Mr Clive Betts
MP for Sheffield South East · Labour · United Kingdom
“I wholeheartedly welcome the Foreign Secretary’s statement, both its content and its tone. I would like to ask about his discussions with our colleagues and allies in other countries who are looking to implement similar sanctions.”
“I offer two congratulations: first, to my right hon. Friend and constituency neighbour, the First Secretary, on her well-deserved promotion—I am sure she will do an excellent job. Secondly, I congratulate her and the Prime Minister for their real commitment to devolution, which I have wanted to see for an awfully long time.”
“I apologise for the fact that—as I have explained to you, Madam Deputy Speaker—I will have to leave straight after my question to chair Westminster Hall. I thank my right hon. Friend for doing this very challenging piece of work. I think that the theme of fairness, for the people who need benefits and for taxpayers, is right.”
“On the other hand, so many constituents with really serious conditions get turned down for PIP, and can get it only if they struggle through the appeal system, sometimes without any help at all. So the system is not fair to anyone at present.”
“When the previous Government let the contract, we were in a situation in which procurement could not properly take account of the past record of companies, and I understand that the Government have now changed that.”
“I will dive very deeply into the question, Madam Deputy Speaker. The Chair of the Committee sends his apologies for his absence; he is presently in a Committee meeting.”
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“We looked at that issue and it is clear that there have to be proper governance arrangements if local authorities are to have not just large amounts of extra spending to control, but greater tax-raising powers, as we also recommend. We looked specifically at the combined authorities, which is the issue my hon. Friend refers to, and we have said that different government arrangements might be suitable in different areas. A directly elected mayor might be appropriate in some areas and a strengthened Public Accounts Committee could scrutinise the work of the executive of the combined authorities. In other areas an indirectly elected mayor might be appropriate, as is the case in Bologna and other places in the world. There are different models available, but no single one is necessarily the right one for every area.”
“That is an interesting question. I do not think there is anything in the water of members of the Communities and Local Government Committee that would prevent that. Members on the two Front Benches probably have slightly different water that affects the way they think on certain issues. I will come back to that in due course.”
“I hear what the right hon. Gentleman says and I think the issue of accountability is important, but it can be dealt with in a number of ways. Instinctively, my view is that these things should be decided at a local level, and areas may come to different views about how accountability should be exercised. I do not think that it is up to us to prescribe one model for how that should happen.”
“There are two aspects to that intervention. The first is that we did not look at income tax, although we said at the end of the report that, in terms of fiscal devolution, there is a case for considering income tax and VAT further. That is an issue for the future, but we recognise that it has to be addressed. The second issue probably strays into the area of English votes on English laws, which the Committee did not go into, but there is a case for devolution within England to more local areas irrespective of how Parliament addresses the other issue.”
“People feel that we in Westminster are somewhat out of touch with what happens in their daily lives, and there is more chance of reconnecting politicians and the democratic process with people if decisions are taken at a more local level.”
“We came to the conclusion that in England we should not be creating new bodies or regions, for example, and that we should base devolution on local authorities and combinations of local authorities—the Government have at least welcomed that fundamental recommendation. Why not local authorities? Greater Manchester has a larger gross value added than Wales, and London has a larger GVA than Scotland, Wales and Northern Ireland put together. Those are large economic entities, and there is no problem about devolving powers to them. We came to the conclusion that devolution was beneficial for growth, a way of delivering better public services that are better related to local need, and a possible way of re-energising the democratic process.”
“Indeed, the Mayor said that Ministers “could not ignore” the “excellent” findings, as it would “provide England’s cities with the means, incentives and crucially the stability of funding to deliver much needed jobs, growth and infrastructure”. The Mayor of London is clearly with us, and he is pushing Ministers a little bit further than they are currently inclined to go. We have had subsequent reports from the Institute for Public Policy Research, ResPublica, the City Growth Commission, and we now have the Independent Commission on Local Government Finance from the Local Government Association and the Chartered Institute of Public Finance and Accountancy. All have come to a similar direction of travel on devolution, perhaps with slight differences concerning how it should be done.”
“I would say to both Government and Opposition Front Benchers that they do not seem fully to have bought in to the level of change that the Select Committee has recommended and which I think we need. I am sure we will have an ongoing debate with them both over a period of time. The report was written before the Scottish referendum, but it anticipated that more taxation and spending powers would be given to Scotland and Wales. Very simply, I think that what is right for Scotland and Wales is right for England, and we followed that very simple rule. The report was also written after the London Finance Commission report, which was supported by the Mayor and the London boroughs, as well as the eight Core Cities. All those bodies and the Local Government Association have welcomed our report.”
“I would say to the Minister that responses are supposed to be made within eight weeks, not eight months. The response was rather a long time in coming, as though the Government could not quite get their collective view together about what should be done. It was very good to hear the comment that the “Government welcomes this report’s contribution to the ongoing public debate on the scope for devolution and decentralisation within England.” That is welcome, at least as a contribution to the debate, but there were not many welcomes in the Government response to the Select Committee’s specific recommendations. I have obviously also read the briefing from those on the Opposition Front Bench.”
“The hon. Gentleman is absolutely right. Indeed, the Committee visited Manchester as part of the inquiry, and it found exactly the arrangements that he has described. We also went to look at the arrangements in Lyon in France. Interestingly, it has attempted, with the development of the grande métropole, to pull authorities together into almost a combined authority arrangement. It currently has an indirectly elected mayor and it will eventually move to a directly elected mayor, so it will have two different governance arrangements in the same area within a short period. There are therefore clearly alternatives. The report was agreed unanimously—it is a cross-party report—and it was very much written with the next Parliament in mind. The Government made a response, as they should to a Select Committee report.”
“I hope that colleagues will discuss with their colleagues in local government in Greater Manchester how that process can be made truly accountable and how social care and health can be joined up—I think that aspiration goes across the House. I have been concerned that the debate could lead to social care being transferred to the health service, and local accountability being lost as part of that process. I therefore welcome what the Government have done to put health commissioning into the arena for local councillors to commission along with social care, as that is an interesting step forward. A lot of detail is required to ensure that that is done properly and with true local accountability, but the principle of putting that measure into the local arena, rather than centralising it to NHS England, is probably correct.”
“The Prime Minister has made a really important point. It means that those who spend taxpayers’ money must be made more responsible for raising it. That is an absolutely fundamental point. Devolution is not simply about handing money out from the centre and allowing more say in how it is spent at local level. It is about holding local politicians to account not just for spending the money, but raising it in the first place. That is fundamental. If the Government resist that, they will stop the general flow of movement throughout the House and the country that requires genuine devolution that is more than simply decentralisation of spending powers to take place.”
“In that sense, we are disappointed with the Government’s response, which seems to equate fiscal devolution with a desire to raise taxes everywhere. The two are not the same. Fiscal devolution is about making tax-raising decisions at a different level, not necessarily about raising taxes through those decisions. I think the Government missed that point. I hope the Minister agrees with the Prime Minister, when he said the other day: “Today’s agreement paves the way for a referendum, that could deliver an assembly that’s not just a spending body but is actually responsible for raising more of its revenue too. And to me that is responsible devolution, that is real devolution and I think that is vital for Wales”. It is vital, too, for Manchester, London and the other major cities that we are going to devolve powers to.”
“Indeed, the words “postcode lottery” did not come from local government but from the NHS because things have been done differently in different parts of the country. More accountability through mechanisms that will potentially be set up is the way forward. I hear the concerns, but they are a debate for Members to have with their colleagues in councils in Greater Manchester. The Committee defined fiscal devolution as: “handing to local authorities the power to raise money through a range of existing and new taxes and charges; some responsibility for setting those taxes; and the facility to borrow.” We contrasted that with decentralisation transferring powers over service delivery and spending to local authorities. We welcomed these developments, but said that greater control over local spending did not constitute devolution.”
“Without going into the details of Greater Manchester, which I do not know all the aspects of, this seems to be a debate between the combined authority, and the collective of leaders there, and individual local councils about further localisation. In my view, devolution does not simply stop with the transfer of power from central Government to a local authority or combination of authorities; it is about how combined authorities enable devolution within their areas to existing local councils, and how those local councils ensure that devolution goes out of the town hall door and into local communities. We cannot be too prescriptive of those stages in this debate, but I understand the concern about losing national frameworks. The idea that everything in the national health service works similarly across the country is not true.”
“Unlike other countries where the GVA of their major cities tends to be above the national average, with the exception of London and Bristol, the GVAs of the major cities in this country are actually below the national average. There is a fundamental problem there. Devolution does not necessarily guarantee more growth, but it removes some of the current restrictions on decisions being taken at a local level that can make growth take place.”
“That has been true so far, but the positions in Scotland and in Wales are going to change. They will have more tax-raising powers and will be held to account. Otherwise, we will have a body that simply spends and gives out the largess, but is not held accountable for raising the money in the first place. The Committee tried to deal with some difficult issues. We recognise that we may not have got absolutely all the details right. We felt, on balance, that there was a very clear case that devolution would encourage greater growth, particularly in cities. That applies to counties as well, but there are very clear figures for cities.”
“There is no other tax in this country for which we have to have a referendum to increase it. Those sorts of freedoms could be given straight away. We thought there could be further freedoms by pushing the commissioning of the Work programme down to all local authorities and that controls over fees and charges could be freed up. Why should the Secretary of State fix fees and charges? They should be fixed at a more local level.”
“Friend the Member for Wigan (Lisa Nandy) present. Indeed, the Government intend to introduce primary legislation to allow those sorts of powers to be taken by the combined authorities. We also recommended the devolution of 100% of business rates, setting the multiplier on business rates, stamp duty and capital gains tax, and flexibility with council tax bands as well. Although all local authorities could go there, we thought there were some changes that could immediately be made to the powers available to all local authorities, including the complete freedom to set council tax. It is quite staggering that the one tax that local authorities have got—the one that is supposedly theirs—is one for which any increase by more than the Secretary of State thinks is appropriate has to be put to a referendum.”
“We thought it would probably be useful to have a body like the Office for Budget Responsibility in the local government sphere. In principle, we are recommending that a framework be set out for how more powers could be devolved, with local authorities setting out their governance arrangements, how they will be fiscally responsible and the sort of strategy they have for using any powers that are devolved to them. We recognised that progress would probably be made more quickly in some areas than in others and that initially the GLA and the combined authorities would probably be best placed to take on those powers. We see them very quickly taking on place-based budgets, strategic planning and housing, and the sorts of health arrangements proposed for Greater Manchester—I will be careful to go back to that with my hon.”
“It is a complicated issue, but we thought that the Government had basically got it right in their business rate retention scheme, which could be used as a model for the totality of business rates, or for stamp duty or capital gains tax, bearing in mind the fact that stamp duty is much more a London issue and therefore slightly more complicated. We recommend the idea in principle, but we recognise that it needs to be looked at in the way the hon. Member for Bromley and Chislehurst mentioned. We tried to deal with equalisation. We suggested that an independent body be set up to deal with problems of resetting and other issues where there might be a conflict between central and local government. The Government dismissed that and thought that they could do all those things.”
“Some receipts might in future be disproportionate, perhaps because of a very large increase in rateable values that are not directly linked to the efforts of an authority, so there should be a resetting arrangement every so often to take account of that. We thought that was quite a careful way of doing it. We have probably gone further, in that we recommend that the totality of business rates be kept at local level and there should be a right within a group of authorities, a combined authority or the Greater London authority to set business rates as well—and obviously the element of any increase in the business rate level should not be taken back by central Government.”
“I was going to come on to equalisation. Some areas have a greater ability to create and get the benefits of growth than others. This was a difficult issue, and we looked at it. I see the former Minister the hon. Member for Bromley and Chislehurst (Robert Neill) in his place. We thought that what had been done with the business rate retention scheme, or at least the partial retention scheme, was actually quite a good model: a starting point where a certain amount of tax is collected and transferred to a local authority in exchange for the grant that is currently given. The extra receipts that come in through growth would be kept in that area.”
“Yes, and I congratulate my hon. Friend and his Select Committee on the work they have done; indeed, we have worked together on a number of these aspects. He is absolutely right: there ought to be some fundamental commitment to the rights of local authorities to have these devolved powers. The worry is that everyone feels that this is a great thing now, but in five years’ time it could be reversed. There needs to be a degree of certainty about the direction of travel we are moving in.”
“It is possible for a Secretary of State to have reserve powers to intervene in extremis, as indeed the Secretary of State has powers to do now. [Interruption.] I hear a little whisper from my hon. Friend the Member for Nottingham North (Mr Allen) about what happens when the central Government behave in a completely irresponsible way—who can deal with them? At the local level, the local electorate can take a view.”
“As the Select Committee said: “The point has been reached for the Government (and policy makers in other political parties) to make it clear whether they are committed in principle to large-scale and more comprehensive fiscal devolution in England.” We as a Select Committee are, and we believe that all those on the Front Benches should be, too.”
“If Scotland can vary it, there cannot be a total managed expenditure that is absolutely fixed, because it cannot be cut elsewhere to compensate for Scotland’s increase. The principle has been accepted, and the Treasury has to relax more about allowing local authorities to raise money for investment purposes at local level outside the controlled total. Finally, let us return to what the Prime Minister said about devolution in Wales: “That means those who spend taxpayers’ money must be more responsible for raising it.” That is a fundamental point. It is why fiscal devolution, as well as spending devolution, is essential.”
“I am sure lawyers will not be out of business any time soon on this matter The hon. Gentleman is absolutely right. In our recommendations on extra borrowing powers as part of a devolution package—including the housing revenue account and using tax increment financing more actively as local authorities have complete control over business rates—we make it clear that all the borrowing has to be done within the prudential borrowing rules. That is absolutely clear. There is one other major issue: the control total for total managed expenditure that central Government use. The Government have already had to accept that if the Scottish Parliament decides to raise more money and spend it, that has to come outside the total.”
“Thinking slightly cynically, may I ask my hon. Friend whether he thinks that Treasury Ministers and shadow Treasury Ministers are interested in pushing more spending powers down to local level because they think that they can get better value out of that arrangement and that if there is more austerity to come, local government would probably manage it better?”
“I agree with my hon. Friend that many questions about the deal in Greater Manchester need to be asked and answered, and locally elected Members of Parliament should be involved in that process. Is it not crucial, however, that if we are to join up health and social care, there should be accountability to local elected politicians for the spending of the money? Is that important issue not embedded in the whole process?”
“I read out a quote by the Prime Minister, which I presume the Minister agrees with, about proposals for increased fiscal devolution in Wales. So far, he has not talked about fiscal devolution at all. The Prime Minister said: “That means those who spend taxpayers’ money must be more responsible for raising it. This is devolution with a purpose”. Does the Minister agree with that in principle, and if so, if it applies to Wales, why does it not apply to Manchester, London or Sheffield?”
“The Minister says that local government has to bear its fair share of the cuts. Does he accept that according to the Office for Budget Responsibility—the Local Government Association produced these figures for us—if we exclude spending on schools and public health, which local authorities cannot affect, in 2009-10 local authorities represented 19% of public expenditure? By 2015-16, it will represent 16%. In other words, local government has surely borne more than its fair share of cuts. It has had more cuts as a percentage than the rest of central Government services.”
“I agree with the hon. Gentleman on the business rate—the direction of travel is right, and it is sensible to move towards total retention—but is there any evidence that the new homes bonus has led to the building of one additional home?”
“That is why the deficit has been cut to only a third or a half—depending on the definition —of its original level.”
“This Parliament will clearly go down as the Parliament of austerity, but let us go back to 2010 and look at the situation when we began this journey. At the general election in 2010 the economy was growing— [ Interruption. ] I know Conservative Members do not like to hear that, but it was growing. The Government made a commitment in the coalition agreement to removing the deficit over the course of this Parliament, but that has not happened, has it? That is because the economy stopped growing because of the immediate severity of the cuts. As a result, not only did that happen, but real wages have not grown, the tax take has been less than anticipated, and the increase in housing benefit paid to people in work has grown substantially.”
“Has it been fair to local government as a whole, to Conservative councils as well as Labour councils, because they will make that point strongly? Why has local government been asked to bear the biggest burden? There is another way of putting that: why do Ministers believe that the services our communities receive from their local councils are less important than other public services? That is important.”
“That is interesting. If the hon. Gentleman is saying that the fundamental problem was a major dislocation in Europe and the world because of the banking crisis and collapse, it is difficult to blame it solely on the Labour Government. After the major dislocation and the recession, the economy had started growing by the time of the election in 2010. It then went back into recession. That is what happened. We are where we are. Through all the austerity and the pain of service cuts, the deficit is at least half of what it was. In other words, the Government have missed their target by at least 50%. That is the position. Nobody will dispute that, will they? It is fairly clear that the Government missed their target by at least 50%. We have had all that austerity, but has it been fair?”
“That is where it is accounted for. Ministers cannot count it in both the Department of Health budget and the Department for Communities and Local Government budget. That would be double counting. Ministers count the better care fund in the Department of Health budget, and say, “Ah. We do not talk about the actual grant and money for local authorities. We talk about spending power.” Although the better care fund is in the Department of Health budget, they say that it is part of local government spending power. That is how they get their calculation down to 1.7%. That is how they do it—by sleight of hand. We cannot have that double counting. That is not to decry or demean the better care fund. The concept of trying to join up health service and local authority social care is obviously a good one.”
“The Government have tried to spin the 2015-16 cut as a 1.7% cut in spending power, but we should again look at the figures produced by the LGA, which are based on OBR figures. The real figures that local authorities can control, on a like-for-like basis over the years, excluding the better care fund, council tax and the public health grant, which is ring-fenced, show that the cut is 8.5% in real terms. That is the figure. Ministers like including spending power and they like the better care fund. Hon. Members should read the exchange that the Communities and Local Government Committee had with the permanent secretary recently. He accepted that the better care fund was not part of the grant from central Government to local authorities. That money is included in the budget of the national health service, in the Department of Health.”
“The hon. Gentleman shouts, “We were protecting the health service,” but social care provided by local councils is as important. Of course, that is not protected from the reductions. The figures I quoted earlier were from the Local Government Association and the Office for Budget Responsibility, so they are clearly right—perhaps hon. Members want to challenge them. The spending that local authorities can control—which excludes schools, public health, which is ring-fenced, and housing benefit—has fallen from 19% of total public sector current expenditure in 2009-10 to 16% in 2015-16. That is a disproportionate cut in local government spending compared with public spending as a whole. There is another way of looking at it: local government spending as a percentage of GDP has fallen from 4% to 2.9%. That is a significant fall.”
“It is one thing to argue the biggest amount, in cash terms, should come from authorities with the most cash given to them, but why should they have the biggest percentage cuts? What is the logical argument for that? How can it possibly be right that over the period of this Parliament, between 2010-11 to 2015-16, Sheffield’s spending power—I will use the Minister’s own definitions —has fallen by £230.60 per head and Wokingham’s has fallen by £2.29 per head, only 1% of Sheffield’s fall? How can there be any rational, reasonable justification to explain that cut? How can there be?”
“I will make a little progress and come back to the hon. Gentleman. There are major issues. Why are local authorities singled out for bigger cuts? Within local government, why have the deprived communities had the largest cuts? Ministers could make a logical, rational argument. They could say that the authorities with the biggest grant might lose the most grant in cash terms. I might not agree with the argument, but I can see a logic to an argument that says because authorities have so much more money given to them historically, they are likely to lose more when cuts are made. Can Ministers sustain an argument that says authorities historically receiving the most grant, the most needy authorities, should therefore have the biggest percentage cuts? What is the logic for that?”
“Sheffield ended that service because it was cheaper to go to a private supplier that had lower overheads, mainly because it does not train as well and pays the minimum wage at best. I then met a constituent on Saturday whose elderly father’s carer missed four appointments. After 36 hours his father was found collapsed on his bedroom floor and, of course, was admitted to hospital. Why was he admitted? The care package had failed. Why had it failed? The authority was having to make cuts because of the budget cuts. That is the reality of how things are in local government at present. That is not a bad authority trying to do it on the cheap, but an authority trying to reduce spending, because of the massive cuts it is facing, by another £60 million next year. In the end, much of that will have to fall on social care, the biggest budget.”
“They have taken money away from the most needy and given it to the most privileged. That is what they have done, to the point where the spending power of Wokingham in two years’ time will be greater than the spending power of Sheffield on a per-head basis. Sorry, but that is just not reasonable and no one can justify it. The impact is there for all to see. I went around my constituency last weekend and met people. We talk about the need to join up social care and the health service—of course we need to. Sheffield had a wonderful in-house care service provision called “Care for you”, which dealt with some of the most needy people who were in their own homes and required extensive support.”
“Absolutely. As I say, Ministers can make an argument that those who have had the most grant might lose the most cash, but not that they should have bigger percentage cuts. They are the areas in greatest need. In two years’ time, we will have the ridiculous situation where Sheffield and most of the northern cities, such as Liverpool and Manchester, will have a lower spending power per head than Wokingham. Can anyone on the Government Benches justify that? It is simply not reasonable. The hon. Member for Bromley and Chislehurst (Robert Neill), an ex-Minister, said he suspects a future Labour Government would find surreptitious ways to redistribute money back to Labour authorities. I think we can be open about this: this Government have not been surreptitious. They have done it blatantly.”
“In the end, do Ministers seriously believe that in the next Parliament we can continue with the same level of local cuts and maintain the financial sustainability of local councils and the services they deliver?”
“I am a decentralist, and I speak on behalf of the Select Committee. We would decentralise not merely spending responsibilities, but tax-raising responsibilities, which the Labour Front-Bench team is beginning to move towards, with full responsibility for retaining business rates locally. I hope we can go further, but so far the Government are not prepared to move in that direction. In conclusion, there are three big questions that the Government have not answered. Why have local authorities had to face more than their fair share of cuts, compared with other Government services, in this Parliament? Why have the poorest authorities faced the largest cuts—far larger than is proportionate?”
“The graph of doom is coming. Tory councils as well as Labour councils are talking about it. Figures from the Office for Budget Responsibility show that by the end of the next Parliament, if the cuts continue on the same trajectory, we will reach the point where statutory responsibilities take up the whole local government budget, and nothing will be left for discretionary services. But I do not expect Ministers to respond, because, as the damning report from the National Audit Office said: “The Department does not understand the impact over time of reductions in funding to local authorities, and the potential risks of individual authorities becoming financially unsustainable if reductions continue.” That is what the NAO said, and that is the reality we are facing up to. I do not have time to go into all the issues of decentralisation.”
“I think we should also deal with the myth that somehow the NHS has been protected. If we look at the King’s Fund and other commentators—the British Medical Association, certainly, or go to the GPs in my constituency—its spending has gone up in line with general inflation. Unfortunately, though, it has not been sufficient to cope with the increased demand, particularly from elderly people wanting ever more support from community GPs and hospitals. If we have dealt with half the budget deficit this Parliament, is the Tory party saying that, if it is returned to power, this scale of local government cuts will continue? Can we really contemplate reducing local government spending as a percentage of GDP from 4% to 2.9% and below? If so, we will not be back to 1930s levels of service provision; we will have gone back even further.”
“Under the Government’s projections, in two years’ time, Sheffield, Liverpool, Manchester and Newcastle will have lower spending power per head than Wokingham. Is that fair?”