Local Government Finance

Simon Danczuk Excerpts

Wednesday 12th February 2014 Commons Chamber

[Simon Danczuk (Rochdale) (Lab)]

I will concentrate on the settlement and the Government’s approach to localism.

I think that all Members accept that the United Kingdom remains one of the most centralised countries in the world. Most Members also accept that services are often better and more responsive when they are closer to communities and local people. There is a general consensus about the need for more localism. I accept that the Government have made some good decisions in respect of localism and have devolved some responsibilities to local government. They have not gone far enough, but they have made some progress. I was pleased that the Leader of the Opposition set out some principles earlier this week on the need for the further devolvement of responsibilities. The Government could do more to progress the localism agenda and that is reflected in the settlement. I will say more about that in a moment.

On Monday, I visited Manchester with the Communities and Local Government Committee. The Greater Manchester combined authority put forward a powerful argument for fiscal devolution. It wants more financial responsibilities to be devolved to local areas. I agree that there is a need for that, but the governance structures would have to be looked at.

I would like to make two important points about the settlement and localism. First and foremost, as the Chair of the Communities and Local Government Committee pointed out, the timing of the settlement has presented serious challenges for many local authorities, including Rochdale borough council. There has been considerable uncertainty and there are also issues with the information that is coming from the Treasury. There is no doubt that the Government need to inform local authorities earlier about their financial prospects. I understand that there was confusion because the Government left out vital information about small business rate relief and education services grants, and that caused problems for local authorities. It was not acceptable to spring the settlement on them for consultation 17 working days before Christmas. Local authorities cannot be expected to cope with those sorts of messages from the Government.

My second point is about crisis loans and the social fund that used to be administered by the Department for Work and Pensions. We now know that the Government decided to devolve that responsibility—we could call this localism—to local authorities so that they could administer crisis loans, community care grants and support to exceptionally vulnerable people. No one will be surprised to hear that when the Government devolved that funding to local governments, they cut it quite dramatically, and they now propose to cut it for the year ahead. We know from the settlement in December that the Government are cutting that funding to zero in 2015. It is good that the Government are localising that responsibility because local authorities can better understand people’s needs, but it is appalling that they have decided to cut to zero the funding for a safety net for the most vulnerable people in our society. That is not the sort of localism that the country wants or that people would expect.

Let me conclude with a few comments about the situation in Rochdale. It is right to say that when compared with more affluent councils, Rochdale has a relatively small council tax base and an equally small business rate base. Rochdale council does excellent work and has big ambitions, but the fact remains that Rochdale is reliant on the grant funding provided by Government. Because of that, the council is disproportionately affected by funding cuts of any size. The cumulative cuts in funding of nearly 23% to Rochdale council since the election put at risk all the work that the council is doing to help one of the most deprived communities in the country. Where cuts are made, they need to be fair. Those who can least afford to pay more, such as Rochdale council, should not be targeted for the deepest cuts, as they have been by this Government.