Local Government Finance (England) — House of Commons, 2022-02-09
Topic: Macroeconomics
Clive James Charles Betts (Labour, Centre-left): The Secretary of State is right: the settlement this year is better than in some previous years. The core spending power is up by 7.4%, though I think his definition of inflation is somewhat different from mine. The scrutiny unit of the House of Commons told me that the Bank of England’s inflation rate is 5.4%, so that does not give quite such a big increase in the real-terms rise in core spending as the Secretary of State indicated. But it has to be set against the background that since 2010, local government has had the biggest cuts of any part of the public sector The Secretary of State was explaining how the coalition Government had to respond to a financial crisis; but there were choices in the way that response was made. One of the choices was to single out local government for those spending cuts. Perhaps the suspicion was that it was easier to pass the responsibility on to others to decide which bits of the public sector were to be cut—libraries, parks or bus services, or whatever else local authorities had to resort to in order to reduce their expenditure It is also, I think, uncontested that the poorest parts of our country had the biggest cuts. That is a reality with the Government grant. The Secretary of State made the point—he produced the figures—that the poorest areas have done slightly better this year. I accept that: I think the figures show it, but it is slightly better on top of substantially worse situations for the previous 10 years, and they are having to recover from that. I will return to the issue of levelling up later For my own city of Sheffield, the grant cut has meant that £3 billion-worth of grant in real terms has been lost since 2010. That is an awful lot of money when thinking about what could have been done with that in terms of levelling up. Yes, the situation has been better since 2015. Government figures show that spending power has gone up by 2.1% in real terms. Actually, per head, though, it has fallen by 2.2%. So even since 2015, real spending power per head has fallen across the country. Some significant themes have continued this year that we ought to reflect on for the longer term. The Secretary of State has been talking about the longer term; I think it is right that we should view these settlements in a longer-term context for the future. First, council tax in my own city of Sheffield was 41% of council spending in 2010; it is now 59%. That is a really significant switch of where the money comes from. Spending on social care is now two thirds, as opposed to about half. Again, that is a switch in what the money is spent on. My real concern is that although councils have properly responded—not just in Sheffield, but all over the country —to the pressures in social care and given it a priority, for very obvious reasons, it means that all the other day-to-day essential services that councils provide have been cut even more. Many libraries across the country are shut; the services in parks have been reduced; cuts have been made to bus services right across the country—we have heard Conservative Members complaining about those; money has been cut from road safety schemes; and cuts have been made in terms of the availability of public health inspectors to go into food shops. One issue I know the Secretary of State is really concerned about is planning departments, where a significant cut has been made to resources. There is a real democratic issue here: most people do not receive services from social care, but the public do, as a whole, look at their street cleaning, parks, libraries, buses and other important services, and they are paying more council tax—I have just described the extra money that comes from council tax—and getting less for it. There is a real challenge to our whole democratic system if we allow that to continue. I think the Secretary of State probably recognises that and we need to address it In the face of that, councils have done remarkably well. They have probably produced more efficiency savings than the rest of Government put together; if the rest of Government worked as well as councils have done, we would all be in a much better place. Most councils, like Sheffield’s, have used reserves very prudently; they are only able to get through the social services crisis we are in because of the reserves we have. Great credit must go to council officers and councils across the country, particularly to those in my city of Sheffield. Councils have also done a remarkable job during covid, be it on food parcels for the elderly and people who are shielding, on working with the health service jointly to deliver effective services, or through directors of public health doing test and trace far more efficiently and effectively than that the national system, at far less cost. We can be proud of what local government has done in those circumstances There were one or two disappointments about the settlements, but to put it slightly more positively I will call them "challenges for the future". First, this is a single-year settlement. Local councils want multi-year settlements; we can all agree on the reasons why, and that is important. Secondly, on fair funding, it cannot be right that we have a settlement here based on 2014 data, with some of it going back to 2000. I accept the challenge; one person’s fair funding is another person’s unfair funding. That is going to be an interesting challenge for the Secretary of State, but I would say that levelling up has to be part of a fair funding review. It cannot be about individual bits of money; levelling up has to be about mainstream core funding and getting the distribution of that right to reflect the need for levelling up We have to get a new source of funding for social care. We have to get money from a levy or whatever source to come in. I welcome the attempt to integrate health and social care. I do not think it should be brought into one giant service; getting local councils and the health service to work together is right. They have done brilliantly well in Sheffield during the pandemic, with the clinical commissioning group, the director of public health and the director of social care working together. One of my worries is that in the reforms to the health system we do away with that place-based approach that a CCG gives. I welcome the letter that the Secretary of State has just sent and the offer to meet officials. It is really important that that place-based delivery of services—councils and the health service working together at a local level—is maintained. I hope that that is absolutely seen through The other two issues are still waiting to be done: business rates reform; and protection for the high street as part of that, with some sort of digital sales tax. When are we going to get it? Everyone seems to think that we ought to have one, but we have not actually got one. I mentioned the level of council tax now—the amount out of the totality of council spending. Council tax is regressive. If we look at the amount people pay compared with the value of their houses as they go up, we see that it is completely disproportionate. So we need a council tax review reform as well as a business rates reform if we are going to deal with this for the future Finally, I come to one regret. I look at the public health grant, where there is a 2.8% increase—if inflation is 5.4%, that means a reduction in real terms. The public health service has done a brilliant job, and I give credit to Greg Fell and his team for what they have done in Sheffield, but covid has shown us the health inequalities in our communities that need addressing. Is that cut not therefore a complete mistake at a time when we need more prevention and more attempts to reduce those inequalities In Sheffield, if I get on a bus in the west end of the city and go to the east end, life expectancy changes by 10 years. That simply cannot be right. Our public health director and his staff in that service, working with the health service, are key to addressing those problems. It is disappointing that their reward for all the work they did during the pandemic is to see a real-terms cut in their spending.