Local Government Funding

Paul Sweeney Excerpts

Wednesday 27th March 2019 Westminster Hall

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

I congratulate my hon. Friend the Member for Colne Valley (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.

[Ged Killen (Rutherglen and Hamilton West) (Lab/Co-op)]

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?

[Mr Sweeney]

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.

[Faisal Rashid]

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?

--- Later in debate ---

[Mr Sweeney]

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 the Member for Rutherglen and Hamilton West (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.