Local Government Finance

Debate between Jake Berry and Kevan Jones

Wednesday 5th February 2020 Commons Chamber

[Jake Berry]

I am very pleased that we are making such good progress in south Yorkshire. The hon. Gentleman and I, along with many colleagues across the House, welcome that. He is correct to say that mayoral combined authorities have retained their 100% business rate retention for next year. Following the successful pilots, including in areas such as Lancashire—the hon. Member for Blackburn (Kate Hollern) and I have benefited from that—any further business rate retention will be part of the spending review process.

Devolution is particularly pertinent to areas such as south Yorkshire. Every deal so far has been bespoke, but as part of our ambition to level up powers we have written to every existing regional Mayor and asked them to take on new powers so that they can truly drive the ambition for the region. I am delighted to tell the House that one of the first to respond was Ben Houchen, the Mayor for Tees Valley. Not only has he made the Tees fly again, by saving Tees Valley airport; he is also making his economy fly again, by working with the Government on a suite of new powers to unleash the full potential of Teesside and everyone who lives there. In addition, the Government are talking to Cumbria, West Yorkshire, East Riding, Hull, County Durham and Lancashire about their ambitions for change in their areas.

Already, 50% of communities in the north have, to coin a phrase, taken back control through devolution. More areas want to be part of our devolution revolution, and we will ensure that they get that opportunity. Later this year, the Government will publish their devolution White Paper, setting out the Government’s ambition for full devolution across England. Through this White Paper, we will work with everyone in our local government family to ensure that they are truly empowered to be partners in growth.

As this Government unite and level up cities, towns and coastal and rural areas across our country, we acknowledge that our town centres are absolutely at the heart of a growing economy. They are the ground on which local jobs are created and small businesses are nurtured, and they inject billions of pounds into the local economy. That is why, through our £3.6 billion town deal fund, we are directly intervening in local communities. We are working with local areas and councils on more than 200 investment plans that have the potential to transform their economies.

The local Member of Parliament is able to sit on the town deal board in each and every one of our town deal areas. That ensures that Members of Parliament from across this House, whichever party they represent, have the opportunity to be an active part of the conversation in driving local growth in their communities. This is a new approach that I cannot recall previous Governments taking. It is about drawing on the talents of every single Member of this House with a town deal.

I now want to briefly mention the hon. Member for St Helens North (Conor McGinn)—this will probably ruin his career. He attended his first town board meeting on 23 January. He then approached me just outside the Division Lobby, fizzing with enthusiasm.

[Mr Kevan Jones]

On a point of order, Mr Speaker. I might be wrong but I thought this debate was entitled “Local Government Finance”. My hon. Friend the Member for Denton and Reddish (Andrew Gwynne) on the Front Bench made a very good speech about finance, but we have heard very little about it from the Minister, who has talked instead about devolution and other things to do with local government. Could I have some advice, please?

[Mr Speaker]

I think if we look in detail at both speeches, we will see that they are around the finance package and the delivery of different projects. I think there is an interconnection there, but I am sure that if we did drift too far the Minister would come straight back into line. For the moment, I am more than happy.

--- Later in debate ---

[Jake Berry]

If we double the council tax that is paid by local people, then I will start to take lectures from the hon. Gentleman about what we should do. He should remember his own record. He entered Parliament in 2005 and was here when all this was happening; perhaps he would like to recall that.

Taken as a whole, this protection will mean that we see the lowest average council tax rise since 2016, ensuring that taxpayers continue to receive the breadth and quality of services that they enjoy today without, as they had under former Labour Administrations, the imposition of crippling tax hikes and rocketing monthly bills.

As we look towards future settlements, the Government intend to conduct a full multi-year spending review. We are already putting more money in this year, but the spending review will give us the opportunity once again to look at pressures in the round and provide councils with the certainty they need. We have committed to a fundamental review of business rates. As part of that work, we will need to consider carefully the link between the review and retention by local councils. We will of course continue to discuss that and the future direction with our partners in local authorities.

Everyone in this House wants to refresh the way we allocate funding, so that it reflects the most up-to-date needs and resources of local areas. That is key work to achieve the agenda set out by the Prime Minister, because dealing with local government finance is part of levelling up our entire country. We have made good progress with the review of relative needs and resources—or the fair funding review, as it is known—and I want to take this opportunity to thank Members on both sides of the House, some of whom have made constructive contributions to the process. The direction of the review has been welcomed by many, including many in local government, but now we have to deliver a sustainable approach, and we look forward to continuing to work with the whole sector.

The review is a large and complex project. Expectations are high on all sides, which is why we are committed to sharing emerging results with local government as soon as possible. We plan to share significant elements for technical discussions in the coming weeks and months. That will include formulas in the review that represent a majority of local government spending. However, I should remind Members that needs formulas represent only a small aspect of the review. As the LGA pointed out, it is simply not possible to predict the overall outcome for individual local authorities or groups of authorities and therefore the extent to which funding may move between authorities. Of course, we will need to consider the review in the context of the outcome of the planned spending review. We look forward to working with colleagues and sharing those results with the sector and the House shortly. I also look forward to updating the House once we have finalised proposals for our new and exciting settlement for local government. Finally—

[Mr Kevan Jones]

Hooray!

[Jake Berry]

I have more—I can keep going.

I welcome the subject of today’s debate, because it gives us an opportunity to look at the exciting programme that this Government have for devolution, levelling up and supporting our towns. However, it would be remiss of any Member not to take this opportunity to thank everyone who works in local government. I often feel that being a councillor is a thankless task, and I want to ensure that they hear a clear message from this House today that, on a cross-party basis, we thank them and support them in their work. Of course, councils are not just run by locally elected politicians. They have fantastic officers who support the work of the council and local communities. [Interruption.] While the Labour party seems to think it is funny that I want to thank people who work in local authorities for their work, Conservative Members think that it is important to do so.

--- Later in debate ---

[Mr Jones]

I will give way in a minute.

They don’t, because, for example, in County Durham over 50% of our properties are in band A, so, no matter how much we put up the council tax, we will not—unlike more affluent areas, with larger numbers of Ds, Cs and even Gs in some cases—be able to bridge the gap that has resulted from the withdrawal of core funding.

[Jake Berry]

Will the right hon. Gentleman give way?

[Mr Jones]

I give way first to my hon. Friend, as I always call him—the hon. Member for Thirsk and Malton (Kevin Hollinrake).

[Mr Jones]

Yes, but I have to say that in the hon. Gentleman’s area, North Yorkshire, the ability to raise council taxes is a lot better than in County Durham and others. I am not talking about a metropolitan council; I am talking about County Durham. In Surrey—Woking—and other areas in the south, the core spending has not been reduced at all. So the hon. Gentleman should be shouting from the rooftops about the unfairness of the current formula.

The other issue—

[Jake Berry]

rose—

[Mr Jones]

I will give way in a minute; I know the Minister gets very excited when I make speeches.

The other issue is the ability of local councils to raise finance through, for example, the distribution of business rates. To be fair to County Durham, it is trying some ambitious plans for economic development to get business rates up, but Durham’s ability to raise extra funding through business activity is not at all comparable with that of, for example, the City of Westminster.

[Jake Berry]

I just wonder if I could recommend to the right hon. Gentleman’s reading the Government’s December 2018 fairer funding review consultation, in which we specifically deal with the point he has raised about differing council tax bases. So it is not correct to say that this is not dealt with in the fairer funding review. The relevant paragraph is 3.2.2 on page 50 of the December 2018 consultation document.

[Mr Jones]

The Minister says that, but then he actually has a situation such as the following one, based on the funding figures put out at the moment—I accept we have not had the final decision. Under the formula for public health funding—and I supported public health funding going back to local councils—County Durham was forecast to lose £19 million, or 35% of its budget, whereas Surrey will increase its budget by £14 million. I am sorry, but that just cannot be right when comparing the two areas in terms of deprivation and health needs. The Minister may say what he likes, but in the past 10 years that has been the direction of travel. If he levels it up and changes it suddenly as Northern Powerhouse Minister, he will have my 100% support, but I doubt whether he will be able to do that. The promises that he and others have made to northern councils are going to be very limited.

On the point about need, there are two areas with which all local councils have been struggling—adult social care and looked-after children. Again, to work on the basis that need for all councils in those areas is the same is to start from the wrong premise. For example, since 2010 demand for children’s social care has increased by £7.2 billion but central Government support has halved. That has pushed demand on to local councils, which have had to make very difficult decisions. As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, these services are not optional—they must be provided, by law. If we look at the national figures, in 2010, 54 children per 10,000 of population were in social care. By 2019, that had risen to 65—an increase of 20%. If we look at the figures for the north-east, the figure is 101 children in care per 10,000 of population. In the south-east of England, the figure is 53, and in Surrey there are only 37 children in care per 10,000 of population.

The demand on councils such as County Durham and others in the north-east, and in other urban areas, is far greater than it is on Surrey. Demand for statutory services, which councils have to provide, is going up and they are very costly. At the same time, core funding from the Government is being taken away from some areas and redistributed to areas such as Surrey, which is not just flatlining but receiving an increase in funding. I am sorry, but that just cannot be fair.

I said at the start of my speech that the direction of travel has been pork barrel politics of the worst type, doling out money to people who vote Conservative in certain parts of the country. The problem for the Conservative party is that the pork barrel has got bigger. The big test will be whether the Government can actually spread that around the country and meet all the pledges they have made. I doubt whether they can, because this has not just happened in local government funding. On fire and police, the direction of travel has not just been cuts, but moving revenue collection to local taxpayers. For example, the Government announced an increase in the amount of money going into policing, but that has been moved on to local taxpayers. Councils like Durham County Council are less able, because of their council tax base, to raise that type of financing.

I do not like using the phrase “fairer funding formula review”, because I do not think it is that at all. I doubt whether the new system will be, either. A lot of promises have been made and we shall have to wait and see whether they will actually be met. I will work with anyone to ensure that County Durham gets a fair hearing. I am sad that my new Conservative colleagues are not here today to join me in demanding fairer funding for County Durham, but I will certainly press the case for County Durham to receive the fair funding deal it wants.

I will end with a point raised by the Minister. I came from local government. I was a councillor for 11 years. I respect, and am very grateful for, the work done by councillors of all parties. They are remunerated at a very low level for the amount of work they do. However, I find it a bit difficult to take it from this Government, who have demonised certain people in local government over the past few years and used them as scapegoats for decisions that have been taken—[Interruption.] The Minister says codswallop, but I remember—as I am sure we will witness again in the next few weeks in the local government elections—the Government using the issue of pay and so on in local government to argue that local councils were being profligate. Those are diversionary tactics to remove attention from the core issue, which is that the Government have decimated local government over the past 10 years. We shall wait and see happens in the review, but I shall continue to make the case to ensure that the people of County Durham get the funding and services they require from what is a very good council, and to ensure that the Government have a formula funding that is not only fair but equal across the country, and recognises need.