Grahame Morris
Main Page: Grahame Morris (Labour - Easington)(10 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
Brandon Lewis
Actually, that is not an unreasonable point. Members highlight the changes in spending power between the different authorities, but they sometimes forget that some of them had high spending power in the first place. The contrast between areas like Newcastle and Windsor is very marked.
Grahame M. Morris (Easington) (Lab)
On that point about fairness, does the Minister recognise that areas like County Durham have high levels of deprivation and need? For example, the cost of looked-after children is much greater in such areas, because the numbers involved are much greater proportionally in places like Durham, Birmingham and Newcastle than in more affluent areas such as Wokingham.
Brandon Lewis
I think the hon. Gentleman will find that that is why those areas have substantially higher spending power in the first place. He should also note that a member of his own Front-Bench team supported the petition for a fairer spread between urban and rural areas a couple of months ago.
Andy Sawford
The Labour party has said that we accept the Government’s spending plans, but what we will not do is cut in such a fundamentally unfair way. I will come on to what the Labour Government will do.
Grahame M. Morris
Does my hon. Friend accept that the coalition Government are breaking the post-war consensus in which the revenue support grant was used to equalise resource allocation?
Robert Neill (Bromley and Chislehurst) (Con)
I congratulate the Minister on his speech, and I commend his statement to the House. This is a difficult settlement for anyone to have to achieve, and my hon. Friend has done it as well and efficiently as I would expect him to. It is a settlement that I would have commended to the House when I was a Minister.
I welcome the hon. Member for Corby (Andy Sawford) to his new position, but he made a disappointing speech. Frankly, it was full of wind and rhetoric, and contained very little analysis. The truth is that the Minister has delivered the best possible settlement for local government that he could in these difficult circumstances, and he has worked tirelessly to do so. I will tell the hon. Member for Corby why he is wrong. He failed to answer a question when I intervened on him earlier. While we are wedded to a four-block formula, we will always have difficulties with the way in which we deliver resource to local government. We are stuck with it for this Parliament, however, so let us be sensible and realistic about it. The Government have done the best they can in the circumstances. The paucity of imagination among Opposition Members is striking; they will not move away from that point.
Such a paucity of imagination also exists among some of our coalition colleagues. My hon. Friend the Member for North Devon (Sir Nick Harvey) has made a powerful speech, and much of his analysis was broadly correct. However, when I was the local government Minister and I sought to reform the system by giving more recognition to rurality and bringing greater efficiency into the system, I was baulked at every turn by our coalition partners, who had no desire to make any change. That is the reality of public life; we have to live with what we have.
I believe that it is wrong when an efficient local authority such as my own in Bromley—which will, I trust, freeze its council tax tonight—is not rewarded for its historical efficiency. For years, we have started from a lower base than others, yet we get no recognition for that in the spending formula. That needs consensus to be taken on board. It is offensive that we do not adequately take on board the cost of running services in rural areas, although many of us tried to do that. I was surprised that my coalition colleagues were more concerned with protecting the position of the metropolitan authorities. Sheffield and Stockport were more important to them than protecting the issues affecting their people in the south-west of England. The reality is that they were unwilling to engage in a serious debate on the reform of the four-block formula.
That is not the fault of the Minister. He has done the best he can with the hand that has been dealt to him. In a future Parliament, however, we might have to think about what we should do with local government finance. That will not be done under these coalition arrangements, and it will not be done unless we are more honest about giving incentives to local authorities to recognise hard work.
My local authority has benefited to the tune of some £5 million through the new homes bonus, because we have worked efficiently and effectively. We have sought to do that in connection with our new business rates. We have worked hard, yet I see nothing in the formula that will reward us. In the London system, we are not rewarded for our historical efficiencies, and that is wrong.
We need to take a more sensible approach in order to get through this current period. The Minister has done that fairly and efficiently, but we now need to think more sensibly about what we do in respect of a system that rewards growth and hard work, and rewards local authorities for driving up their own economic base. Some Labour Members raise their eyebrows at that, but Newham council is a local authority that has worked hard to drive up its economic base and does not get a reward under the four block system. Unless we are prepared to deal with the four block system, we are doomed to a perpetual dance around—a bit like the last act of Eugene Onegin and the Polonaise—redressing a formula that is fundamentally flawed.
Grahame M. Morris
I do not necessarily agree with the hon. Gentleman’s analysis, but does he accept that it is possible to do both: we can incentivise growth, economic development and housing development, and still address need, without the requirement to destroy the equalisation elements of the formula?
Robert Neill
I think we all accept that there will always be an element of equalisation in the formula, but if the system becomes entirely about equalisation, rather than about incentivisation, we will be getting into the wrong place in terms of bringing in market economics and growth. I want an element of equalisation in any formula—everyone does—but I say seriously to the hon. Gentleman that he misses out the importance of recognising that efficiency should be written into the formula. We are in a binary resource-versus-needs equation at the moment in the way the four blocks operate, and there is also an inefficient means within the blocks. I worked this out once and found that about 297—I may have lost a couple along the way—bits of regression and analysis in the formula are worked out. The right hon. Member for Salford and Eccles (Hazel Blears) nods, because she had to suffer about 300 in her time—we have scaled it back a bit. This is a ludicrously complicated formula, it does not get to the heart of where need is, and very often the interactions of the bits of the regression and analysis are counter-intuitive. So unless we are prepared to sit down in the new Parliament—it will not happen in this one—to examine seriously the formulation for local government finance, we will not get anywhere.
The Minister has presented a workable, sensible and effective proposal that will take us through until the general election and beyond. This House needs to take on board the fact that we will be having these same circular debates time and again unless we are radical about the need to change local government finance for the future. Such change will come after the general election, but all of us, if we are serious about local government, need to get a grip on that and be prepared to think outside the box of where we currently are. That would be in all our interests.
Mr Graham Stuart (Beverley and Holderness) (Con)
It is a pleasure to follow the right hon. Member for Salford and Eccles (Hazel Blears). She made an interesting speech, as one would expect. Many hon. Members’ speeches have been powerful, not least in suggesting the weakness of the system that guides local government funding.
There is a consensus of disappointment—albeit unspoken on Labour Benches—about the speech made on behalf of Her Majesty’s Opposition by the hon. Member for Corby (Andy Sawford). It entirely lacked any alternative narrative or suggestion, other than a platitude about the system being fairer and needing to be looked at in future, to give us an idea of what the Labour party would do. The right hon. Member for Salford and Eccles was a Minister in the previous Government, and the right hon. Member for Leeds Central (Hilary Benn) was a senior figure in that Government. After all, the previous Government led us into this calamitous financial state, meaning that today’s Ministers have to make tough and difficult choices. Her Majesty’s Opposition’s total failure to recognise responsibility for the mess that the Government inherited, or to provide any insight into the tough decisions or choices they would make if they were ever allowed back into government by the British people, was disappointing. The House deserved better, and I expected more of the hon. Member for Corby, of whom I am actually an admirer.
I am a founder of Rural Fair Share, a cross-party campaign group of MPs from both sides of the House, and I am chair of the all-party group on rural services, so I make no apology for speaking from a rural perspective. Powerful speeches have been given by my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox), the hon. Member for North Devon (Sir Nick Harvey) and my hon. Friend the Member for Newton Abbot (Anne Marie Morris). There was a very Devonian quality to much of their speeches. They spoke effectively for Devon, but also for rural areas right across this country, not least the East Riding of Yorkshire.
As has been said—I make no apology for saying this again—people in rural areas earn less than those in urban ones. The idea that people in rural areas are somehow all prosperous and wealthy compared with the massively deprived populations of urban areas is false. In truth, people on lower incomes are paying £86 more per head in council tax. That came about under the system instituted by Labour Members who talk about the cost of living crisis. It sometimes feels as though they do so with crocodile tears. They put in place a system in which poorer people pay higher levels of council tax, while their councils receive £145 less per head in central Government grant than those in urban areas, and the cost of delivering services in rural areas is higher, as my right hon. and hon. Friends have said. Look at a map: where does it cost more to empty the bins—in the city or in the vast rural area around it? It is obvious that there are cost pressures.
Grahame M. Morris
The hon. Gentleman is selling a misconception to the House. Where are services more expensive? Let us look at the numbers for looked-after children, which, as he well knows as chair of the Education Committee, cost £40,000 to £50,000. In my area of Newcastle, there are 101 looked-after children per 10,000 of the population; in Wokingham, there are 24 per 10,000. That is an example of where costs are much higher.
Mr Stuart
It is fair to point out that Wokingham is not representative of all rural areas in this country. It is a rather unhelpful comparison. However, the hon. Gentleman is right to say that urban areas involve costs, and concentrated areas of deprivation have costs. No Government Members are suggesting complete equalisation, but to have an area with more low-income people paying higher levels of tax for fewer services is not sustainable.
I know that, in his heart of hearts, the hon. Gentleman was disappointed by the speech of the hon. Member for Corby, who simply failed to explain how Labour would wrestle with the issues. The Minister is wrestling with those issues. [Interruption.] The hon. Gentleman is trying to heckle me. What we heard from him was a defence of a system that is indefensible. [Interruption.] It is indefensible to suggest that the system was based on need and that consensus had somehow been smashed. The truth is that the previous Labour Government refused to listen to voices from all parts of the House representing the rural interest. In fact, they allocated four times the weighting to population density—not deprivation, but density—than to sparsity. That was unjustifiable, but, sadly, it continues to be a fundamental part of the system today.
I, too, am pleased that there has been a minuscule increase today in the diminutive grant to rural areas from £9.5 million to £11.5 million. However, even the larger figure would not stretch to a grab bag of crisps for each resident who lives in a rural area, although that might depend on how competitive one’s local grocer is. My hon. Friend the Member for North Devon laid out just how many decades it would take to equalise the figures. Those of us who speak on behalf of rural areas simply say to the Government that we must take more action to narrow the gap. We think that the 50% rural penalty—50% more funding goes to urban areas—should be reduced to no more than 40% within five years.
We have asked for more evidence. The Government have undertaken to carry out research on the cost of rural services. I fear, as do many of my hon. Friends, that the research will look just at rural services. It must compare the costs of services across urban and rural areas. It would then be able to pick up on the point made by the hon. Member for Easington (Grahame M. Morris) about the number of children who are in care and the cost pressures that arise from that.
Not only must the funding system be dynamic and reward successful councils that promote housing and business, but it must have a baseline that genuinely reflects need. The system that Ministers are wrestling with today was inherited from the Labour party. It is not fair and it does not properly reflect need. The fact that rural communities have been penalised so much for so long just goes to show how morally bankrupt are the arguments that we have heard from the Labour party.
Grahame M. Morris (Easington) (Lab)
I want to touch on my concerns about the overall settlement and about my own area of County Durham.
I commend to hon. Members who have not seen it the excellent briefing note provided by the House of Commons Library. Frankly, any impartial observer reading it would realise that it makes a complete mockery of the local government Minister’s claim that this is a fair settlement. He suggested that those with the broadest shoulders should bear the biggest burden, but that is clearly not happening. At a time when ordinary people across the country—certainly in my constituency—are struggling with the cost of living crisis, the Prime Minister and the Secretary of State for Communities and Local Government think it is right that the most deprived communities in the country should bear the brunt of Government cuts, while the most affluent areas should escape relatively unscathed.
I say that advisedly. The revenue support grant for Durham is being cut by £28 million. It is suggested that these cuts have been applied fairly, but of the 14 councils in England that are receiving an increase, 13 have Tory MPs, four of whom are Cabinet Ministers. To my mind, this is gerrymandering of the revenue support grant, and it is targeting mainly Labour-held councils. They are the principal losers, because they are being targeted for much deeper cuts than their Conservative counterparts, and it is having a devastating impact on their ability to provide services locally.
I am amazed at the audacity of Government Members who claim that we are all in this together. During this Parliament, the 10 most deprived areas in England, including mine, are receiving cuts 10 times greater than the most affluent areas. Despite all the Government’s rhetoric about rebalancing the economy, Durham county council’s cumulative spending power is being reduced by a staggering 17.3% under this Government. The Treasury calculated that, for the period from 2011-17, £222 million is being lost. Conservative and Lib Dem Members were saying that we need to address the disparity between urban and rural areas. Members who represent affluent areas should come to my constituency; they should come to Peterlee and to Horden and see the problems that we have. They would then understand the lack of car ownership, the problems that people have in accessing services and their disadvantages.
Adult social care and children’s services account for over 60% of our expenditure. We have heard about the Barnett graph of doom, where all local government revenue will go on statutory functions, particularly social care. Many authorities, particularly in the north, will hit the buffers. The hon. and learned Member for Torridge and West Devon (Mr Cox) suggested something similar was going to happen in the south-west. It should be a cause of concern for all of us.
It has somehow been implied that we are undeserving. My late father was a coal miner. County Durham made enormous sacrifices for the nation. The county has been scarred by a legacy of coal mining, shipbuilding and steelworks. That has a legacy in people’s health that we must recognise in greater need. There is a debt of honour that the Government should recognise. Consensus on the equalisation element of the revenue support grant has existed across all parties since the war. It is a serious matter to break it.
There are alternatives. My hon. Friend the Member for Corby (Andy Sawford) mentioned the discussions that have taken place with the Local Government Association, but we should not throw the baby out with the bathwater. The Government will be putting authorities such as mine under the most intense pressure and, quite frankly, the wheels will come off. They will not be able to deliver services. This will result in children and older people in deprived areas such as mine suffering worse services than their counterparts in more affluent parts of the country. That seems to me to be a perversity.
In areas such as County Durham, with a relatively small council tax base due to low house values—some 60% or 70% of the properties in my constituency are in band A—there are problems because of the greater use of local council tax support schemes. What does that mean? It means that we have a greater reliance upon Government grants to maintain the same level of services. So when grants are cut—even in the same proportion as in affluent areas—areas such as mine suffer the most. If this is the rebalancing of the economy that the Government are trumpeting, they are ignoring the reality of people’s needs. It is Robin Hood in reverse: rewarding those living under Tory councils at the expense of those in Labour councils.