Local Government Finance (England)

Graham Stuart Excerpts

Wednesday 10th February 2016 Commons Chamber

[Greg Clark]

The right hon. Gentleman is an intelligent man, so he should go away and study the changes in the formula. When I met the former leader of his city, Sir Albert Bore, he recognised, as has the Institute for Fiscal Studies, that it is fair to proceed with an approach that looks at all the resources that are available to local councils. On that basis, his city of Birmingham, for which I have enormous ambition and regard, has benefited significantly. Of course, the transitional grant is for places that did not benefit from the changes in the formula.

[Graham Stuart (Beverley and Holderness) (Con)]

My right hon. Friend maintains a soft and genuine manner, which I admire, but I am made furious by the interventions by Labour Members, because when in power they skewed the whole system. They could not find a way to put the money into Labour areas without coming up with a falsehood. They put density into the formula at four times the weighting of sparsity, when there was no evidence whatsoever of any link between density and need. It was they who skewed the system, and it needs to be put right.

[Greg Clark]

My hon. Friend is a passionate advocate and he makes his case very well. I think that all Members across the House would recognise that after 10 years it is appropriate to look again at the cost of providing services in different areas—rural as well as urban—and at the changes in demographic pressures in that time. That sensible approach has been welcomed widely.

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[Mr Reed]

What is really worrying is that the Secretary of State does not seem to understand what is really going on in councils and in public services across the country.

Even Tory MPs were terrified of what voters would make of all this, and they threatened to vote it down. On Monday this week, the Secretary of State came to the Chamber with a fix to head off the rebellion. He announced he had found £300 million down the back of a sofa—he would not tell us where it had come from—and then handed nearly all of it to the wealthiest Tory councils as a sweetener just weeks before the council elections. Some 85% of the money will go to Tory-run areas and barely 5% to Labour-run areas, despite the fact that those Labour areas have suffered far bigger cuts since 2010. Whatever happened to the one nation Tories? What about the northern powerhouse? If the word gerrymander did not already exist, we would have to invent it to describe a fix like this.

[Graham Stuart]

The hon. Gentleman is making a powerful speech, but I think that it is factually incorrect. As he will know, rural areas tend to have the oldest populations, yet when this Prime Minister came to power, there was a 50% premium going to urban councils with much younger populations. Whatever the future might have held for them, they were not old then and they did not have the need. Rural areas did and his party did absolutely nothing.

[Mr Reed]

We need a funding formula that is based on need. The Tories have had six years to give us that and they clearly have not done it.

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[Steve Double]

I thank the hon. Lady for her intervention, but this is simply about the case that was made about rural constituencies, where the funding was going to widen the gap we had begun to close. That was the issue at stake. I am delighted that not only have funds been made available through this transitional grant to make sure that that gap does not get any wider, but, probably more importantly, we have the promise of a comprehensive review of the cost of delivering services. That gives us the opportunity to establish that it costs more to deliver services in rural areas than in urban areas.

[Graham Stuart]

My hon. Friend is right about the fundamental needs reassessment and he is right to congratulate the Secretary of State, but does he share my disappointment that, repeatedly in January, the Opposition spokesman refused to sign up to closing the gap?

[Steve Double]

I could not agree more with my hon. Friend. We need to address this issue, and this review gives us the opportunity we have asked for, time and again, to establish the true cost. Tonight, I will therefore be happy to support the Government on this motion.

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[Robert Neill]

Yes, of course. That is precisely why the Government set up the local enterprise partnerships, and why under the previous regime we set up the arrangements for top-ups and tariffs, which I hope we can simplify in future.

The simplistic idea that we cannot be, to some degree, masters of our own destiny is wrong. In particular, what seems to me utterly wrong is that a local authority such as Bromley, which has historically had the lowest unit costs per head in London, was treated on a formulaic basis in exactly the same way as local authorities that had never bothered to keep their unit costs down and which were never, therefore, driven by efficiency in the same way as we were. Once, when I commented that there was no reward for efficiency in the formula, I was told by a civil servant, “Well, Minister, surely efficiency is its own reward.” He did not grasp the concept. I am glad to say now that Ministers and officials in the Department for Communities and Local Government do grasp the concept, which should be fundamental to the way we go forward.

I welcome what has been done for Bromley, but more importantly, I ask the Secretary of State to ensure that we take forward those basic principles to the next degree so that when we get to the calculation of the needs element, I hope we will remember that there are more than simply the old-fashioned demographic trends in what constitutes needs. As has been observed, the way that needs were calculated in the past, for example, took a simplistic weighting of density as equating with deprivation. That was not the case at all. The way that both inner London and outer London have changed demonstrates that clearly.

[Graham Stuart]

Will my hon. Friend give way?

[Robert Neill]

I had better not because I need to save time.

Very often, the greatest driver of adult social care is not purely deprivation; it is age profile, as much as anything else. We need to build that sort of thing into the equation. We also need to make sure that where local authorities—

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[Graham Stuart (Beverley and Holderness) (Con)]

It is a pleasure to take part in this debate. I stood here a month ago and said that now was the time for the rural voice to be heard. A month on, I am pleased to say that the rural voice has spoken and has been heeded, at least to some extent. I pay tribute to the way in which my right hon. Friend the Secretary of State has conducted the consultation, making time for colleagues in all parts of the House and councils from all parts of the country. He has turned a consultation exercise, which can sometimes seem like a rubber-stamping exercise, into a genuine engagement with people across the country.

[Sir Greg Knight (East Yorkshire) (Con)]

I believe that my hon. Friend and I are on the same side on this matter. Does he agree that the test of a good Minister is that they are prepared to change when they are faced with a valid argument for doing so? That is what the Secretary of State has done following the representations that my hon. Friend, I and others have made. The deal may not be perfect, but does my hon. Friend agree that it is better than it was?

[Graham Stuart]

I expect that my right hon. Friend and I will always be on the same side on such matters. He is right in what he says.

One of the most important aspects of the settlement—the promise to look again fully at the needs of local government—is not actually in the settlement, and it is long overdue. As my right hon. Friend has just said, when the facts change, sometimes my opinions do, too. The fact is that this country has a fast-ageing population, as Labour Members have said, and the distribution figures show that older people are disproportionately to be found in rural, rather than urban, areas—[Interruption.] Some people are saying “Nonsense!” and “Rubbish!” I do not know what dataset they have, but just as there is a massive discrepancy between the amounts per head for rural and urban areas—it was 50% when Labour left power, and it is 45% now—

[Liz Kendall]

Nobody from the Opposition is denying that elderly people live in rural areas, but does the hon. Gentleman agree that we have to consider those people’s ability to pay? The most deprived areas have the greatest need for publicly funded care. Does he not agree that that must be part of the equation?

[Graham Stuart]

Some of the hon. Lady’s colleagues deny that the people in rural areas are older, on average, than those in urban areas. They shouted “Rubbish!” just moments ago when I asserted that, even though the shadow Minister acknowledged it in his speech in January. People are, on average, older in rural areas, and the hon. Lady is clearly unaware of—or, like too many of her colleagues, closes her ears to—the fact that people in rural areas are, on average, poorer than those in urban areas. Average earnings based on residence are lower in rural areas than in urban areas. Average earnings based on place of employment are lower in rural areas than in urban areas. That is not to say that centres of real deprivation do not need special and specific support, but to generalise that the poor burghers of Sheffield are all on the breadline, whereas everyone in Withernsea in my constituency is living it up in some rich, prosperous rural idyll, is nonsense. I know that the hon. Member for Leicester West (Liz Kendall) would not do that, but too much of the Labour party’s argument has suggested otherwise, as has much of today’s debate.

If we are to move to a fair system, we must recognise how iniquitous it was of the Labour Government to use density to drive funding to wealthier, younger, less needy urban areas. The Labour party is now screaming about an adjustment that recognises an ageing population, predominantly based in rural areas, who are also poorer. Those are the facts; if they are not, I will happily take another intervention from the hon. Ladies who shouted “Rubbish!” at me. The Labour party was shameful in skewing the funding formulae. It is equally shameless now in pretending that my right hon. Friend the Secretary of State is being unfair in dealing with the mess that the previous Labour Government left behind and making the tough decisions that he has to make.

In a less partisan spirit, I say to Members from all parts of the House that we must work together on the needs assessment to embed efficiency, not dependency and incompetence, and to recognise hard need such as an ageing population. Someone who is relatively healthy but old has—guess what?—higher health needs and higher social care needs. They are entwined, as colleagues from all parts of the House have said. They are predominantly less well funded in rural areas than in urban areas, so there is greater need. The Labour party should hang its head in shame at the fact that it turned its face utterly against that clear and present need. If the party apologised, as it should, for doing so, it would have much more traction in the debate to appeal for a fair and proper settlement.

[Mrs Helen Grant (Maidstone and The Weald) (Con)]

My hon. Friend is making a very good point. Does he agree that the review needs to take place sooner rather than later—there must not be any delay—and that it must cover all needs, including the demographics, which is very important in rural areas?

[Graham Stuart]

I pay tribute to my hon. Friend, who has been a champion of the rural interest, along with so many other colleagues, in arguing for a fair settlement. In the rural fair share campaign, which has always been a cross-party campaign, we have been clear that we want something that is fair to all.

The reason I have been so confrontational with Labour colleagues is that I am starting to hear the old untruths coming out, such as the suggestion that there is a difference, as the hon. Member for Oldham West and Royton (Jim McMahon) described it, between some phenomenally wealthy Trafford and some downtrodden Oldham, and that the allocation of money is utterly unfair. Of course the people taking the biggest percentage reductions in the Government grant were predominantly, in the original settlement, rural areas. Mets were getting an average reduction of 19% and rural areas were seeing cuts of 30%-plus in their Government-supported spending. That is the truth: those are the facts in the data table. Yet, to listen to the hon. Gentleman, one would think the opposite was true. He puts forward the entirely false argument that the cuts are somehow unfair. Transitional arrangements are put in place to soften the blow.

We now have the opportunity—I must say that I congratulate my right hon. Friend the Secretary of State—for all of us, on both sides of the House, to move to a settlement that is fair to rural and urban areas alike and to Labour and Conservative areas alike. Never ever again must we have a Government who, for partisan purposes, put in place a skewed and unfair formula in the outrageous, shameless and shameful way that the Labour Government did during their 13 years.

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[Dr Blackman-Woods]

I am grateful to my hon. Friend for confirming what I have just said. Those of us in Durham think that the settlement is absolutely shocking because, once again, it hits hardest those councils with the greatest problems and highest levels of disadvantage, such as Durham. I had hoped that the Secretary of State’s comments on Monday would go some way to addressing the balance in favour of areas with the highest need, but I am afraid there was not a glimmer of that. Given the Government’s record of unfairness and widening inequalities, it is perhaps not surprising that the settlement massively favours Conservative councils. In fact, 87% of the funding announced on Monday is going to Tory councils.

[Graham Stuart]

Will the hon. Lady give way?

[Dr Blackman-Woods]

I am not going to give way to the hon. Gentleman, because he would not take an intervention from me.

The only north-east council to benefit from the £150 million additional funding announced on Monday is Northumberland. That is staggering, especially as Durham is also a substantially rural area. It is odd, then, that Northumberland is the only council to benefit from the rural fund. Indeed, if we look across the country, the areas to benefit most are Surrey, with £11.9 million; Hampshire, with £9.4 million; North Yorkshire, with £9.2 million; and Devon, with £8.3 million. Examples of the reduction in core spending tell a similar story: Durham had a reduction of minus 4.1%; Newcastle minus 4.4%; and Sunderland minus 4.3%. Compare that with Surrey, which has a decrease of only minus 1.1% and North Yorkshire minus 0.3%.

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[Kevin Foster]

There may be nothing false about the issues, but it is somewhat false to come into this Chamber and complain about reductions in local government funding, when Labour Members had an opportunity to change the situation in their manifesto but failed to do so.

[Graham Stuart]

My hon. Friend may want to reflect on the fact that the reductions in Government grant and Government spending power over this Parliament to the original settlement in Durham amounted to 19.6%, yet rural areas were seeing reductions of 30%-plus. That is why Durham did not receive transitional relief—because it was not among the councils that were suffering the most. It is a simple concept, but Labour Members have misrepresented it—and yet again they should be ashamed of themselves.

[Kevin Foster]

I thank my hon. Friend for bringing his usual laser-like precision to the debate. It is interesting to reflect on some things, and I expect some council leaders will be reflecting on the old floors and ceilings that used to exist in local government funding as a means of altering the assessments.

I therefore find some of the fury we have heard this afternoon to be somewhat unconvincing and fairly fake, given the absence of proposals for any extra funding. When the Government are being attacked and the Secretary of State offers to intervene, the refusal to accept it just about says it all.

I am pleased about aspects such as the coastal community fund and some of the other funding and support that is coming in. I am most pleased to see a Government who are prepared to let councils get on with their work and reward those that deliver economic regeneration, as well as a Government who are delivering an economy that will provide benefits to local people. Ultimately, this is a Government with the vision to take the country forward rather than a vision for attacks and a lot of hot air. When it comes down to it, the Chancellor put up a manifesto, put up a commitment and said where it was going to be paid from—yet nothing came forward from Labour.

[Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)]

Let me tell the hon. Member for Torbay (Kevin Foster) that this is an issue about distribution and the unfairness of the distribution of these cuts. Some parts of the country that have the greatest social and economic need, such as Liverpool, are facing the biggest cuts yet again. That is what Labour Members are genuinely very angry about, reflecting the anger in the communities we represent.

My hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) has already spoken about the challenges that we face in Liverpool. I join her in paying tribute to the mayor of Liverpool, Joe Anderson, who has done a fantastic job in leading Liverpool over the last six years. Where did he start? He started with efficiencies. Efficiencies could be made, and he made them. Then he turned to innovation. He made a city deal with the Government that enabled him to rebuild or refurbish 12 schools that had lost out when the Government cancelled Building Schools for the Future. He took the lead, working with other council leaders in Merseyside, in securing city region devolution.

It is not a question of a choice between efficiency and innovation on the one hand and cuts on the other. Liverpool is facing up to the challenges, but even with efficiencies and innovation, its funding from central Government has been cut by 58%. That is simply not tenable. It is simply not possible to balance the books without harming front-line services.

That brings me to the £300 million of Government transitional support. Conservative Members have made legitimate points about rural payments. Rural poverty is undoubtedly a real issue, as is an ageing population, but if that is what the transitional money is about, why on earth is Surrey the biggest beneficiary of the additional money? It is not going to the poorest rural areas. Despite that 58% cut in central Government funding, Liverpool will not receive a penny, while Surrey will receive a substantial amount.

Let us have a fair system of funding. I do not want to talk about “urban versus rural”, because this should be about need and deprivation. Yes, there is deprivation in rural areas, but there is also considerable deprivation in constituencies like mine. I want to ensure that there is fairness and justice in the treatment of different types of authority, but hitting a council like Liverpool with a 58% cut and then providing no transitional support does not strike me as reasonable.

[Graham Stuart]

According to the figures that I have seen, the average cuts in Government-funded spending power in this Parliament will be 19% in metropolitan areas and 30% in rural areas, and the figure for Liverpool is just over 15%. Where did the hon. Gentleman find his figure of 58%?

[Stephen Twigg]

I am talking about the actual reductions in Liverpool’s actual funding from central Government. However, the hon. Gentleman has helped me by bringing me to my next point, which other Members have already made today.

In areas with greater social and economic needs and higher levels of poverty, such as my constituency, the council tax base is such that allowing local authorities to increase council tax simply does not have the impact that it has in Surrey and some of the wealthier London boroughs. My hon. Friend the Member for Liverpool, Riverside spoke about social care. The increase in council tax that Liverpool has been allowed will enable us to raise £2.7 million. That is better than nothing, but the city’s social care budget has been reduced by £90 million since 2010. We can raise £2.7 million, but the gap is still £90 million.

My hon. Friend the Member for Leicester West (Liz Kendall) made the important point that, while we must take account of demographics and the number of older people in each area, we must also take account of ability to pay. One Member mentioned the number of people aged over 85 in one of his constituency wards. Clearly that brings pressures, but life expectancy in poorer parts of the country is such that not many people live until they are 85. Those are the kind of pressures caused by an ageing population that are faced in areas of high poverty, and they are different from those that are faced in other parts of the country.

I urge the Minister and the Secretary of State to think again, and, in particular, to take up the excellent suggestion made by my hon. Friend the Member for Leicester West and make the better care fund money available immediately. That could at least help us with what is an emerging social care crisis. As a number of my hon. Friends have said, it is a human crisis not just in terms of the provision of social care, but in terms of the additional pressure that is placed on our health service.

I am hopeful that devolution for the Liverpool city region will bring many benefits, but those benefits are more than cancelled out by the scale of the cuts, which are simply unfair because they hit the poorest parts of the country—constituencies like mine—much harder than the rest.

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[Simon Hoare (North Dorset) (Con)]

It is a pleasure to follow the hon. Member for Denton and Reddish (Andrew Gwynne). I concur with him and share his thanks to councillors and council officers, of all politics and none, for the work that they do, day in, day out, on behalf of their communities across the country.

To listen to Opposition Members, one would have thought that the settlements for their areas had been stripped away in order to adjust ours. Had that been the case, I would have shared their anger, but it is not the case. No draft settlement that was announced in December has been driven downwards. The Department and the Treasury, to whom thanks must be due, have found additional money. I find myself asking this question, because I am not convinced by the synthetic froth of anger that we are hearing from Opposition Members. Where were they—with the honourable exception of the shadow Minister and the hon. Member for Workington (Sue Hayman)—for the debate on the local government settlement just a few weeks ago? They were not here. They thought that they had got away scot-free, and that our areas were getting the clobbering. They have suddenly woken up and taken an interest in this situation.

[Graham Stuart]

My hon. Friend is right that it is a synthetic froth. Let us take Tameside and Trafford. In the original settlement, Trafford was facing a 28% reduction in Government-funded spending power, against 19% in Tameside. Surrey was facing a 54% cut—I would never normally speak up for Surrey—so it is no wonder that it got some transitional relief.

[Simon Hoare]

My hon. Friend is right. Frankly, the Opposition party has been rumbled on this. Let us not kid ourselves, this remains, even after the welcome announcement made by the Minister on Monday, a tough settlement. It leaves an unfair and unsustainable gap between funding for rural and urban areas. That continues. It has just been made a little less tough. There is no golden goose being given to Tory local government.