Speech delivered to the Annual LGA Local Government Finance Conference, 8 January, 2019.
It’s my pleasure to come to come to speak to you as we welcome in the new year.
Firstly, a thank you – over the past eight years, despite the funding pressures, and despite the challenges, you are improving the life chances of our children and young people, caring for the elderly and vulnerable and keeping our local public services going at a time when demand for them has increased and funding has fallen through the floor.
Indeed Government has massively reduced support for local government in England, it’s funding now 77% less in real terms than in was in only 2015.
And even if we include the new powers that have been provided to local authorities to retain some of their income, since 2010 there has been a 28.6% real-terms reduction in ‘spending power’, the government’s preferred measure.
And as you know, alongside these reductions, you’ve have had to deal with growth in demand for support services for homelessness services and adult and children’s social care.
But the innovation you have shown over these years has ensure that the most vulnerable in your communities receive the support they need, that front-line services have been protected as much as possible, and has allowed local government to become one of the most efficient parts of the public sector.
I will make sure that this important work is not forgotten by the next Labour Government and I will make sure that councillors and local people are at the heart of rebuilding our communities.
Until then, I will continue to work with the LGA to help champion the work that you do.
I want to also thank LGA Chairman, Lord Porter, who continues to be a powerful voice for local government on the national stage. In an increasingly polarised political environment, it is important that we work together and create a better future for the people that we serve. I want to say clearly to you Gary, that Labour will back you up as you continue to champion the cause of local government here at the LGA.
And finally, thank you Nick and the LGA Labour Group team. I want to thank you for the work that you do in supporting our Labour Councillors that are at the forefront of delivering our vision, empowering our communities and rebuilding local institutions and local services.
Local Government Finance Settlement 2019/20
Two years ago on the steps of Downing Street, and again in her new year message last week, the Prime Minister promised to build a country that works for everyone.
And at her conference last year, she promised to end austerity.
But even before Christmas came, we were able to test this promise – and I expect that like me, many of you felt let down.
We saw a Provisional Local Government Finance Settlement of smoke and mirrors.
Yes, some more resources roads and social care, though nothing like enough to meet demand or plug the gaps, and as we know for many councils, the pressures continue with a further £1.3 billion cut to central funding for local government.
I expect that the Secretary of State will later mention that the settlement offers an increase in spending power next year for local government by 2.8% – but let’s bust this myth.
Last month’s announcement announced more austerity, a further £1.3 billion cut to central government funding for local government.
These cuts are expected to be partly offset by you – Councils will need to to increase Council Tax again
This is not fiscal devolution; it is another attempt by the Government to devolve the blame for their cuts on to you, and to shift the pain onto the council tax payer.
This is local administration – not local government.
And the fact of the matter is – areas like the one I represent cannot bring in anything like the resources that are needed to meet the growing demand for social care from council tax – let alone see an increase in spending power.
Researchers from Cambridge University have laid bare the uneven geography of local government funding under the Conservatives. They find that since 2010, changes in local authority spending power range from a drop of 46%, to a fall of a mere 1.6%.
But it’s the areas with a greater dependency on government funding that have been hit hardest. These are areas that often have relatively limited opportunities to raise extra revenue by other means, and face a high demand for services amongst residents.
Such a move means that austerity is hitting struggling families three times over:
First as the services they rely on are cut back or taken away
Then they’re forced to pay more for less through council tax
And then again, as poorer areas will fail to raise as much as wealthier areas, meaning more cuts to public services.
Comparing these reductions to the Indices of Deprivation shows that the more deprived areas tend to correlate with bigger cuts in service spending, and in the least deprived areas, the spending cuts tend to be smaller.
This is supported by IFS estimates, that suggest if we include additional revenue from business rates retention, since 2016 the most well off councils have actually seen an increase of 2.8% to their spending power – whilst the poorest areas have seen little growth despite the growing pressures on their services.
Adult and children’s social care remains one of the largest issues facing councils. The Government’s own NHS plan published this week recognised the importance of local government stating that the funding that councils receives “directly affects demand for NHS services”, adding that action by the NHS ”is a complement to, but cannot be a substitute for, the important role of local government”.
But yet, according to the LGA the sector is £1.3 billion short next year, and needs £2 billion for Children’s Services.
The re-announced £650 million promised last year to be split between supporting children and adults is a drop in the ocean of what’s needed and forces councils to pit vulnerable adults and vulnerable children against each other. Worse at the PLGS we were told that this funding would also be called on for NHS winter pressures.
And now, we are told that the publication of the Green Paper on the future of adult social care has once again been pushed back, now missing it’s delivery date four times.
These repeated delays cannot continue.
It would also be remiss of me not to briefly turn to Brexit.
Janet Sillet of the Local Government Information Unit wrote last year that Ministers had promised local government a seat at the table, “but it’s fair to say that after a year it’s very obvious that there’s no seat, there’s no table, and there’s probably not even a single room or group of people for local government and the public sector to engage in over Brexit.”
Sadly since then, although we have seen some improvements, we need to see far more engagement with the sector.
I know that the Secretary of State warned the Treasury last week that councils need more funds for Brexit preparations, but yet earlier this year we found out that his Department had failed to bid for any of the first £1.5 million pool of funds for preparing for Brexit.
And just before Christmas, the Government snuck out that they will give Local Government a measly £35 million for Brexit preparations next year – paling in comparison to other departments.
So the Secretary of State is right – you do need need more support from Government, but this should have come much sooner.
This is no way to run a whelk stall, let alone a country.
So although I know there will be debate amongst us here today on the solutions to the crisis in local government; we all agree that the current approach is not sustainable and as we approach the cliff edge of Brexit, and the cliff edge of local government funding, we may soon find the ground crumbling underneath our feet.
Labour’s vision for Local Government
At last year’s conference I spoke about the need for a new settlement with local government to address these challenges and those beyond brexit.
The ambitious GE manifesto the Labour Party stood on in 2017 requires local government to play a key part in delivering the social change that we want as a party to see. I’ve calculated that 44% of our manifesto will be delivered at the local level by local government. But also, I want to see a rejuvenated local government sector as a force to rebuild democratic accountability and in trust in public service..
We pledged £8 billion extra to social care, with £2.1 billion in the first year. We would also give an additional £500m a year for sure start and early intervention services, so we can once again make sure that every child a fair chance to succeed and is given the best start in life. Alongside this Labour will fully fund public health services, establish a new national target to narrow health inequalities and prioritise the health and wellbeing of every child. And £1.5 billion for general council services too.
Under a Labour Government, our councils would be massively better off this year, and in opposition we will initiate a review into a local government finance to deliver a new settlement, built on a strong foundation of a resourced, sustainable and empowered local government – but extra money isn’t the whole solution, we need a local government system that is fit for purpose.
I also know that today I am giving a typical opposition speech – and I know that it is often thought that by nature all governments are centrist and all oppositions are localist.
So I want to provide you with some assurances and an indication of the work that we are doing to make sure that the next Labour Government is able to deliver the localism that I want to see – and I ask that you suspend judgement, and judge me on my record and the record of my party.
I want to see a clear national framework that offers determined devolution for every community – with clear accountability and governance, and with standards and statements of entitlement.
For Britain to thrive, every nation and every region must grow and reach its full potential, developing an inclusive economy that is built on a strong foundation.
During the general election we said that we would initiate a review into Devolution and Local Government, and I am proud to say that this work is already underway, with my colleague Jim McMahon leading on this work.
A new green paper will be co-produced with the sector, and we will reach out to understand how we can develop an offer for every community in England. We will also work closely with the LGA and Council Leaders on this.
This work will allow us to build a framework for a significant redistribution of power and resources to local areas and will address questions like: What is the purpose of local government, what should its role be, how can it empower communities, what extra freedoms does it need and how do we fairly and properly resource it to enable it to do these tasks?’
But Local Government also needs to be properly empowered to shape your communities.
So alongside this work we are also undertaking a review of the planning system, to deliver a “system of local plan making that is genuinely democratic’’. Our Planning Commission led by Roberta Blackman-Woods includes representatives of professional bodies and is holding meetings across the country to ensure that the views of local people are heard.
Working with you in local government, I want to take further the good work you already do – leading the way on innovation, transformation and shared services.
This means recognising the expertise and potential within local government – of the knowledge you have of your local economies, and seeing each other as collaborators.
It is only through a true partnership between national and local government, working together more closely than we ever have before, that we will be able to deliver the transformational plan that this country deserves.