3.24 pm

Jesse Norman (Hereford and South Herefordshire) (Con): Thank you, Mr Crausby. I am grateful to you and to the hon. Member for Birmingham, Edgbaston for calling this important debate.

I absolutely applaud the measures that the Government have taken over the past couple of years, not merely to bring the national economic crisis under some kind of financial control, but to make specific improvements to local government in the hope of making it more relevant, more accountable and more autonomous. The hon. Lady made the very good point that local government was glorious in the 19th century, and one reason for that was how autonomous it was. It is very important that we restore proper dignity to town halls, and I think the Government are doing that.

It is remarkable that the Government have been able to do that in the extremely difficult financial conditions in which we find ourselves. It is extraordinarily hard to change embedded funding decisions and disparities that have been left over from times past. In my county of Herefordshire—although we are talking about cities and the wider impact, I hope that we can strike a rural note, as the hon. Lady acknowledges the differences between them and the effects that each can have on the other—levels of funding have always been extremely low. The culture is one of making do and mending. To take one example, it was a minor miracle when we moved from having the third worst-funded schools in the country to the fourth worst-funded schools in the country, in the past year or two. I hope that we will continue to motor rapidly up the tables thereafter.

Above all, the issue is not only about local government, but about the totality of public services, because, as I think all Members would recognise, the services interlink with each other and the cumulative and interrelated effect of them makes all the difference. I am perhaps somewhat unusual in that I commissioned an independent study of underfunding in Herefordshire in 2010, which concluded, based on a comparison with other authorities, that it had been underfunded to the tune of £174 million over the previous five years—the period from 2005 to 2010. That is £35 million a year or roughly 10% of local government spending.

Those totals broke down across the public services as: police, £11 million a year; fire, £4 million a year; schools, £30 million a year; and health, £44 million a year. Each of those sums, in turn, was dwarfed by the underfunding of local government, which was £85 million over that period, or £17 million a year.

It is important to put that in perspective. It is not only about underfunding in some of the leafy suburbs to which people like to refer, because there are areas of deprivation in Herefordshire. It is not a rich place; it is a county in which the average earnings are significantly below the averages for the west midlands and for England as a whole. It is well known to those who have studied the issue that public services are harder, not easier to deliver, and more expensive, not cheaper to deliver, in

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rural areas than in cities, whether that involves filling potholes or the number of women whom a midwife can see in a given year.

Steve McCabe: I want to see whether I understand the essence of the hon. Gentleman’s point. Is he arguing that his area is underfunded, as a number of us would think of our areas, and therefore that central Government need to do something to relieve that underfunding? Alternatively, is he arguing that money should be taken off other areas and given to his area to address what he perceives as the underfunding problem in his area alone?

Jesse Norman: I am arguing that the situation in Herefordshire is the result of well over a decade—possibly two decades—of underfunding and that therefore, although every area has been hit badly because that is the nature of the tough times we are in, the case for treating with care and attention areas that have suffered from that inherited imbalance of underfunding is clear.

Let me give an example. In many parts of the country, local councils have reserves—indeed, large amounts of reserves that they have stored up over many years against a rainy day. That is not true in Herefordshire. Herefordshire council is only 10 or 15 years old. It does not have large inherited reserves. All the reserves it has are spoken for, more or less, and therefore it is not in the position that some cities are in of being able to draw on inherited reserves.

Ms Gisela Stuart: Will the hon. Gentleman give way?

Jesse Norman: I am winding up my speech, but I defer to the hon. Lady so much that I am happy to take her intervention.

Ms Stuart: I am exceptionally grateful. The hon. Gentleman mentioned that Herefordshire is a relatively young county. Is not that the problem? When there was a split between Herefordshire and Worcestershire, there was always a debate about whether they were big enough to be sustainable local authorities. Do not some of the problems in his area relate to the question whether the size and configuration of local authorities is optimal?

Jesse Norman: Of course, that point would be much stronger if it were ever true that Herefordshire had received anything like a fair level of funding relative to its comparators. Unlike, I think, most other hon. Members, I have the facts and the evidence in my hands and on my iPad if anyone would like to check them, so we can be quite precise about it.

My final point has to do with reserves. Herefordshire does not have huge reserves. It has virtually no reserves and an embedded underfunding over at least two decades. In that context, the Government’s efforts to level the playing field, if that is what they are, are to be welcomed, because that is doing a difficult thing in unusually difficult circumstances. I am grateful to the Minister and his colleagues and hope that they will continue to look closely at this issue and at the disparities between different authorities as reflected in their reserves.

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3.31 pm

Catherine McKinnell (Newcastle upon Tyne North) (Lab): It is a pleasure to serve under your chairmanship, Mr Crausby. I, too, congratulate my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) on securing this important debate. She is a tireless campaigner for the people of Birmingham and, like me and many of my colleagues on the Opposition Benches, is simply unwilling to let the issue of unfair cuts to local government go.

Indeed, I have lost count—I am sure that the Minister has too—of the number of times I have raised with him and other Ministers the impact of disproportionate cuts on cities such as Newcastle, yet he continues to bury his head in the sand about the scale of the consequences of the decisions that the Government are taking. I therefore look forward to hearing his response and seeing whether he will acknowledge the impact of those decisions on communities and services in cities such as Newcastle. However, given the provisional local government finance settlement that was confirmed to the House on 18 December, I am not holding my breath.

The United States celebrates groundhog day on 2 February, but I think mine might be occurring at the beginning of this month, because on 8 January last year, I introduced an Adjournment debate on the effect of funding cuts on Newcastle city council, during which I was complacently told by the Minister:

“Predictably, the doom mongers have been consulting their Mayan calendars and issuing dire warnings about the end of the world as we know it and a billion pound black hole in local budgets. Concerns that the poorest councils or those in the north will suffer disproportionately are well wide of the mark”.—[Official Report, 8 January 2013; Vol. 556, c. 293.]

What is the reality facing cities such as Newcastle? In the debate last year, I outlined how in 2012 Newcastle city council had started to consult on a three-year budget for the period from 2013-14 to 2015-16 in the light of the unprecedented funding challenges it faced. When it began the consultation process, it believed it was looking at a funding shortfall of £90 million over three years as a result of disproportionate central Government funding cuts and rising cost pressures, such as inflation, energy prices and the costs of providing services to an ever-ageing population. That figure rose during the consultation process to £100 million, following further cuts announced in the 2012 autumn statement and the local government finance settlement. However, following the 2013 spending round and provisional local government finance settlement announced in December 2013, Newcastle city council now believes it faces a funding gap of £108 million over the same period.

I have no doubt that the Minister will again seek to dismiss concerns about the scale of the cuts faced by cities such as Newcastle by reminding us, again, of the “spending power” that Newcastle has at its disposal—it is groundhog day, after all—but I suggest, as other hon. Members and I have suggested on several occasions, including today, that that measure is absolutely meaningless if it is used simplistically to compare total spending power without taking into consideration the completely different spending pressures facing cities such as Newcastle and those facing other parts of the country with totally different needs and challenges to support.

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The Minister repeatedly fails to mention the scale and the speed of the change in spending power that is proposed for the next two years. Newcastle may have a higher total spending power than certain parts of the country, but it faces a cut in that spending power of £232 per dwelling over the next two years. In sharp contrast, Wokingham, which my hon. Friend the Member for Birmingham, Edgbaston also referred to—I appreciate the concerns of the friend to whom she referred—and which the Minister often likes to cite, will see its spending power rise by £60 per dwelling, and Windsor and Maidenhead’s will rise by £32 per dwelling. Therefore, although the spending power of cities such as Newcastle is being significantly cut, the spending power of some of the wealthiest and least deprived areas of the country is not only being protected but increased under this Government. The straight fact is that the additional spending power of cities such as Newcastle has not originated from some unfair funding decision of the past, but reflects very real differences in spending pressures and, in particular, differences in the requirement for statutory services.

Newcastle, as an urban and relatively deprived city, faces significantly greater spending pressures than the two councils that the Minister frequently chooses to compare it with. However, as Newcastle city council officers have pointed out:

“The reduction in spending power of areas with higher needs and lower resources and the increase in spending power in the wealthiest areas is a trend that will continue each year if the Government continues to operate the grant system as is currently proposed. It will not just close the funding difference between these areas but in time will potentially reverse it...This effect is happening because the Government’s funding system now focusses on self-sufficiency and providing incentives for areas where economies grow as opposed to applying the core principles of providing sufficient funding to reflect the different needs to provide statutory services across the country and to compensate for very different abilities to raise money locally from a standard council tax. These were the core principles introduced…in 1993/94 by the Conservative Government at that time. The principles were aimed at ensuring that residents anywhere in England could receive a standard level of service to meet their needs with a similar council tax charge for similar bands of property. Now that this no longer holds true the provision of statutory services can and will only be achieved by councils in poorer areas with higher services demands by charging a higher Band D council tax than wealthier areas of the country. As the Government is effectively restricting increases in council tax this will in effect mean that similar levels of service (including statutory services) can no longer be provided in poorer areas of the country or those areas with higher calls on statutory services.”

Crucially, the officers say:

“It is unclear whether Ministers...fully understand the implications of the new funding system that they have introduced.”

With regard to the title of today’s debate, the key concern is the cumulative impact of higher percentage cuts and higher cash cuts in spending power per dwelling. Far from Opposition Members bigging up the cuts, those cuts will place much greater pressure on the financial sustainability of councils sooner than would be the case if they were proportionate. The Minister may decide to use his response to the debate to continue to bury his head in the sand on this critical issue. Perhaps he thinks that if he sticks his fingers in his ears and sings loudly enough, we will all just go away, but it is not just Opposition Members and Labour-run councils that fear that, although they are clearly the ones worst

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affected by the Government’s decisions. Ahead of the autumn statement, the Conservative chairman of the Local Government Association, Sir Merrick Cockell, commented:

“The next two years are make or break for many councils and the Chancellor has it in his power to either deliver a stable environment in which they can plan for the unprecedented challenges ahead, or he can deliver uncertainty and risk which will put even more stress on vital local services and push councils toward failure…This Government is testing the resilience of councils to breaking point and in many areas the cracks are starting to show. 2015/16 is shaping up as the crunch year and we expect some councils to be placed in a position where they do not have the money…to meet their statutory obligations.”

That is a truly damning statement, and if it comes to fruition, it will be residents of constituencies such as mine, in Newcastle North, who will pay the price.

3.39 pm

Robert Neill (Bromley and Chislehurst) (Con): It is a pleasure to serve under your chairmanship, Mr Crausby. I am slightly disappointed at the outcome of the debate, although I congratulate the hon. Member for Birmingham, Edgbaston (Ms Stuart) on the thoughtful way in which she introduced it. The subject of the debate deserves a little better than some of the contributions that have been made. I agree with the hon. Member for Southport (John Pugh) that we must use the debate as an opportunity to think about the sustainability of local government finance in the longer term.

Some of the matters that have been raised relate, I suggest, to symptoms rather than disease. The hon. Member for Birmingham, Edgbaston hinted at the real problem with financial sustainability in local government, which is that the state in this country is highly centralised. That needs to change. I gently say that that is not the construct of any one party; it has happened over about 50 years. In fairness, it must be said that this Government have taken important steps to seek to reverse that.

I agree with my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) that Ministers should be congratulated on the devolutionary steps they have taken at the same time as having to make significant spending reductions to meet the economic crisis we inherited. We cannot have sustainable financing for local government, which accounts for some 25% of the spend on public services, without a sustainable economy for the public finances as a whole. I do not accept lectures from Opposition Members who suggest that we should exempt local government from the necessary spending reductions.

In the longer term, we need to tackle the real problem, namely that local government has historically been too dependent on central Government grant for its finance. The Government have taken important steps to address that, but the degree of the problem is highlighted by the London Finance Commission. I represent a suburban London seat, which falls somewhere between the two poles when it comes to the matters that are being discussed. The LFC report, which the Mayor of London commissioned and endorsed, points out that some 7% of all the tax paid by London residents and businesses is retained locally, as opposed to, say, New York, where the picture is some 50%.

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I am not saying that it is realistic to change those figures overnight, because we come from different constitutional and historical traditions, but we can move in that direction. In that regard, the Minister and the Government—I might have a slight interest in this—are to be commended for providing other financial levers to local authorities beyond pure dependency on central Government grant or council tax. The new homes bonus was an important additional income stream from central Government.

Mr Clive Betts (Sheffield South East) (Lab): Recycled money.

Robert Neill: The hon. Gentleman rather misses the point. During the whole time that the Labour party was in government, it made no such devolutionary steps in local government finance. It ill behoves the Labour party to criticise the steps that the Government have taken against a background of financial stringency.

Secondly, the retention of business rates, particularly if we follow it through in due course and increase the local share, has a real opportunity to reduce dependency on central Government grant. Currently, for understandable reasons such as deficit reduction, the local share has to be constrained. The primary legislation is drafted in such a way as to permit the local share to increase as the economy grows. I hope that happens, and I think hon. Members would do better in the longer term at finding financial sustainability for local government if they were to support that growth on a cross-party basis rather than seek to make short-term points about the funding of individual local authorities.

John Cryer (Leyton and Wanstead) (Lab): To some extent, the hon. Gentleman makes a fair point about the long term. The problem is that we are dealing with the situation we are in, which is that local government is dependent on grant from central Government. Waltham Forest council, which covers most of my constituency, has already faced extensive cuts and will probably face further cuts in grant from central Government of some 8% over the next two years. That reaches the stage, as Sir Merrick Cockell has said, where it is unsustainable and cracks start to appear. My local authority has wrought miracles in delivering services in difficult circumstances, but I am not sure that that can continue.

Robert Neill: With every respect to the hon. Gentleman—I know he thinks about such matters carefully—the problem with his analysis is that simply shovelling more money into the system that cannot be paid for in a sustainable way is not, I regret to say, the answer. A much more radical approach is needed to the way in which we deliver services, which good councils of all political persuasions are willing to undertake. We should move away from the high levels of dependency that local government in this country has on central Government bail-out.

There are things we could do. I hope we will not only increase the local share of the retained business rate and therefore reduce dependency on central Government grant, but work with the Local Government Association to deliver a genuinely sustainable market in municipal bonds, which holds real opportunities, particularly for big cities.

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I hope we can extend the period of the funding settlements for local authorities. It is worth recognising, as the LGA recognises, that in the autumn statement this year we set out that local public services will get the same long-term indicative statements as central Government, which will provide more certainty. That is an important and valuable step forward, on which I congratulate the Minister. We might, in due course, roll that out to five-year settlements for local government, which will provide a sensible approach to long-term planning.

There are things that can be done, but it is not enough simply to talk about a system and to have a needs-versus-resources argument that does not recognise efficiency. We can do more in the system to recognise efficiencies and past efficiencies. Although the cities are a pressure point, it struck me when I was a Minister that we should not forget that there are financial pressures on rural authorities as well. One thing that concerned me when I first came into office at the Department for Communities and Local Government was that the then formula grant system did not recognise the cost of rural services or the particular pressures that give rise to rural deprivation. I congratulate the Minister and the Government on taking important steps to recognise that. There are positive, long-term things that we can do, and I hope the Minister will reflect on what we can build on in a constructive way.

3.46 pm

Mr Clive Betts (Sheffield South East) (Lab): I congratulate my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) on securing the debate. Reference has been made to the Local Government Authority’s position. It is a good idea to take notice of those who, day to day, have to deal with the problems we are discussing and make decisions in local government. Sir Merrick Cockell, the Conservative leader of the LGA, which has a Conservative majority, has said clearly that the position of local Government finance is not sustainable. I happen to agree with him, and there is cross-party agreement in the LGA. That comes about because, as my hon. Friend has said, local government has been asked to make twice the level of cuts demanded of central Government Departments. Local government services are more important than that, and the extent to which local government services have been singled out for disproportionate cuts is unacceptable.

We can argue about which authorities have had the worst deal, and I certainly argue that those with the greatest needs and traditionally the highest level of grants have had the biggest cuts in their grant. That is not questionable—the figures are there to back it up. Local government generally has a good record on efficiency savings. It has coped with the cuts so far quite well, but we have already seen across the country cuts to community services such as libraries and changes to eligibility criteria for adult social care that are affecting communities and individuals in local authorities of all political persuasions.

We cannot continue on that basis, because it is not sustainable. Cuts that are made one year cannot be simply repeated and enhanced the following year. Every year it becomes more difficult because there is less room for manoeuvre and a lower percentage of discretionary spend that can be cut. That is not a steady state, because more pressure is being put on spending for adult social care all the time. The graph of doom that the hon.

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Member for Southport (John Pugh) referred to is already there. As cuts are made in spending availability and extra demands are made on adult social care, the amount left for other local government services is squeezed until it becomes non-existent. Adult social care and care for looked-after children ultimately benefit a minority of people, important though those services are, and the rest of the population do not know what they get from local councils because virtually nothing is left. That undermines local democracy, which is very worrying.

The hon. Member for Bromley and Chislehurst (Robert Neill) is absolutely right that we have to look towards the longer term. The Government have done some good things, such as abolishing ring-fencing, moving a little on business rates—I would like to see more—and introducing city deals. The most significant thing they have done, however, is to undermine the basis of local government finance in this country to such an extent that a future Government simply will not be able to come back and build on what was there before.

There has to be a fundamental and radical change. There was a good contribution to the debate from the LGA with the “Rewiring Public Services” document. There was a good contribution from the London Finance Commission. The Communities and Local Government Committee is to conduct an inquiry into local and inter-city financing and how city governance affects other parts of the country. Important elements have been raised for discussion, and I hope we can take that debate forward.

In the meantime, what will the Minister do when a local authority gets into real difficulties? The National Audit Office has been highly critical that the Government have not done an impact assessment on the cumulative impact of cuts to local councils. The LGA has said that 56 councils will spend 15% above their income by 2015-16. What happens if one of those councils gets into serious financial difficulties? Would the Government insist on a council having a referendum if it needed to raise council tax by 20% to make ends meet and to deliver its statutory service? Will the public vote for an increase in a referendum if they know that the Government have section 31 powers—civil servants and Ministers revealed them to the Committee—to step in at any point and give councils extra grant to stop them from going bust? Where do we stand when an authority gets into serious difficulty, whether that authority is Conservative, Labour or Lib Dem, rural or urban, a city authority or a district council? What action will the Government take if a council gets into difficulty, which seems to me to be almost inevitable?

Angela Smith rose—

Mr David Crausby (in the Chair): Order. I plan to call the first Front-Bench spokesman at 3.55 pm, so, with four minutes to go, I call Angela Smith.

3.51 pm

Angela Smith (Penistone and Stocksbridge) (Lab): I will do my best, Mr Crausby. I congratulate my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) on her excellent speech, which had depth and context. The only thing I can add on the history of local government is its contribution in cities such as Sheffield and Birmingham to our housing, our schools, our leisure facilities and our libraries. The green legacy,

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particularly in Sheffield, bears a heavy debt to the history of local government in the area. She succinctly outlined the declining powers of local government over many decades, which was echoed by the hon. Member for Bromley and Chislehurst (Robert Neill).

The case for cities as economic motors was powerfully made by my hon. Friend the Member for Birmingham, Edgbaston. I want to compare Sheffield with Pittsburgh in the USA—she made comparisons with Europe, but comparisons can occasionally be made with the USA. Pittsburgh is Sheffield’s sister city and suffered the same decline in its industrial base, but it is now motoring ahead. Why? It is because Pittsburgh had the powers available to rebuild itself. It has focused on life sciences and hydraulic fracturing—fracking to most of us—and has rebuilt its economic base very successfully. It has managed to tap in to resources made available by the federal Government, but beyond that it has tapped into local resources and rebuilt itself. It stands as a shining example of what can be done when a city is given control of its destiny. It is not just Europe we can look to for comparisons of what can be done; sometimes, the US can teach us lessons.

By comparison, Sheffield will, over the lifetime of this Parliament, suffer a 50% reduction in its grant. Barnsley, the other borough I represent, will suffer a 41% cut over the same period. The contrast between what is happening in some of the great cities of the world and what is happening in the UK could not be greater. People living in Sheffield and south Yorkshire more generally feel emotional and strongly about the loss of their industrial base. Something has to be done to rebuild the economy of south Yorkshire. Even the boroughs of Barnsley, Rotherham and Doncaster would acknowledge that Sheffield has to be at the heart of that regeneration.

The myth about the rural and the urban needs to be scotched. Some 70% of south Yorkshire is rural, but it is within a metropolitan area. It has suffered declines greater than Herefordshire, Worcestershire and other areas in the country. I do not want to pitch south Yorkshire against other parts of the country, but south Yorkshire and areas like it helped to build the UK’s industrial base, and they have the capacity to do that again. The role of local government in that is critical. Local government as we know it is broken for ever. The model has gone. Devolution has to be at the heart of the solution for countries and regions such as ours. For Birmingham, for south Yorkshire, for Greater Manchester, for Newcastle and for the north-east, we have to have devolution and a different model for delivering local government in future.

3.54 pm

Andy Sawford (Corby) (Lab/Co-op): It is a pleasure to serve under your chairmanship, Mr Crausby. I congratulate my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) on securing this very important debate and on how she has spoken up for her constituency and her city and made a wider and powerful case on the importance of our cities to the UK economy. Cities have helped to shape local government as we know it.

As my hon. Friend has said, urbanisation and industrialisation in the 19th century created the impetus

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in cities for the growth of local democracy, whether that was guilds of merchants and craftsmen coming together; the turnpike trusts and the improvement commissions; or the local Acts of Parliament, such as in Newcastle, to ensure that houses had privies attached to them, or those in the west midlands, where councils came together to promote an end to animal cruelty, or those of many local authorities who sought public health measures to tackle diseases such as cholera and tuberculosis. There was also the invention and confidence of municipalism in Birmingham, symbolised by Joseph Chamberlain—he was mentioned by my hon. Friend—who municipalised the gas works and the water supply. London blazed the trail for the national health service. Some 40,000 of the 55,000 hospital beds in the city were run by the county council.

Today, the challenge is even greater for our big cities. They must lead the renewal of local government, not only for local citizens who rely on their local services, but also, as my hon. Friend rightly said, for our national economy. They must do that in spite of Government policies that have hit our cities hardest of all. Birmingham council’s leader, Sir Albert Bore, said that

“these cuts will mean the end of local government as we know it”.

My hon. Friend the Member for Liverpool, Walton (Steve Rotheram) spoke powerfully about how his council has already worked incredibly hard to reform local public services and to make efficiencies. We know that local government, despite receiving the biggest cuts of any part of the public sector, is viewed by the Government as the most efficient part of it. The Prime Minister has said that.

The core funding reductions in local government are an average real terms cut of 33%, and the figures announced in the 2013 spending round envisage a further 10% cut in the local government resource budget, but I believe that it goes further than that. The key issue is the unfairness of the distribution of those cuts. By 2014-15, the 10 most deprived local authorities in England will have lost six times more than the 10 least deprived local authorities, compared with 2010-11.

While Birmingham, Newcastle and other cities will lose most, the Prime Minister’s local authority—West Oxfordshire council, which is one of the wealthiest—is seeing its spending power increase. My hon. Friend the Member for Birmingham, Edgbaston contrasted the cuts to her local authority, as did other hon. Members, with the increases in Wokingham, Hampshire, Surrey and Windsor and Maidenhead. Where is the fairness in a policy that takes most from those with least to give to those with most and a policy that takes from the have-nots to give to the haves? The council cuts are brought to us by the Government who gave millionaires a tax cut while imposing the bedroom tax on the poorest.

We know that the policy is deliberate. The former local government Minister, the hon. Member for Bromley and Chislehurst (Robert Neill), whom we have heard from, is on record as saying that. Both the Audit Commission and the Joseph Rowntree Foundation have said that councils in the north have been hit harder than those in the wealthier south-east. Can the Minister explain why that is right?

The National Audit Office has warned that cuts are having a direct impact on front-line services—we know that from our own areas—and that many councils are at

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risk of being unable to balance their books in future, with potentially disastrous consequences, not only for the delivery of those discretionary services, but for the delivery of those statutory services that our constituents rely on. The Public Accounts Committee report on the financial sustainability of local authorities found that there had not been a proper analysis of the impact of the cuts. The Committee highlighted the unfairness of the cuts for different areas of the country and raised serious concerns that some councils will simply not be viable.

As my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) has said, it is not just the scale of the cuts but the pace of them that is having such a significant impact on our areas. The Chair of the Committee has said:

“Central government is cutting funding to local authorities by more than a quarter over four years but does not properly understand what the overall impact will be on local services.”

For instance, the Department for Education has failed to provide a proper cost analysis of how funding reductions will affect children’s services. As my hon. Friend the Member for Liverpool, Walton has said, the cumulative impact of cuts in other departmental budgets on local authority public services is affecting our cities most. Nor is enough work being carried out across Departments to determine how funding reductions in one area of spending might affect services in another—for example, how cuts in local authority adult social care are leading to bed blocking in hospitals, as they are in my area.

The Public Accounts Committee says that the Government do not understand the impact of their cuts on vulnerable groups. We know that, and it is reflected in other policy areas across government, not least welfare reform. We want to know what actions the Government would take in the event of the financial failure of multiple local authorities. As my hon. Friend the Member for Sheffield South East (Mr Betts) said—he is the Chair of the Select Committee on Communities and Local Government, and I hope the Minister will listen to him—we must hear from the Government what action they will take if councils cannot balance the books.

The hon. Member for Bromley and Chislehurst told us that the shifting of funding is aimed at reducing dependence, but the truth is that often the areas with the highest demand for services have the least capacity to raise income through business rates or council tax, as I am sure he knows. Although some of the changes to business rates can be built on and are to be welcomed, on the issue of fairness, he is not right. It has compounded the problem for some of the toughest areas of our country with greatest need.

In the Government’s spin operation following the provisional finance settlement, they said that there would be no more cuts to local government. I was astounded to read august publications such as the Local Government Chronicle reporting “No more cuts to local government”, when we know that next year, the year after that and—to listen to the Chancellor yesterday—in the five years that follow, if the Conservatives are in power, there will be substantial further cuts to local authorities. The Chancellor has said that 10% will be cut in the next two years, but I ask the Minister to take this opportunity to correct the record. The Local Government Association, a cross-party organisation, is clear that without including NHS support for social care, which is not available for all councils, the reduction over the next two years will be 15.9%.

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The Minister and I are having our own groundhog day; we were here a few weeks ago debating holdbacks. I welcome the Government’s U-turn on holdbacks, particularly the decision to return some of the money held back as part of the new homes bonus, which was the subject of a debate led by my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah), who was here earlier. The second U-turn that we heard about was to adopt Labour’s policy to act on business rates, which have increased for small and medium-sized businesses by £2,000 under this Government. However, we would go further, freezing and then cutting business rates for 1.5 million small and medium-sized businesses. If the Minister were to confirm that the Government are willing to take that U-turn, I am sure it would be welcomed around the country.

My generosity to the Minister does not extend to the fairy tale that we are likely to hear about council tax and the notion that it will again be frozen. When will we hear the details of the council tax freeze grant for 2014-15? What is his response to the recent report in The Daily Telegraph that at least 42 councils, more than half of which are Conservative-led, plan to reject the Government’s additional funding and raise council tax this year? The leader of Conservative-led North Yorkshire said that

“settling for the additional funding for another year could place the council’s finances in a perilous position.”

The next Labour Government will not be able to turn back the clock, but we can offer hope to local authorities and local government around the country that we understand the depth of the financial challenge that councils face and are committed to finding a way forward. We will start by putting fairness back at the heart of the relationship between central and local government. We will acknowledge the difficulties that councils face, not try to sweep them under the carpet. We will respect decisions made by councils at local level about how to use resources, not criticise and carp from Whitehall, as the Secretary of State does about everything from the level of reserves to bin collections.

The next Labour Government will, of course, want councils to meet communities’ needs, but our approach will be one of partnership. It is crucial that we support councils to deliver economic growth in all areas of the country with fairness. We will consider the report of the London Finance Commission and some of its proposals, and the LGA document “Rewiring Public Services”. We want to devolve power over housing and planning, and jobs and skills. Councils will have to come together to decide how best to use those powers, not just in our cities but across England, as part of what my right hon. Friend the Member for Leeds Central (Hilary Benn) calls the English deal. We will take the process of devolving power from Whitehall further, through Labour’s “Total Place” programme, which has sadly stalled under this Government, but whose pilots in places such as Greater Manchester show that there is much potential.

The local government innovation taskforce, set up by the Leader of the Opposition, makes it clear that Labour in local government is already innovating in responding to the challenges faced by our communities. As my hon. Friend the Member for Liverpool, Walton said, our councils are doing a great deal already, even in these difficult circumstances. That taskforce will press for a growing role and greater freedom for local government.

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Labour’s localism will be an ambitious programme requiring Whitehall and local government to work together as we transfer much more power and responsibility to local councils. In that way, although resources will be tight, councils will have a better chance to find a sustainable and fair way forward for their communities.

4.4 pm

The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis): One would be forgiven for believing that there was some golden inheritance for local government when this Government came in. Many council leaders across the political divide would struggle to recognise the description given by the shadow Minister. Having been a council leader under the last Government, I find the idea of the Labour party favouring anything involving flexibility or partnership with local government, as opposed to top-down central control through one mechanism or another, almost laughable.

We should put this debate in context. We still have not heard anything from the Labour party about the £52 billion in cuts to local government that they outlined—local government still has something to fear. Members have also talked about money for areas. We have heard the debate about the difference between rural and urban areas. We would argue that we have created a fairer position, but we should also remember the backdrop outlined by the right hon. Member for Birmingham, Hodge Hill (Mr Byrne): the previous Government basically spent all the money. As my hon. Friends the Member for Bromley and Chislehurst (Robert Neill) and for Hereford and South Herefordshire (Jesse Norman) rightly said, we are working within the tight financial envelope left to us by the mess of the last Labour Government.

Having said all that, I must also congratulate and thank the hon. Member for Birmingham, Edgbaston (Ms Stuart) for securing a debate on this important issue and for her thoughtful opening speech. This Government have armed local government with a fair funding deal for all parts of the country—rural and urban, district and county, city and shire—which means that councils can plan budgets and deliver sensible savings while protecting front-line services. I will come back to the context of “fair” in a moment.

As has been outlined, every bit of the public sector must do its bit to pay off Labour’s deficit, including local government, to account for a quarter of all public spending. Our hats should go off to local government for the impressive work it has done, because we have shown that we can make those savings and still deliver good front-line services. Public satisfaction is at an all-time high, especially compared with 2010.

The autumn statement ensured that local government is protected from further spending reductions for 2014-15 and 2015-16. Councils now have the stability and certainty to plan their budgets and move ahead with transforming local services and ongoing efficiencies, which they absolutely need to do.

Richard Burden (Birmingham, Northfield) (Lab): Will the Minister give way?

Brandon Lewis: No, I will not, due to the time constraints.

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Councils now have stability. A number of local authorities have already done much work to prove that efficiencies deliver not only savings, but better services for their residents. Ultimately, that is the key. It is not about Government money or councils’ money; it is about taxpayers’ money being spent on good front-line services for local residents. I encourage authorities to look at the good councils out there doing great work with efficiencies and innovation, such as those that have done work through the community budget programme and the public service transformation network.

Their work is becoming more efficient and effective for council residents. Independent reports show that it is saving about £20 billion a year in this country. More importantly, areas going forward with such innovation show better outcomes for residents, not the least of which is being highlighted through the work of the better care fund, which involves work between the Department for Communities and Local Government and the Department of Health, and is showing benefits. I will touch on Members’ individual points in a moment, and I will write to the hon. Lady with some details about the better care fund, particularly with relevance to Birmingham. I am happy to meet her separately on that issue as well.

The average spending power reduction for councils in 2014 is expected to be limited to 2.9% per household. Members have mentioned the top 10% and the bottom 10%. Let us be clear that authorities’ spending power in the most deprived areas is much higher. In 2014-15, it is up to about £4,200 per dwelling in the 10 most deprived authority areas, compared with about £2,100 per dwelling in the 10 least deprived. That absolutely reflects, as the hon. Member for Southport (John Pugh) said earlier, ensuring that need is recognised.

The hon. Member for Birmingham, Edgbaston mentioned better care, as I have said, and education, which I will feed through to the Department for Education. I appreciate the invitation to Birmingham. I will look at the diary and see whether we can work out a visit, to ensure that we get up there. However, I gently point out to Members from Birmingham, Liverpool and Newcastle that we are holding consultations right through January—councils are coming to see me to talk about the financial settlement—and at the moment those individual authorities have not even asked for an appointment to come and see the Department. I gently suggest that those Members go back and say to those authorities that if they feel they need to talk to the Department they should make appointments to come and see us. I am seeing the councils from the north-east next week, but at the moment Birmingham and Liverpool councils have not asked to come and see us.

Several hon. Members rose—

Brandon Lewis: As I have said, I am not giving way, either to tide or time.

Regarding Liverpool more generally, I will happily see Mayor Anderson. In fact, I saw him just a few months ago, and the next time I am in the north-west I will make a point of ensuring that I go to see him again. I appreciate the kind invitation that has been made to visit him, but if it is a working visit it will be even more efficient for the taxpayer.

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My hon. Friend the Member for Hereford and South Herefordshire quite rightly made the point about the backdrop we are working with. He also made the point about rural and urban funding. I appreciate his comments on the work we have done in that regard, which recognises the problem for young councils.

As I have said, some councils have been mentioned today whose representatives have not yet made an appointment to come and see us. I hope that they will do so, but I particularly want to point out that my hon. Friend the Member for Bromley and Chislehurst quite rightly highlighted the key role for moving the relationship between local and central Government, particularly on funding, so that we have a system that is much more based on reward rather than handouts, and on giving local authorities the power—the autonomy—to decide their own future and their own destiny, which is something we are very keen to do. That is about ensuring that we get efficiencies, and that we encourage local government to move away, as some councils are doing—not all councils are doing so but there are some really good councils doing great work, across the political divide. As has been highlighted, Manchester is a good example, with its community budgets work.

However, councils must not do what they do just because they do it. They must go even further than the occasional stop and pause to think, “Can we do this better and quicker and faster?” They should start from the beginning by asking, “What is it we are looking to achieve? What is the outcome we want for our residents and how do we best supply that?” The councils that do so are finding substantial savings.

There is significant scope—with small things as well, in some cases—for small authorities with a small budget of £5 million to £20 million to merge back office services to do more joint working. Councils that are doing that are finding up to 18% in savings—substantial money. They can get more for less that way and do better with the £60 billion-a-year procurement budget that local authorities have; they could tackle the £2 billion of local fraud that is still there; they could reduce the £2 billion of lost money in council tax arrears, with arrears substantial in some areas such as Liverpool; or they could use their record £19 billion of reserves and get better value for money from the billions they have in property assets.

We touched on spending power this morning in the House and the Government grant is, of course, not the only way councils receive their money. People need to understand why we look at spending power. Local councils have income from a wide range of sources, so it is right and accurate to look at their overall spending power. The Government have again looked at all of a council’s income, from council tax, settlement funding assessment figures, specific grants, new homes bonus

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and, as I have said, from 2015-2016 the pooled money that will come from the NHS to support health and social care.

Councils still have a long way to go in terms of the work they can do to be efficient. They can look at the transformation fund—there is a new fund of £330 million. There is a £200 million extension of the troubled families programme to support 400,000 more families that need help and to build on the progress that has already been achieved. There is £100 million to enable efficiencies in service delivery; a £30 million revenue fund; and £45 million to drive transformational change just in the fire and rescue service.

There are rigorous safeguards in place to protect local authorities’ sustainability. Local authorities are legally required to balance their books and are responsible for managing their cash budgets within each financial year. The chief finance officer plays a key role in positively influencing the budget-setting process, including setting out the key risks associated with the budget and helping to find sustainable solutions in future. Chief finance officers have a duty to stop council spending effectively instead of allowing an overspend, and there is an audit process in place to ensure that the books are balanced. I encourage authorities to look at the 50 ways to save for local government and at what good authorities are doing to find those savings, and to learn from them.

Authorities have considerable flexibilities to set income and spending levels and to move money between years to help themselves. We have given more flexibility and more local autonomy, and councils are now directly able to benefit from local business growth for the first time in a generation, with around £11.5 billion per annum available through business rates and the annual growth on their share. Therefore, there is a strong incentive to support and develop local businesses, and to help people get into work and to see those businesses grow. There are cutting-edge councils that are doing this work—they know how to do it and they are leading by example in developing best practice for the rest of the country to follow.

I know that getting the ball rolling can be a hard part of overhauling local services. We have seen that. That is why the transformation challenge award was brought in. We were pleased to announce 18 successful schemes just last year, including projects looking at shared services and integration of health care and council services.

Local government has shown commendable skill in reducing its budget and protecting front-line services. With the economy now in recovery and more job opportunities being created, councils are managing their budgets and have a once-in-a-generation chance to step out from Whitehall’s shadow and be masters of their own destiny.

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Mid Staffordshire NHS Foundation Trust

4.15 pm

Jeremy Lefroy (Stafford) (Con): Thank you very much, Mr Crausby, for calling me to speak. It is a pleasure to serve under your chairmanship. Given the interest of several colleagues from the Staffordshire area, with your permission I will take a number of interventions in the course of making my remarks.

On 18 December, the administrators of the Mid Staffordshire NHS Foundation Trust published their final report. It recommended the dissolution of the trust as soon as possible and the absorption of Stafford and Cannock hospitals into the University Hospital of North Staffordshire NHS Trust and the Royal Wolverhampton NHS Trust respectively. It also set out proposals for the services that would continue to be offered at both Stafford and Cannock. The total cost over three years would be £220 million, of which £63 million is revenue and £157 million capital.

Let me first address the proposal to dissolve MSFT. I believe that is the right thing to do. It will enable both Stafford and Cannock hospitals to work much more closely with larger specialist teaching hospital trusts. They will both then be able more easily to recruit clinical staff who see greater opportunities for skills development within a larger organisation working across two or more sites and overhead costs will also be reduced.

However, the administrators’ proposals do not go far enough in ensuring that the interests of those who currently use MSFT are fully taken into account. Monitor and the Secretary of State clearly need to state that the expanded trusts should immediately recruit suitable non-executive directors from the areas served by MSFT, such as Stafford, Cannock, Penkridge, Rugeley, Stone, Brewood and so on, to ensure that those areas are properly represented.

Paul Farrelly (Newcastle-under-Lyme) (Lab): Under the proposals, the University hospital of North Staffordshire will take over Stafford hospital. North Staffordshire hospital has a deficit at the moment, caused by reopening beds to cope with blockages in A and E and in admissions. Does the hon. Gentleman agree that in taking over Stafford hospital, it is very important and in the interests of everybody—everybody in Stoke-on-Trent, Newcastle-under-Lyme and Stafford—that the University hospital of North Staffordshire has the prospect of attaining financial stability?

Jeremy Lefroy: I thank the hon. Gentleman for his intervention and I entirely agree with him. I would see the situation more as two hospitals coming together, but it is vital that the financial difficulties that UHNS is facing are sorted out. I particularly urge the Government to look at the private finance initiative cost, which is too great for that particular trust.

Joan Walley (Stoke-on-Trent North) (Lab): I am most grateful to the hon. Gentleman for giving way and I congratulate him on securing the debate. May I point something out for the record, so that when the Minister comes to reply he can, hopefully, give cast-iron assurances about the financial input that will be needed for this reconfiguration to take place, addressing the issue that UHNS has identified—that the additional expenditure

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needed for service configuration is in the order of £28 million or £29 million, whereas the trust special administrator has said that only £13 million would be needed? Also, the trust special administrator has proposed a cost improvement programme of 8.5%, whereas Monitor has said that anything above 4.5% is dangerous. We need a very clear, detailed calculation and input from the Government as to how these extra costs will be met, also taking on board the issue about PFI.

Jeremy Lefroy: I thank the hon. Lady for her intervention and I entirely agree with that point. There is no point in Stafford’s merging with Stoke if the consequence is that we have a trust that will be financially failing in the future.

The administrators rightly place emphasis on the need for swift action, and I believe that the dissolution of MSFT in the autumn of this year should be possible—indeed, it should be possible even earlier. In fact, I would go further. MSFT has improved greatly in recent years following the huge failings brought to light through the vital work of Cure the NHS and documented in the Francis report. Its recently published hospital standardised mortality ratio figures were the best in the west midlands, but it is fragile and finds it difficult to recruit in some areas. We need the overall arrangements to take immediate effect, even in shadow form. In recent weeks I have detected less engagement than is necessary, because of the uncertainties of the administration process. That needs to stop.

This is all taxpayers’ money. It is our national health service. It is time to work together.

Andrew Griffiths (Burton) (Con): I congratulate my hon. Friend on securing this debate and on the work that he has done in recent years. He used the words “fragility” and “uncertainty”. He understands the fragility and uncertainty of the health care economy in Staffordshire. Queen’s hospital, in my constituency, is a Keogh hospital, which has huge financial debts and is struggling to survive. Does my hon. Friend agree that it is essential that this reorganisation takes place and is properly funded? If not, the knock-on effect on other hospitals, such as Queen’s, and on the wider health economy, could be damaging and have a domino effect, with other hospitals falling over.

Jeremy Lefroy: My hon. Friend is right. We must make sure that we do not jump from the frying pan into the fire. We must get to a sustainable condition for the health economy. These new overall arrangements must take immediate effect. I urge the Minister to make that clear today, to give the various managements confidence to get on with their work.

I shall make one final point about the future UHNS and the Royal Wolverhampton hospital. The Secretary of State has rightly emphasised patient safety and care since the publication of the Francis report. The new expanded trusts have the opportunity to become national leaders in zero-harm health care, so I urge Monitor and the Secretary of State to seize the opportunity to support them in doing so at this time. Let this administration not be a dry legal exercise. Let it be the chance for Stoke, Stafford, Cannock, Wolverhampton and Walsall to become, even more, shining examples of the best 21st-century health care.

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Mr Aidan Burley (Cannock Chase) (Con): I congratulate my hon. Friend on securing this debate. I do not think that any other hon. Member has had to deal with a local hospital issue as all consuming and difficult as the one in Stafford. I congratulate him, on behalf of everyone, on his tireless dedication to getting the best deal for his constituents.

My hon. Friend mentions Cannock Chase hospital, in my constituency—the other hospital run by Mid Staffordshire NHS Foundation Trust—which will be taken over by Wolverhampton as part of the administration process. I welcome the abolition of that trust, which left my hospital 50% empty and which, even as we speak today, has just closed Littleton ward, to decant nurses to Stafford to try to shore up the hospital there.

Does my hon. Friend agree that we cannot wait until later—until sometime this year; perhaps even the back end of the year—for Wolverhampton to take over running Cannock and for UHNS to take over running Stafford, and that we need to move to the new organisational structure as soon as possible? I mean weeks, not months, so that both of our hospitals can have a secure future and the staff can know that their jobs are safe.

Jeremy Lefroy: I agree. I welcome my hon. Friend’s huge support, both for Stafford and Cannock, throughout this process.

Valerie Vaz (Walsall South) (Lab): I congratulate the hon. Gentleman on securing this debate. I know how hard he has worked and I echo the tribute of the hon. Member for Cannock Chase (Mr Burley).

The impact on the Manor hospital in Walsall has been immense, as the hon. Gentleman said. We have already had to open 70 beds, as well as attempting to open two wards. The hospital desperately needs £40 million. I have raised this matter frequently with the Minister. I should be grateful if the hon. Gentleman took that on board in his summing up and if the Minister looked at the Manor hospital—he has visited it, although I was not there when he did—to ensure that it gets the funds that it desperately needs, having taken the impact of the closure of accident and emergency at Stafford hospital.

Jeremy Lefroy: I am grateful. I place on the record my thanks to all the staff at all the hospitals—Stafford, Cannock, Wolverhampton, Walsall and Stoke—for all they have done through this difficult time.

Let me turn to the detail of the services, which comprises the bulk of the trust special administrators’ report. We have come a long way from 11 months ago. Then, the contingency planning team recommended removing A and E and all acute services from Stafford, as well as elective surgery from Stafford and/or Cannock. We now have proposals that retain elective surgery at Cannock and, indeed, foresee increased activity there. At Stafford, we retain 14/7 A and E, together with acute medicine, elective and some less serious non-elective surgery, day-case surgery and a large out-patient department.

As a result of the consultation, the administrators proposed a midwife-led unit for maternity, when their original proposals removed all childbirth from Stafford. The estimate is that some 90% to 91% of all current patient attendances would remain at Stafford and Cannock.

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Gavin Williamson (South Staffordshire) (Con): Most of my constituents and, I am sure, many of my hon. Friend’s, would find it deplorable if Stafford hospital did not have a consultant-led maternity unit. The pressure that that will place on so many hospitals—Walsall, Manor, New Cross, Queen’s or the University hospital of North Staffordshire—will be unsustainable. I urge Ministers to look at the issue again.

Jeremy Lefroy: I am most grateful to my hon. Friend. I will come to that important point.

I pay tribute to the work of Support Stafford Hospital, because the impact of its campaign has shown just how much the community values the services at Stafford and Cannock. I also pay tribute to the working group, which I set up, and all those who have worked with me on that to provide us with the detail on alternative proposals, some of which I shall outline.

There is no doubt that the administrators listened carefully to what was said in the consultation and made a number of changes in their final proposals. However, the proposals as they stand are insufficient. What I am setting out requires not a re-doing of all the work of the trust special administrator—given what I have said about the urgency of the situation, that would not be sensible—but a modification of the detail.

I do not believe that such a modification would necessarily require more money than is currently proposed, although that remains to be seen, but it would be of huge benefit to many thousands of my constituents, and those of hon. Friends and other hon. Members. It will also ensure that both Monitor and the Secretary of State can fully comply with their legal obligations under the Health and Social Care Act 2012, in respect of health inequalities, as I will show later.

My proposal is that rather than cutting three areas of service in Stafford, those continue in a more cost-effective form, at least for two or three years. I, and the clinicians at Mid Staffs, consider that it will be quite possible to show how these services can be run across the two sites in Stoke and Stafford on a networked basis. The areas concerned are paediatrics, obstetrics and maternity and critical care.

First, the report proposes a reduction of the critical care unit to four beds. It says that the possibility of the highest level of critical care—level 3—should be maintained, but it is not clear how this will be possible without a rota for specialists in critical care. The critical care department at Stafford made its own submission to the consultation, which suggested a reduction in beds and a networked specialist rota. That seemed eminently sensible. Given that the CCU at Stafford is a net contributor and supports several other activities, I urge Monitor and the Secretary of State to determine that this model is tried for a period, during which it will, hopefully, be proven to operate well, clinically, operationally and financially.

The TSA’s final report also proposes, as my hon. Friend the Member for South Staffordshire (Gavin Williamson) mentioned, removing the consultant-led obstetrics and maternity service and replacing it with a midwife-led unit dealing with approximately 350 to 400 births a year. That is a step forward from the draft report, which proposed no childbirth at all at Stafford. However, my constituents and I do not believe that it is sufficient.

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Currently, Stafford sees more than 2,000 births a year and that is likely to rise, with extensive house building, various new business parks being built and the doubling of the size of MOD Stafford, to mention but some developments, resulting, in the coming years—even with a MLU—probably in some 2,000-plus babies being born in other maternity units, mainly at Stoke and Wolverhampton. UHNS in Stoke already sees some 6,000 a year and its population is also growing. With at least 1,000 births, and probably more from Stafford, UHNS will probably approach 8,000, which is the number currently born at the largest unit in the country, in Liverpool.

The NHS rightly promotes choice for women about where to have their babies and the Prime Minister has spoken out against the trend towards ever larger units. Yet that is precisely what is being proposed here for women who are unable to use a MLU, due to the possibility of complications in childbirth. There would also be an impact on those who currently use UHNS and the Royal Wolverhampton, as their local units will become even busier—probably including Walsall as well—taking in women from a much wider area.

My proposal, and that of clinicians at Stafford, is to continue with the current service, fully networked with UHNS, while the impact of the current rise in both the population and birth rate is assessed. That would also enable the special care baby unit at Stafford to continue to support the regional intensive care network for babies, as it currently does. An added benefit would be that women will continue to have a local obstetric and gynaecology service, which I am sure the Minister will appreciate as he comes from that specialty. Again, that would relieve pressure on the larger University hospital of North Staffordshire and the Royal Wolverhampton hospital.

Thirdly, the TSAs propose to reduce the paediatric assessment unit to 14 hours a day from 24 hours a day and to do away with in-patient paediatric beds. There will be no paediatric rota, although A and E doctors will receive extra paediatric training and paediatric out-patient services will continue. The principal reason given by the TSAs is the national standards of the Royal College of Paediatrics and Child Health, which state that such services should be provided by a full consultant rota, which is usually between eight and 10 consultants, whereas at Stafford it is between five and six.

Let me be clear about the consequences: if the proposal is allowed to happen, the clear logic is that dozens of other paediatric units across the country that have similar numbers of consultants, or indeed fewer consultants, must be closed or have their activities drastically curtailed. Monitor cannot use the argument that that must happen at Stafford but not at other foundation or NHS trusts for which Monitor or the NHS Trust Development Authority are responsible, and neither can the Government.

The argument that all in-patient paediatric care should take place in the largest hospitals is not accepted by the general public. They fully understand why very sick children should go to specialist units; they do not understand why their local general hospital cannot

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receive sick children at night or for short stays, and neither do I. If experts at the Royal College insist on making that argument, however, let it be open, let it be consistent across the land and let it be agreed by all political parties. The proposal should not be implemented by stealth through a trust special administration that in no way arose because of the performance of the paediatrics department at Stafford.

I have one final point.

Mr William Cash (Stone) (Con): I have been waiting for my hon. Friend to reach his conclusion so that I can say how much I support him in his endeavours on Stafford hospital, which affects my constituency of Stone. I had to fight so hard to get the public inquiry that has led to many of the changes, and I simply offer him many congratulations. I support pretty much everything that he says, and I believe that he has done an enormous service to his constituents through his work over the past few years.

Jeremy Lefroy: I am most grateful to my hon. Friend, and I return his compliments. He has likewise tremendously supported the trust and the work that has been done.

My final point is that the children and families who will be most affected by the paediatrics proposal are those on the lowest incomes. Such families are the least likely to have access to private transport to take their children nearly 20 miles to the nearest hospital at night. For them public transport in the daytime is often poor, and a taxi fare is beyond their means—certainly if they have to visit a sick child several times. I believe that those on low incomes should have fair access to health care, which both Monitor and the Secretary of State have a responsibility to ensure.

The paediatrics department at Stafford made an alternative proposal in its response to the consultation. That alternative was measured and understood the need to cut costs. The alternative proposal included a reduction in the number of in-patient paediatric beds, and consultants would have worked in a network across both of the new trust’s sites.

A pattern can be seen: critical care, maternity and paediatrics. There are sensible alternative proposals.

Robert Flello (Stoke-on-Trent South) (Lab): I echo the sentiments of other hon. Members in thanking the hon. Gentleman for securing this debate. I also echo the sentiments of my colleague and near neighbour, the hon. Member for Stone (Mr Cash).

Before the hon. Member for Stafford (Jeremy Lefroy) concludes, I have two points. First, he is absolutely right that there are sound alternatives that need to be considered very quickly, and a proper process must be put in place. Secondly, the situation’s impact across the whole of north Staffordshire, and indeed the whole of Staffordshire, should not be underestimated. I hope he agrees that there is probably no right solution, but we must get as near as possible to a right solution.

Jeremy Lefroy: I entirely agree with the hon. Gentleman, and I appreciate his support and the support of colleagues from Stoke-on-Trent, Newcastle and across Staffordshire. We have worked together, which is a great achievement on a subject that can be political.

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In conclusion, surely it makes sense to work through the proposed clinical networks while Stafford is joining the expanded UHNS—with things roughly as they are now—for a period of two or three years. I believe that those network solutions can work. If they prove as effective as the clinicians and I think they can be, we will have achieved the objective of securing services that are financially, clinically and operationally sustainable in Stafford, and indeed elsewhere, under the expanded UHNS. Such services would be welcomed by my constituents and would reduce the potential pressure on other hospitals, such as UHNS, the Royal Wolverhampton, Manor hospital in Walsall and hospitals in Burton.

4.35 pm

The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter): It is a pleasure to serve under your chairmanship, Mr Crausby. It is also a great pleasure, as always, to respond to my hon. Friend the Member for Stafford (Jeremy Lefroy) and, indeed, to all hon. and right hon. Members who have contributed to and supported this debate, which raises an important issue for patients and constituents, not just in my hon. Friend’s Stafford constituency, but across Staffordshire and the wider region.

It has been an incredibly difficult time for local patients and staff at the Mid Staffordshire NHS Foundation Trust. I entirely agree with my hon. Friend that the trust has come a very long way since the terrible events exposed by the inquiries and the Francis report last year. My hon. Friend has walked the journey every step of the way with his constituents and with the patients, and he should be congratulated and commended on his strong and superb advocacy of the needs of local patients, of all his constituents and of the families of those who were treated appallingly by the trust in the past. He should also be congratulated and commended on his strong advocacy for the improvements and the high-quality care that is now being delivered by parts of the trust today. I am sure we would all like to put on record our congratulations on his advocacy and on the work done by him and my hon. Friend the Member for Stone (Mr Cash), who for many years has also been a strong champion of local patients.

In responding to some of the points that have been raised today, it is important to talk a little about the trust’s background to provide some context. The trust has been operating at a deficit for some time, and certainly since 2009. In April 2013, the trust reported a deficit of £14.7 million. As my hon. Friend the Member for Stafford alluded to, that position is expected to get considerably worse. As a proportion of the trust’s turnover, the deficit forecast for 2014 is higher than that of almost any other trust in the country. For the past two financial years, the trust received approximately £20 million a year in support from the Department of Health. Without that funding to supplement its income, Mid Staffs would have been unable to pay its staff.

The contingency planning team sent into Mid Staffs in late 2012 concluded that the trust was delivering services at a cost substantially higher than most other trusts in the country. A key challenge faced by the trust is the recruitment and retention of staff and the high cost of temporary staff, which is no wonder, given that it must have been a very demoralising time for those working in the trust when there have been ongoing investigations into events that took place in the past.

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Additionally, some of the trust’s services are operating with consultant numbers significantly below Royal College guidelines. The 2012 contingency planning team reported that, despite improvements in clinical services, the trust is unlikely to be able to achieve the required cost savings without adversely affecting the quality of care provided to patients.

On the reasons why the special administration process has been set up, it is important to take the initial report into account and to recognise that we are where we are today because of that report. In cases such as this, where a trust is facing substantial financial challenges, it is crucial that action is taken quickly to secure services for patients and ensure that high-quality patient care can still be delivered. The special administration process for foundation trusts offers a time-limited and transparent framework for resolving the problems of a significantly challenged trust. Like the regime for NHS trusts, the special administration process is intended to be used only in the most serious circumstances.

As my hon. Friend the Member for Stafford is aware, Monitor made the decision to place Mid Staffs into special administration on the basis of the 2012 work. The CPT’s first report concluded that Mid Staffs is not financially or clinically sustainable in its current form and recommended the appointment of administrators as the best option for identifying the changes required in the years going forward to continue to secure high-quality patient care. Acknowledging the serious financial challenges facing the trust, the Secretary of State wrote to Monitor giving his support for the appointment of the trust special administrators.

It is worth touching briefly on the work of the trust special administrators at Mid Staffs. The TSAs have been in place since April last year, and they have had two tasks. First, they had to take over the day-to-day running of the trust. Secondly, they have had to work with the trust’s staff, commissioners, providers and other local stakeholders to develop a plan for services. The work undertaken by the TSAs builds on the earlier conclusions of the CPT and only strengthens the case for urgent change. If no action is taken, the TSAs estimate that Mid Staffs’ annual deficit will exceed £40 million in four years.

Joan Walley: I am conscious of the amount of time left to reply to the specific points made by the hon. Member for Stafford (Jeremy Lefroy) and in interventions, so will the Minister ensure that the issues flagged up will be responded to in detail in this debate?

Dr Poulter: I will of course respond to those that I can, but as the hon. Lady will be aware and as I will set out later, the TSAs’ report is currently with Monitor—I would expect it to be recommended to the Secretary of State by the end of this month—so it would be inappropriate for me to comment on it at this stage. I hope she understands that it would be wrong for me to make assumptions about a report that has not yet been submitted to the Secretary of State.

Mr Cash: Will the Minister give way briefly on that point?

Dr Poulter: I will, but I am conscious of the time.

Mr Cash: I have asked nearly 10 times for a report to be debated on the Floor of the House in Government

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time, but it has not happened yet. Nobody can understand why it has not happened yet. Can we please have an assurance that a debate will take place and within a matter of weeks?

Dr Poulter: My hon. Friend makes an important point. The Secretary of State has previously given that assurance, and I give my hon. Friend that assurance again today. It is obviously for the Leader of the House to organise Government time, but I will have conversations with and write to him following this debate to ask him to expedite the issue.

Returning to the report, the TSAs have also highlighted the serious clinical implications of failing to act. They predict that services operating below the recommended consultant level, such as A and E, would need to be reduced. Low-volume services would risk being closed altogether, forcing patients to travel further for treatment. Throughout the process, the TSAs have stressed the fragility of the trust and emphasised the huge importance of agreeing to and implementing the changes required as soon as possible.

I will now move on to the next steps, about which all hon. Members are concerned. I know that it is frustrating for hon. Members wanting answers that I cannot provide them all today. The report is currently with Monitor, so it is for Monitor to make recommendations to the Secretary of State on the basis of that report. That will be the appropriate time for the Secretary of State and Ministers to comment. That may be frustrating for hon. Members, but that is the way that things need to be. We cannot comment on the matter until Monitor has made its recommendations. If Monitor is satisfied with the TSAs’ final proposals, the Secretary of State will have a maximum of 30 working days to consider them against a set of requirements defined in legislation. These aim to secure services for patients that are of a sufficient level of safety and quality and that offer good value for money. The Secretary of State will consider each requirement carefully before coming to his final decision.

As I have said, it would be inappropriate for me to pass further comment today on the TSAs’ final report because its final version has not yet been submitted. It is clear from the debate, however, that there is widespread interest from around the region and from local Members who are concerned about the wider impacts of the report on the health care economy and on services for other local patients. I am confident, however, given the interest from Members and the support provided to the trust from other health care trusts and hospitals in the area, that we will come to the right conclusion. We all want to see a strong and viable health care service for patients in Stafford and the surrounding areas, and I am confident that that is what we will have delivered once the Secretary of State has considered the report.

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Autumn Statement (Coventry)

4.45 pm

Mr Jim Cunningham (Coventry South) (Lab): This is one of the few times I have had the honour of serving under your chairmanship, Mr Crausby. I will start by looking at the background to why I asked for this debate.

The Chancellor said he would eliminate the deficit by 2015, but we heard yesterday that he is going to have to make a further £25 billion of cuts. At the same time, the Government have presided over a cost of living crisis that is affecting ordinary families right across Coventry. Families are on average £1,600 a year worse off. The purchasing power of their wages is down by 5%. Energy prices have rocketed, adding £300 a year to the average family bill. Train fares have increased by up to 6% and bus fares have increased by 2.5%.

Food prices have also increased. The bedroom tax has penalised many in the social housing sector, while rents in the private sector are at an all time high. The benefit cap is also making life difficult for children in Coventry, in particular those in care—the Government are making things harder for around 287 children who have already had a tough start in life.

All that has culminated in large numbers of people relying on food banks across the city, with 67 families receiving food vouchers from the Coventry citizens advice bureau in November alone. Nationally, Citizens Advice expects to allocate over 100,000 vouchers this year.

Cuts could mean that pensioner benefits, such as the winter fuel allowance, could be cut back. As a result of spending cuts, other pensioner benefits are also at risk. Centro, the west midlands transport agency, has to cut £14 million from its budget over the next two years, which will mean reducing pensioner benefits to the statutory minimum.

Benefits for the disabled are also at risk in the transport budget, with Centro having to consult on removing up to a third of ring-and-ride services. Many of my constituents are also facing long delays in receiving their benefits and problems with Atos, which seems to be forcing ill and vulnerable people off benefits and back to work.

Since the Government came to power, the cost of child care has gone up by 30% while wages have been cut by 5%. Moving on to the situation regarding women, tax adjustments made last year raised £14 billion, of which women contributed £11 billion. Given the £11 billion in tax that was inflicted on women and the cost of child care, women are hardest hit by this Government. More women than ever before are on low wages. More women than ever before cannot get a job. More women than ever before are bearing the brunt of cost of living increases.

I turn to the settlement for Coventry. Core funding has been cut by £45 million since 2010. Coventry will face a further £19 million funding cut in 2014-15, which is a 10.6% cut. In 2015-16, the provisional settlement indicates that Coventry will face a 15.2% cut. Government figures regarding Coventry’s spending power do not make sense as they ignore inflation and include funding from council tax and new burdens placed on the council. The council tax base is being eroded; council tax has

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not increased as a result of the freeze grant, which is storing up problems for the future.

I turn to the impact on children’s services and education. There will be a significant impact on youth services and social care services to support education and the well-being of children, and schools’ basic need grant has been reduced to zero. That may be a mistake by the Government that needs clarifying urgently, because it puts in jeopardy plans to expand our local schools. If what I have said is correct, plans to expand primary schools to meet the demographic changes will have to be cancelled.

Mr Bob Ainsworth (Coventry North East) (Lab): In our casework and surgeries, we are all seeing the effects of what my hon. Friend is outlining. If we couple that huge increase in need, which is apparent to Members of Parliament and is impacting on the services provided by the local authority, with the deep cuts that have taken place and will continue to take place, is there not a substantial magnifying effect of the gap between needs and the ability to provide for those needs?

Mr Cunningham: I totally agree with my right hon. Friend. I come back to something that Nicholas Ridley said many years ago—about 25 years ago. He foresaw a time when local councillors would meet once a year and give contracts out to the private sector. If we look at the strategy of this Government and of previous Conservative Governments, we see that they have slowly but surely taken powers away from local authorities. They do so in a number of ways, in particular by slowly but surely cutting budgets and forcing services out to the private sector, and yet the private sector does not always know best.

Also, we have a big issue regarding pensioners, in particular caring for them, that started under the previous Conservative Government and the matter has never been resolved, as far as I can remember. We are still debating changes that should have happened 25 years ago. Instead, 25 years ago local authorities were forced to hand over—or sell, if people want to put it that way—old people’s homes to the private sector. Five or seven years down the road, however, after the private sector had made a profit, the homes closed down. That, too, created a shortage of beds, but more importantly it forced the prices up for care for elderly people.

The whole strategy can be seen. I have always said that this Government think in generations: what the previous Conservative Government leave off, the next Conservative Government pick up. At the end of the day, in local government we will have only one or two little services, while the rest is in the private sector. Mr Ridley’s prophecy is becoming true.

I move on to the impact. Support for Age UK and other local charities will reduce by 22%; there are significant reductions to housing-related support; the housing-with-care scheme in Coventry at Jack Ball house and George Rowley house has ceased; a range of day centres and the in-house, short-term home support service have closed; and charities will no longer get the business rate support that they once had, even though that is meant to be something to do with the Prime Minister’s big society.

If we cut the public sector—the social sector, in particular—we can hand things over to the private sector, or the voluntary sector, but if we hand it over to

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the voluntary sector, the Government inflict cuts on the voluntary sector. It is an endless cycle of viciousness. If the Government want to get some credibility in local government—even Conservative councils are concerned about what the Government are doing—they need to get a grip and have a good look at what they are doing.

Finally, there is the impact on benefits, such as the local welfare provision grant, which will also end this month—£1.4 million for Coventry, providing emergency funding to those in direct need.

Mark Pawsey (Rugby) (Con): Many of my constituents in places such as Binley Woods, Bulkington and Brinklow see Coventry as their major city, so what happens in Coventry is important to them. I notice, however, that the hon. Gentleman is not merely restricting himself to the autumn statement; he is having a rather broadsided blast at lots of things that the Government are doing. Does he agree, however, that the steps the Chancellor took in the autumn statement to reduce the burden of business rates on small businesses is beneficial to the prosperity of Coventry, as was the freezing of fuel duty, which means that fuel is now 20p less than it would have been had Labour been in power? Are those things not beneficial to his constituents and mine?

Mr Cunningham: I expected the hon. Gentleman to come in on that. That should have been done three and a half years ago, and not left until now. He mentioned that I have had a wide-ranging debate on a lot of subjects, but the Government have had three or four Budgets since coming to power, and each one has had an effect on the areas that I have outlined.

As I said, the Government have to look seriously at the burdens that they are inflicting on local government and, more importantly, on the public. Up to 1,000 more jobs in Coventry, or 1,800 over the past three or four years, will go as a result of the Government’s so-called rebalancing of the economy.

4.55 pm

Mr Geoffrey Robinson (Coventry North West) (Lab): I am pleased, Mr Crausby, to serve under your chairmanship. I congratulate my hon. Friend the Member for Coventry South (Mr Cunningham) on securing the debate, and I thank Mr Speaker for allowing this important local debate on the impact on Coventry of the autumn statement.

My hon. Friend covered well and succinctly the overall impact of the autumn statement on the country as a whole. We have at last had some small growth, which is very welcome, with a continued reasonable increase in employment, but there is no point in trying to kid ourselves that we are anywhere near where we said we would want to be. Furthermore, the Government should not kid themselves that they are anywhere near where they want to be on the deficit, because the deficit has not been tackled to anything like the extent that they said with such confidence that it would be when they took office in 2010. As a result, we are still facing the cuts, an increasing level of cuts, that we are discussing this afternoon.

Coventry, which is anything but one of the richest cities, has suffered a massive collapse. All Members who know the west midlands or live near there will recall that in the first period of the Thatcher Government up

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to 1983, we lost something in the order of 30% of our manufacturing capacity—certainly more than that in Coventry—and the city has never really recovered. Whether that was necessary is not for today’s debate, but the hangovers and the legacy are still with us, meaning that Coventry is quite simply not a rich city and cannot bear the level of cuts being imposed on it.

Since 2010-11, we have lost £45 million from the core support to Coventry, which is 20% over about three years. I have heard it said by various business men, in the House and in particular elsewhere, that 10% of any company’s budget can be cut and it will survive quite well. Frankly, I have done that myself—it can be done. I have never heard any sensible business man say, however, that that should be done for three or four years running and then tried for another two years at an even higher level of cut than 10%. I have certainly never attempted to do that myself. It simply cannot be done, but the figures show that in effect that is what the Government are trying to do.

The figures given by my hon. Friend bear repeating, I am sorry to say. In 2014-15 we face a 10.6% cut, and in 2015-16 a 15.2% cut. I am well aware that that is not the entire income of the company, if we want to regard the local authority as a company. Nevertheless, that is a substantial and continuing sustained cut to its core budget, from which it has to deliver the key services.

Put together, the cuts from 2010 through to 2016 in Coventry, I think, come out as something in the order of a 65% cut in the core budget—making allowance for inflation and all the other things that the Government do not necessarily allow for in their figures. I do not invite the Minister to bandy her figures against ours—we all know that local government finance is an extremely complicated and tiresome matter, which can be twisted in any way and used to prove almost any argument—because that would not be helpful.

Instead, I ask the Minister to address two questions asked by my hon. Friend, to see whether we can get clear answers. I think that she has passed a message back to the officials about one of them, which—to quote from a note received from the local council—is:

“Coventry’s capital allocation for Schools Basic Need has, without prior explanation, been reduced to zero for 2015/16”.

That is surely a mistake. The council cannot believe it. How will it maintain its school buildings? The worst thing a school can do is neglect its buildings. I remember that when we took office in 1997, schools had buckets underneath the holes in their roofs where the rain was coming in. Difficult though it was, the first thing we did was to release £1 billion from the tax on utilities’ excess profits to deal with that situation. It costs a lot more in the long run to deal with such situations in that way. What I read out must be a mistake; I am sure that the Minister will be able to reassure us on that point.

The other specific point put to us by the Coventry local authority, to which my hon. Friend the Member for Coventry South also referred, is that the local welfare provision grant will end from 2015-16. That is worth £1.4 million to Coventry. That is not a lot of money, but it is a line in the budget until 2015-16. There has been a line in our budget for local welfare for as long as I can remember.

My right hon. Friend the Member for Coventry North East (Mr Ainsworth) referred to what we are

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seeing in our surgeries. People turn up destitute: they have nowhere else to go or to look. A constituent came to my surgery with two young children and asked, “What am I going to do?” I said that we had to release some funds from what I think we call the hardship fund—that is the vernacular for it. That fund, too, has disappeared as a line in the budget. I would like the Minister to note that.

Now, if a line in a budget disappears, we can bet our bottom dollar that the money for that line in the budget has disappeared as well. We had a temporary holding reply from the Government—I do not think that is good enough—on this matter, which says that the money is still there, but is simply in the whole total rather than being identified separately. Nobody is going to buy that—if a line has disappeared, the money has disappeared. We are facing a 16% cut in the year. It is simply not possible to believe that that money is still there. The money comes from core funding, and has gone down by 16%, yet we are being asked to believe that the money is still there. It is not.

Those are the two fundamental errors in the settlement that we are discussing this afternoon, and we need a reply on each. There are many other problems in Coventry, of course, that are very sad. The hon. Member for Rugby (Mark Pawsey) spoke of the small amount of help on business rates: every help is welcome, especially from this Government, and so we welcome the measure. But then one thinks of what could be done for small businesses. We could get rid of national insurance for new small businesses, or get rid of NI for businesses taking on new employees. There are so many imaginative measures that could grasp the attention of small businesses—particularly in the west midlands, where we have not done so well and could do so much more. But none of that was in the local government settlement in the autumn, and we did not imagine that it would be.

I ask for three things. The level of cuts should be re-examined; they are simply unmanageable in their present form. They cannot happen. They are just too big. Will the Minister also please answer the two specific points I raised, if possible this afternoon? If not, will she answer them in writing as soon as she is able to?

5.3 pm

The Economic Secretary to the Treasury (Nicky Morgan): It is a pleasure to serve under your chairmanship this afternoon, Mr Crausby. I congratulate the hon. Member for Coventry South (Mr Cunningham) on securing this debate, and the hon. Member for Coventry North West (Mr Robinson) on his speech. I shall try to address the points hon. Members have raised. Although I appreciate that this is not always the style of the House, it would have been helpful if an indication of specific questions had been given in advance, so that I could have come with specific answers. If I do not answer the specific points raised by the Member for Coventry North West, I shall write to him with further information.

I should say that the subject for this afternoon’s debate was the effect on Coventry of the autumn statement. The points that have been raised are partial and do not fairly reflect the impact on the city of Coventry and the surrounding areas of Warwickshire of the Chancellor’s autumn statement. Hon. Members have focused on local authority funding as the main reason for the debate, but the whole point was that local government

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funding was excluded from the autumn statement and 2013 Budget reductions to help local authorities to freeze their council tax for 2014-15 and 2015-16. In fact, it is central Government Departments that are going to have to make further spending reductions as a result of the autumn statement, not local government.

The hon. Member for Coventry South started by talking about a cost of living crisis. The best way to deal with the fall in living standards is to deal with the economic crisis left to us by the previous Government. The hon. Gentleman is shaking his head, but he cannot possibly ignore the fact that the economy at the end of last year was 7% smaller than in 2008. That will have an impact on every household budget and every business in this country. My right hon. Friend the Chancellor has made enormous progress, as heralded in 2010, in putting our economy back on track. That should be welcomed by all hon. Members on both sides of the House.

Mr Jim Cunningham: I do not know whether the hon. Lady was in the House when the Chancellor was the shadow Chancellor and used to tell us that there was too much red tape. The actual economic crisis was worldwide and started in America with Lehman Brothers. She should not rewrite history.

Nicky Morgan: I thank the hon. Gentleman for that intervention. There was certainly an issue with the banks that had to be bailed out. I was not in the House when that happened; his colleague, the former Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), made the decision to do so—rightly, in my opinion—but the point is this: from the early 2000s, the then Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), was running a deficit budget, which means that a huge gap now needs to be plugged. The previous Government consistently spent more than they raised, which means that the achievement of this Government in cutting the deficit by a third—indeed, the Office for Budget Responsibility is forecasting that the deficit will be halved by next year—is an enormous one and should be welcomed by all people in this country.

Mr Robinson: If I could take us all back to the situation in Coventry—we could argue indefinitely about local finance and about the Government’s economic policy—I wanted to raise one other point, and apologise to the Minister for not having mentioned it before. I will write to her about, and hope that she will take note of, another issue arising directly from the cuts in Coventry, concerning the Meriden Street Housing Co-operative, which is facing cuts of 60%—a figure she will recall. I promised to raise that matter today, and I look forward to her reply.

Nicky Morgan: I look forward to the hon. Gentleman’s letter. Either I shall answer or I shall ensure that a colleague in the Department for Communities and Local Government answers if the issue is more within its remit than within the Treasury’s. He is right: today’s debate is about Coventry. When I was handed the brief I was amazed and impressed—although I should not be, as I am an east midlands Member of Parliament and Coventry is in the west midlands—at the amount of investment that both the Government and the private sector are making in Coventry. I will come on to the city deal that

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was announced recently, but I am also impressed by the number of new jobs that have been created in Coventry. Only yesterday, I was reading an article in the

Coventry Telegraph

about a software company, Phocas, which is choosing to locate its global headquarters in Coventry, bringing jobs with it. That should be welcomed and I am sorry that the hon. Member for Coventry South chose not to make a single mention of job creation or of companies choosing to locate in the midlands, a part of the country that I would agree is a fantastic place for companies to locate.

I will leave aside statistics on the autumn statement, and will talk about ensuring fairness. The hon. Gentleman failed to mention the rise in the personal allowance that came into force last April, and the further rise that will come into force this year: from this April people will be able to earn up to £10,000 without paying any income tax. If he thinks that that is not making a difference to the pockets of hard-working families in Coventry, he is very much mistaken. I can tell him from my constituency casework that it is very much making a difference to the hard-working families in Loughborough and the east midlands.

The autumn statement delivered an average saving of £50 in household bills. It will maintain support for the poorest families and provide new home owners with incentives worth up to £1,000 to undertake energy efficiency measures. That package of support will also help more than 2.3 million households in the west midlands with the costs of their electricity bills. We are freezing fuel duty for the remainder of this Parliament, saving motorists in Coventry £11 every time they fill up their tanks.

5.9 pm

Sitting suspended for Divisions in the House.

5.33 pm

On resuming—

Nicky Morgan: I will be brief because we expect further Divisions, but I want to finish the points that I was making, particularly in relation to council funding. The hon. Member for Coventry North West talked about not trading figures, but as he referred to some figures in the debate, I will tell him that, for Coventry city council in 2013-14, the spending power per household —per dwelling—will be £2,323, which is £107 more than the England average of £2,216. In relation to welfare payments, I think he was referring to the discretionary housing payment, which residents can apply for in relation to the spare room subsidy. My figures show that in the first six months of the scheme, Coventry city council allocated only 20% of that budget to households that had asked for help, so I hope he asks the city council why some of the funding remains unspent.

Mr Jim Cunningham: We have the cabinet member responsible for the city council’s finance here in the room, so he will be making a note of that.

Nicky Morgan: I thank the hon. Gentleman very much indeed. Let me finish with some good news, which I did feel was lacking from his speech.

We have already talked, thanks to the intervention from my hon. Friend the Member for Rugby (Mark Pawsey), about the announcements in the Chancellor’s

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autumn statement on business rates, which will benefit 174,000 properties in the west midlands. Thirty-seven per cent. of properties will see their business rates either frozen or falling, which is extremely welcome news. We are making it cheaper for businesses in Coventry to employ young people by abolishing employer national insurance contributions for under-21-year-olds. That will help 123,000 people in the west midlands under the age of 21.

I mentioned the good news announced yesterday that the software firm Phocas is to move its global headquarters to Coventry. Its work force will increase by one quarter. In China, Geely, which had recently acquired the London Taxi Company, announced that it was to quadruple its work force, creating 500 jobs in Coventry. In the hon. Gentleman’s constituency, food manufacturer Mission Foods has announced 50 new jobs as part of an expansion of its factory in Coventry. I understand that the hon. Gentleman used to work for Rolls-Royce. He will know the extremely good news about the success of that company. I am pleased to say that the east midlands, through the facility in Derby, shares that success.

On 12 December, my right hon. Friend the Prime Minister announced the agreement of a bespoke city deal for Coventry and Warwickshire. I know that that is the result of an enormous amount of hard work by Warwickshire Members of Parliament, including my hon. Friends the Members for Nuneaton (Mr Jones) and for Rugby. The city deal recognises the fact that the west midlands and Coventry and Warwickshire are a key engine of growth for the United Kingdom. Part of that success is the advanced manufacturing and engineering sector, including the automotive sector, but further growth in that sector is being impeded by a series of barriers, including insufficient business support advice, access to finance and the non-availability of individuals with appropriate skills. The city deal rightly seeks to tackle those key barriers.

The Coventry and Warwickshire local enterprise partnership predicts that the deal will include the delivery of more than 15,000 jobs in the wider economy, of which 8,800 will be in the advanced manufacturing and

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engineering sector. A range of innovative business support programmes will support further growth in the advanced manufacturing and engineering sector and a new flagship clearing house centre, where key business support agencies are co-located in one building.

Mr Jim Cunningham: Over the years, the local MPs have pushed for a lot of the companies that she has mentioned—for example, Jaguar Land Rover—in the midlands and particularly in Coventry. A city deal would push for that as much as anyone else, so we are not totally negative. We have played a part in some of the things the Minister has outlined.

Nicky Morgan: I am very glad to end the debate in a spirit of positivity. I thank the hon. Gentleman. He is quite right. All hon. Members, from both sides of the House, come together to support their local areas. That is why I felt that his speech missed the importance of the west midlands and the successes that are being achieved there. I am sure that neither he nor any MP would want to talk down their constituency or city. I am pleased to see that, as we approach the end of the debate, we are getting there.

Before I finish, let me talk about education funding, which was referred to by the hon. Member for Coventry North West. I have just been handed some figures, which show that Coventry’s capital allocation for 2014 to 2017 is £6.25 million. That is funding for new school places. In relation to the pupil premium, the extra in 2013-14 is £13 million and in 2014-15 it is £17 million. I will write with more detail to both hon. Gentlemen who referred to the figures, but I wanted to get that on the record.

I thank the hon. Member for Coventry South for organising the debate, for bringing this matter to the attention of the House and for enabling me to highlight some of the positive impacts that the autumn statement has had on Coventry, the west midlands and the United Kingdom.

Question put and agreed to.

5.39 pm

Sitting adjourned.