PARLIAMENTARY DEBATE
Local Government Finance Settlement - 15 December 2016 (Commons/Commons Chamber)

With permission, Mr Speaker, I will make a statement on funding for local authorities next year.

First, let me wish you, Mr Speaker, a merry Christmas. I am sorry to hear that the statement arrived late for the Opposition—I understand from my office that it reached them at 11.15. That was not the intention, and I do apologise for it.

Local government accounts for almost a quarter of public spending and it is making a significant contribution to reducing Labour’s record-breaking budget deficit. Councils have dealt with this admirably. Public satisfaction with local services has been maintained. There is much that other parts of the public sector can learn from councillors across the country when it comes to delivering value for money, but no one is disguising that more can be done to improve efficiency and further transform services.

In last year’s spending review, we delivered a flat-cash settlement for local government. It was one that gives councils more than £200 billion to spend on services over the course of this Parliament. In February, we published an historic four-year offer for councils, providing the certainty that they need to plan ahead.

I am pleased to say that 97% of councils have taken up the offer and met our expectations of reform by publishing a long-term efficiency plan. That means that almost every council in England is now working with local partners in the NHS and other areas to translate this greater certainty into improved services and efficiency savings.

Today, my Department has published a consultation that confirms the second year of this four-year offer for councils. Core spending power figures have been made available in the Library of both Houses.

The added certainty provided by the four-year offer will increase stability for councils as we transition to a world where they retain 100% of locally raised taxes to fund local services. By 2020, we will see local councillors deciding how to fund local services using local money—true localism in action.

Meanwhile, stronger incentives to support local firms and local jobs may increase business rate revenue for local government as businesses expand. In the new year, we will introduce a Bill to provide the framework for the new system, with trials beginning later in the year. The March Budget announced that, in London and the devolution deal areas of Greater Manchester and Liverpool city region, there will be pilots of 100% business rates retention. I can confirm today that those authorities have reached agreements to begin rate retention pilots in 2017-18. I am pleased to say that they will be joined by authorities in the devolution deal areas of the west of England, Cornwall and the west midlands.

The new homes bonus is an important part of our commitment to reward communities and authorities that embrace ambitious house building plans. It also provides valuable income for councils seeking to grow their local economies, which they can then go on to spend as they see fit. Since its introduction in 2011, more than £6 billion has been paid to reward housing supply and more than 1.2 million homes have been delivered. But for all its successes, the system can be improved.

A year ago, we consulted on a number of possible reforms to the scheme. Having studied those results closely, I can confirm today that, from next year, we will introduce a national baseline for housing growth of 0.4%. Below that, the new homes bonus will not be paid. That will help to ensure that the money is used to reward additional housing rather than just normal growth.

From 2018-19, we will consider withholding new homes bonus payments from local authorities that are not planning effectively by making positive decisions on planning applications and delivering housing growth. To encourage more effective planning, we will also consider withholding payments for homes that are built following an appeal. A consultation on this will take place in due course.

We will implement our preferred option in the consultation, reducing the number of years for which payments are made from six years to five years in 2017-18 and to four years from 2018-19. This will release important funding for adult social care, recognising the demographic changes of an ageing population, as well as a growing population.

I am sure that all Members on both sides of this House agree on the need for action to meet the growing cost of caring for some of our most vulnerable citizens. Every year councils spend more than £14 billion on adult social care. It is by far the biggest cost pressure facing local government. The spending review put in place up to £3.5 billion of additional funding for adult social care by 2019-20, allowing local government to increase its spending on this service in real terms by the end of this Parliament, but more needs to be done. Over recent months we have listened to, heard and understood calls from across the board saying that funding is needed sooner in order to meet short-term pressures.

Today I can confirm that savings from reforms to the new homes bonus will be retained in full by local government to contribute towards adult social care costs. I can tell the House that we will use these funds to provide a new dedicated £240 million adult social care support grant in 2017-18, to be distributed fairly according to relative need. I can also confirm the indicative allocations of the improved better care fund that we published last year. The Department of Health will shortly be confirming allocations of the public health grant to councils for next year.

Last year we agreed to the request by many leaders in local government to introduce a social care council tax precept of 2% a year, guaranteed to be spent on adult social care. The precept puts money-raising powers into the hands of local leaders, who best understand the needs of their community and are best placed to respond. In recognition of the immediate challenges faced in the care market, we will now allow local councils to raise this funding sooner if they wish. Councils will be granted the flexibility to raise the precept by up to 3% next year and the year after. This will provide a further £208 million to spend on adult social care in 2017-18 and £444 million in 2018-19. These measures, together with the changes we have made to the new homes bonus, will make almost £900 million of additional funding for adult social care available over the next two years.

However, we do not believe that more money is the only answer. There is variation in performance across the country that cannot be explained by different levels of spending. Some areas have virtually no delayed transfers of care from hospital, but there is a twentyfold difference between the best and the worst performing 10% of areas. It is vital, therefore, that we finish the job of integrating our health and social care systems. We know that this can improve outcomes and make funding go even further, helping people to manage their own health and wellbeing and to live independently for as long as possible. There are already some strong examples of where this works. For example, in Oxfordshire joined-up working has seen delayed discharges plummet by over 40% in just six months. Meanwhile, Northumberland has saved £5 million by joining up with the local health care trust, reducing demand for residential care by some 12%.

The better care fund is already supporting this with £5.3 billion of funding pooled between councils and clinical commissioning groups last year. But we also want to make sure that all local authorities learn from the best performers and the best providers, so we will soon publish an integration and better care fund policy framework to support this. In the long term, we will need to develop the reforms that will provide a sustainable market that works for everyone who needs social care.

We also need to recognise that demographic pressures are affecting different areas in different ways, as is the changing cost of providing services, so we are undertaking a fair funding review to thoroughly consider how to introduce a more up-to-date, more transparent and fairer needs-assessment formula. The review is looking at all the services provided by local government, and will determine the starting point for local authorities under the 100% business rate retention programme. This is an opportunity to be bold—an opportunity for bottom-up change. We are working with representatives from local government on the review, and we will report on our progress to the House in the new year.

Council tax is a local decision, and local councils will need to justify social care precept rises to their taxpayers. They will need to show how the additional income is spent to support people who need care in their area and how it improves adult social care services. However, it is worth noting that the extra flexibility to raise funding for adult social care next year will add just £1 a month to the average council tax bill. The overall increase to the precept in the next three years will remain at 6%, so bills will be no higher in 2019-20. In our manifesto, we made a commitment to keep council tax down, and that is exactly what has happened. Since 2010-11, council tax has fallen in real terms by 9%. By 2019-20, hard-working families will be paying less council tax in real terms than they were when we came to power.

However, last year we saw a worrying 6.1% rise in precepts in town and parish councils. That is why, earlier this year, we consulted on extending council tax referendum principles to larger town and parish councils. These councils play an important role in our civic life, and I understand the practical considerations of scale, so we have decided that we will defer our proposals this year, while keeping the level of precepts set by town and parish councils under close review. I expect all town and parish councils to clearly demonstrate restraint when setting increases that are not a direct result of taking on additional responsibilities. I am also actively considering with the sector ways to make excessive increases more transparent to local taxpayers.

This local government finance settlement honours our commitment to four-year funding certainty for councils that are committed to reform. It paves the way towards financial self-sufficiency for local government and the full devolution of business rates. It recognises the costs of delivering adult social care and makes more funding available sooner. It puts local councillors in the driving seat and keeps bills down for hard-working taxpayers. I commend it to the House.

This is a settlement that will leave the people of England paying higher taxes and getting worse public services for their money. For some, this settlement will still mean that the support they had hoped would be there for an elderly or vulnerable relative is not available. For others, visible public services, such as street cleaning and rubbish collection, will be cut ever closer to the bone, and even more youth centres and libraries will close.

While it would have been nice to see the statement in good time, at least we can be grateful that the crisis in the Conservative party over the price of a pair of trousers has abated enough to allow the chief of staff at No.10 to decide what the Secretary of State can say today.

Is not the real truth about this statement that there is no new money for local authorities to tackle the social crisis now? Moving new homes bonus money around in a few years’ time is not going to tackle the crisis now. On 18 July, when the Association of Directors of Adult Social Services was already raising the alarm, the Secretary of State said of social care, in response to my hon. Friend the Member for Easington (Grahame M. Morris):

“I do not accept that it is underfunded.”—[Official Report, 18 July 2016; Vol. 613, c. 530.]

Why has it taken so long for the Secretary of State to spot that there might be a problem after all?

This is a crisis that Ministers still do not seem to grasp the severity of, with £4.6 billion axed from social care budgets as a result of their cuts since 2010, and 1.2 million people, according to Age UK, not getting the care they need. There are even senior figures in the Secretary of State’s own party with a closer grip on reality than he appears to have, such as Lord Porter, the chairman of the Local Government Association, who notes:

“Services supporting our elderly and vulnerable are at breaking point now.”

Does the Secretary of State share our view that we did not need to be in this position? Does he remember how, before the 2010 general election, senior figures in his party chose to kill off serious cross-party talks on how to fund social care going forward?

Once Ministers finally began to realise that there might actually be a bit of a problem, they reached for that old Conservative favourite: blaming councils themselves. Ministers like to attack councils, but is not the truth that councillors and local authority staff up and down the country are doing their best to plug the funding gap to cope with huge rising demand for care and increasing costs?

When will the Secretary of State address the worsening postcode lottery for social care? In the most deprived areas of the country, social care spending fell by £65 per person, but it rose by £28 per person in the least deprived areas. Will he not accept that the rising social care precept will only further entrench this inequality? I gently ask of him: is this really the best time to be choosing to cut corporation tax on Amazon, Sports Direct and the big banks?

Since the Prime Minister came to office, there has been much talk of help for those who are only just about managing their finances. That seems to have gone out of the window today as the Prime Minister decides to put up the council tax in every part of England again. To borrow her words, “If you are from an ordinary working-class family, life is much harder than many people in Downing Street realise. You have your own home but you worry about the cost of living, the state of your area, and the services you rely on, and you also worry whether you can pay the tax bill at the end of each month.” Today she decided to make it just a bit harder for them to manage. On top of council tax rises this year, there is 3% in 2017-18 and more again in 2018-19, and by 2020, a 17% increase in council tax compared with 2015—all decided in Downing Street. Who would have thought it: the Conservatives, who once claimed to be in favour of low taxes, putting up taxes every year until the next election?

The truth is that social care is in crisis. This settlement means even deeper cuts in funding and worse public services. Is not the truth that the people of England deserve better?

The shadow Minister claims that as a result of today’s news there is “no new money”—those were his words—for adult social care. He could not be more wrong. However, if he wants to imagine what a world would look like with no new money for adult social care, that is exactly what would have happened had the result of the last election been different. Let us just remember what the then shadow Chancellor said:

“There will be no additional funding for local government”.

He went on to say, when pushed on the point, that there will not be a penny more for local government.

The shadow Minister mentioned, and rightly so, the important role that the NHS plays in providing and helping with adult social care. Let us also remember that at the last general election the Labour party’s plans were to cut NHS spending by £5.3 billon—[Interruption.]

Order. I need to hear the Secretary of State. You may disagree with him, but everyone wants to get in, and if I am going to get people in, let us hear the Secretary of State.

Thank you, Mr Deputy Speaker. If the Labour party had had its way, NHS funding would have been £1.3 billion lower this year. What difference would that have made to people, especially the most vulnerable in our society? We should be grateful that Labour is not in office.

Under this Government, the spending review allocated an additional £3.5 billion of funding for adult social care by 2020. Let me focus precisely on the shadow Minister’s claim that there is no new money, because he is absolutely wrong. There is new money, with today’s announcement of £240 million that otherwise would have gone to the new homes bonus. We have responded to what local councils and many local authority leaders have asked for and repurposed that money. There is also an additional £654 million because of the precept changes. If the shadow Minister cannot work that out, he needs to look again at his basic mathematics skills. Taken together, those numbers mean an additional £900 million over and above the spending review settlement over the next two years. That means approximately £450 million of new money each year for the next two years.

The shadow Minister also referred to council tax bills, which reminded me of what the shadow Minister for adult social care, the hon. Member for Worsley and Eccles South (Barbara Keeley), said recently:

“Asking taxpayers…to pick up the bill…is no substitute for a proper plan.”

The Opposition need to learn that there is no such thing as Government money—it is all taxpayers’ money, whether it is raised locally or nationally. I know that the Leader of the Opposition believes in a magic money tree, but I did not realise that all Opposition Members feel the same way. If we want properly funded services, including for adult social care, there needs to be a balance between those who pay for them—the taxpayers—and those who use them. That means making the right decisions to make sure that the services are properly funded and, at the same time, that tax bills do not rise more than necessary. That is why I am proud that, under this Government, even taking into account the precept changes that we have announced today, by the end of this Parliament the average council tax bill will be lower in real terms than it was in 2010.

I welcome today’s statement. Will my right hon. Friend confirm that 97% of local authorities have agreed a four-year long-term deal, which is welcome and allows them to plan for the future? That means, however, that 3% of local authorities have not agreed the deal. What impact will their failure to agree a long-term settlement with the Department have on their council tax payers and the future of their services?

My hon. Friend makes a very good point and it is worth talking about it a bit more. As he rightly says, the good news is that 97% of councils have accepted the four-year settlement. That means that 10 councils have not, including, unfortunately, his local council, Harrow. In practice, that means that those councils will have an annual, year-by-year settlement, which will deny local people the certainty that they seek. It also means that they have not put together efficiency plans, as the other councils will have done. It is a shame that they did not accept the settlement. That was entirely up to them, but it will have consequences.

Does the Secretary of State agree that his statement still leaves life very challenging indeed for most local authorities dealing with social care and the crisis that it is in? Will he confirm that even £900 million goes only part-way towards filling the £2.5 billion to £3.5 billion gap that the LGA, the Nuffield Trust and the King’s Fund believe will exist by the end of the spending review period? Why has he chosen not to pay the new homes bonus money through the better care fund, which would have enabled him to target the money at the poorest authorities, which raise the least through the precept?

Finally, I do not know whether the Secretary of State saw that Simon Stevens and Stephen Dorrell came before the Communities and Local Government Committee yesterday. They said that integration between health and social care was desirable, but that that of itself will not solve the problems of social care in the longer term. Will he agree to a much wider review, including the full involvement of the LGA, to try to get cross-party agreement for a genuine, sustainable solution for the longer term, which will need all-party support?

I always take very seriously what the Chair of the Select Committee on Communities and Local Government has to say, and I know that he considers such matters carefully. To answer his questions, he may recall that at the spending review last year the LGA asked for, I think, £2.9 billion of extra funding for adult social care by the end of the Parliament. The spending review provided more than that—£3.5 billion—and the changes that we have announced today add another £900 million on top of that £3.5 billion. That is a significant increase, and even more so when we look back at what the LGA was considering just last year.

The hon. Gentleman asked about the allocation of the £240 million that would otherwise have gone into the new homes bonus. He will know that the allocation of the improved better care fund, which is worth £1.5 billion by the end of this Parliament, takes into account the council tax-raising powers of each local area. The £240 million is allocated based on relative need, and I think that that is the best way to do it.

I quite agree with the Government that we need more money and reform. The two local authorities serving my constituency were short-changed in the past, which is a separate issue. On the general question, what can be done about the perverse incentive created by the fact that if a council does not come up with a timely care package, a person will stay for longer in an expensive hospital bed, where they do not want to be and which is needed for other purposes?

My right hon. Friend highlights the vital issue of more and better integration between the healthcare system and the adult social care system. I referred in my statement to places where we are seeing good practice. I mentioned Manchester and Northumberland, and there are some other such areas. Many areas can learn from that, especially on things such as delayed transfers of care. We want to see more work in this area. That is why the Department has already started to work with the Health Secretary on a set of principles that we expect to be implemented as local authorities access the additional funding.

The great city of Birmingham has been hit hard by the biggest cuts in local government history—£800 million. That is having increasingly “catastrophic consequences” for public services, in the words of the chief executive. According to the chief executive of Birmingham YMCA, it is leading inevitably to more young men and women dying, like the young man who froze to death on a Birmingham street on 29 November. Birmingham has been denied a fair deal. Can the Secretary of State begin to explain why—as we have seen with nursery schools last week, schools yesterday and local government today—Birmingham is treated less fairly than the Prime Minister’s own constituency of Maidenhead? It cannot be right to put the interests of the Tory party above the interests of the public.

The hon. Gentleman should re-examine the figures and get them right. I have here some helpful figures for him. He will know that Birmingham has significant failings, which is why an independent panel was put in place by my predecessor. Failings were significant in management areas. The hon. Gentleman seems to suggest that there is a real funding issue with Birmingham, but let me give him the facts. Birmingham, among the metropolitan districts, by 2019-20 will receive £1,984 per dwelling, in comparison with the average of £1,767. It is a well-funded local authority, and it is incumbent on those who run it to do so more efficiently in the interests of their residents.

In four years’ time, Birmingham’s money will go up, but the money for Worthing, Arun and Adur will not. Those who throw accusations across the Chamber should look at the figures.

Leaving aside most of my right hon. Friend’s statement, I think he should pay a lot of attention to the consultation on whether planning permission granted on appeal should not count towards the new homes bonus. Many times, it seems as though rationally produced local authority and parish council plans are torn up by some imposition of new housing targets. I hope that he will pay a lot of attention to that. I am glad that he has taken away the referendums on parish council increases. Parish councils are closest to the people, they can easily be turned out and they can be trusted.

I know that my hon. Friend will be pleased by the fact that the Neighbourhood Planning Bill passed its Third Reading this week. One of the things that the Bill tries to do is to make neighbourhood plans even stronger and easier for local communities to put together, and I know that he supports me in that goal. On the issue that he raised, as I said in my statement, we are minded to deny the new homes bonus where planning permission is granted on appeal, but we will have a consultation on that, and then we will decide.

Liverpool has high levels of poverty. It also has an innovative local authority that believes in value for money. Liverpool City Council has already lost 58% of central Government funding, and yesterday, in a redistribution of education funding, it lost £3.5 million more. What does today’s statement do, in concrete and specific terms, to address the crisis in social care, except ask poor people to pay more? Even that will not address the growing crisis of people in need.

I was in Liverpool a couple of weeks ago, and I met local leaders, including the chief executive, because I want to understand directly some of the challenges that Liverpool is going through. Some of the changes we have announced today will help Liverpool and other places that are in the same situation. The hon. Lady will know, for example, that the allocation of the better care fund takes into account the power of a local area to raise council tax, and that benefits places such as Liverpool. She may have noted from the statement the extra £240 million that will be based on need; that will certainly advantage Liverpool. She may also be interested to know that Liverpool’s council tax spending power per dwelling is rising from £1,922 in 2017-18 to £2,041, which is a much bigger increase than in most other areas in the same situation.

It is good news that people are living longer—in the decade to 2015, there has been a 31% increase in the number of people living to 85 and over—but already, more than a million people have unmet care needs. Although I welcome the fact that some of this money will be brought forward, I do not feel as though we are going far enough in this House to address the scale of the increase in demand and allow people to be cared for with dignity in their old age. May I join the Chair of the Communities and Local Government Committee in asking the Government to start cross-party talks urgently to ensure that we have a long-term, fair, sustainable settlement for both health and social care?

My hon. Friend speaks with experience. I know that she has spent a great deal of time looking into this issue, especially in her work as Chair of the Select Committee on Health, and I take what she has to say very seriously. I think I am correct in saying that my hon. Friend used the words “bring forward spending”. Today’s announcement on adult social care does more than just bring it forward; it is a real, significant increase in spending of £900 million. To be clear, that is an additional £900 million over the next two years where there are some of the biggest short-term pressures. That would not have happened had these changes not been announced. It is, significantly, new money, not just bringing forward spending. I know that she will welcome that clarification.

My hon. Friend referred to the need to talk widely, including with members of the Opposition. I would include in that local leaders, health professionals and social care professionals, and that is certainly what I intend to do over the coming months, to make sure that we keep this always under review.

This is, surely, a truly feeble response to a national crisis. The LGA would be entitled to reject the proposal and put the ball firmly back in the Government’s court, for them to think again. This is an unfair way to raise additional money; it will increase inequalities between rich and poor areas. When will the Government come forward with plans to work genuinely across parties? There have been two suggestions about that already in this question-and-answer session, but the Secretary of State has not answered either one. When will he work with others to come up with a genuine solution to what is now a real national crisis?

As the right hon. Gentleman will know, any funding provided to a local authority is raised through taxes, either locally or, when that funding is in the form of grants, nationally. He used the word “unfair” about this funding, but he should be aware—I know he has experience in this area—that when we allocate billions of funding from the better care fund, we take into account the council tax raising power of each area. That is the basis used, and it is the fairest way to do it. We have given councils flexibility through the precept, and we have enhanced that flexibility today so that councils are in a better position to meet local needs. That is also a sensible and fair policy. Where councils have more demand for services locally, they should be given the power to deal with that.

I appreciate the appalling pressure that the Secretary of State is under on adult social care, but may I press him further on the new homes bonus? This is an important point. The bonus is vital in industrial towns such as Gainsborough to promoting difficult developments on brownfield sites. What worries me about his proposal is that if a council such as West Lindsey does not meet the 0.4% target, but allows developments that go against community plans in suburban villages, where it is easy to develop, it may lose its new homes bonus. Furthermore, he said: “To encourage more effective planning, we will also consider withholding payments for homes that are built following an appeal.” This is centralism; it goes against localism. I urge him to think again. Councils should determine such appeals on their merit, not on the basis of central Government diktat.

I assure my hon. Friend that the new homes bonus will stay in place. The reforms that we have announced today were consulted on; I think the consultation began in December 2015. It is important to make sure that the incentives for local authorities to promote house building remain, not least to deal with some of the local pressure for more homes in their area. He mentioned the national baseline figure of 0.4%, which councils must be above. He may be reassured to know that that is based on historical numbers, and that the figure for the country last year was 0.94%, so most local authorities will still be able to benefit from the new homes bonus. I listened carefully to what he said about the possible change in relation to appeals, which we will consider in the consultation.

How will Hull be in a better position to meet local needs when the Secretary of State’s announcement of a 1% increase in the precept that the council can levy will bring in only £700,000, or just 12% of what Hull actually needs to address its social care budget following the massive cuts since 2010? Wealthier areas such as the East Riding can raise much more from their council tax base, and they have many more self-funders, so how is that fair? The Government are not giving Hull what it requires to meet the needs of some of the most vulnerable people in one of the most disadvantaged areas of the country.

Hull, the area the hon. Lady mentioned, will benefit from these changes. She mentioned the change in the precept, which is important; I do not have the exact number for Hull at hand, but it will help. I notice that she did not mention the money going into the new homes bonus. The new homes bonus is allocated on the basis of relative need and takes into account the ability of local areas to raise money through taxes. As it is based on relative need, it will benefit places such as Hull.

I agree with my right hon. Friend that this is an opportunity to be bold and to use bottom-up thinking. I welcome the fair funding review, but does he not agree that until that review is completed and we have a fuller picture of what local authorities can afford and what central Government are prepared to provide—taking into account the demographic pressures in various parts of the country, such as mine in Devon—there should be a moratorium on the loss of community hospital beds?

My right hon. Friend highlights the need for the fair funding review. I hope he agrees with me that it is about time we looked carefully at the needs of every local area, including the more rural areas, and made sure that the way funding is distributed takes into account all the challenges that those areas face. For example, in rural areas, sparsity creates more challenges and funding pressures. He will be aware that my predecessor listened to such arguments and, despite his limited flexibility, took action where he could, with a £65 million rural services delivery grant for 2017-18. My right hon. Friend is absolutely right to highlight that in the fair funding review, we will need to look carefully at the pressures, particularly in rural areas, and make sure that we act on them.

We will take no lectures from this Government about funding for social care. They walked away from the cross-party negotiations on the funding of social care before the 2010 election, purely for political gain, and they then cut £4.6 billion from social care during the last Parliament. The crisis we have now was created by the people sitting on the Government Benches. A 1% increase in the precept will bring in £670,000 in my local authority, but we already have a £14 million deficit in our expenditure. This is not going to touch the sides, as the leader of my local authority has said. It is just not good enough. We have a gaping hole, and the Secretary of State has come to the House with a sticking plaster. It is just not good enough. We need cross-party agreement on how to deal with this crisis.

It is worth reminding the hon. Gentleman that at the last election he stood on a ticket that would have led to even less funding for his local authority, which I believe is Greenwich, and lower funding for the NHS as well. He should keep that in mind when he considers today’s announcement. He should welcome the fact that the Government have not only made more available in the spending review, but have announced an additional £900 million today. Just for next year alone, that will mean a minimum of an additional £3.1 million for his local authority.

The discussion on this statement is rather sad, because there is too much party political point scoring on a very important issue. I agree entirely with the excellent Chairman of the Select Committee on Communities and Local Government, the hon. Member for Sheffield South East (Mr Betts), and with the former care Minister, the right hon. Member for North Norfolk (Norman Lamb), who speaks for the Liberal Democrats, that we need a policy with genuine cross-party support. This is not a party issue, and I urge the Secretary of State at least to explore the possibility of cross-party working on this issue.

My hon. Friend is right to say that the more we can all co-operate, put aside party politics and deal with this issue for the long term—there are some significant long-term challenges in the sector—the better off we will all be, and our constituents would thank us for doing that.

The most crippling cuts are being planned in Walsall borough, because the allocation from central Government has been nearly halved in the past six years. Does the Secretary of State not understand that I am talking about an area—my area—where there is so much deprivation and poverty? The cuts next year will be even higher than previous ones, so I want to ask: why is there a Tory onslaught on this borough, and when is this war going to end?

The hon. Gentleman will know that all councils across the country, without exception, have been asked to find efficiencies and make savings, and many of them have done so in very innovative and clever ways. For example, sharing services means that some of them have been able to maintain the level of services, but at a lower cost to taxpayers. He mentioned his borough of Walsall; it, like many other areas, needs to do things better and deliver services in a better way where it can, but he will see an increase in core spending power by the end of this Parliament, and the changes to adult social care budgets that we have announced today will also help his borough.

I thank the Secretary of State for the money, but I also add my voice to those who are concerned about the long-term sustainability of social care. As the Prime Minister said at Prime Minister’s Question Time, this is a short-term, medium-term and long-term issue. The Secretary of State will know that rural areas have issues not only of sparsity, but of delivery. Will he assure me of two things: first, that he will not take his foot off the gas in ensuring that we find long-term solutions; and secondly, that he will work cross-departmentally, because it is important that we have joined-up Government as well as joined-up opinions on this issue?

I absolutely assure my hon. Friend that adult social care will remain a priority, not just for me and the Health Secretary, who was here for the statement, but across Government. This issue is well understood by the Government. That is why we have been able to listen and take the action we have announced today. My hon. Friend is right to say that although this action meets the short-term need of particular cash pressures, which were rightly identified, we also need to think about the medium term and the longer term.

As the Prime Minister mentioned yesterday, Newcastle City Council performs well on social care in the face of continued punitive cuts, but that will all be put at risk if the Government do not act responsibly to plug the £15 million funding gap. Today’s plan relies on local areas being able to build new homes and raise local taxes to solve a crisis in social care funding. Can the Secretary of State not see that this will entrench inequality across the country and that it is playing politics with vulnerable people’s lives?

The statement has just been made, and when the hon. Lady has the time to look at it a bit more closely, she will see that it does not rely on building new homes to get more adult social care—nothing of the sort. Perhaps that was not clear earlier and I am glad that she has raised it, because if she thought that, others might be thinking the same. The £240 million comes from the new homes bonus budget. That money will no longer go into that budget and has been transferred to adult social care budgets across the country on the basis of the relative needs formula. It will certainly benefit Newcastle upon Tyne and other areas.

The Secretary of State is right to point out that this is not wholly a question of money. He mentioned Oxfordshire in his statement. Does he agree that in Oxfordshire, the problems with delayed discharges and care are being solved by a greater use of care home beds, and that we need to see more of that sort of imaginative approach?

My hon. Friend is absolutely right and I am glad he highlights that point. This issue is not just about money. Of course resources play an important role, and today’s announcement helps with that, but it is also about finding a better way to deliver services. One of the key things that is required is more integration between health and social care, and Oxfordshire is an excellent example of that.

Since 2011-12, Nottingham City Council, which as the Secretary of State knows serves a population with high levels of deprivation, has seen its spending power reduced by 23%, while more prosperous areas have seen their funding rise. As the King’s Fund has shown, the precept will further widen those inequalities. Nottingham city organisations recently won a Health Service Journal award for the quality of their partnership working on integrating health and social care, but the portfolio holder describes them as at “breaking point”. I listened carefully to the Secretary of State’s answer to the hon. Member for Wellingborough (Mr Bone). Will he confirm whether he will take up the offer of a cross-party review to tackle the crisis in social care funding—yes or no?

Turning first to Nottinghamshire, the hon. Lady is right to highlight Nottingham as an example of an area that, through the precept, cannot raise as much as even some of its neighbouring areas. That is why the better care fund, which is already in place, takes account of the tax-raising powers that are available locally. Beyond the precept, the other allocation I have talked about today, the £240 million fund, will be based on need, which will mean a relative benefit for Nottingham. She might be interested to know that the precept alone is worth £12.5 million to Nottingham next year. On talks, I think I have made it clear that I am happy to talk to everyone. This is just such an important issue.

The new homes bonus has become an important source of funding for councils with a positive attitude to development, such as Rugby Borough Council. I welcome the additional incentives the Secretary of State has provided today, especially in respect of consents granted on appeal where there is an up-to-date local plan. Will he reassure councils like Rugby that they will continue to be able to generate funds from the new homes bonus to provide valuable infrastructure, which is often needed to respond to local concerns about development?

I am more than happy to provide that reassurance. My hon. Friend makes an important connection between the new homes bonus and the need to ensure that there are enough local services, especially infrastructure, to deal with more people living in the area. The new homes bonus helps with that. He might be interested to note the Chancellor’s announcement in the autumn statement of the new £2.3 billion housing infrastructure fund, which is designed to help with those pressures. I look forward to discussing that with him.

I think the hon. Lady was referring to the Dilnot reforms that were recommended. She said that they are not happening or that they have been cancelled. She will know that we are delaying them because we are listening to local authorities, many of which have asked for a delay. I know she will agree that when we carry out such a big long-term reform, it is very important to get it right. She also talked about the need for more integration and co-operation with the Department of Health and others. In my statement, I referred to the fact that my Department and the Department of Health, which are already working closely together, will be assisting on a new framework to convince us that local councils are taking integration seriously as they utilise the new flexibility.

I welcome the Secretary of State’s statement and all the work the Government are doing to encourage the building of new homes. When considering changes to the new homes bonus, I ask him to bear it carefully in mind, as I am sure he will, that it is an important source of income for smaller local authorities like mine in North Devon and that the triggering of the new homes bonus is tied to the delivery of new homes, which is not always totally in the gift of the local authority, because of issues such as the availability of land and, frankly, the willingness of developers to build out. Will he work with me and North Devon Council to consider that carefully so that we get the balance right?

My hon. Friend makes an important point. I agree with him on the importance of the new homes bonus. As the name suggests, it is a bonus and not something that councils should rely on for day-to-day spending. That is why we do not include it in our core spending power calculations. Nevertheless, it is important, not least to meet the added pressures brought by the homes. He also talked about ensuring that the incentives are working properly, including in Devon, and I am happy to discuss that with him further.

Does the Secretary of State recognise that additional precept in an area with a low council tax base raises drastically less than in more prosperous areas? The better care fund goes nowhere near plugging that gap. The Secretary of State is therefore denying tens of thousands of older people the home care and social care services that they desperately need.

I am afraid that I have to disagree with the hon. Gentleman. The better care fund goes a long way to plugging the gap. Let me remind him of the overall numbers: the spending review set out £3.5 billion of new spending by 2020, £2 billion of which would come from precepts, and £1.5 billion a year from the better care fund. It was designed precisely to plug the gap. I hope the hon. Gentleman recognises that, in today’s announcement, not all the money is through precepts. One of the reasons for the £240 million fund that is allocated on needs is to acknowledge that gap.

Despite council tax bills doubling under the last Labour Government, there was no long-term solution to the problem of funding adult social care. Does my right hon. Friend agree that, if we are ever to make real progress, we need a long-term solution based on the Conservative principle of self-reliance, and we need to encourage people, as far as possible, to provide for themselves?

I agree absolutely with my hon. Friend. He kindly reminded the House of Labour’s track record and of how taxes increased. He rightly said that council tax doubled in the 13 years of the last Labour Government. During those years, they had a manifesto commitment to deal with adult social care, a royal commission in 1999, two Green Papers in 2005 and 2009, a comprehensive spending review and the Wanless review. All that, they said, would solve the adult social care challenges, and all they did was make it much worse.

First, I want to say that the 1% rise in the precept in Redcar and Cleveland will raise just £500,000, which is meaningless given the scale of the rising demand in need. I want to ask the Secretary of State two questions because the answers were not clear from his rather rushed statement. The first is about the new homes bonus, and the key words are “the savings from the reforms”, not the new homes bonus. If it is just the savings from the reforms, that is not an awful lot of money, so I hope that he can clarify that.

Secondly, is the Secretary of State saying that local authorities will keep what they make in the new homes bonus, or will it be distributed nationwide from one pot on a needs basis? If it is the latter, yet again he reinforces the inequality that already exists in this country, because the new homes bonus is based on council tax rates.

I can tell the hon. Lady that for her local council, Redcar and Cleveland, the precept next year could raise £2.2 million, and the following year it could raise £3.4 million. The numbers are considerably higher than she may think at the moment.

On the new homes bonus, let me be clear: it is being reformed, but it is staying in place. The bonus that is currently equivalent to six years’ band D council tax will fall gradually from five years to four years, but the essential principles remain the same. The savings that are generated from that change from six years to four years are national savings—that is the £240 million pot—and will be distributed nationally across authorities that provide social care services. That will be based on a needs formula.

Both Corby Borough Council and East Northamptonshire Council are firmly engaging with the Government’s housing growth agenda. Will my right hon. Friend undertake to consult them fully on any proposed changes to the new homes bonus, because it is essential that infrastructure and services keep up with the pace of housing growth? I particularly say that because the level of development is so significant in our area and because it is focused on urban extensions, and the costs associated with those are inevitably high.

Again, my hon. Friend highlights the importance of the new homes bonus to meet some of those additional pressures. By having the reform, we have made sure that we keep the principle of helping those authorities that are doing the right thing and building those homes. My hon. Friend asked me specifically about consulting on the changes. I should point out that the consultation has happened: it started in December 2015 and is now complete. However, I said that there was a potential new change, which concerns whether the new homes bonus should be available if planning permission is granted on appeal, and we will consult on that.

This morning, children in Birmingham woke up to a £20 million cut in their schools funding. My son’s school already has more than 30 children in every class. He has special educational needs provision, which will now be taken away. That was done following what Government Members might call the “shroud waving” by Conservative Back Benchers about the underfunding of schools in their areas. I am therefore here to tell the Secretary of State that the social care funding disparity in this country deserves exactly the same redistribution. In his constituency of Bromsgrove, the older adult weekly rate in social care homes is £100 less than in the constituency of the Secretary of State for Health in Surrey. Will the Secretary of State stand here in front of me and tell me that it is okay that his constituents already get £100 a week less than those of his Front-Bench colleagues who live in still leafier areas?

In rightly referring to her constituency in Birmingham, the hon. Lady mentioned my constituency of Bromsgrove, which is next door. I think that she was somehow trying to demonstrate that Bromsgrove gets more per head on average.

No. Bromsgrove gets less than Surrey.

I am comparing Bromsgrove with Birmingham and it gets on average a lot less per head than Birmingham. I assure the hon. Lady that that is noticed locally. I guess her wider point was about fairness in the allocation of funding. She knows that some areas have less power to raise money locally through the precept because of the size of their council tax base, and that is precisely why we have introduced the better care fund. Today’s announcement will help Birmingham significantly through the precept, but Birmingham will also benefit from the additional £240 million, which is allocated on need.

I welcome the announcement of the fair funding review, for which my hon. Friend the Member for Beverley and Holderness (Graham Stuart) has been pushing for a long time. I also welcome the additional funding that has been announced today, but I add my voice to those who call for a proper, cross-party solution to this extremely important issue.

Has my right hon. Friend managed to discuss with the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Nuneaton (Mr Jones), the issue in Staffordshire, where problems with the better care fund are leading to substantial reductions in, for example, drug and alcohol services, which will inevitably place greater burdens on adult social care and the NHS?

First, my hon. Friend highlights the importance of the fair funding review being thorough and looking at all the issues carefully, and I wholeheartedly agree. He also echoed the Chamber’s desire, which I welcome, for all parties to work together on adult social care, given its importance to all our constituents. He asked me particularly about the problem in Staffordshire. The Under-Secretary of State, my hon. Friend the Member for Nuneaton, is looking at the matter, and I am discussing it with him.

I had an email this morning from a constituent, a retired gentleman called John, who lives in West Kirby. He points out that not only will a 3% social precept on council tax have an unfair impact across the country, as several of my colleagues have mentioned, but councils cannot start collecting it until April, by which time winter will be over. What action will the Secretary of State take to tackle the winter crisis?

Although the hon. Lady is absolutely right that the change we have announced today is for the next tax year—as she rightly indicated, it begins in April—and the following one, I know it is hugely welcome for many local authorities because it allows them to plan. Those were the two particular years for which local authorities felt they had the biggest gap because, as a result of the way in which the better care fund was profiled, the £1.5 billion in full does not kick in until towards the end of this Parliament. The planning that can now be done, and the certainty that that will provide, will immediately help to allay some concerns in local areas. In her area of Wirral, the precept increase for 2017-18, starting in April, will raise £1.4 million; in the following year it will be £8.3 million. That will make a considerable difference.

Does the Secretary of State agree that improving efficiencies must be a priority when considering the financial settlement? Will he outline any proposed measures to encourage local authorities to move from a two-tier structure to a unitary one?

My hon. Friend’s general point about efficiencies is absolutely correct. That is why I have today praised those local authorities that have shown they can spend less money and in many cases improve public services. I have also talked about the work my Department and the Department of Health are doing together on the integration of adult social care and promoting that more locally.

My hon. Friend asked specifically about the structure of local authorities. The Government are very responsive to that. We will listen to local authorities. A number have started coming forward with plans, and we will look at each one of those very carefully.

Today, as every day, more than 300 people will present at the accident and emergency department at Addenbrooke’s, the hospital that serves Cambridge, 50% more than there were just a few years ago. Shamefully, at least 60 of them will not be seen within four hours; it is almost 1 o’clock, so they will not be seen until at least 5 o’clock this afternoon. That is because of the problem with delayed transfers of care, which in turn is a problem because Cambridgeshire County Council chose not to use the precept this year. I think it is highly likely that that will occur in lots of other places next year, because it will be county council election year; that will mean that the money will not be available in lots of places. The Secretary of State is in a unique position to tackle the crisis. I urge him not to pass the buck to local government but to listen to Members from across the House. He has expressed some warm words, but can I pin him down and ask him what he is actually going to do about this?

I hope the hon. Gentleman agrees with me and believes in the power of localism and of letting local people, through their elected representatives, make decisions for their local areas. That is the job of local government; the precept provides flexibility, and today we have provided even more, but the decisions should be made at the local level. That is important.

The hon. Gentleman will know that Cambridgeshire and Peterborough have reached a devolution deal. By May next year, they will have a directly elected mayor. As well as economic growth and more productivity, part of the deal is about seeing whether there can be better management and delivery of public services. Cambridgeshire and Peterborough are in a good position to look at how those devolution powers can be used to improve services, including adult social care.

Last, but certainly not least, I call Huw Merriman.

Thank you, Mr Deputy Speaker. I think there are about the same number of people here as there were when I first started bobbing.

Order. Does the hon. Gentleman want me to take them again?

No, Sir. I was recently told that in my constituency town of Bexhill we have more over-85s than any other town in the whole of western Europe. Many of those constituents will have moved from other counties to East Sussex to downsize. As a result, council tax increases are a challenge not just for them but for those in the rest of East Sussex. May I therefore thank the Secretary of State for the extra funding for East Sussex and for listening to the concerns of East Sussex MPs? When he looks at the bold reform for social care, will he consider whether national funding for social care will help to alleviate the demographic issues I have in East Sussex?

First, I thank my hon. Friend for his words. He highlights the important issue of having the right balance between national funding for adult social care, provided through the various grants, and local funding, through council tax. The changes we have announced and the increased flexibility on the precept will help East Sussex, his local authority, as will the changes in the grant, and the extra £240 million. What he clearly implied is absolutely correct: this is welcome short-term news, but there is a much longer-term issue, and the Government will be concentrating on that.