particularly in children’s social care services. The total spend for all children’s social care services rose from £23 million in 2010-11 to £38 million—nearly double—in 2018-19, despite the reductions in grant funding. I have been told that that is the greatest cost pressure facing local authorities around the country.
Another key problem that has been highlighted to me is the inability of some councils to think ahead due to the uncertainty of local government funding. The spending review is supposed to sort that out, and we have a fair funding review, but sadly I do not feel terribly optimistic about it. Local authorities will retain a greater proportion of business rates, but there is a severe lack of clarity or agreement about how that will work. Large tower blocks in Westminster or Chelsea will raise millions of pounds for their respective councils, but local authorities like Stockton can expect very little in comparison.
Austerity affects not just the funding that local councils get—the lack of jobs and prospects that go hand in hand with it put additional pressure on families. There is a desperate need for more public health funding to address the inequalities in our society. It is estimated that there are still 19,000 smokers in my Stockton North constituency. Smoking costs my area £37.4 million every year. Some 31% of households with a smoker are below the poverty line. If those people were to give up smoking, 1,991 households would be lifted out of poverty, including 1,342 children. However, public health budgets are being diminished, rather than increased so that we can develop programmes to help people quit, and address obesity, drug misuse and dangerous choices. That is Government failure. It is the result of a reckless Government slashing the vital support services that people depend on and systematically reducing job opportunities not just through austerity but through business and industry uncertainty caused by the threat of a no-deal Brexit.
Ministers love to trumpet the rise in employment and fall in unemployment across the country, but that is not happening in areas like mine. Unemployment has risen month on month in my area for some considerable time, and local authorities have limited, if any, resources to sort it out. There has been a devolution deal of some Government budgets to the Tees Mayor and the combined authority, but despite the plethora of news releases and ministerial statements about Tees Valley, few new jobs are being created in reality. The Minister must take full responsibility and tell us what the Government will do—he is too busy looking at his phone. The Government are too busy to tell us what people are doing for constituencies such as mine.
I agree with organisations including Action for Children, Barnardo’s, the National Children’s Bureau and the Children’s Society that the spending review must provide additional funding for children and young people’s services, and address the estimated £3 billion funding gap that local authorities face by 2025. I agree that there must be a clear link between the likely need and the funding available in each local area. There cannot be a postcode lottery benefiting councils that are aligned with the Government of the day. The children and service users who are in desperate need of social care should and must come first. Importantly, early intervention is key to ensuring that the demand on services does not get out of hand. We must prevent family breakdown, not just deal with it when it happens, as that costs more money and can severely damage people’s lives and future relationships.
This is about political choices and priorities. We simply cannot afford not to spend money. We cannot scrimp and save on children’s social care and family support services until there is nothing left but the skeleton.
I congratulate my hon. Friend Thelma Walker on securing this very important and timely debate. Since the Conservative party came to power in 2010, my local authority, Croydon Council, has lost more than 70% of its central Government funding. At the same time, the population is growing. We have higher numbers of older people who need care services, more families have been made homeless because of welfare reform, and more working families are in poverty because of the freezing of working-age benefits and a real-terms reduction in people’s wages. Funding cuts and an increase in demand for statutory services such as care and housing means that there is drastically less funding for everything else. That includes services that help tackle the causes of violent youth crime. That is on top of severe cuts in policing. The result of all that is a national knife crime epidemic.
We largely know how to prevent violent youth crime and have successfully stopped it in the past. I was the leader of Lambeth Council in 2007—the last time there was a big increase in violent youth crime. We were the first council to set up what would now be called a public health approach, which means understanding and then treating the causes of violent youth crime, rather than focusing only on the symptoms. We commissioned the country’s biggest piece of academic research on violent youth crime, learned the lessons and then funded the services that stopped young people at risk of drifting into criminal behaviour from doing so. Violent crime quickly dropped by 30% and continued falling. We know what works, but it requires investment in services, including early intervention with low-level young offenders before they progress on to higher-level offending; mentoring and support that helps offenders not to reoffend; help for families in which children are growing up without the support they need, for instance to develop language and cognitive skills or loving, emotional bonds with their family; treatment for mental ill people, particularly when it arises from a child experiencing traumatic situations such as sexual or violent abuse; school exclusions, particularly of black boys; and youth activities and diversionary projects that help young people develop healthy relationships, skills and interests that will support them throughout the rest of their lives.
Since 2010, the Government have taken away the funding for those services in every community that needs them the most. They targeted the biggest cuts on the poorest communities, where violent youth crime is the highest. The 10 poorest communities in the country have suffered cuts more than 18 times bigger than the 10 wealthiest communities. By removing those communities’ ability to stop violent crime early, it spiralled out of control and spread, leading to what is now called county lines—the export of violent criminal behaviour linked to drug dealing from the areas where it started to everywhere else. That is why the number of deaths on our streets has escalated year after year across the entire country.
Instead of learning from their mistakes, the Government seem determined to keep repeating them. Their ironically named fair funding formula, which comes into force next year, removes deprivation levels from how funding for local services is calculated. The poorest communities will lose even more, and what capacity they have left to stop a further escalation of violent crime will be reduced, so violent crime will rise even faster.
When I asked the Home Office Minister about the need to do more to tackle violent crime, she emphasised the importance of the troubled families work, which is funded by the Minister’s Department. That is one of the few areas where the Government have done the right thing. They are funding professionals who bring together support that helps to reduce offending by families who are generating the highest levels of crime. What she did not say, perhaps because she did not know, is that all funding for that programme will come to an end in 12 months’ time—March next year. The services are working on their wind-up and closure plans. It is staggeringly short-sighted at a time when violent youth crime is soaring out of control to close down one of the few services that is actually helping. We need more of that kind of work, not less. What action is the Minister taking to ensure the troubled families programme continues after March? What guaranteed funding will the Government make available to ensure that it can continue?
We do not need to wonder how to tackle violent youth crime. We already know. The problem is that the Government have slashed the resources available to tackle it in the communities where it is growing the fastest. We need them to think again.
It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate my hon. Friend Thelma Walker—a near neighbour of mine—on securing this important and timely debate.
I rise to speak as someone who, both as a Member of Parliament and as Mayor of the Sheffield City Region, works very closely with our local authorities. Not only do I lead the combined authority of Barnsley, Doncaster, Rotherham and Sheffield, but through the Yorkshire leaders board, I work very closely with all of Yorkshire’s other local authority leaders. As hon. Members will know, the work of our local authorities is critical to the communities that they are there to serve.
I was out on the doorstep in Barnsley at the weekend talking to my constituents and, although some of them wanted to talk about Brexit—completely understandably —many of them wanted to talk about other things, including bins, potholes, parking, antisocial behaviour and, of course, housing. Those are incredibly important issues that fall to local government.
Given that a Member has just withdrawn from the debate, we now have a little more time for colleagues to speak, so I am extending the limit to seven minutes with immediate effect. Some of you have noticed that the clock has shifted on somewhat. We suspended on the point of an intervention, but perhaps you would like to save it for your speech, Ms Onwurah.
I thank my hon. Friend for giving way so graciously. He is absolutely right: when we knock on people’s doors, we hear about the issues that matter to them. Increasingly over the past nine years since I was elected, constituents have told me that litter is destroying the environment in which they and their children live because of central Government cuts to local authority and police funding.
My hon. Friend raises an important point that is often raised with me by local residents, as is fly-tipping, which is a big concern for many of my constituents. One of my local residents, Kevin Osborne, has been running a long-standing campaign against the fly-tippers, as has Barnsley Council, which has taken decisive, innovative action to prosecute them. My hon. Friend raises an important point that is of great concern to our constituents.
Before the Division, I was talking about important local issues that fall to local government. We all instinctively understand that councils and councillors work hard every day to improve the lives of our residents, but they face a funding crisis. Austerity has caused huge damage to communities across the country. It has undermined the way we protect children at risk, disabled adults and vulnerable older people, and it has reduced the quantity and quality of community services such as street cleaning, libraries and rubbish collection.
We should be honest about the fact that reduced funding is not just about numbers on a spreadsheet, but about a reduction in the capacity to invest in prevention. The cuts represent a false economy. If councils cannot fund sufficient support for older people, more of them will end up being admitted to hospital. Less money for children’s services means our young people will only get by, rather than thriving. Failure to invest in public transport stifles economic growth, isolates communities, reduces social mobility and damages our environment. Those are just a few examples of an austerity agenda that lacks any form of long-term strategy.
My hon. Friend raises an incredibly important point. Following eight years of austerity and some £7 billion of cuts, neither the autumn Budget nor the more recent spring statement offered any comfort to our local authorities. The Local Government Association has projected that local councils will face a funding gap of £7.8 billion by 2025, and they still face a cut of £1.3 billion next year. Last autumn’s Budget offer of £650 million for the coming year is nowhere near enough even to close the funding gap for social care, let alone to address the shortfall in other services. Such concerns cannot be addressed by the piecemeal redistribution of income that we have seen from the Government.
Central and local government need to work together on the fundamental reform of the funding of our community services, and I believe that devolution offers the opportunity to do that. When we get it right, it offers a fairer and more democratic means of governing and delivering, where working people have a greater say in the choices that affect their lives and a greater stake in the services on which they rely. We can seek radical, transformative change to our communities only if those communities can control their destinies themselves. That means that the Government need to listen to and invest in those communities and the leaders they have elected to represent them.
We need to abandon an economic and political model in which the only hope is that wealth will trickle down and prosperity will ripple out. We must replace it with a fully empowered three-tier system of Government—local, regional and national—giving each tier the powers and resources that it needs to make a difference in the communities for which it is responsible. Only if we do that correctly will we put the right people at the heart of decision making, end the status quo in which so many people have become disenfranchised, and allow communities to overcome the challenges they face, and thrive. Greater funding and stronger powers for local authorities should be the first step of that journey.
It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate my hon. Friend Thelma Walker on her speech and on securing the debate.
Many of the services that are closest to the people we represent and that many people value and appreciate are delivered by local councils. Many of them, such as collecting refuse, recycling, street cleansing, operating street lighting and keeping street drains clear, are easily identifiable council services but, as we know and as my hon. Friend highlighted, councils do much more. They provide education, social and youth services, libraries, community centres, leisure centres, allotments, play areas, car parks, local tourism and business support. They also facilitate a huge amount of partnership working by acting as the conduit for joint working between police, health, the third sector and others. Many local authorities also still provide housing services and even those who no longer have housing stock still provide limited private sector housing support and are responsible for taking the lead on tackling homelessness.
I spent the 20 years before I was elected to this place in 2015 as a councillor and cabinet member. I was first elected in 1995. My first experience as a councillor was marred by the huge financial pressures that local authorities were under. I was full of hope at first that I would play a part in making a positive difference to the community that had just elected me. Is not that why we are all elected? However, the council I was elected to was subjected to massive cuts in my first two years as a councillor. Our annual budget was cut by £30 million over two years. That happened from 1995 to 1997, in the dying days of the Thatcher-Major Tory Government.
From 1997, things changed dramatically and for the 13 years under a Labour Government the council’s funding increased year on year. There were modest increases in the early years but more significant increases followed—in one year reaching almost 10%. Those were years when local authorities thrived. I recall one year when I was the youth champion for the authority and was able to argue for and obtain an additional £150,000 for youth services in the following year. There are many other examples when funding was available to support local services.
Local councils provide vital services to our constituents, whether on fly-tipping, homelessness, adult social care or children’s services. Any funding cut is a direct attack on our constituents. Does my hon. Friend agree?
I certainly agree, because cuts dilute local authorities’ ability to act on behalf of the people they represent.
Local authorities have been at the forefront of strategic partnership working in relation to developing and prioritising projects to secure and utilise European funding and co-ordinating the securing of match funding so that residents get maximum benefit for the investment. That, sadly, will be hugely diminished as we leave the European Union. Despite a promise from the Government they have yet to confirm the mechanics of how the shared prosperity fund will work, which leaves communities to wonder whether the commitment from Conservatives on the leave side who promised that our country would be no worse off was no more than a sop to gain support.
Financial support for local councils started to change in 2010. Since then our local councils and public services have been starved of investment. In Wales, local government is devolved to the Welsh Government and the block grant for the Welsh Government is now some £4 billion less than it was in 2010. In the early years of austerity, the Welsh Government protected councils in Wales from the harsh policies of the Tory-Lib Dem coalition. I remember speaking to local government colleagues in England at the time and hearing the horror stories about how council services were starved of investment. As the years have passed and austerity has continued to bite hard, the ability of Welsh Government to protect local councils has been diminished. Although in Wales the responsibility for local councils lies with the Welsh Government, I am in absolutely no doubt that the cause of the pain being felt by councils and public services in Wales lies with the harsh austerity policies of this Tory Government.
In the most recent budget round, Merthyr Tydfil County Borough Council and Caerphilly County Borough Council, which cover my constituency, were again forced to cut millions of pounds from their annual budget and they have also been forced, along with many authorities across the UK, to increase the council tax by more than 5%, which has been the maximum upper limit in recent years. Some councils are even starting to use reserves to plug the revenue gap, which is a dangerous precedent. Reserves are often earmarked for specific commitments while the much lower free reserves are there for emergencies and one-off expenditure. As we know, once they are used to plug the gap in revenue funding greater problems are created for future years.
We have heard in recent debates in the House that cuts to policing have had a big impact in many communities where crime and antisocial behaviour have increased. However, that is exacerbated by the fact that, owing to cuts to council services, there are fewer youth workers, education welfare officers and social workers and generally less funding for work with the police and partners to manage antisocial behaviour and reduce crime. Local councils play a huge part in crime reduction and in reducing low-level nuisance and antisocial behaviour. We should not underestimate the importance of their role.
In conclusion, in the early years of austerity some local councils and public bodies were able to find efficiencies to make their budgets stretch. People were expected to do more with less money and fewer people, which put remaining staff under increasing pressure. However, after nine years of painful austerity there are no more efficiencies to find. The low-hanging fruit has all been picked long ago. As I said in questions on the spring statement a few weeks ago, all that is left to cut are jobs and frontline services.
I make a plea to the Minister today to recognise the pain that austerity has caused and the fact that local councils are not able to withstand any more cuts. The Government need to show compassion. The services that we are discussing are those closest to the people. We know from press reports that Tory-led councils are also experiencing financial pressures. People are feeling the pain across the country, so please will the Minister give us some hope that austerity really has ended?
I congratulate my hon. Friend Thelma Walker on securing a vital debate, and I pay tribute to council staff. It is rightly fashionable to pay tribute to emergency staff in the health, police and fire services, but sometimes we do not recognise the work done by council staff day in, day out, and by the council leaders and cabinet members who must deliver, on a daily basis, the services our constituents want.
I agree with my hon. Friend, and want to emphasise that councillors and officials in Newcastle City Council are under huge pressure, working not to implement the cuts for the public. They deserve our thanks.
I thank my hon. Friend for that intervention.
We are all aware of the fact that post-industrial towns and cities in the north of England such as Bolton have been hit hardest by the deep cuts to local government spending. The idea that the Government sometimes project—that austerity hits everyone equally—is nonsense. The cuts are nothing less than politically motivated. The heaviest have been in the most deprived regions that are often thought of as economically left behind. That is compounded by the fact that those areas have the highest levels of poverty and a lower capacity to mitigate cuts through local taxation or asset sales.
My local council, Bolton, has lost about £l billion in spending power since austerity began in 2010. That has impacted on social care, with adult and child services taking the biggest hit, despite being the areas with the highest demand. As many hon. Members have said, we have an ageing population and therefore the impact on the social care budget is getting bigger. More and more children are being taken into care, meaning that the amount of money required is increasing.
Colleagues have mentioned the pressures on local authorities. For example, over the past three years, Bolton Council’s adult services department had to find more than £10 million of savings, including £8.8 million from children’s services. My local authority had to raise council tax, specifically to pay for social care. That led to its critics saying, “Oh, the council is raising taxes”, but nobody spoke about the fact that it had no choice. With funding cuts of 50%, what was it to do other than raise local taxation to fill that gap? The Institute for Fiscal Studies has estimated that between 2010 and 2020 local government will have had its direct funding cut by 79%. Let that sink in: 79%!
I thank my hon. Friend for his intervention, and I entirely agree with what he said. We have seen our youth centres, museums and libraries close, and a social care system in crisis, and that is due to the Government’s ambition to reduce the public sector.
Most of what Bolton Council has done has been to provide the best for the people who live there. Successive council leaders and cabinet members have considered the benefits of their discretionary services, and the impact of cutting them, and looked at how to run things differently internally without affecting frontline services and staff. For example, when a member of the local authority leaves, they are not replaced, which means that the burden of the work falls on fewer people. Such savings help the council to fulfil its obligations.
Bolton Council is good in that it is still finding ways to invest in the borough beyond the statutory requirements. It has innovated in the face of austerity through capital investment projects such as improving access for disabled people, investing in leisure facilities, and putting millions into community and environmental projects. It has been working with businesses, and its latest capital strategy involves spending £212 million on various projects across the borough. Some of that will go towards the town centre masterplan, but other investments include school expansions, fixing roads, and improving the township generally.
The council has stimulated the market, and it is sharing that success with extra investment in our schools, and in the area, so that the lives of those who live in Bolton can be improved. Bolton Council has the lowest priced school meals in the entire United Kingdom, and we still offer free breakfasts in schools where they are needed. We are the first council in the country to open a new children’s centre, while Tory-run administrations continue to cut such services. The bottom line, however, is that 10 years of austerity and three years of focusing on Brexit has left local government on the ropes. Councils are facing a funding black hole of more than £5 billion by the end of the decade, and it is still unclear how they will be funded beyond 2020.
It is upsetting and nauseating when Conservative politicians in Bolton, who know that the council has had to make cuts because its grants have reduced by 50%, dishonestly blame the Labour council for not providing the things that people want—for example, filling potholes. If the choice is between giving money to an elderly vulnerable person or filling a pothole, we know what the council has to do. People are being disingenuous when they jump on such issues, as has happened in Bolton where Conservative politicians go on about potholes, even though they know where the problem lies.
The independent parties are no better either, as they deliberately mislead people about why certain things are not happening in our town. For example, in Farnworth, which is one of the deprived areas, our local authority has been involved for a number of years in a project to renovate the town centre, but on two occasions the private companies pulled out. The council has now taken on that work, but the Opposition parties use that as a mechanism to say, “The local authority is not doing anything”, which is misleading. That annoys people, and they can sense that we are angry about this. There is misrepresentation by independent political parties as well as by the main Opposition party in Bolton.
Bolton Council has been doing a fantastic job with limited money, and we ask the Government to think seriously about how funding should be allocated. Removing deprivation from the factors that influence funding is completely unacceptable, as that should be one of the main criteria used when considering local authority funding for a particular area. Until and unless funding is properly resolved, those problems will continue, and councils and people who live in certain towns—especially in the north—will suffer.
It is a pleasure to serve with you in the Chair, Mrs Main, and to follow my hon. Friend Yasmin Qureshi, who made a positive case for what the Labour council is trying to achieve in such constrained times. I congratulate my hon. Friend Thelma Walker on securing this debate at a crucial time for our local authorities. By the end of the next financial year, my constituents across York will have experienced an £189 cut per household, which has had a significant impact on families. I often say to colleagues that in York they need to look beyond the walls and travel into the communities to see the real deprivation in our city. York itself is the most inequitable city outside London, and it experiences severe deprivation.
It is important to consider deprivation when creating a so-called fair funding formula. York has the worst-funded schools in the country, and one of the worst-funded health authorities. Crime is rocketing by 13%, which is 5% above the national average, yet 60 police staff have been cut. Those cuts are having a cumulative impact on our city, and the need to fall back on the local authority is escalating. As a result we must consider what is happening with different funding formulas and that cumulative impact, not least because of the many partnerships that existed, which is where the real work is done to address issues of crime and public health. Resilience is breaking down in our cities, and we must ensure that funding works across the board.
The cuts have impacted on social care in our city, which is under particular strain because hospitals cannot discharge patients, the support is not there, and there is a knock-on impact on other services. York has a particular reputation for delayed discharge, and it is not a good one.
There are also pressures on social care. We cannot recruit the social care workforce—people cannot afford to live in our city because the housing is so expensive and the wages so low. I urge the Minister to take a more holistic view of his brief and to work cross-departmentally when looking at the funding formula, because of that impact.
I am also concerned about future dependence on business rates. We have debated those rates many a time in this House, and they have a negative impact on the retail outlets in York, as well as other businesses, because we have a false market. What has happened is much like the sub-prime market that existed ahead of the last crash. Many offshore landlords have invested in York, hiking up the prices, the values and the rentals of their properties. As a result, they are more interested in their investment in the longer term, rather than in the high street, so 50 units in the city are empty. Sadly, our Tory-Lib Dem city council just puts stickers in the windows of high street outlets, as opposed to trying to get businesses in. Increasing business rates therefore have an impact, because businesses leave and the revenue does not come to the council. There is a negative cycle. I will be interested to hear the Minister’s comments, and it is certainly something that I have discussed with Treasury Ministers at length.
The precept is also a regressive tax on social care. It is important for us to look at more progressive, fairer and more proportionate forms of taxation, as opposed to some of the measures put in place instead. Again, with issues such as the precept, areas of deprivation will clearly not generate the same levels of money and resource for social care as more affluent areas. We therefore see greater inequality yet again. Even within York we have serious inequality. In fact, between the most and least affluent areas of York is an eight-year gap in life expectancy, which demonstrates not only economic inequality but its impact on health and other social determinants of health.
We therefore need the local authority to be properly resourced. Sadly, the Tory-Lib Dem failure in our city has meant that resources have not gone into the right places to address inequality. The council has been quite profligate in how it has used limited and restrained resources without bringing real benefit to our city, so I am absolutely delighted that Labour has put a well-costed programme together.
“Getting York back on track” is our manifesto for York to move forward. It looks at how to bring investment into our city and to ensure that we build a more sustainable and long-term approach to delivering services, putting in vital resources and growing the economy by attracting businesses. We are a low-wage economy so it is vital to have investment for good-quality jobs in the future. Socially, we also want to address the very issues of my constituents’ constant need, such as investing in our city centre by putting in a family quarter, or ensuring that we have higher environmental credentials in our city, which should be something that all local authorities are mandated to have.
We want to be carbon-neutral by 2030. A pressing agenda throughout the country is to have carbon budgets, and we want water provided on our streets, so that people are not buying plastic bottles. Such investments are made for the long term of our planet as well as of cities. We are talking about funding, so I will be interested in what focus the Minister has on improving the environmental credentials of local authorities and their contribution to that agenda.
I will leave it there. I can say so much more about what Labour wants to do when we come to power in May, but the Minister already has much to respond to today.
I congratulate my hon. Friend Thelma Walker on securing this debate at a critical time for our public finances.
I speak as a Member of Parliament for the great city of Glasgow, which has a fine tradition of what might be called municipal socialism. It would be great to rediscover that municipal route to socialism, but it has been under assault for many years now, with a decade-long programme of austerity cuts, if not more, the brunt of which has been borne by local government. We often hear from Scottish National party Members in this place about how wonderful everything is in Scotland, and how munificent the Scottish Government are in stewarding local government by dispensing the fruits of excellent governance in Edinburgh to the rest of Scotland. That could not be further from the truth.
Look at the dire straits in which Glasgow City Council finds itself. Last year, Glasgow had to find £49.9 million-worth of cuts, almost £20 million of them a direct consequence of the Scottish Government’s cuts to local government. The remainder are due to pay and other inflationary pressures. The real brunt of cuts made by central Government in Westminster and at Holyrood is borne by councils, and, as a result, Scotland has lost 30,000 council jobs in recent years. That is a shameful indictment of those who are responsible. The mass unemployment that we railed against during Thatcherite deindustrialisation in the 1980s has been writ large in local government by a Scottish nationalist Administration in Edinburgh.
Between 2010 and 2018, Glasgow lost £233 per head of population in Scottish Government funding. That is a real-terms cut; it is the cost of the Scottish National party to every single Glaswegian. In May 2017, a minority SNP administration took over Glasgow City Council. However, instead of robust opposition to the onslaught of cuts, we have seen not only meek acceptance by the council, but even an attempt to divert attention and to deny the reality of the fiscal constraints on Glasgow—Scotland’s largest city, and a city with some of the greatest social problems in the country.
In my constituency, the failure in the quality of local services—a reduction in cleansing services, poor repair of roads, failure to help homeless people to move into temporary accommodation, and a decline in care and social work services—has had a creeping effect on some of the weakest people in our society, who disproportionately rely on such services. That has happened at a time when the SNP has celebrated imposing a council tax freeze on local government.
On the council tax freeze, does my hon. Friend agree that if local councils are to be accountable to the people who elect them, it is essential to protect the autonomy of local government to raise its own funds, rather than giving councillors the choice between making worse cuts and even worse cuts?
I thank my hon. Friend for making that pertinent point, which goes to the heart of the issue of local government—structural decay over decades. Once we had great, autonomous and highly vigorous municipal authorities. Look at Glasgow, which used to run its own gas and electricity provision, tramways, railway system and subway system. The Glasgow Corporation was a huge enterprise, and it has been slowly but surely torn apart over the past 50 years by creeping centralisation. That has happened at a regional level, and it is now happening with the dismantling of Scottish regional councils and regional authorities and their centralisation into Holyrood.
An inadvertent and regrettable effect of devolution over the past 20 years has, in essence, been to displace the municipal power of Glasgow and the west of Scotland, and to suck it into the east and into Edinburgh. We should guard against that in the constitutional reform of city regions across the United Kingdom. We need to consider what effect such devolution might have on the margins and the periphery of that power base. I would like that to be corrected in Scotland as we look forward to the next two decades of devolution.
I will be brief this time, Mrs Main. Because of funding cuts, councils across the country are being forced to sell their assets in order to fund the revenue budget. Does my hon. Friend agree that that is not the way to fund services?
I absolutely agree. Glasgow is in the absurd situation of having what must be the only car parking company in the world to lose money every year. There is not much of an overhead in running a car parking service, but as a result of the constraints on funding, and particularly the effort to resolve disputes and long-standing historical issues of equal pay in local authorities—that is a national issue, but the council has received no national support to deal with it—the mechanism that was devised was essentially to sell its assets to arm’s length companies. It mortgaged those assets but because of the credit crunch, a lot of them fell into negative equity. Councils are paying off huge bills—to Barclays bank, in the case of Glasgow—to service the financial constraints that have been imposed upon them.
We have to look at the reality of council financing, as my hon. Friend Ged Killen mentioned. More than 80% of funding for councils in Scotland is derived from central Government grants. Councils do not raise their own money—very marginal yields are achieved from council tax and business rates. In Scotland, the bulk of it is controlled centrally. With the council tax freeze, the SNP removed councils’ capacity to raise council tax. The SNP has massively cut the budgets available to local authorities, and that will hammer their capacity to provide services and will push councils into destructive decisions such as selling off and mortgaging assets, creating a vicious cycle of decay and decline.
According to the Scottish Parliament’s information centre, the local government revenue budget in Glasgow was cut by 6.9% from 2013 to 2018, whereas the Scottish Government’s own revenue budget fell by just 1.6% over the same period. As opposed to the Scottish average of 6.9%, Glasgow’s budget has been cut by 12.8%—an even greater cut to the local authority that is in the greatest need in Scotland. That reduction is twice the average cut to Scotland’s 32 councils, and a further 3.6% cut for Glasgow is planned for this year.
There is no question but that the Tories are to blame for handing the Government in Edinburgh a cut of 1.6%. However, to multiply that percentage by four to make a 6.9% cut, and to multiply it by seven in Glasgow, is a deep injustice that flies in the face of any semblance of social justice or economic redistribution. It makes a mockery of the Scottish National party’s tendency to come to this place and profess to be custodians of Labour’s soul and of real socialist values. I find that absurd, because it is not the reality in the streets, towns and cities of Scotland under the SNP’s Administration since 2007. That is the stark reality.
The only conclusion we can draw is that local government in Glasgow in particular has been targeted disproportionately for cuts, in large part because for many years Glasgow was under Labour administration, so it was easy enough to pass the buck and blame a Labour council for having to administer the harsh choices. In many cases, we were too keen to be the managers of that decline rather than resisting it robustly.
We need to offer an apology to the women in Glasgow who suffered as a result of the failure properly to settle the equal pay dispute in Glasgow, and who have continued to be militant about it. A Court of Session ruling has declared that they are due more than half a billion pounds as a result of historical pay injustice. That is the reality of what happened, but it is not necessarily the fault or the design of councillors trying to do women out of a settlement. They administered and dealt with the problem badly, but the root cause lies in the destruction of local councils’ capacity to raise their own money, deliver their own services and be masters of their own destiny. That is the brutal reality.
On behalf of the Labour party, I offer a profound apology to women in Glasgow for what they have faced over the last 10 years. Many women died waiting for the settlement. But it was a sin of omission, not of commission; we failed properly to challenge the decline in council services and budgets. In many ways, we tried to resolve the equal pay dispute by selling assets, but we have to recognise that the system and pay structure were flawed. The root cause of the problem was our national failure to get a grip on local government reform. That was a great flaw of devolution over the last 20 years, certainly in Scotland.
I hope that as we look forward to the next two decades of devolution, we can right some of those injustices and properly re-establish decent municipal services in councils and city regions across Scotland. The story of devolution does not end with Edinburgh or Holyrood; it has to continue into the great towns and cities of Scotland and develop for a successful future.
It is a pleasure to serve under your chairmanship, Mrs Main. I declare an interest as a vice-president of the Local Government Association. I thank my hon. Friend Thelma Walker for securing an interesting debate. I would say that the debate had been inspiring, but it has not; it has been quite depressing to hear about the human consequences and the community cost of austerity.
We were told that austerity was over, and that there would be a reset—a bright new tomorrow. That has proven to be a lie. When the Chancellor was called to open his cheque book, no money came to local government. That is because there has been a determined attempt not just to take the money away, but to completely reshape how local public services are funded. For someone who lives in a wealthy area where property prices are high and the business rate base is strong, that is great, because it will be possible to fund reasonable public services. I am afraid, however, that people who live in areas with historically low house prices and business rate bases will be denied basic public services—the civic infrastructure that makes a country a decent place to live.
Those may be the 1.2 million older people who would have had care in 2010 but no longer receive it today. They may be the children who are denied a good start in life because of cuts to Sure Start centres or the youth service in their area. They may just be people who live in areas where crime has gone through the roof, not simply because our police service has been cut, although it has, but because support has been completely taken away. Crime reduction budgets in England have been cut by 61%, safety services by 76% and CCTV by 35%. Hundreds of youth centres have been closed, and the Government scratch their head and wonder why knife crime has gone through the roof. They wonder why probation is falling over, even though money has been taken away and the failed privatisation model let so many people down.
It is about more than just funding, although that is important; it is about a Government who want to wash their hands of local public services and local communities. That is shameful for a number of reasons, not least because of the cries for a new settlement during the EU referendum. Not many people were talking about the European Union as a political entity. People were saying, “I am fed up with this being my lot. I am fed up with looking at my community and seeing all the times that things are taken away. I am fed up with having to look backwards to yesterday, when there were decent jobs. For my children and grandchildren, even more than for me, I am more fearful for the future than ever before.”
When the Government had the opportunity to reinvest into local public services, they did the opposite—they turned their back on the very communities that needed that investment and support. It is criminal to allow that responsibility to fall by the wayside. We cannot continue to have an £8 billion public service deficit for local councils. It will be on this Minister’s watch that an older person dies because they did not get the care that they needed in their own home. It will be on this Minister’s watch that a child is neglected because there is no funding for children’s services to support them. It will be on this Minister’s watch that someone dies in a doorway because money is not going to support homelessness in our communities. No Minister wants that to be their record. Who comes into this place to make the country worse, rather than better?
There is an opportunity, because we know that the Treasury is sitting on many billions of pounds of tax surplus. Something like £14 billion was collected at the end of January, over and above what was spent on public services. There is money in the system, but it is being stubbornly held back rather than being released to fund public good.
I will finish on this point: if the Government want to build a better Britain, they have to base it on a strong local public service foundation. If we do not do so, when we look to our communities and councils to start to rebuild, they will simply say, “We haven’t got the resources or the capacity to do that.” We will miss an opportunity for another generation. No more excuses, no more rehearsing the financial crash and no more pulling out the old top lines from Tory HQ. Today is the day for answers.
It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate Thelma Walker on securing this debate. I join her in paying tribute to all those working in local government up and down the country, including her husband, for the terrific work they do to make our communities better places to live.
It may surprise hon. Members to hear that I agree with much of what has been said. First, the sheer range of things we have heard illustrates the importance of what local government does and the impact on all our residents’ and constituents’ lives. I also agree that local government has been dealing with a very difficult financial climate these past few years, for reasons we do not need to rehash in the short time we have. This Government took the right decision—the moral decision—to get our public finances back in order, and local government has played a very important role in making that happen. It deserves enormous credit for the way it has done that—for finding better, cheaper ways to do things while maintaining high resident satisfaction—but I appreciate that that journey is closer to its end than its beginning.
One thing we may disagree on, though, is the talk of cuts. We heard a lot about cuts and a lot of selective quoting of statistics. The simple truth is that the resources available to local government to spend on core services will be £1 billion higher this financial year than last financial year. That represents almost a 3% rise in the cash available to local authorities up and down the country.
I acknowledged right at the beginning of my speech the difficult financial climate that local government has suffered over the last few years. I am not trying to pretend it has not—I acknowledge that. The point is that the Government are absolutely listening and responding. A billion pounds more is almost a 3% rise in funding. That is more than the economy is growing by, and it is more than inflation.
[Sir Christopher Chope in the Chair]
The Minister is correct that councils have £1 billion more to spend on public services today than they did this time last year, but that is because of the pressure that has been applied to council tax payers. People are paying more and more council tax for less and less in the way of public services. By the way, the data shows that, in England, there have been cuts of £4.5 billion to neighbourhood services and £3.5 billion in real terms to transport services. That is the cost in the community—the £1 billion goes nowhere near covering that. Surely he knows that.
It is nice that we are now talking about whether the increase in funding is enough. I am glad we have moved the debate on. It is also good to hear Labour Members talking about the importance of council tax. We believe in keeping people’s council tax bills down. They will be 6% lower in real terms this year than they were when this Government came into office, and they have risen slower than under the last Labour Government, when they increased at an annual rate of almost 6%. This Government are committed to keeping council tax bills low, and it is important that we are mindful of that.
Many points were made, and I want to try to address as many as I can in the time available. I would like to do so through the framework with which I look at local government, given the sheer range of things it does. Local councils do three important things: support the most vulnerable in our society, drive economic growth in their areas and build strong communities. I believe very much that this Government are backing them in doing all three of those vital tasks.
First, as we heard, local government helps the most vulnerable in our society. Local authorities are the first to reach out those who fall on hard times, and I am delighted that our recent settlement provides them with increased funding to do exactly that. Councils have told this Government that the most acute pressure they face is in adult and children’s social care, so in the recent settlement and Budget, the Government responded with an additional £650 million for adult and children’s social care this year. That includes £240 million to ease winter pressures and the flexibility to split the remainder between adult and children’s services as local preferences dictate.
We also champion authorities that put innovation at the heart of service delivery. We heard a lot about money, but the outcomes that that money delivers are just as important. We should be focused not just on what goes in but on what comes out. The Government will focus relentlessly on ensuring that taxpayers’ hard-earned money is well spent.
On children’s care, about which we heard a lot, a recent National Audit Office report noted the enormous variation in performance and cost among local authorities. That is nothing to do with the political colour of those authorities; it is just down to differences in leadership and management practice. That is why it is important that the Government are backing practices in Leeds, Hertfordshire and North Yorkshire with an £84 million fund, and taking their models, which deliver higher-quality outcomes at lower cost, across the country.
The hon. Members for Colne Valley and for Stockton North (Alex Cunningham)—and indeed Mr Reed, who is no longer in his place—rightly mentioned the importance of early intervention, in which I strongly believe. I have been a relentless champion of the troubled families programme since I have had this job. He is not here anymore, but the hon. Member for Croydon North will have seen the Secretary of State make a very significant speech last week about the progress of that programme and how it is transforming children’s lives on the ground, getting people into work and keeping people out of the criminal justice system.
Knife crime is also important. That is why a £10 million extension was recently made to the troubled families programme, specifically to support families against youth crime. That funding is now benefiting 21 areas that bid into the programme to tackle that vital issue. The hon. Gentleman talked about funding running out. That is because we are at the end of a spending review period. Of course, in the spending review, I and the Government will be batting very hard for a successor programme to the troubled families programme. The Secretary of State committed to that last week, and I wholeheartedly support it.
I am also passionate about technology, which has the potential to be transformative. I recently launched an innovation fund to help councils embrace the digital revolution. Technology helps deliver services better on the ground and find ways to save money. Together with the LGA, we are developing a tool to help councils to benchmark, analyse and drive their performance. I believe there are considerable opportunities across local government to improve lives, save money and transform services, and we will pursue them all relentlessly.
The second thing local authorities do is drive economic growth, ensuring that every part of our country can prosper. Ultimately, that is the only sustainable way to fund the public services that we have heard so much about and we all care passionately about, and it is the only way to improve living standards in our communities. There may well be fundamentally different points of view on that. The Government believe that, rather than being funded by central Government handouts, local authorities should be empowered and rewarded for their entrepreneurship. Indeed, even Labour Members expressed different points of view about the degree of autonomy local government should have to raise its own money and about over-reliance on things such as business rates—the single largest way for local areas around the world to raise income. It is all very well saying we want more local autonomy, but we must understand what that means in practice.
Our business rates retention scheme does exactly that, putting power in the hands of local authorities to reap the benefits of their hard work. This year, on top of the £46 billion I mentioned, local authorities will retain an additional £2.4 billion of business rates growth. The 15 new business rates retention pilots across the nation, from Northumberland to Southampton, demonstrate this Government’s commitment to backing councils’ ambitions for their local economies.
I am happy to do that. I am glad that York and Kirklees—the areas represented by the hon. Lady and the hon. Member for Colne Valley—joined my local area to be part of one of those business rates pilots. That will generate an extra £34 million, which our councils have worked together to decide how to deploy in our area. That is central Government backing our area’s ambitions. Rachael Maskell is right to mention business rates. The change in retail shopping habits is a pressing issue. There is a range of measures, from small business rates relief to rural rates relief and the new retail relief, giving retailers a foot—
Again, I am happy to say that it is not my job or the Government’s job to dictate to people how they should shop. Part of what is changing habits is part of why people are changing how they shop. It is not the Government’s role to dictate to them.
No, I will finish my point. Where the Government do have a role to play is in ensuring that the tax system is in line with modern practice. When it comes to business rates retail relief, which gives retailers a third off their business rates bill for the next two years, is the latest in a long line of measures that mean there will be £13 billion of business rates reductions by the end of this Parliament. That means a third of all businesses will pay no business rates.
That is a fair point, but the Minister will recognise that that is nowhere near enough. Because of the threshold that is in place, a local Marks and Spencer would not benefit from the type of relief that is being offered. He must accept that, unless we deal with international taxation and business taxation in the round rather than just having business rates coupled to local government spending, it will never be fair, and we will still be in a situation in which a cleaner or a server in Starbucks pays more tax than Starbucks itself. How can that be sustainable?
The idea that this Government are not doing that is an old chestnut. This Government have brought forward more ways to clamp down on international tax than any previous Government and £14 billion extra has been collected. This Government put in place the first diverted profits tax and at the last Budget announced a digital services tax, which we will put in place in line with international peers.
I am conscious of time, so I will make progress. If those peers do not act, then we will act unilaterally. The Government are addressing the point.
I agree with the hon. Member for York Central that high streets are important. That was also mentioned by the hon. Member for Stockton North, who talked about his high street, which I know as it is near my constituency. This Government understand the importance of high streets in creating living, breathing communities. That is why a £675 million high streets transformation fund was announced at the last Budget for all local authorities. I encourage Members to talk to their local authorities and bid for the fund. It is there to fund transformational projects that revitalise high streets and comes on top of the Treasury business rate reductions. The Government are agreeing with and backing local authorities to ensure that high streets remain the beating, vibrant hearts of communities. We are in agreement and there is financial support, through tax reductions and this fund, to support high streets. However, shopping habits are changing and retailers, high streets and planning authorities have to adapt. Business rates are only one part of the answer.
The last thing to touch on is building strong communities. We have talked about high streets and other points. Ultimately, local authorities are making people more proud of the places where they live, partly by building houses that people want to call home, whether through the new home bonus or through the lifting of the housing revenue account borrowing cap. Again, the Government are responding to what local government has asked for and delivering it for them.
The Minister is talking about devolution and the responsibility of others. The Mayor of Tees Valley has just spent up to £90 million on a loss-making airport. Does the Minister agree that that money would have been better invested in transport infrastructure that encourages investment and creates real jobs? The airport has not created any new jobs or new flights.
I think the Mayor of the Tees Valley, Ben Houchen, is doing a fantastic job of ensuring that the voice of Tees Valley is heard in this place. There has been considerable investment in developing the steelworks, the development zone and tax reliefs, which has been widely welcomed. I know that because my constituents are excited to see the rebirth of Durham Tees Valley airport. I know the airport well and I am delighted that it will now have a bright future under the stewardship of the Conservative Mayor of the Tees Valley.
We heard from the hon. Members for Poplar and Limehouse (Jim Fitzpatrick), for Bolton South East (Yasmin Qureshi) and for York Central about Government funding formulas. There is lots to say about that, but the question was raised about why homelessness is not included in the formula. The simple reason is that the amount of homelessness funding that goes through the local government finance settlement is a very small percentage of the total amount—from memory it is only £175 million. The remainder of the homelessness funding, which is several hundred million pounds, has a dedicated formula specific to it. Obviously, if that changed and a future decision was taken to roll that homelessness money into the overall local government settlement, it would demand a formula of its own. I am happy to give that reassurance.
Deprivation is in the formula and in all the areas where it makes a significant difference. Deprivation has little to do with the cost of maintaining a road or a flood defence, for example, and therefore it is not factored into those areas. Of course, it is factored into all the areas that we heard about, including adult social care and children’s social care. In answer to the hon. Member for York Central, we are working in conjunction with all those Departments to develop formulas that they are happy with.
In conclusion, we believe in local government. As we look forward to the spending review, I and the Department will be making a strong case that local government is funded properly, to do all the things it does today, as well as those it will do tomorrow. Beyond money, we will ensure local government has the power, the flexibilities and the devolution that we heard about from Dan Jarvis. Indeed, the Government are supporting that devolution with a considerable amount of money. That is the future for local government that central Government are backing. I will continue to listen to local government, learn from it and push its case in this Government.
Thank you for chairing this part of the debate, Sir Christopher. I thank my hon. Friends for their passionate speeches, in which their compassion for their communities really came through. I thank the Minister for his response. What came through to me is a lack of caring from him. I just heard words, but I do not feel compassion. I am sorry. The fact that there has not been one Conservative Member here to stand up and speak in support of the Government’s cuts to local government speaks for itself.
No, it is too late. The hon. Gentleman was not part of the debate. The reality, as expressed so compassionately by my hon. Friend Jim McMahon, is that communities are hurting: we have food banks; we have children with special needs waiting for appropriate support; and we have homelessness. That is the reality. I hear words but I do not hear compassion and care.
Question put and agreed to.
That this House
has considered local government funding.