I remind hon. Members that there have been some changes to normal practice in order to support the new call list system and ensure that social distancing can be respected. Members should sanitise their microphones using the cleaning materials provided before they use them, and dispose of the cleaning materials as they leave the room. Members are also asked to respect the one-way system around the room.
Members should speak only from the horseshoe. Members can speak only if they are on the call list and cannot join the debate if they are not on the call list. Members are not expected to remain for the wind-ups. Members in the latter stages of the call list should use the seats in the Public Gallery and move to the horseshoe when seats become available.
I remind hon. Members that there is less of an expectation that Members stay for the next two speeches once they have spoken. This is to help manage attendance in the room. Members may wish to stay beyond their speech but should be aware that doing so may prevent Members in seats in the Public Gallery from moving to seats on the horseshoe. There are lots of Members attending this debate, so there will be a time limit, to be advised in due course.
That this House has considered the adequacy of funding for local authorities during the covid-19 outbreak.
It is a pleasure to serve under your chairmanship, Mr Hollobone. One day, there will be a public inquiry into the conduct of the Government during this pandemic and the decisions they have taken, particularly on the provision of finance to different parts of the country, and we will be able to learn what went well and what did not over the past few months. I hope that we will all support such an inquiry, so that further errors are not made in future.
Even before the pandemic, it would have been hard to argue that national Government were friends of local government and local services. Since the 2010 general election, the Government have reduced funding for local authorities by some £15 billion. The National Audit Office has found that Government funding for local authorities has fallen by 49% in real terms from 2010-11 to 2017-18, and that this equates to a 28.6% real-terms reduction. To put that in context, councils have lost 60p out of every pound they had a decade ago. The Institute for Fiscal Studies concurs, saying that local government spending has “fallen significantly”.
Let us never forget that this is not by accident: it was a decision made by Conservative Ministers and their Liberal Democrat coalition partners in the 2010-15 Government. National Government grants were gradually scaled back, so that poorer areas with great need were not provided with the additional funding they needed alongside local income generation. The cuts made in the name of austerity did not fall equally on the shoulders of people and local authorities: they hurt the poorest and most disadvantaged areas significantly, including areas such as Tower Hamlets, where my constituency is. The IFS says that deprived communities—those communities most reliant on public services—such as those in my constituency saw the greatest reduction in national Government funding.
The debate can last until 4 pm. I am obliged to start calling the Front Benchers no later than 3.37 pm. The guideline limits are 10 minutes for Her Majesty’s Opposition and 10 minutes for the Minister, and then Rushanara Ali will have two or three minutes to sum up the debate at the end. There is a stellar cast of Back-Bench talent. Sixteen Back Benchers are seeking to contribute until 3.37, so if we have a time limit of three minutes, everybody should be able to contribute.
2:44 pm
Imran Ahmad Khan (Wakefield) (Con)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank the hon. Member for Bethnal Green and Bow (Rushanara Ali) for bringing to the House the issue of the adequacy of local government funding during the covid outbreak, as it facilitates a much-needed debate on both the role of local governments in the crisis effort and the broader interaction between local and national Government.
It was important that any central Government approach to crisis management throughout the pandemic was measured against three key performance indicators. The objectives were, first, to provide adequate financial support to ensure that crucial local government services could continue; secondly, to equip local governments with the tools and flexibility they required to adapt their services to provide targeted support in the relevant jurisdictions; and, finally, that any such support did not create a precedent that would serve to create a further burden on an already overloaded state apparatus.
The figures as of 23 October, without taking into consideration the latest round of business grants, highlight that in my constituency alone, Wakefield Council received an extra £41.52 million to support its efforts in tackling covid-19. This ensured that critical services could continue, despite decreased tax revenues and the higher costs incurred by the pandemic.
In April, £850 million of social care grants, for both children and adults, were paid up front to cover the period from April to June 2020. Although the figures provided by central Government may not have been delivered on a like-for-like basis, they have provided unprecedented sums of money to local authorities, facilitating their ability to use discretion in targeting the needs of their districts as they see fit.
In a crisis, ring-fencing funds for one service may not be appropriate when jobs are at risk and the landlord needs his rent paid, for example. Decisions were made on the best information available at one point in time, and further support was provided where required. One such example was the £617 million discretionary fund, which served as an addendum to the small business rate relief grant and retail, leisure and hospitality grants, and allowed local authorities to distribute further moneys as they saw fit to businesses in need. At the time, I suggested that any underspend from the small business rate relief grant and RHL grants should be combined with the discretionary grant, as a method through which individuals who had been defined as the economically excluded could receive much-needed support on a case-by-case basis.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) for securing this debate. I want to begin by paying tribute to Wirral Council for the incredible support it has provided to my constituents during the pandemic. This includes instituting a greatly deserved pay rise for care workers, helping homeless people off the streets and into appropriate accommodation, co-ordinating mutual aid efforts and providing much-needed financial support to residents whose livelihoods have been devastated by the lockdown restrictions.
Despite all the difficulties that council workers have faced themselves, their commitment to the poorest and most vulnerable people in our community has always shone through. As a matter of local pride, I would argue that Wirral Council is exceptional, but I note that its efforts are being replicated nationwide and all hon. Members will have similar stories to share.
After years of being underfunded, marginalised and overlooked, local authorities have risen to meet the challenges of covid-19 admirably. This year has shown what a vital role councils play, not just in the provision of services, but as powerful advocates for those people whose voices are too rarely listened to by central Government.
I commend the resolve shown by the metro Mayors, Steve Rotheram and Andy Burnham, when the Government plunged their regions into a tier 3 lockdown with only cut-price financial support, and I was deeply moved by the testimony of the newly elected leader of Wirral Council, Jeanette Williamson, as she opposed the Government’s callous decision to let children go hungry over the holidays. I was also very glad to work so closely with council leaders from across Merseyside in successfully lobbying for the reopening of gyms and leisure centres before the current lockdown was announced.
But now our councils face an uncertain future. Across the country, the threat of cuts to frontline services and even bankruptcy looms. Expenditures have soared while income in the form of business rates, council tax and parking charges has plummeted. Wirral Council faces a black hole of £60 million in its budget, and it is not alone. Last week, the County Councils Network warned that 60% of its members anticipate having to make a fundamental reduction in frontline services, while just one fifth are confident that they can set a balanced budget next year. At a time of spiralling unemployment and a public health crisis unlike any known in our lifetime, we simply cannot afford further cuts to already overstretched and underfunded frontline services. The human cost would be unthinkable.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I am grateful to the hon. Member for Bethnal Green and Bow (Rushanara Ali) for giving us the opportunity to pay tribute to council staff across the country.
The whole country has been knocked sideways by the pandemic, and frontline workers in all sectors and industries have stepped up in the most tremendous way, and that really does apply to councils and council workers. They have faced huge costs and huge reductions in their income because of the crisis, but the real effect is not financial. It is on the staff who deliver services for councils. I want to acknowledge that. When we were having the daily press conferences at 5 o’clock, the leader of Wiltshire Council, Philip Whitehead, said to me in despair one evening, “Can we please have the press conferences in the morning,” because all those announcements were coming out and his staff were having to work right through into the middle of the night to respond. That made me realise how hard council staff work, not only out in communities, but in council offices as well.
I want quickly to acknowledge the financial commitments that the Government have made to local authorities through the crisis: nearly £5 billion of non-ring-fenced money, specific grants for a range of special activities that councils have to perform, £6 billion in cash-flow facilities to help councils, and compensation for the loss of fees they have incurred. However, I acknowledge that councils are still out of pocket, and we need to think about how that gap will be met in the months and years to come.
In Wiltshire we have a prudent council that has balanced the books in recent years. It has received additional money from the Government—£15 million is due. That is still to be confirmed, but we trust that it will arrive. Also it has been possible to increase the council tax through the social care precept, which, again, is to be confirmed. We understand and hope that it will be allowed. The authority still faces a budget gap of nearly £30 million, and I recognise that it will be a long task to match and meet that. I hope more money can be found.
I want to begin by thanking all those on the frontline of the pandemic, working to care for the elderly and vulnerable, collect our refuse, look after our children, and much more. Our frontline local government staff are essential workers in every sense.
We all know that local government funding has been decimated since the coalition Government started a programme of cuts in 2010. Since then, we have been subject to a slash-and-burn austerity programme that has led to councils losing more than half their budget in the past decade. Overall, councils in England can spend £7.8 billion a year less on key services than they did in 2010. That is a cut of £150 million a week. Drastic cuts to local government funding have seen the UK’s most deprived areas shoulder the burden of austerity. Poor areas have faced a threefold impact. They have less money to start with, they have been hit hardest by the demands caused by austerity, and are the least able to meet the shortfall with council tax.
Covid-19 has added fuel to the fire. The financial pressures of meeting the costs of tackling covid include lost income from council tax and other revenues. The total is between £10 billion and £13 billion for councils. I would usually be quick to point out that more is being cut from poor Labour councils than wealthy Tory ones, but after 10 years of cuts and a lack of meaningful funding through the pandemic almost all councils are now at breaking point, including large Conservative-controlled councils.
Naturally, though, I want to talk about Leeds. Our situation is not unique. It represents the situation that many, if not most authorities, are facing, but still the figures create a grim picture. Following significant extra costs relating to covid-19, the council is currently projecting, after the application of Government support, an estimated funding gap of £52.5 million for this year. For the year after, 2021-22, the projected funding gap is £118 million. Leeds City Council may have to make more than £95 million of cuts in the coming months if no extra source of income is found.
It is a pleasure to serve under your chairmanship, Mr Hollobone.
I start by thanking Suffolk County Council and East Suffolk Council for stepping up to the plate to meet the challenges posed by covid-19. I want to highlight the challenges that county councils face, taking into account my role chairing the county all-party parliamentary group. Councils have been on the frontline supporting communities during the pandemic. This has cost money, and the Government have met covid-related costs through four tranches of emergency funding. However, there is uncertainty about the potential costs of the current lockdown, which will not show on the latest local government returns to the Ministry of Housing, Communities and Local Government.
Covid-19 has starkly exposed the fault lines in the funding of county councils and will exacerbate the underlying financial challenges they face in areas such as adult and child social care, special educational needs, highways maintenance and school and bus transport. The County Councils Network’s budget survey of two weeks ago revealed that just one in five of their 35 council members was confident of delivering a balanced budget next year without dramatic reductions to services. In the following year, only one of those councils is confident of doing so.
In the immediate future, county councils are faced with an overbearing and seemingly insoluble dilemma. On the one hand, they will be expected to, and they will, play their role in the covid recovery. On the other hand, they will find that they have even less money to perform this vital task. Two thirds of the funding that county councils receive comes from council tax, and they will thus be exposed to the difficulties in collection that I fear will be inevitable.
The future is both bleak and intimidating for county councils. In the very short term, additional funds are urgently required both tomorrow and in the local government funding settlement that is due next month. Grants should be provided for three years, not one year, so that councils can plan strategically, and more money is needed for special educational needs. In the longer term, we must fix social care, and the Government must carry out the fair funding review.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I begin by thanking and paying tribute to my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) for securing this important debate.
Day in, day out, our local authorities are on the frontline fighting the virus and providing essential services that we all rely on, from bin collections, street cleaning and libraries to children’s services, social care and homelessness support. I pay tribute to all council workers, especially those at Barnsley Council. During the pandemic, we have relied on them to rapidly reorient themselves in a way we could never have envisaged: being on the frontline of the fight against the pandemic as well as supporting their businesses and residents, all while continuing their everyday essential work.
For that, they were promised “whatever it takes”; they should do whatever was needed, and the Government would ensure that they were not left out of pocket. Sadly, the rhetoric has not been matched by reality, certainly not in Barnsley. Our council has done an exceptional job of supporting residents, but that has come at an expected cost at the end of March of £50 million, including around £34 million in support for the most vulnerable and social care and relief to support businesses. The council also estimates around £16 million of lost income from council tax, business rates and fees. The Government income compensation scheme is expected to provide only £2 million to cover that, with that shortfall leaving the council with a loss of £15 million. The Institute for Fiscal Studies estimated the figure nationally at £1.1 billion, and that was before the second national lockdown.
Of course, this follows a decade of austerity in which Barnsley received the biggest cut in Government support of any council in the country. My constituency cannot afford to be left behind by this Government for another decade.
20 of 50 shown
There is another unfairness to the way in which funding was allocated, particularly Government grants, which have pretty much disappeared. That has made it very difficult for local authorities to deal with child poverty. Unfortunately, my borough, which includes two constituencies—Poplar and Limehouse and Bethnal Green and Bow—has the highest child poverty rate in the country. It is vital that the allocation of funding is fair and addresses the actual needs of communities. According to the Local Government Association, between March and June this year, councils have faced a bill of £4.8 billion because of extra costs and lower incomes due to the coronavirus pandemic. It estimates that the cost of the increased pressures on adult social care alone will be £533 million, and that the figure for public health will be £148 million. Future non-tax income losses due to covid will be about £634 million.
In summary, in terms of funding, the coronavirus pandemic has added even greater challenges to already pressurised local authorities up and down the country. And, of course, the worst challenges have been in poorer areas. I know that many other Members will want to speak of how their own councils have struggled with all those challenges while having to provide much-needed services during the pandemic.
In addition, local authorities have had to rise to the challenge of making up for the fact that the Test and Trace system has been inadequate. It is funded by the £12 billion provided to Serco and other private contractors, but local authorities have had to step in to serve their communities and make it work. They are taking on additional responsibilities because of the pandemic but not getting the necessary funding. The Government promised to provide that funding and it is falling short.
Although I welcome the £3.2 billion of emergency funding and the £300 million of funding for clinical commissioning groups, that still leaves a shortfall of billions of pounds, which is putting local authorities between a rock and a hard place. Labour, Lib Dem and even Conservative-run councils are struggling to balance the books. Some are going bankrupt or have declared bankruptcy. That is a big worry for communities, given that local authorities are on the frontline, cleaning the streets, looking after those who are vulnerable, dealing with the pandemic and providing support, including to the police service, which has experienced cuts, with 20,000 officers taken out of the system over the last decade. In reality, this means that communities such as mine in Tower Hamlets have faced £200 million of cuts over the last 10 years.
The extra costs of covid mean that a further £30 million will have to be found; otherwise services will have to undergo dramatic changes, which will have a damaging effect on people by 2024. At the same time, demand for services has grown. At the height of covid, my area also experienced the fourth highest age-standardised death rate in the country. The health inequalities and other factors that make people vulnerable mean that our local authority has to work closely with other agencies and their resources to protect people. Their actions have saved lives. There would have been an even greater number of deaths if local authorities and partners had not done that work, but they cannot continue to do it without support from national Government.
On education, schools are suffering and need support. Local authorities have worked closely with them to provide that support, but they need funding, as we saw in this summer’s debates about holiday hunger and child poverty. My local authority stepped in a long time ago to help keep children fed, but the food bank queues are astonishing. I would welcome the Minister visiting some of the food banks in my constituency. I joined others in visiting Bow food bank recently. The number of people using it has increased dramatically. They are not the usual suspects who need help because they are extremely vulnerable; middle-income families are also struggling because of covid, employment issues and lack of support. The need is greater, but the funding and resources are not there.
Other services under threat—and not just in my constituency but up and down the country—include those for young people with special educational needs and disabilities and those for young vulnerable children. It cannot be right that, in addition to the double whammy of the coronavirus pandemic and long-term funding cuts, the future life chances of the most vulnerable are being further damaged. We need the Government to act and use tomorrow’s spending review announcement to make sure that local authorities get the support they need to protect our communities.
I am sure that the Minister will say that there are limited resources. Of course there are, but the question is how the money is being used. We have to ask this. Is it right that, for instance, the towns fund—the NAO and others have pointed this out—which is more than £3 billion, is allocated in the way it has been rather than by focusing on indicators of need? That cannot be right. That kind of favouritism is what breeds distrust. It smacks of pork barrel politics and is absolutely unacceptable. How money is allocated and spent is crucial. Of course, there have also been scandals about personal protective equipment and other scandals.
It is right to say that the Government need to refocus their resources in a way that is fair and appropriate, because many local authorities and not just mine—Sunderland, Knowsley, Sheffield, Gateshead, South Tyneside, Oldham and many others—desperately need additional funding but are not getting it. I could go on, and I am sure other hon. Members will, about the number of local authorities that need support but are not getting it.
We need the Government to think quickly and act quickly to ensure that local authorities get the support that they need. If they do not, we will face, in the middle of a second wave of coronavirus—in the middle of a crisis like no other—more lives being put at risk not only by of the pandemic but by the failure to address the secondary effects of extreme vulnerability through local action and support, because local authorities will not have the capacity and resources to act.
I hope that the Minister will take on board my concerns and those of others about children and young people, adult social care and the wider issues of the underfunding and neglect of local government, which is at the frontline of delivering services and does not get the recognition and credit it deserves for the work it does. These are decent public servants who work very hard to deliver for our constituents. We need to back them up and support them, because if we are to fight and win the battle against the coronavirus pandemic, we are going to need them even more than ever before. We are also going to need a collaborative effort from the private and the public sphere to deliver implementation of the vaccine, as well as to improve testing and tracing, on top of all that they already do.
I hope that in today’s debate we can build consensus among Members of all parties to make the case for local government, because it is absolutely at the heart of addressing not only the challenges we face with the pandemic, but the long-term challenges of tackling inequality and genuinely fighting to level up. If the Government genuinely meant what they said in the election about levelling up, they need to put their money where their mouth is and deliver. I hope that the Minister will make that case later today to the Chancellor of the Exchequer, ahead of his statement.
In March, the Secretary of State for Housing, Communities and Local Government promised that the Government would support councils in doing whatever it would take to protect their communities. Now it is time to honour that promise. The Government should listen to the Local Government Association and provide a minimum of an additional £8.7 billion in core funding over the next financial year. Councils in areas as diverse as Wirral, Nottingham and Gloucestershire have also called for the cancellation of debt held by the Public Works Loans Board. That would massively increase the spending power of local authorities and allow them to make critically important investments in housing, adult social care and green development.
I want to finish with two more strategic solutions that all councils have to grapple with, and opportunities that they can take. The first is in reform of social care, which makes up the bulk of spending by local authorities—65% in the case of Wiltshire. I am not going to get into a debate on how to reform social care, but clearly our model is not working and we need to fix it and the financing of it. I support the call by the Health and Social Care Committee and the Housing, Communities and Local Government Committee in the last Parliament for a new model of social insurance to fund social care, which will enable us to get on top of costs.
Finally, I want to pay tribute to a Labour council, Wigan, which, over the last 10 years, has faced all the challenges of austerity, and coped with them by doing a deal with the community of Wigan—the people of Wigan. It kept frontline services open and cut its own back office. It kept the frontline services open by trusting communities and working properly in partnership. That is the model for all of us.
Council staff are in the frontline in the battle against this disease. Bus drivers, social workers and public health officials are all vital to the proper functioning of cities—now more than ever. But at Leeds City Council jobs are being hit. The most recent figures put the projected job cuts at around 800 with the current funding gap. The council has done everything asked of it, including lending its chief executive officer to the Government to assist with track and trace and going door to door in areas talking with local communities.
Labour councils in this country have found new ways to help their citizens with the pressures they face. Labour councils make, and continue to make, a huge difference to people’s lives despite a Conservative Government whose policies have left gaping holes in their budgets. I would like to pay particular tribute to Leeds City Council administration, which has done great work in providing frontline services, including to black, Asian and minority ethnic and older people, who have been hit hardest by covid.
The Government must now honour their pledge, do whatever it takes and step up to help with Government underfunding in the future, including in tomorrow’s Chancellor’s statement, to help close fully the funding gap in Leeds of £118 million.