Local Government Funding

Steve Double Excerpts

Wednesday 3rd February 2016 Westminster Hall

[Liz Kendall]

My hon. Friend is absolutely right. Once again, we see the difference in the funding deal that social care gets compared with the NHS, where the money is more front-loaded. The social care funding is back-loaded, and what are councils supposed to do in the meantime?

These cuts to services are morally reprehensible and economically illiterate. They will leave elderly and disabled people without the help that they need. They will push families to breaking point and force even more people to give up their work so that they can look after elderly or disabled relatives because they cannot get the support that they need. That will deprive the economy of their skills and increase the benefits bill, and all of that will pile further pressure on an already struggling NHS, which will cost the taxpayer more.

We now have the second highest ever number of delayed discharges from hospital since data were first collected. One third of those are due to a lack of social care. In the last year alone, there has been a staggering 65% increase in delayed discharges due to a lack of care in the home. That makes sense for no one. The Government must urgently rethink their immediate support for council care services in the upcoming Budget, to ensure that people get the support that they need, and they must grasp the nettle of the long-term reforms that we desperately need to truly join up the NHS and social care, so that we finally have a single budget for these local services that people depend on and we stop the farce of continuing to rob Peter to pay Paul, pushing the costs up for everyone.

[Steve Double (St Austell and Newquay) (Con)]

The hon. Lady is making a passionate speech highlighting what she thinks the problem is. Will she enlighten us on what the solution is? Will the solution be more borrowing, or which other Departments will she take the money from?

[Liz Kendall]

If the hon. Gentleman had listened to what I said, he would know that the first point is that we are spending more money unnecessarily because we do not have a fully joined-up NHS and care system. We are spending more on elderly people ending up in hospital and getting stuck in hospital when they could be cared for at home. Also, we need a fairer funding formula. If the most disadvantaged communities, who most need publically funded care, do not get it, we will increase costs and demands because people will end up in the NHS. We need proper reforms of the system to get the best results for the people who use it and the best results for taxpayers’ money. My worry is that the Government are thinking, “The NHS and social care? Job done,” which is to be completely ignorant of the crisis that is unfolding and not take seriously the reforms that we need for the future.

I know that many hon. Members want to speak, so I will finish by asking the Minister some questions about the Government’s plans to change the way local councils are funded in the future and to give councils additional new responsibilities as a result. As a strong supporter of devolving more powers to local councils, I welcome the spending review announcement that councils will be allowed to keep 100% of their business rate growth by 2020. That will help to give councils some of the tools that they need to boost jobs, growth and investment and for which they have been arguing for many years. However, there is a real risk that that change, combined with the total abolition of grants, will exacerbate existing inequalities between different parts of the country and further harm deprived areas, which have already been hit hardest by the Government’s cuts. Once grants are abolished, how will the Government ensure a fair distribution of resources, especially when more deprived areas, with higher levels of need, may be less able to raise funds from business rates and council tax?

Can the Minister confirm that the additional responsibilities that the Government are considering giving councils by 2020 include funding all of public health services, attendance allowance and the administration of housing benefit? How will the Government ensure that future revenues from council tax and business rates keep pace with demand for the services for which councils already have responsibility, such as adult social care, and the new responsibilities that they may gain, such as attendance allowance, especially when our population is ageing?

The Government must work closely with local councils to provide proper answers to those questions and, crucially, to hardwire fairness into the system to ensure that the local services that my constituents and those of all hon. Members here today value and depend on continue to get the support that they need in the future.

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[Sir Edward Leigh (Gainsborough) (Con)]

It is always a pleasure to see you, with your acerbic wit, in the Chair, Mr Davies.

I thank the hon. Member for Leicester West (Liz Kendall). We all know that there is not enough money in the pot. I accept that cuts have to be made, but I want to make the case for fairer funding. I know how wasteful government can be, although generally, local government has delivered broadly the same service over the last five years despite having to face considerable cuts. I want to make the case for fairness between urban and rural government.

For my local district council, West Lindsey, Government -funded spending power—the overall funding available for local authority services—was £76 per head for 2015-16. The Government propose to cut that to just £52 for 2019-20. Many hon. Members here represent urban councils. Let us take Wolverhampton as an example. For 2015-16, Wolverhampton’s funding was £559 per head. It is being cut to £455 per head over the same period. That means that the people of Wolverhampton face a reduction of just 18.6%, while my constituents in West Lindsey will have to bear cuts of 31%.

The facts are just as bad at county level. The average amount awarded in Government grant per head across urban England is £486, while the grant per head in rural Lincolnshire is just £385. Metropolitan non-fire authorities face cuts of 19% over this five-year period, while shire counties, non-fire, are being saddled with an average of 34% cuts, and predominantly rural unitaries, non-fire, face cuts of 30%.

We have to face the fact that the sparsity allowance is totally inadequate. It does not even meet the higher operating costs of running essential services in rural areas. Urban residents are receiving a grant settlement from a Conservative Government that is about 50% higher than that received by rural residents. It is a double blow, as we in rural areas face higher council tax burdens, which have to be extracted from people who, on average, earn less than those in cities.

[Steve Double]

Does my hon. Friend share my concern that, despite the Government’s intention to narrow the gap between local government funding in rural and urban areas, the new formula seems to widen the gap and make the matter even worse?

[Sir Edward Leigh]

Yes, it widens the gap. We are asking the Minister not for more money but for fairer funding between rural and urban areas, which is precisely the point that my hon. Friend makes.

I have worked alongside Lincolnshire County Council and West Lindsey District Council for decades, and they are not spendthrifts. They count every penny, but they are being penalised for having saved so much in the past. They know the needs of our people far more than anyone in Whitehall does. We have already given up much of our invaluable network of local libraries, and got rid of our magistrates courts and our police stations. Are we going to get rid of our fire stations now? How much more does Whitehall really expect that rural England can take?

Closing the gap between the Government grant to the urban dweller and to the rural inhabitant by just 5% over five years would make a huge difference to service provision in rural areas. In Lincolnshire, it would mean an extra £13,130,000 per annum at the end of a five-year period. Right now, good, hard-working people in rural areas are subsidising much better provision of services to people in urban areas, and that has to change.

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[Sue Hayman]

The fundamental point of argument, which I will come to, is about the way that funding is decided on need. That relates to what my hon. Friend says.

Cumbria has one of the fastest-growing populations of older people in the whole country, which will put extra pressure on the council in the future. This is about not just the funding formula now but the proposals for future years, and that is not taken into account.

The timing of the announcement and the consultation process is important, but it often gets glossed over. The announcement of the provisional settlement came very late in the year, more than three weeks after the autumn statement and the announcement of the spending review. Inevitably, that resulted in a short consultation period, which happened over Christmas. I understand that that was done to keep to the timetable for the announcement, but it is not helpful when councils are trying to manage their budgets and prepare for the future. There were significant changes, which should have meant a proper consultation, as Government guidance states that “12 weeks or more” is appropriate when significant changes are being made. The consultation fell well short of that. I urge the Minister to look at how we can improve consultations and their timings.

On the proposed approach to allocating the funding, I appreciate what my hon. Friend the Member for Leicester West (Liz Kendall) said, but the methodology does result in rural areas losing a significant amount of funding.

[Steve Double]

As the hon. Lady may know, I represent a constituency in Cornwall that faces many of the same challenges as her constituency. Does she agree that part of the problem—this is not a party political point, because this has been true under successive Governments —is that deprivation is not measured in the same way in rural areas as it is in urban areas? It is often hidden, but it is just as much of a real issue.

[Sue Hayman]

The hon. Gentleman makes an extremely pertinent point. People who live in rural areas often have very low expectations of the level of service they should receive, so they often put up with receiving an awful lot less. That is not sufficiently taken into account.

I will briefly touch on the topic of social care, about which my hon. Friend the Member for Leicester West made some powerful points. My understanding was that the Government’s stated desire—the Minister may put me right on this—is for greater protection for councils that provide adult social care. Therefore, it does not make sense to me that that money is diverted away from the county areas, such as Cumbria, that have a larger proportion of ageing people and a faster-growing elderly population. It has a profoundly negative impact on the stability of an already very fragile care market, and will have a knock-on effect for the wider health sector.

The distribution of funds for councils should take into account not only resources but needs. The proposals do not reflect that, and it is important to address that for the future. If we do not reflect need, where are we going, particularly with regard to social care? Cumbria County Council struggles to deliver social care and mental health services. To come back to my first point, social care and mental health care will be under increased pressure because of the impact of the floods. I urge the Minister to consider how he can support us in those areas.

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[Colleen Fletcher (Coventry North East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Davies, and I congratulate my hon. Friend the Member for Leicester West (Liz Kendall) on securing this really important debate on local government funding.

It is clear that Government cuts to local authorities have impacted on the authorities’ ability to deliver services. That is certainly true in Coventry, where Government cuts are hollowing out our local communities. Since 2010, Coventry City Council has lost £94 million from its budget and by 2020 its Government grant will have been cut by a massive 65%. As a result, the council is being forced to consider proposals that will further reduce its ability to deliver the services that my constituents deserve and depend upon.

Coventry City Council has rightly prioritised the needs of vulnerable people, and despite the pressure on its budgets the council has found more than £10 million to invest in children’s services, to help to turn around a service that is overwhelmed by children who need support from the social care system.

Like many other local authorities, however, Coventry City Council is also seeing a significant rise in the number of elderly residents requiring support from adult social care. While I recognise that the Government have permitted local authorities to add a further 2% to council tax as part of the adult social care precept, that simply does not go far enough. Social care budgets are facing a perfect storm of rising demand and rising cost, but funding is not increasing far enough to cover that.

[Steve Double]

Will the hon. Lady give way?

[Colleen Fletcher]

No, I will not. I am going to finish in a bit, as I only have a minute. In Coventry this year, adult social care budgets are predicted to have been overspent by £6.7 million, but the social care precept will add only £2 million. That leaves a massive gap that the council will need to cover by reducing spending elsewhere, and it is to that expenditure that I now turn.

Many have spoken about the “graphs of doom” that show local authorities ceasing to be able to provide anything other than the most basic of statutory services and social care. Those predictions are becoming a reality in Coventry. The council has made a frank assessment that in future it will be unable to fund, among other things, libraries, community centres, voluntary agencies and road repairs to the same level that it has in the past. That means that the colour and lifeblood of our communities will begin to dwindle as support that they once received from the council is no longer there. If the Government want to help people escape poverty, tackle poor levels of productivity and deal with the long-term problems associated with worklessness, they must provide local government with the resources it needs to let our communities grow and flourish.