Local Government Finance (England)

Lisa Nandy Excerpts

Wednesday 9th February 2022 Commons Chamber

[Lisa Nandy (Wigan) (Lab)]

I enjoyed the Secretary of State’s debate with himself on what I was about to say; let me try to enlighten him. I must say, having treated us to a lecture about the causes of the global financial crash and the reasons for the deep and harsh cuts inflicted on our communities in the past 12 years of Conservative Government, he struck a different tone from that struck yesterday with northern leaders at the convention of the north. When he was challenged by the Liverpool Echo about whether the Government accepted that they—and he personally—played a role in the problems that he has been dispatched to solve, he said:

“You can never know with…hindsight whether”

those decisions “were judged just right”. I will leave it to Members to decide whether the Secretary of State is saying one thing to the House and another to the north of England. To misquote Eminem, “Will the real Secretary of State please stand up?”

The trouble is that the core spending power that the Secretary of State has trumpeted in press releases comes from our pockets. Bills have gone up and shopping costs more, so, as he should well know, people across the country are trying to keep their heads above water. Surely he can see the problem with the settlement that he has brought to the House today. For a decade, people have had money stripped out of their places and taken out of their pockets by the Government. The council tax rebate does not compensate us for that; nor does his settlement for councils. He has given us a partial refund on our money and asked us to be grateful.

Unsurprisingly, the Secretary of State was not asking people to be grateful for that last week when he was touring the country trying to sell his White Paper to a sceptical public. He did not say to people in Grimsby, Blackpool and Liverpool that this is the offer on the table from the Government: they can pay more to stand still or pay the same and get less. For all the gloss on this announcement, he is continuing to cut the central fund to councils in real terms, so, if places want to get the spending power that he promised, taxes will have to go up. That is a direct consequence of the decisions made by Ministers and the Tory Government.

[Mr Kevan Jones]

Does my hon. Friend agree that it is actually worse than that? For local authority funding, in the last 10 years—we continue to have it today—we have had a movement away from central Government funding and on to local council taxpayers, and areas such as County Durham, where 56% of properties are in band A, are severely limited in their ability to raise that revenue, whereas areas such as Surrey can raise a lot more. The net effect is a movement of resources away from areas such as County Durham to places such as Surrey.

[Lisa Nandy]

My right hon. Friend is exactly right. Worse than that, it is at a time when people can least afford to bear it. Walk into any community in any part of the country and we find people talking about the impact of runaway inflation under the Government and their inability to pay their gas and electricity bills and meet the costs of the weekly shop. How can the Secretary of State look them in the eye and tell them that he is forcing council tax rises on them of 3% in just a few months’ time, and that is on top of the increases in national insurance that his Government are so determined to bring in?

In 2019, the Secretary of State promised that people will keep more of what they earn and more will be invested in public services. That was an election promise, and it turns out that neither of those things is true. In the past seven years, the proportion of funding for local councils from central Government has nearly halved. The Government are doing less, so people are having to do more, and they have made people pay £10 billion more in council tax this decade.

Just yesterday, the Secretary of State was in Liverpool telling our northern leaders that they should

“judge us on our actions in the future.”

How about we judge him on his actions right now? How on earth did he get here—a Conservative politician, who once promised that hard-working people would keep more of what they earn under a Conservative Government, throwing new taxes on struggling families like confetti and treating the British public like a cash machine? This is the consequence of a high-tax, low-growth Government, and in every community people are paying the highest possible price for this Tory Government.

How can the Government have got their priorities so wrong? This week, BP announced £10 billion in profits, but while we said that oil and gas companies should pay more in tax so people could keep more of their own money—remember that phrase?—the Secretary of State backs the oil giants, and all this Government have done is offer families a dodgy loan to ease the pain now and to be paid back later. They have stripped £15 billion from our councils over the last decade, and in the last couple of weeks, with one stroke of a pen, they wrote off £13 billion of our money to fraudsters and dodgy contractors.

Where is the investment we were promised? Even after getting levelling-up funding, in 144 areas, people are £50 million worse off. North-east Lincolnshire, Dudley and Hyndburn have all lost under his deal. Blackpool, which the Secretary of State visited last week—and it is a town, by the way, not a city, if he wants to let the Prime Minister know—is down 1.92% in real-terms in funding to its council. Does he not understand what councils are dealing with? We are still in a pandemic, and these are the people who stepped up to run test and trace services when the Government failed. These are the heroic people—the council workers, the public health workers, the NHS workers—who rolled out the vaccine in record time.

Two days ago, the Government cut the public health grant in real terms, telling councils to pick up the slack. These are the same councils that have a half a billion pound funding shortfall for children with special educational needs. Remember the Sure Starts that the right hon. Gentleman closed—over 1,000 of them across the country—when he was the Education Secretary? Remember the time he lost a High Court battle for slashing funding for nursery children? On his watch, he set in train a process that saw spending on vulnerable children fall by half over this decade.

Actions have consequences. The Secretary of State said yesterday that he understood why we would be cynical about a Government Minister coming and promising us the earth. Well, we are not cynical; we are furious. We are still paying for what he did as Education Secretary, so when he rocks up and tells us that we can have less to do more, and talks about renaissance Florence and the rise and fall of the Roman empire, we have had enough. Our local leaders, meanwhile, are living in the real world—grappling with climate change and rising transport costs—and having to compensate for what the Government have taken from us and our communities, with all the added costs that come from inflation at a 30-year high.

The Secretary of State must know that by far the biggest factor driving up costs is the crippling cost of social care. We have just had an exchange about that in the House, because it affects every single community in this country. However, this is also at the heart of levelling up, because it is our towns that are ageing as good jobs have left and young people have had to get out to get on. These are the places where pressure on social care is most acute, but they are also the places where property prices are lower and the rise in council tax that he is promoting and forcing on people across this country produces the least. When his Department steps down, as it is doing today, these are the places least able to step up.

That is how we get a settlement in which parts of this country have fallen further and further behind while others have pulled further and further ahead. This is what he was tasked with fixing. That is before we even consider that, for six years now, the Government have been wasting our time, announcing and re-announcing intentions to review the system, yet all we have again for the fourth year in a row is a one-year settlement.

“Levelling up requires a focused long-term plan of action”.

Those are not my words, Mr Speaker, but those of the Secretary of State in his White Paper that he published last week.

We are getting sick and tired of the spin and the hype. Levelling up surely has to mean levelling with us and being honest about what this Government are doing. We are getting big promises and nothing to show for it. People are not fools, though; they can see through the shine, through the press releases, and see that life is getting harder and harder under this Conservative Government. Today should have been the day when the Secretary of State set that right, but instead he came with more of the hype, more of the slogans and more of the spin. It will not do.

--- Later in debate ---

[Mike Amesbury]

I must move on—I have acknowledged the hon. Gentleman.

My hon. Friend the Member for Sheffield South East (Mr Betts), who chairs the Select Committee, referred to the political choice of austerity over a 10-year period and the stark consequences for Sheffield City Council—I think £3 billion was cut from the council. My right hon. Friend the Member for Knowsley (Sir George Howarth) referred to the need for three-year settlements. I believe we are now in the fourth year of one-year settlements. How can we plan resources effectively—how can we plan for the future and invest in early years—when we have continued one-year settlements?

The hon. Member for Bromley and Chislehurst (Sir Robert Neill) rightly referred to the need for genuine fiscal and financial devolution, and I concur. The hon. Member for Westmorland and Lonsdale (Tim Farron) spoke about the public health grant, which is being reduced in real terms, and the pressures on mental health. My hon. Friend the Member for Harrow West (Gareth Thomas) referred to devolution, concurring with the hon. Member for Bromley and Chislehurst. My right hon. Friend the Member for North Durham (Mr Jones) referred to the cut of more than 50%, as measured by the National Audit Office, that has been imposed over the past 10 years in communities up and down the country.

If the levelling-up White Paper did not already out the Department as being devoid of any real ambition or strategy to better the lives of people across our regions, this settlement is the confirmation. It might not be 300 pages, and I might not have learned much about the last 10,000 years of urban settlements, but it once again reminds us that this Government do not truly back our communities, do not back our councils and certainly do not back our country. No wonder that Tory councillor and Local Government Association Chairman James Jamieson, whom the Secretary of State phones on a regular basis—

[Lisa Nandy]

Every morning.

[Mike Amesbury]

Every morning, I think. No wonder he stated that he was disappointed that council tax went up by a massive 31% between 2010 and 2021 while the area base grant has been cut, on average, by 37%. Tory Ministers have just piled the pain on to hard-pressed families, who pay more while receiving fewer services that are vital to making life work in our communities.

The Secretary of State has been waxing lyrical about the core spending power. Does he think that our residents, communities and constituents have missed the fact that inflation is at its highest for 30 years? Taking that into account outs this settlement for what it is: a 2.2% reduction compared with last year. It is a settlement that assumes local authorities will all raise council tax by the maximum amount without needing a referendum, meaning that councils will have to choose whether to raise much-needed funding while being well aware of the real financial pressures on households. The social care precept on top of the social care levy create a double whammy of taxation for residents, while providing insufficient resources for adult social care, according to the Tory leader of Surrey County Council. Indeed, the hon. Member for Bromley and Chislehurst raised exactly that point.

The draft of the settlement also came with another announcement, because the Government have once again kicked local government finance reform—the fairer funding review—into the long grass. It is desperately needed. Council tax as the main source of local authority income, as hon. Members across the House have said, is inherently unfair and regressive. We need that funding review very soon indeed.

The reform of business rates is another thing that we apparently will not see this year. We desperately need a new system that reflects the modern nature of business, that has some relation with money that goes through the till, that rebalances our high street versus online, and that boosts local economies rather than stifling them. However, we are of course not getting that. Could there be a clearer sign that the Government do not have a real plan?

The Secretary of State mentioned the announcement earlier this month of the £150 council tax rebate. We would very much like to see the detail of that, because we have had little so far. Indeed, our councils’ financial officers and leaders have had little information. How are councils to be involved in handing out that money? Will it be by cash, cheque or electronic payment? In some areas, such as Manchester, 49% of residents do not pay by direct debit, so there are some real practical difficulties there. Have the Secretary of State or the Minister estimated how much the administration will cost?

These woefully inadequate short-term fixes will not stop the cost of living crisis. The Government choosing to put taxes up on working people—the Government cannot escape the fact that they are now at a 70-year high—while cutting benefits and utterly failing to tackle rising food and energy bills simply pushes more people into poverty. Of course, the money is spare change compared with the £15 billion that our communities have had taken away over the last 12 years. Finances have gone that could have kept vital services open. Instead, the public now do not have 921 libraries, over 1,000 children’s centres and 368 swimming pools, to name but a few. The public health grant has been cut, but we are not quite out of the covid/omicron crisis at the moment. Real-terms increases are desperately needed.

We do not have a Secretary of State for Levelling Up; he is quite rapidly becoming the Minister for closing down, boarding up and laying off. The Government have kept our regional towns and cities down and held them back. No wonder this week’s newspapers representing communities across the north used their front pages to plead with the Secretary of State not to leave them behind, after 12 years. They pointed out the fact—this is a damning indictment of the inequality under this Government—that a baby girl born in Salford will, on average, die 10 years earlier than one born in the Secretary of State’s Surrey constituency. I know that he will not be at all proud of that fact, but he really needs to do something about it.

In conclusion, the sad truth is that the Government have left people and communities behind for over 12 years. We now know that they simply do not have a plan to change; they just have a scorecard with 12 mission statements of failure over the last 12 years. We know that, as a nation, we can do better than this. Any genuine levelling up of our communities will chiefly be delivered by local authorities. They need three-year settlements. The funding needs to be adequate, with long-term resources, devolved freedoms and budgets that reflect the work that local authorities put into their communities—communities that are genuinely powered up to deliver the fair and green future that our constituents and our nation require.