Local Government Finance Debate
This is the debate:
This is me arguing my view that spending cuts should be in proportion of spending power.
John Hemming (Birmingham, Yardley) (LD): I thank the Minister for meeting MPs from Birmingham to look at this issue, and I congratulate hon. Members generally on highlighting the difficulty of working out what a fair system is for allocating local government finance. The Government have focused on percentage reductions in spending power. Does the Minister agree that, after incentives, looking towards the reduction in percentage spending power, not absolute spending power, provides an equality of pain that gives us a way forward? It takes into account the fact that in areas like Greater Birmingham, where people work in Birmingham but live around it and require services from Birmingham but are not contributing towards—
Brandon Lewis: Thank you, Madam Deputy Speaker. The hon. Gentleman made that point in the meeting we had. As I said to him, I will happily go through it in more detail over the next couple of months, meeting him and officials to look at some of the ideas he is talking about.
I also managed to get Labour's position confirmed:
John Hemming (Birmingham, Yardley) (LD): If the Labour party wins the general election it proposes further cuts. What formula would it use to identify the equity or fairness of any distribution of cuts?
Andy Sawford: The Labour party has said that we accept the Government’s spending plans, but what we will not do is cut in such a fundamentally unfair way. I will come on to what the Labour Government will do.
later he said: "Hon. Members have asked about the next Labour Government’s plans. We will not be able to stop the cuts or turn back the clock, but we will put fairness at the heart of the relationship between central and local government, and at the heart of our approach to local government finance."
He would not, however, give any details as to how Labour would approach the issue of the distribution of cuts. I think it is possible that they may come to a conclusion not dissimilar to that which I have argued.
Other MPs also tried to draw Labour on what they would actually do (with a similar lack of success)
Mr Graham Stuart: I am grateful to the shadow Minister for giving way; he is being most generous. I notice that he did not respond to the question from my hon. Friend the Member for Birmingham, Yardley (John Hemming) about where Labour would make cuts. On the issue of need, density was given four times the weighting of sparsity, even though there is no link between density of population and increased cost and delivery of services. How was that fair?
Andy Sawford: If the hon. Gentleman will be patient for a moment, I will, of course, come on to what Labour will do if it forms the next Government. On sparsity, I took part in the debate that he and others led last year, which I thought was excellent. I recognise many of the issues that he raised and there is a sparse rural authority in my constituency in East Northamptonshire. The formula should of course take account of rural sparsity, as well as urban deprivation. There is always a debate to be had about fairness within the system, but what is critical is that the part of local authority funding with fairness at its heart—notwithstanding the debate that will be had—is now being eroded, so the opportunity to ensure that funding is fair and according to need is being lost.
I am making some progress in arguing that cuts should be linked to spending power (as a proportion). However, it is important to note that MPs for rural areas continue to express concern that their spending power per person or per dwelling is much lower than urban areas even though many rural areas are quite poor. Their argument is that they get lower services as a result. My view is that a system based upon spending power is more likely to get consensus (which will never be 100% anyway).
The big issue for Birmingham, however, is that if Labour win the general election there will be further cuts in support for local government. Hence Birmingham has to plan on the assumption of Liam Byrne's note from the last government to David Laws "Dear chief secretary, I'm afraid to tell you there's no money left."
I don't like cuts. I accept that there are some politicians who wish to see state spending as a proportion of GDP driven lower. I take the view that a 40% or so figure is not unreasonable. What is now clear is that the government's policies are based upon necessity rather than an ideology of cuts.