Government accused of ‘devolving blame for cuts to local government’

The Government is “devolving the blame for their cuts” through changes to the local government funding settlement, Labour has claimed.

Shadow communities and local government minister Steve Reed (pictured) argued the reforms would result in cuts to front line services, including youth services, fixing potholes, cleaning the streets, emptying the bins, keeping the street lights on at night, Sure Start centres, libraries, museums and rural bus services.

Mr Reed claimed Communities Secretary Greg Clark had not protected any of these areas and had “sharpened the knife”.

On social care, he said: “The Government has told councils to impose a 2% council tax rise every year for four years to plug that gap, but even that doesn’t raise anywhere near enough to pay for the care that older people need and it raises the least money in the poorest areas that need the funding most.

“The Government has cut the funding then handed it over to councils to take the blame.”

Mr Clark, he argued, had claimed to have protected funding for councils over the next four years, but the settlement funding assessment “takes away £1 in every £3 given to councils for funding core services” on top of cuts in excess of 40% or 50% to councils that had already been imposed.

Speaking during a Commons debate on the Local Government Finance Reports, Mr Reed referred to the Government’s two-year, £300 million package of transitional support announced on Monday.

He said: “85% of that money goes to Tory-run areas and 5%, barely 5%, to Labour-run areas, despite the fact that those Labour areas have suffered far bigger cuts since 2010.

“Whatever happened to the One Nation Tories, what about the Northern Powerhouse, if the word gerrymander didn’t already exist we’d have to invent it to describe a fix like this.”

The way the money was being distributed was “desperately unfair”, he said, branding it a “political bung”.

Opening the debate, Mr Clark said the way the settlements had been conducted had been “fair across the country”.

He said: “We’re moving from one world to another, from a world in which the Government grant accounted for nearly 80% of local government expenditure in 2010. We’re moving to a world during this period by 2020 only 5% of local government spending power will come from the revenue support grant.

“And in the same period with the implementation of 100% business rates retention, the proportion of council spending power that comes from local sources, council tax and business rates, will grow.”

Mr Clark said a council that was almost entirely dependent on central government would end up looking to central government to be told what to do.

He said the transition fund would “ease the pace of reductions” in the first two years of the spending review period after which income from others sources would grow.

Mr Clark said local councils would need to continue to make savings, but he added that required savings over the course of this Parliament would be less than those required in the previous Parliament.

On the settlement changes, he said: “Indicative budgets for the entire spending review period to make longer term planning a reality, a big increase in the funding for adult social care, one of the most important of our council’s responsibilities.

“Action to help the position of rural areas along with a commitment to all councils that the move to 100% business rate retention will be accompanied by a fundamental review of the needs based formula and transition funding secured to smooth the long overdue journey from our over-centralised state to a future where all money that is spent locally is generated locally.”

Mr Reed said that under the Government’s funding plans people could face a 20% “hike” in council tax by 2020.

He said: “It is very hard indeed to square that massive Tory tax hike with a Tory manifesto pledge to keep council tax as low as possible.

“They are breaking their promises. They are hiking council tax up.”

Meanwhile, Mr Reed also said it was clear what the intention of the transitional cash was.

He said: “The figures speak for themselves: 85% to Tory councils, 5% to Labour councils and we can all see what they are up to.”

Mr Reed said that people will be asked to “pay more but they will get less in return”.

“That’s Tory value for money,” he said.

“Tax hikes and service cuts, picking people’s pockets while damaging the quality of life of every community up and down this country.

“That is the story of this funding settlement.”

Clive Betts, the chairman of the Commons communities and local government select committee, questioned why similar transitional funding wasn’t made available to metropolitan authorities in previous years.

He said: “The cuts that are going to be made, and there clearly are going to be cuts as a result of this settlement … have come of course on top of the ones that have already been made.

“In the last parliament when the majority of the cuts, bigger percentage cuts were on the metropolitan areas with the greatest needs and the greatest problems.

“We never once had mention of a transitional arrangement, did we?”

Mr Clark rejected that suggestion.

“Uncharacteristically I think your memory is letting you down,” he said.

“You will remember in the last parliament that there was a series of tariffs and top-ups to stop the bigger cuts in authorities.”

Steve Double, the Tory MP for St Austell and Newquay, said he was going to rebel against the Government before the transitional cash was announced.

He said: “I’m happy to place on record that as of Monday morning I would have been one of the members on this side of the House who this evening was prepared to walk through the ‘no’ lobby and vote against the Government.

“That was quite simply because the settlement that was proposed was unfair to rural areas.

“It widened the gap on the Government’s funding between rural and urban areas.”

Mr Double said that rural areas have had the “raw end of the deal” on council funding for decades and he welcomed the fact that the Government had “listened” on the issue and come forward with proposals to address his concerns.

Bob Neill, the Tory MP for Bromley and Chislehurst, described the finance settlement as “genuinely transformational” because it moves away from a “flawed” funding system.

He also attacked Labour’s approach to local government.

“It’s sad that we have seen such an old-fashioned and I think almost demeaning approach towards local government from the party opposite,” he said.

But Jim McMahon, the Labour MP for Oldham West and Royton, criticised ministers for treating councils as a “plaything” as he characterised the relationship between central government and local government as “lions led by donkeys”.

He also suggested that the additional funding made available was a “cash bonus” designed to “buy” the votes of Tory MPs.

He said that rural areas are getting “cash after cash after cash” without any regard to need.

“It has been pointed out that 85% of this funding is being given to Tory shires, but let me go closer to home and look at Greater Manchester,” he said.

“Trafford, alright it’s got some rural areas, but let us look at these rural areas of Bowdon and Alderley Edge and Hale – footballers’ wives territory.

“This is the most affluent borough in Greater Manchester.

“It has got the highest council tax base, the highest business rates base and it has the healthiest budget as a result of this Government.”

Mr McMahon then said that Baroness Williams of Trafford, the Communities Minister, lives in the borough.

He said: “Is this a friends and family discount being offered? What do we need to do Greg?

“If you want to come and live in Oldham, if that helps our financial situation then we will do that.”

Mr Clark, intervening, told Mr McMahon: “I appreciate you’re new to this House, but first of all you should know Trafford of course doesn’t get any rural grant – it’s not a rural authority.

“Secondly, I think you might want to reflect on the remarks that you made about Baroness Williams of Trafford, who is and has been throughout her career an excellent public servant.

“She has done great work, not only in Trafford, for Greater Manchester and is a woman of the utmost integrity and I think you’ll want to reflect on that.”

Mr McMahon replied: “I’m quite happy with my comment. There’s a direct link there between the members on the other side that had to be bought to vote today and the fact that the only council in Greater Manchester to have received a transitional grant happens to be the place where the minister lives.

“So there is a link. I’m sorry about that. I didn’t choose where the baroness chose to be a council leader and chooses to live.”

Labour’s Jenny Chapman accused Mr Clark of “ripping the heart out” of her Darlington constituency.

She said: “It’s extraordinary what this Government has managed to do in pitting town against village, North against the South, the metropolitan areas against the shires – it is disgraceful.”

Ms Chapman went on: “I don’t resent members opposite being good champions for their areas, winning some extra funding for their councils.

“That’s one of the things we’re here to do.

“But I hope they enjoy that extra money they get. I hope they win their shire council seats that it was clearly designed to provide victory for, I hope they enjoy that.

“And I hope they realise that it’s being done on the back of services in my area … in (Labour MP Roberta Blackman-Woods’s Durham) area, on the back of services for deprived children, the children’s centres that are closing in my constituency, the libraries that are closing – my constituency has two libraries, they are both to close – the market that is at the heart of my town is set to close.

“I hope they enjoy the extra funding that they’re going to receive because my town and the people in my town are angry.

“I’ve never ever seen them this angry before. They’re angry about what’s going to happen but they’re angry too about the unfairness.”

After Mr Clark repeatedly attempted to intervene, Ms Chapman said: “Why should I give way to the minister who is ripping the heart out of my constituency?”

Conservative Graham Stuart (Beverley and Holderness), who has helped coordinate the campaign for fairer rural funding, said: “I stood here a month ago and said ‘Now is the time for the rural voice to be heard’.

“Well a month on I’m pleased to say that the rural voice has spoken and has been heeded, at least to an extent.”

Mr Stuart said people living in rural areas are, on average, poorer than those living in urban areas as he criticised Labour MPs.

He said: “That’s not to say that centres of real deprivation do not need special and specific support, but generalisations that somehow the poor are burghers of Sheffield, are all on the breadline whereas everyone in Withernsea in my constituency is living it up in some rich, prosperous rural idyll is a nonsense.

“And too much of the argument from the party opposite has suggested otherwise. Too much of this debate today has suggested otherwise.

“If we’re going to move to a fair system then we need to recognise just how iniquitous it was when the Labour government used density to drive funding to urban areas – wealthier, younger, less needy urban areas – and are now screaming about an adjustment that recognises an ageing population predominantly based in rural areas, who are also poorer.”

Labour former minister Liam Byrne warned the Government that the “battering of Birmingham” has gone on for too long.

He also said Mr Clark’s reputation has taken a “bit of a battering” due to the settlement he has put forward.

The MP for Birmingham Hodge Hill said: “I simply cannot square with any sense of fairness an outcome that means that budgets in Buckinghamshire rise by 11.5% by 2016/17 and yet budgets fall in Birmingham by 10% over the same period.

“Quite frankly, the battering of Birmingham has gone on for far too long and we looked to this settlement for some sense of salvation.

“I should be grateful for small mercies and I’m grateful that (Mr Clark) has recognised Birmingham’s case, but there is a fairer funding formula to be had.”

The Government’s report on Local Government Finance (England) 2016-17 was passed by UK-wide MPs by 315 votes to 209, majority 106.

English MPs voted by 301 votes to 181, majority 120, to approve the report.

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