Local Government Finance (England) Special Grant Report (No. 75)

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Mr. Adrian Sanders (Torbay): The Minister set out a catalogue of the problems and difficulties that have been experienced in Hackney over a decade or more. They include corporate problems, weak management systems and, by implication, not only the professional but the political structures in the council.

As the hon. Member for Eastbourne (Mr. Waterson) said, the people who have paid the price and who continue to pay it are the residents of Hackney who depend on the services of the professionals that the councillors are supposed to deliver. The housing benefits system has been and continues to be in crisis, and rubbish has gone uncollected. Perhaps the biggest problem, however, is that many people with great needs depend on the social services that should be available in Hackney, given that it contains some of the most deprived communities in London—or, indeed, in the country.

It is essential that the council gets its act together, by whatever mechanism is necessary. The Minister said that Hackney has agreed to tackle its own problems and that a plan has been agreed. She said that the special grant is meant to meet the costs of implementing that plan, but that is not what the report says. It lays out the purposes for which grant money is to be used, and the costs listed are the costs of putting together the plan, rather than implementing it. Will she clarify whether the money for this financial year is meant to meet costs already incurred rather than the cost of implementing the plan? That will have implications for the future. Have all the posts that are described here been filled and can money be claimed for vacant posts? Will the Department withhold grants where it cannot be properly audited that the money has been spent?

The biggest question is, if such grants are being funded from the Minister's own running costs budget, how many councils could it help if there were other Hackneys? This clearly must be not just a special grant, but a special special grant. The Minister needs to make that clear and send a message to local government that what has happened in Hackney does not necessarily set a precedent for other local authorities that may suffer from similar structural, political and management weaknesses. There is only so much money available in the running costs budget. I should be amazed if it could stretch to more than one authority at a time.

Therein lies the problem. Does the Minister bail out the authority, as she has done through her running costs budget for Hackney in this instance, or does she press the nuclear button and take control of the services? Could there be another way around this? What led her to decide not to press the nuclear button but to come up with this resolution? What alternatives were considered?

I, too, pay tribute to the people who have been drafted in from other authorities to give up their time, which could perhaps be usefully spent running their authorities. They are prepared to consider the problems facing another local authority from the best motivation of caring about delivering services to people in the best possible way. I hope that, at the end of this process, we can draw a line under Hackney's problems. I hope that we do not have to come back here to discuss them again. I am keen to hear the answers to my questions.

4.52 pm

Ms Hughes: I welcome in part the response from the Opposition, although the hon. Member for Eastbourne did not disappoint with his characteristic churlishness on this occasion. I certainly would not defend anyone in public office, from any party, who reneged on or failed to fulfil his or her responsibilities in any way. I regret that the hon. Gentleman fell into the trap of making this a party political issue. Even a cursory knowledge of the history of Hackney reveals that it is not a party political issue. Members of all political parties have a responsibility for the current failure.

The hon. Gentleman will know that, although there was a Labour majority council for a short time after the elections in 1994, fragmentation of all the political groups in one way or another quickly led to a situation in 1995 in which there was no overall control. There was a political vacuum, leading to a complete lack of political leadership. An unchecked accumulation of officer power and control, together with certain other reforms that took place around the ``Transforming Hackney'' strategy, led to a restructuring that demolished the normal financial controls at the centre. It was only the official Labour group at that time that expressed concern about the direction that the council was taking.

I also regret that the hon. Gentleman referred to the Housing Today article. One of the most unhelpful things in Hackney is that, instead of working together, members of various parties who are involved in meetings go straight out to the press with their perspective on what is going on. The source in that article did not choose to make himself or herself known, so I have no way of knowing whether that person's view of the current situation and the plans for reform of the benefits administration is valid. My view, taken from the new managing director, is that there are issues to be negotiated with a contractor, some of which are difficult, but there is a clear strategy on the way forward to help those people in Hackney who are dependent on housing benefits.

I want to answer the questions posed by the hon. Member for Torbay (Mr. Sanders). The grant is to cover costs for this financial year. In the sense that some people are already in post, we can say that some of those costs have already been incurred, but we are not yet at the end of the financial year, so some costs are still to be paid out. Not all the posts have been filled, but I expect them to be filled shortly. There must be a certificate, issued by an external auditor, showing that the money has been spent on the purposes for which it was intended. That process is conditional on the grant being paid. I agree that, to use the hon. Gentleman's term, this is a special special grant. I am sure that all members of the Committee are pleased that the range, severity and complexity of the problems are exceptional and that the vast majority of councils and local authorities are in nowhere near such a situation—nor would we expect them to be.

The hon. Gentleman asked whether there was another way. The 1999 Act gave us the new powers of intervention to which I referred. There would still be a cost to Government of direct intervention, because we would have to finance that intervention, whatever it might be. To help an authority such as Hackney to manage in future, we must act in a way that helps the authority, its officers and members to build up their own capacity and take ownership of the issues that need to be faced. That is less likely to be achieved if we sweep in with a team that takes over and then moves out. That would not move Hackney very far forward. Given the willingness that we have seen in Hackney, and the new coalition, there is the wherewithal to make progress on a voluntary basis. We want to work in that way while we are making progress, but we certainly have not ruled out intervention.

Mr. Sanders: Has the Minister considered that some services could be run in partnership for a short time with other competent boroughs that deal with a similar part of the world and similar territory? Has that been investigated as a possible option? If so, what were the reasons for ruling it out?

Ms Hughes: Nothing has been ruled out. The initial focus has been to put in a strong central management team, raise the capacity at the centre and sort out some of the corporate problems. Unless we do that first and develop that capacity, we will not be able to deal easily with service failures. With support, Hackney is beginning to look beyond that at benefits, pensions, street cleaning and so on. There will be detailed examination of the best options on how those services are to be delivered and by whom.

I am grateful to both hon. Gentlemen for their recognition of the exceptional work done by the elected members who have gone in from other authorities and by the IDA and others. The newly appointed managing director and finance director are making a significant contribution to change in Hackney. With those details and, I hope, satisfactory answers to the questions that have been asked, I ask the Committee to accept the grant report.

Question put and agreed to.


    That the Committee has considered the Local Government Finance (England) Special Grant Report (No. 75) (HC Paper 228).

        Committee rose at one minute to Five o'clock.

The following Members attended the Committee:
Wells, Mr. (Chairman)
Cryer, Mrs. Ann
Hopkins, Mr.
Hoyle, Mr.
Hughes, Ms Beverley
Hughes, Mr. Kevin
Kebble, Ms
Kingham, Ms
McNamara, Mr.
Mountford, Kali
Sanders, Mr.
Trickett, Mr.
Waterson, Mr.

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