Local Government Finance

Rachael Maskell Excerpts

Wednesday 7th February 2024 Commons Chamber

[Rachael Maskell (York Central) (Lab/Co-op)]

It is always a pleasure to listen to the hon. Member for Ruislip, Northwood and Pinner (David Simmonds), and to all hon. Members who have made the case for the real reform we are seeking from the Minister today. I appreciate his listening to the debate.

City of York Council is a small authority, but like so many, it is on its knees. The last Lib Dem-Green administration drained the reserves, and therefore real pressure has been put on the new Labour administration. I am grateful to Councillor Claire Douglas, who has taken up the leadership in York, for her work to try to address the big issues of inequality facing our city by driving through innovation—not least the already-delivered lifting of the blue badge ban, delivering free school meals into schools where there is the greatest deprivation, and reforming services.

However, it is apparent to us all that not only is local authority funding insufficient, but the funding formula itself needs addressing. It is just sad that we have had to wait 14 years to get to this point. We really need that reform to be brought forward, and I agree that if there can be cross-party talks—even at this late hour—we would welcome them, because meeting statutory requirements will clearly be incredibly challenging for all local authorities. While York, unlike other authorities, will scrape through this year and avoid a section 114 notice, we know that the starvation of funds from central Government has meant that the city is under significant stress.

If we do not address the funding formula, we are all going to struggle, and this is not just about local government. The design of the formula and how it operates crosses all areas, and therefore I ask the Minister to consider it with other colleagues. It is not working for health, education, the police, fire, or the broad rental market area, which I will turn to shortly. That puts more and more pressure on local government, as it has to integrate its services more with those of others while addressing all the challenges.

York is by no means the poorest place, but it is by no means the most affluent. We are a post-industrial city in the north and experience many challenges, yet we are the worst-funded upper-tier authority if all the services are added together. That does not ring right—and it is not right, because we have some of the deepest areas of deprivation in the country. We are the eighth lowest upper-tier local authority on a stand-alone basis. In real terms, my local authority is £33 million worse off than in 2010, but accounting for the rise in service demand in adult and children’s social care, we have lost £40 million in much-needed funding since 2010.

If we look at education—I am grateful for what was said about the dedicated schools grant—we have the 17th lowest funding in the country, which again does not meet the area’s needs, and we sit in the bottom third for pupils with special educational needs and disabilities, which causes real stress. We need the Education Secretary to step up and really invest in those children, because we are seeing a significant rise in the number of children with SEND, and in York it is higher than across the country. We need to understand why that is, but also how we can fund it. School transport falls to local authorities, and it is another area under significant stress. Children need EHCPs to get additional services from different agencies, and 98% of appeals are successful, yet the costs to local authorities, parents, children, schools and all the agencies do not add up. We therefore need reform to ensure that those children get the necessary timely support.

We also have an ageing population. Like rural areas, it happens in urban areas too, but the age is rising faster in places such as York, and the pressures falling on social care budgets are significant now. In the spirit of cross-departmental working, we know that the Health Secretary has invested heavily in emergency departments at the front door of hospitals, but it is the back door of hospitals that need the funding, and that is for social care. A quarter of the patients in York Hospital are waiting for discharge. If that can be sorted out, our NHS would be able to function. Again, that spirit of cross-party working is needed in the light of where we are today, and such a plan would take the pressure off elsewhere on the wider piece of Government funding.

The same goes for police and fire funding, and I must highlight—I had a useful conversation with a former Home Secretary about this—that if we do not fund local authorities correctly for youth services, we will be paying for that out of the police budget. All these things are interconnected, which is why I urge the Minister not just to look at local authority funding, but to look at this in the round. Of course, public health is another example, and it moved into local government for a reason, as Professor Sir Michael Marmot would highlight, to address the social determinants of poor health, ensure people can have greater equality and address issues around having longer healthy lives. However, if we are not making the crucial right investments, we will again see the fallout in other services.

I want to understand why we have this real disparity in the funding formulas. We have heard today about the council tax regime, which was introduced in 1991, but business rates are another massive challenge. I am pleased that those on our Front Bench have said they will reform that area, because we need that reform urgently.

The Minister will know that York is a place that floods. I am really grateful for the support we have had to build flood defences, but we now fall below the threshold for triggering the Bellwin scheme. Those businesses that still flood are not getting the support they would otherwise have had, so it seems as though there is almost a perverse incentive. It would be really helpful not only if he looked at that, but also if he would ensure that there is business rate relief for flooded businesses while they are not able to trade. I would be grateful if he will comment on that.

Turning to the broad rental market area, York is an incredibly expensive place to live. Bearing in mind what said about it being a post-industrial city, the costs are driving people out of our area. We do not have the supply of social housing that we need right now. As a result, the local housing allowance is just £650 for a two-bedroom property, yet the cost in the private rented sector is £1,026. The disparity is such because the broad rental market area is just too broad. As a result, people are being pushed out, which is impacting on our economy. It is a comparatively low-wage economy, with the gig economy, the hospitality sector, retail and tourism, and the disparity is putting more pressure on local authorities to find support for housing and, increasingly, to address homelessness issues as well. Again, these things are out of kilter, and we need to bring them together to ensure that the system works for local government.

I look at the inequality between York Outer and my constituency; the centre of York is where the greatest strains are felt. Those strains are clearly being felt by families right now, and I urge the Government to carry forward the household support fund. Perhaps the Minister could have a word with the Chancellor about that ahead of the forthcoming fiscal event; it would really help our city. There was a debate on the subject in Westminster Hall last week. That disparity needs addressing for people in my constituency.

It was disappointing to hear that the fair funding formula will not happen in this Parliament, and that we will have to wait for the next Parliament—my hon. Friend the Member for Oldham West and Royton (Jim McMahon) also heard that message clearly—because that needs to be brought in across the piece. Look at health, and what happens under the primary health trusts, or the primary care groups, as they were back in the day. My predecessor, Sir Hugh Bayley, made the case that York, which was lowest funded in that arena, lost out, and that put pressures on local government. It is ironic that the Carr-Hill health funding formula was devised in the Centre for Health Economics at the University of York, yet somehow it perversely means a disadvantage for York.

In recent times, real pressure has been put on services, and I wish to highlight what that means to York. There has been a 15.8% increase in the cost of children’s social care. I congratulate our team on the council, which has cut agency spend. I met the director of children’s social care the other day, and he said that the team has two agency staff left, and that the department has cleared out agency staff to cut costs. Where will the additional headroom come from to pay for that? The cost of adult social care has risen by 12.5%. The cost of social protection housing services has risen by 26.1%, yet the minimum wage increase was 9.7% last April and 9.8% this April. It all adds up. The average rise that local authorities get is around 4%. That is squeezing resources more and more, and the disparity is taking its toll. We must protect those most in need, and certainly the voluntary and community sector to ensure that we keep its vitality. Clearly it delivers so much. We need a cushion, not a knife, and the fact that we face the challenge of cuts, rather than getting protection, is extremely worrying.

In his opening remarks, the Minister talked about other sources of revenue that local authorities have had, including levelling-up funding, the towns fund and the high street fund. York has not had any of that money. It seems that whether it is received depends more on political affiliation than need, so we have missed out on that, and additional resources have not been put in place. After 14 years, we need not only more funding in numerical terms, but a funding formula that works. If that is for the next Government to do, we will deliver it; it is so urgent and overdue. My constituents are smart; they know what is happening, and they are concerned. They are feeling the pinch. They are being stretched as far as they can, and we must ensure that they get opportunities. My constituents deserve so much better; my constituents deserve a Labour Government.