Local Government funding – 3….AND THE GOVERNMENT’S RESPONSE
Responding, Marcus Jones Parliamentary Under-Secretary of State (Department for Communities and Local Government) acknowledged the hard work and dedication of councils across the country over the past five years and the contribution they have made to improving local services in challenging times.
“But we need to make more savings as we finish the job of eliminating the largest deficit in post-war history.
“We listened carefully to councils when preparing the provisional settlement that was recently consulted on…. I and my fellow ministers spoke to local government leaders from across the country and many colleagues in the House.
“We have previously had one of the most centralised states in the world—almost 80 per cent of council spending was financed through central government grants at the start of the previous parliament—but councils will be entirely financed by their own resources by 2020.
“Local government will retain 100 pc of the business rates, fees and charges raised by councils, leaving them fully accountable to the electorate rather than Whitehall.
“Those huge changes will not be made without careful consideration and consultation in the coming months. “Hon. members will have the chance to have input into the design of the new business rates retention process, which is the other side of the Government’s devolution agenda.
“The Government do not underestimate the challenges. “Local government representatives consistently tell me, as they told my predecessors over many years, that greater certainty about their income over the medium term would enable them to organise more efficiently and strategically, and put their safety-net reserves to more productive use.
“This settlement will for the first time ever offer a guaranteed budget to every council that desires one and can demonstrate efficiency savings for the next year and every year of the Parliament.
“Four-year settlements will give local government more certainty and confidence. “Councils will also be able to spend 100% of capital receipts from asset sales to implement cost-saving reforms.
“As we move to a world of full localisation of income, it does not make sense to talk simply about Government grants, as a number of opposition members did.
“As colleagues know, the revenue support grant will be phased out by 2020, but local government will still spend significant sums of money. “Therefore, it makes more sense to talk about the wider measure of council spending power, which we improved after listening to the public accounts committee and the communities and local government committee.
“Overall, our proposals are fair. “Councils’ core spending power will remain virtually unchanged over the Parliament—it will go from £44.5 billion in 2015-16 to £44.3 billion in 2019-20.
“Real-terms savings of 6.7 pc are required over this spending review period, compared with the 14 pc savings announced in the 2010 spending review. “Even the Institute for Fiscal Studies recognises that that is substantially lower than the spending reductions that councils had to deliver between 2009-10 and 2015-16.
“On adult social care, we responded to the clear call from all tiers of government and many colleagues in the House to recognise the importance of the growing cost of caring for our elderly population.
“The Local Government Association and the Association of Directors of Adult Social Services asked for £2.9 billion by 2020 as a contribution to the cost of social care. “In the settlement, we make up to £3.5 billion available by that year.
“It will be distributed fairly to local authorities with social care responsibilities. “There will also be a package of support for councils working with the local NHS to address pressures on care, a dedicated social care precept of two per cent per year, and a fund of £1.5 billion by 2019-20 to complement the new precept.
“We recognise that councils providing services in rural areas face additional costs, so we have proposed that the rural services delivery grant should be quadrupled from £15.5 million this year to £65 million by 2019-20 to address those issues.
“The hon. Member for Leicester West (Liz Kendall MP) and a number of other opposition members spent a lot of time talking about the effect that the reduction in central government spending will have on local government.
“They have very quickly forgotten that their election manifesto clearly set out a path for reducing local government spending. “They may wish to take that into account.
“The core spending power measure is the most accurate way of measuring councils’ expenditure. “Leicester has a core spending power of £2,003 per household this year, compared with the English average of £1,829, so I hope that reassures the hon. lady that Leicester is not getting a bad deal.
“On the point made by Mr Reed about council tax, the Conservative party will not listen to any lectures from the Labour party. “Council tax is 11 pc lower in real terms than it was five years ago.
“I remind the hon. Gentleman that council tax doubled under the Labour Government between 1997 and 2010, so the Labour party clearly says one thing in opposition and does something else in government.
“We are moving to a world long desired by local government, in which councils are financed by local sources.
“Whitehall’s apron strings will be cut. “Central and local government are decisively addressing social care pressures, and we are beginning to design long-term integrated care and lasting local solutions.”
Responding, Liz Kendall (Labour, Leicester West) said: “With the greatest respect, that was a head-in-the-sand denial of the problems.
“The Minister said that, overall, the Government’s proposals are fair. “They are not.
“The areas with the greatest need and the most deprived communities have been hit hardest.
“I ask the Minister to look again at what is happening to adult social care. “I am deeply concerned that care home providers will fail and that vulnerable elderly people will not get support.
“That will pile pressure on the NHS, and in the end we will have to pay the cost, but it will be more expensive and done in the least efficient way. “Opposition members will continue to press the case for fair funding for our councils and communities.”
Motion lapsed (Standing Order No. 10(6)) (Editor’s note: This states that: “Any order made or resolution come to at a sitting in Westminster Hall (other than a resolution to adjourn) shall be reported to the House by the Deputy Speaker and shall be deemed to be an order or resolution of the House.”
