A Cash Bonanza for Tory Councils

It has been reported that up to thirty Conservative MPs were threatening to rebel and vote against the government on cuts in funding to councils across the nation. However, the threat of Tory rebellion has been averted  by finding ‘cash down the back of the sofa’ for a few tory councils.

Greg Clark, Communities and Local Government Secretary, put forward the motion to save the day for the government, through the approval of the report on Local Government Finance 2016-2017 in parliament today, a report which strongly favours relatively prosperous areas of the country and, therefore, unsurprisingly, meets with the approved of by the wayward Tory MPs. Marcus Jones, Minister for Communities and Local government, thanked the Tory ministers for speaking up on behalf of their constituencies, while castigating Labour MPs for their impassioned concerns on behalf of theirs.

The Minister found extra funds for local councils and distributed them to relatively affluent, predominantly Conservative areas of the country. Relief is to be offered in proportion to the size of the cuts, which favours richer councils. A number of Conservative MPs have admitted to having changed their votes in response to the government’s hand-out, including, for example, the MP for the Isle of Wight, Andrew Turner.  Another MP, Peter Heaton-Jones, Con, Devon North, thanked the minister for listening to dissent,  and indicated that he no longer intends to rebel against the government. One by one the MPs have been bought off by a cash bonanza. Cameron’s mother and aunt might be pleased that Oxfordshire has done well, it gains £9 million, but Labour MPs, representing other, poorer, councils and constituencies are furious.

Steve Reed, Lab, says the settlement is deeply unfair. Northumberland is the only North-East council to benefit from the transitional funding arrangements, while areas that benefit the most include the relatively affluent counties of Surrey, Hampshire, N. Yorkshire and Devon: 85% of the transitional funding goes to Tory councils, and only 15% to Labour councils.

Liam Byrne, Lab, Birmingham Hodge Hill, said that the reputation of the minister has taken a dive with this report. He argued that in the past the councils were asked to accept the mantra that there could be no flexibility at all in the light of the need for austerity measures. With this transitional funding that ruling has been over-turned in the interests of a few, relatively prosperous, rebellious Tory councils.  It is clear that the concessions are designed to sidestep a rebellion of Conservative MPs by pandering to them, and not to the nation at large.

Labour members call for the Office of Budget Responsibility (OBR) or the Institute of Fiscal Studies (IFS) to look at this from a politically neutral position. Jenny Chapman, Lab, Darlington, “I have never seen anything so deliberately partisan”, adding that “the victories for the shires [in these negotiations] are on the backs of more deprived areas.” She also says that “The people of the North-East will never ever forgive this government for what it is doing”. This is unusually venomous language in Parliament. The outrage is very deeply felt.

Julie Cooper, Lab, Burnley, reminded parliament that “we were told that those with the broadest shoulders would bear the greatest burden of austerity measures” and she claims that the current proposals underline the fact that this is not true. Meanwhile, Steve Double, Con, is another of the MPs who changed his mind about voting against the government following the government’s cash handouts for relatively affluent councils. He expressed his gratitude to the ministry for listening to the “many voices of the rural areas”, and commented that “at the heart of this is devolution”.

Liam Byrne said the government’s policy is described as “not credible, not realistic, and intensely dangerous”. He argues for a  special and strong based provision for poverty in the distributional impacts of all funding arrangements. The future proposal of Cameron’s government is that councils retain all money raised from local business enterprises. The idea is that local people reap the benefits of economic growth, rather than a central government distribution. This approach takes no account of different local circumstances. It is, quite obviously, easier to raise tax where the council is made up of more affluent residents and has more prosperous business opportunities.

Jim McMahon, Lab, Oldham West and Royton, makes a broader point when he says that the link between need and cash has been broken while at the same time no money is saved by these cuts. Costs are simply shifted from local government to national government. McMahon argues that challenges to do with the under-provision of services will come eventually through the courts. This will send a shock wave through the system that the local and national governments are not ready for.

McMahon argues that the government is not realistic about the effects of the cuts. Some of these costs fall onto unpaid family carers, which is an often unmeasured heavy human cost. McMahon reminded parliament that Oldham suffered £200 million in cuts. An increased levy of 2% on council tax will generate only £1-5 m, while the cost of higher wage bills, to cover the living wage increase, will cost the council £2.7 million.

“We are going backwards” says McMahon. “The government’s response has been a cash bonanza to buy votes”, saying that cash has been made available primarily for relatively affluent rural areas, and no allowance has been made for need.  The five most deprived areas get nothing, while the five least deprived areas share £5.3 million from the transitional funding amendments. Jim McMahon calls this a ‘friends and family’ discount. As a newcomer to parliamentary debate his words were unguarded and poignant. Though the arrow struck its mark it is unlikely to affect the outcomes of the division in the House.  Parliament has had its day. By some clever accounting the threat of Tory rebellion has been quashed.

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