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Mr Pickles: I am most grateful for your protection, Mr Speaker. As for the front-loading, the settlement has not been announced. Opposition Members are getting very excited about press reports, which is not a very sensible thing to do.
Mr Rob Wilson: I thank my right hon. Friend for giving way so early in what I am sure will be a brilliant speech. Does he agree that although we are very pleased to be having the debate today, it seems from the number of Labour Back Benchers who have turned up that they are not very pleased at all?
Mr Pickles: There is a point in that, but I have to say to my hon. Friend that we must give all the encouragement we can to the right hon. Lady the shadow Communities Secretary because it is very important that we have an Opposition and if we do so she might table the occasional parliamentary question, in which case we would have an opportunity to come to the-
Hazel Blears: The right hon. Gentleman appears to be floundering a little at the start of his contribution, and I wonder whether I might, in a constructive spirit, offer him a small lifeline. My right hon. Friend the shadow Communities Secretary has made a powerful case against the front-loading of these cuts. As I understand it, there is a surplus of about £3.4 billion in the national non-domestic rate pool, and the leader of my council in Salford, Councillor John Merry, has written to the Secretary of State suggesting an ingenious way of smoothing out the front-loading of these cuts. If we were to put the £3.4 billion back into the formula grant, that would enable us to reduce some of the devastating impact of that first year of cuts, certainly on Salford council, which is facing cuts of £40 million. If the right hon. Gentleman accepts my lifeline I will be very happy.
There is not a £3.5 billion surplus in non-domestic rates in the year coming. There is a potential £2 billion surplus in 2013-14. It is hoped that the new system of local government finance, which I will be making some reference to in the statement, will be in the process of being brought in, so it is theoretical at this stage.
Caroline Flint: The right hon. Gentleman teased the House a few seconds ago when he told us to wait and see what the financial settlement provides. Local council leaders have been pressing him to give some hint on, and recognition of, the problem of front-loading and whether that can be looked at. Can he not give some steer that the Government have listened to some of those concerns, because at present they are planning for huge cuts, based on what they expect to have to deliver come April 2011-12?
May I reassure the right hon. Lady both that we will be making a statement to the House, unlike
last year when the statement was relegated to a written ministerial statement, and that we are going to ensure that the distribution is fair?
It is reasonable for us to have expected to hear in the speech of the right hon. Member for Don Valley how much she would cut from the budget. What percentage reduction does she want from each tier of local government? If she does not like the phasing, which other Department should be cut more next April?
The Opposition have simply lost touch with financial reality. They have got their head in the sand in respect of the urgent need to tackle the nation's record overdraft and the slide towards a national debt of over £1 trillion. We need to reduce the deficit to keep long-term interest rates down, thereby directly helping families and businesses through the lower cost of loans and mortgages. By reducing spending and restoring the nation's fiscal credibility, we avoid the massive debt interest bills-over £42 billion a year-which is sucking taxpayers' money from front-line services.
We had a choice in the most recent spending review: we could face up to the legacy left by Labour-the crippling public debt, the black hole in the nation's finances-or we could simply let Britain fall into the economic abyss. Looking around Europe, the situation that some of our neighbours continue to face reminds us just how dire the challenges remain.
Simon Hughes: I sincerely hope that all Members, on both sides of the House, realise that local government must do its share of reducing expenditure to deal with the public debt and deficit that we inherited. Will the Secretary of State give me one explanation and one assurance? Will he explain why the comprehensive spending review's four-year plan set out a greater reduction in the budget in years 1 and 2 than in year 3? Will he reassure me that, as I think Ministers have heard when we have come to see him in the Department, the whole of this year's funding settlement for local government is being taken into account when the assessment of the reduction is made, not just the direct core funding provided by the grant from central Government?
My hon. Friend raises a very important point. The rules are different when sums are being reduced, rather than increased, so it is massively important that we examine all the finance available to local authorities and the gap in spending. I am going to address that most carefully, as I shall do for the precise phasing of the amounts. It is sensible to see these sums taken out at the beginning of the period, because the only way in which local government can approach a 26% reduction
is not to salami-slice here and there, but to restructure, share services and the like. If it is going to do that, it had best get on with it.
Mr George Howarth (Knowsley) (Lab): On phasing, will the Secretary of State accept that it is hugely important for boroughs such as Knowsley that the process of damping stays in place? If it does not, incredible swings will take place within a year-even greater than those he is proposing.
Mr Pickles: The right hon. Gentleman is absolutely right. Hon. Members may not be aware that some authorities, such as Knowsley's, are heavily dependent on grant; if I recall it correctly, the percentage is in the upper 70s-
Mr Pickles: It appears that that is correct. There are other places, such as Surrey, where we are talking about 20%. If we were dealing with a cut across the board, the effect of an amount coming out of Knowsley's budget would be considerably greater than if it came out of Surrey's. That would not be desirable and we will be putting together a system that offers help.
Despite all the bluster and all the complaint, the Opposition would have made some of the same choices had they clung on to office. Perhaps Opposition Members would not like to be reminded that the Labour Government were quietly planning cuts of £52 billion over the next four years. The Treasury's own figures show that those were front-loaded cuts, with a hit of £14 billion to fall in 2011-12. A small amount of those cuts were made public in the dying days of the previous Administration. The back of a fag packet small print of the March 2010 Budget reveals £480 million of cuts. Those were cuts to regional development agency regeneration, cuts to the working neighbourhoods fund, cuts to the local enterprise growth initiative, cuts to the housing and planning delivery grant, cuts to smaller Department for Communities and Local Government programmes and cuts to time-limited community programmes.
Let us deal directly with the issue of the working neighbourhoods fund. Whether the right hon. Member for Don Valley likes it or not, it was a three-year figure; the programme was coming to the end in March and no money was provided for it to be extended thereafter. We would have been facing precisely the same problem as we are now. Some Members have complained about the end of the working neighbourhoods fund, but we would have been facing this in March.
"is not the biggest priority we face as we look at other competing priorities",
"Housing is essentially a private sector activity...I don't see a need for us to continue with such"
Stephen Lloyd: In the past 12 months, Eastbourne borough council restructured its senior management, producing a more dynamic and customer-focused team, while cutting the cost of its senior team by £300,000 a year. Does the Secretary of State agree that other local authorities can follow the example of Eastbourne borough council, saving money for the taxpayer and bringing local authority executive pay under control, which was something that Labour singularly failed to do?
Mr Pickles: My hon. Friend is right. There is increasingly a trend towards reducing backroom services and I welcome the support from the right hon. Member for Don Valley. Perhaps the clearest message that should go out from the Chamber today is that there is broad consensus on the sharing of services and it would be a very wise chief executive and leader of a council who continued with that process.
Of course, part of the problem is that the so-called operational savings that the Labour party promised were simply not met. When I opened the Department's books, I noticed that almost £1 billion of planned efficiency savings promised by the Department and announced in the 2007 spending review and the 2009 Budget were never delivered by Labour Ministers.
We know that Labour had secret plans for cuts for local communities, but it did not have a route map to get there through constructive reform. The Labour Government had 13 years to improve the system of local government funding but they fluffed it. They introduced 10 different Acts that affected local government finance. They scrapped capping, then they reintroduced it. They gave pensioners an extra payment for their council tax, then they dropped it. They passed a law to hold a council tax revaluation, and then passed a law to delay it. They published a local government finance Green Paper, then a White Paper, then they held a balance of funding review, and then they held the Lyons inquiry review. They then extended the Lyons inquiry review and when the Lyons inquiry reported they did not even bother to issue a formal response.
In the 2010 Labour manifesto, we were promised a cross-party commission on local government finance. Perhaps Labour just ran out of ideas and wanted to ask us. The final Labour initiative, with the third leader in three years, is the famous blank piece of paper. No wonder the shadow Housing Minister, the hon. Member for Plymouth, Moor View (Alison Seabeck), has admitted
"we won't rush into policy making"-
[ Interruption. ] I am glad she has confirmed that. Perhaps they are waiting for the next Labour leader. I suspect that that will not be long now-like with buses, one waits around for ages and three come along pretty quickly.
I welcome the opportunity to lay to rest some of the reckless scaremongering that the Labour party has peddled in recent weeks, and particularly in the past few moments. We are a few days away from the settlement and it is important that we do not create a climate in which wacky, fictitious figures end up scaring people unnecessarily without adding anything to the debate.
Andrew Bridgen: Does the Secretary of State remember the words of the previous Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling)? Before the last general election, he said that if the Labour Government were re-elected this country faced the biggest cuts in its history. My right hon. Friend might have noticed that that statement has not been repeated by those on the Opposition Front Bench.
Mr Pickles: I do indeed. From what I can understand from what the right hon. Member for Don Valley was saying, it seems that she is in favour of cuts but not specific cuts. She is in favour of financial prudence, but not if it involves cuts to local authority spending.
The key argument about the forthcoming grant reductions is that the right hon. Lady seems to think that they will be unfair. How she can assert that when she does not know what the settlement will be is a mystery to us all. Opposition Front Benchers point to briefing figures from the pressure group SIGOMA, without realising that they are being played. SIGOMA understandably wants to paint a dire picture for its members as part of a lobbying exercise ahead of the settlement. It is playing metropolitan areas off against shire counties.
Mr Marsden: The Secretary of State asks why these points are being raised by the Opposition, but he and his colleagues have a record on this issue. The figures and cuts that the Government Front-Bench team produced in June, with the abolition of area-based grants and various other measures, disproportionately hit the parts of the country that we have been talking about.
Mr Pickles: The hon. Gentleman is well aware that in the emergency Budget we had to prevent money that had not been paid out from being paid-it is difficult to take money from areas that have not received any at all. He seems to think that we live in a vacuum. Has he seen what has gone on in other parts of the continent and the problems that other Governments face? Had we not taken these decisions we could have found ourselves in precisely the same position.
Hazel Blears: I am glad that the right hon. Gentleman has got back to reality regarding what, if anything, can be done to mitigate the impact of the cuts on some of the poorest communities. I put to him again the issue of national non-domestic rates. He said that there would not be a surplus until 2012-13.
Well, the Office for Budget Responsibility's forecast in the Treasury's June Budget report indicated that there is likely to be a surplus of £3.4 billion. If that is the case, will the right hon. Gentleman agree now to
redistribute the whole of any surplus there might be, as the legislation covering this area provides that any such surplus will be redistributed? That is something practical that he could do to mitigate the effects on the poorest communities.
Mr Pickles: I always enjoyed it when the right hon. Lady occupied my role, so I am sorry to tell her that this is not like a deficit; we have to pay down the debt in relation to non-domestic rates, so the money that she suggests will be available will not be available for what she suggests. In case she thinks I am just making a rhetorical point, I am willing to write to her, copying in the right hon. Member for Don Valley, explaining this issue. If £5.5 billion were suddenly available, I think I might have used it by now.
The points that SIGOMA makes could be made by the county councils network, the district councils network, the SPARSE Rural group and my dear chums at the London councils. They could produce similar figures on how the funding system seems to channel more money to certain areas. Before Labour jumps on these bandwagons, it needs to realise that it cannot play the mets against the shires and then campaign honestly at the May district council elections.
Mr Pickles: We will listen to all representations. We are moving to meet the points made by the Local Government Association and other interested parties. We intend to deliver a fair and sustainable settlement that protects the most vulnerable communities and spreads the impact in a manageable way.
Mr Watts: I thank the Secretary of State for giving way. Will he give an undertaking to the House today that any changes in the grant system will be based on academic evidence that takes deprivation into account, or is he intending to fix it as he has in the past?
Mr Pickles: The hon. Gentleman seems to have left the 1980s for the 1970s and "Jim'll Fix It". There is no intention to fix this or to hit vulnerable communities the hardest. We will be doing our best and I hope that the hon. Gentleman will be ready to praise me next week when we produce our proposals. Frankly, he should take with a pinch of salt some of the more alarmist predictions of jobs cuts that have been fed to the media by the unions and others. Such dossiers are based on looking at local media and projecting them out. We see unions being upset by stories that unions themselves have placed.
Reducing the number of posts is not the same as job cuts, as staffing can be reduced through natural wastage and freezing. The unions have intentionally misled on the issuing of section 188 notices, which allow the terms and conditions of workers to be changed to save money. The GMB has claimed that 26,000 staff in Birmingham face "the threat of redundancy". Indeed, that would be
a shocking figure-26,000 workers faced with redundancy. In fact, the process seeks to reform car allowances and staff parking, and is nothing more than that. It is designed to reduce the scope for redundancies. Even Leon Trotsky at his worst would not have taken to the streets over car parking. Such reforms reduce the scope for redundancies and do not increase them.
Sir Alan Beith: Speaking of redundancies, my right hon. Friend has some discretion over the limited amount of money that he has to allow capitalisation of redundancies in those authorities that have low reserves. I ask him to look carefully at Northumberland, whose reserves were low because of a forced reorganisation under the previous Government, and there is a very heavy claim on the county council at present because of the incredible snowfalls that we have had in Northumberland.
Mr Pickles: My right hon. Friend makes a good point. We warned about the effects of the various reorganisations, and stopped those intended for Norfolk and for Devon. Where money is tight, we cannot afford to waste it on a reorganisation of local government.
I am actively reviewing the amount available for recapitalisation. Clearly, there will be tough choices. The sharing of services and back-office consolidation will reduce the number of staff posts needed over time. The priority of local government is not to be a municipal job creation scheme, but rather to provide quality front-line services, keep local taxes down, and provide a positive environment for private sector job creation and the expansion of local business.
Mr Pickles: I do not believe the figures. If that is the case, we are beyond economic ruin, because our country has reached a point where we can no longer afford to level off spending. If the hon. Lady would like the United Kingdom to enter the world of Greece and our friends in Ireland- [Interruption.] Let us be fair. What is the biggest problem? Sovereign debt. Which country has the largest sovereign debt? Had my right hon. Friend the Chancellor not taken those brave decisions in the emergency Budget and in the spending review, and if we did not take those brave decisions to their logical conclusion, we would have been in the danger zone. We all know where the Opposition would have been-they would have been running for cover.
Nic Dakin (Scunthorpe) (Lab): I am interested in the Secretary of State's references to Trotsky and other people, but how many local government workers does he expect to see made redundant at the end of this year on the basis of his policies?
That is just a typical Labour intervention. It is not about the economy; it is all about getting as many bleeding stumps as possible. What we do know, through research, is that despite the various daft claims made about the number of people being made redundant in Birmingham, for example, the majority are going by way of natural wastage, turnover, mutuals and co-operatives being set up-something that Trotsky would have approved
of-voluntary redundancies and early retirement. When it comes down to it, the likelihood is that the number of compulsory redundancies will be less than 4%. Frankly, these things can be managed with a will, and it is our intention that councils will manage them sensibly.
Owing to Labour's planned cuts and the dire state of the public finances, the vast majority of councils have seen these difficult and challenging times coming, and they have been making sensible, constructive plans to address them. I want to support them with action, not meaningless words. I can make councillors' and councils' jobs a lot easier by scrapping regulations, tearing up unnecessary guidance and cutting through red tape. The Government are restoring real democratic accountability to local government, giving the power, the freedom and the authority to those who actually make the decisions. We have to be realistic. We realise that there is less money, but unlike the former Government, I do not intend to tell councils how they should spend it. The money given in this settlement will not come with strings attached. As we said during the spending review, with very few exceptions we have ended the ring-fencing of grants, so that councils can decide for themselves how their money should be prioritised and spent.
Under the spending review, we will allow councils to borrow against future business rates. We are also introducing powerful new financial incentives for councils, such as the new homes bonus. In addition, there is the £20 million through capitalisation, referred to by my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith). Councils can top that up with the sensible use of their £10 billion of reserves-they were prudent and repaired the roof when the sun was shining, unlike Labour, and they can now spend that money when it is rainy. There are a whole range of measures that proactive councils can take-for example, improving transparency, sharing services, cutting out waste, improving procurement practice and bringing senior pay under control.
Joan Ruddock: May I tell the Secretary of State that my council of Lewisham has done all the things that he has just mentioned? Over the past five years, it has saved £40 million through efficiency savings. He made the point about jobs. Let me tell him that the council has just taken a decision to cut £16 million from the budget. That would cost 300 jobs, but only 50% of them could be found through natural wastage. However, the council tells me that front-loading means that it will not be able to plan to get down even to that level, let alone the 4% that the Secretary of State has just spoken about.
Mr Pickles: The right hon. Lady's council has just £1 million short of £60 million in reserve. The decision that has been taken is its own decision, and I would urge it now to look at other measures. I would urge the council to look towards a joint- [ Interruption. ] It might not be for the right hon. Lady-I know she lives a champagne lifestyle-but £60 million is a lot of money. Let the council look towards sharing a chief executive, or sharing an education authority or planning authority. Let it look at working together right across back-office services.
At the heart of the settlement, we want to ensure the protection of hard-working families and pensioners; support for vulnerable individuals; help for vulnerable
communities; and fairness, for both north and south, and rural and urban England. Practical policies to protect the vulnerable include: £1 billion in extra grant for social care and a further £1 billion from the NHS; a new role for councils in public health, backed up with extra funding; £2 billion for decent homes, improving the quality of life for those in poor-quality housing; and £6.5 billion to support people and allow the vulnerable to lead independent lives. Labour talks about fairness, but when it was in government council tax more than doubled-in some years, above inflation-thanks to fiddled funding and unfunded burdens.
Caroline Flint (Don Valley) (Lab): The right hon. Gentleman mentions funding for public health, which is estimated to represent at least 4% of the NHS budget. Will that move across to local government?
Mr Pickles: The right hon. Lady is playing a game whereby if money moves from the health service it represents a cut in the health service, but if it moves to local authorities it fills a hole. Conservative Members have been saying for years that there is a role for councils in public health, and we are backing that. I recall, at the Opposition Dispatch Box, asking the then Government for the kind of financial commitments that we are currently giving to deal with adult social care. Frankly, the right hon. Lady should be thanking us- [ Interruption. ] Well, I'm glad you're supporting it. Just get behind the programme then, dear. That'd be marvellous.
Working families, pensioners and, indeed, the squeezed middle were hit the hardest. The hikes were equivalent to 3.5p on income tax, and the Labour Government were planning further local tax rises, as their local government manifesto for a fourth term revealed: removing the retail prices index cap on business rates, hammering local high streets; a council tax revaluation and rebanding, hitting cash-poor pensioners; and new taxes to empty bins, punishing struggling families. Labour's answer to every policy problem was an extra rise in tax or more red tape. But, in six months, the new Government have scrapped Labour's bin taxes, called off the council tax revaluation, increased small business rate relief and found £650 million a year of funding in each of the next four years to help to freeze council tax next year. Let me make it clear: that is completely new money; it is not top-sliced.
I intend this settlement to be the last ever to rely on such a complex and outdated system, which is not fit for purpose. It has trapped too many councils, making them financially dependent on central Government, and there is no incentive for them to invest in their local economy, given that the proceeds simply vanish to central Government to share out nationally. It makes planning difficult, weakens local accountability and stifles local innovation. It is part of the same trend that has led to some areas of the country becoming almost completely dependent on the public sector.
All that will become clearer when I present the full settlement to the House, but let me reassure Members that I and my ministerial team are doing everything possible to ensure that local government has a fair and sustainable settlement, to the good of the country and to the good of local communities.
Andrew Gwynne (Denton and Reddish) (Lab): May I take this opportunity to thank you, Mr Deputy Speaker, for allowing me to speak in this important Opposition day debate? I am pleased to follow the Secretary of State, who, in his calm Yorkshire way, said not a lot. What he did say, however, will send a chill through communities in my constituency.
The Conservative-Liberal Democrat Government's cuts will clearly have an effect on all constituencies, but I believe they will impact more unfairly on areas with additional social need, such as my constituency in Greater Manchester. I benefit from representing a constituency that covers two very different local authorities, Stockport and Tameside metropolitan boroughs, and, although both authorities plan major reductions in spending in the years ahead, I fear that the cuts will impact particularly on Tameside, which has been ranked as an area of high deprivation and the 56th most deprived local authority area in England.
People in Tameside earn lower incomes than the national average, and in their time of need they might find themselves calling on council services, just when the council is least able to assist them because the massive reduction in its overall budgets will impact on those crucial services. To be fair, it is a similar story with the two Reddish wards in the Stockport part of my constituency. Although those wards are located in a much more prosperous borough overall, they are also areas of very high social need.
Duncan Hames (Chippenham) (LD): The hon. Gentleman makes a very interesting point about how poverty can be localised much more than on the basis of local authority area. Does he accept that that is a shortcoming local government finance in the past? The assumption has been that an area is either poor across the whole of the local authority or not at all?
Andrew Gwynne: For the past 13 years of the Labour Government, Stockport received additional money because of those deprived Stockport wards. It is a shame that the Liberal Democrat council chose not to spend the money in Reddish and in those wards.
It is true that we are facing one of the worst rounds of spending contraction ever experienced. That is likely to have a massive impact on every part of our public services, not just local government. However, we should not forget that local government provides, or co-ordinates, the delivery of some of the most valued public services-from children's services to adult social care, from leisure, parks and libraries to schools and from fixing roads and pavements to public transport and refuse collection.
I am concerned about how the cuts are being implemented and their unfairness to more socially deprived areas. My constituents in Tameside and Stockport accept that there needs to be a reduction in public spending and that local government must play its part, but it is certainly difficult to see any fairness-as was promised in the comprehensive spending review-in the fact that some councils in the most deprived areas will have reductions in their budgets next year of, as has been suggested, up to 25%, 30% or more, whereas other councils-many in the south-will feel the impact of those reductions far less.
Research from SIGOMA, a group of 44 metropolitan and unitary authorities outside London-I know the Secretary of State's view on that grouping-demonstrates that the councils that expect to be worst hit by the CSR are in the 20% most deprived areas. Clearly we know that the cuts will hit places such as Denton and Reddish very hard indeed.
Tameside council is planning for a total funding reduction of around £100 million over the next four years-a massive amount for one fairly small metropolitan borough to lose. We also know the cuts are being front-loaded, so Tameside council will need to save more than £37 million next year. It must save more in one year than it has saved over the past seven, despite making extremely tough choices to meet its Gershon savings. There is very little meat left on the bone. These cuts will hurt our services. Ultimately, the proposed cuts will mean a reduction in Tameside council's work force of about 800 over the next four years.
Gavin Barwell (Croydon Central) (Con): The hon. Gentleman is speaking up for his constituents, and he is to be applauded for that. He says that there is very little meat left on the bone in Tameside. What will he say to my constituents when they realise that under the previous Labour Government Tameside received a real-terms increase over the past five years, whereas Croydon received a real-terms cut of 3%?
Andrew Gwynne: I am not sure that those figures are correct. However, if that is what the hon. Gentleman says, people in Croydon should vote Labour. When combined with the new year rise in VAT, it is clear these cuts and the impact they will have on public services means that those people with the least-especially the elderly and most vulnerable-will pay more and lose the most.
I have had sight of recent research showing the overall impact of the Government's spending plans on local authorities, including Tameside. It calculates that from 2014-15, as my constituents make their contribution to the Government's deficit reduction, Tameside's economy will lose £50 million a year. It also shows that residents of working age will, on average, contribute £39.79 per person compared with the Chancellor's constituency of Tatton, where residents will contribute only £22.62 per head, or those living in Kensington and Chelsea, who will contribute just £5.91 per head.
George Hollingbery (Meon Valley) (Con): I congratulate the hon. Gentleman on defending the constituents whom he so ably represents. He can, of course, cherry-pick statistics as he wishes, but I should like to let him know what is happening in part of my constituency. East Hampshire district council-the provenance of these statistics, incidentally, is the council itself, and they are historical-has seen a real-terms 25% reduction in the grant from central Government over the past 10 years. Does he think that that is fair?
Andrew Gwynne: Of course, the hon. Gentleman makes the case for his area, but I would say that areas such as Tameside, which I represent, do not have the capacity to raise the money locally, so they suffer disproportionately when central Government grants are cut in the way proposed by this Government.
It is a similar story when we look at the changes to long-term sickness benefit, which is being cut by £2 billion a year. Tameside will lose £11 million a year: £85.14 per head of the working age population, compared with £45.18 for Tatton or £13.18 for Kensington and Chelsea. This is hugely unfair, and it clearly illustrates who is bearing the brunt of the spending reductions.
Let me turn to how the Stockport part of my constituency will be affected. The Liberal Democrats who run Stockport council are being very evasive-to put it politely. We know that they have to make about £20 million of cuts next year, but so far they have announced only £15 million-they will not yet say where the other £5 million will come from. That uncertainty is chronically unfair on their dedicated and hard-working work force. I find it ironic that the Liberal Democrats tabled one council motion after another condemning Labour's grant settlements-real-terms increases, year on year, on a frequent basis. Since their Government announced cuts, there has been not a single peep from any of their councillors. Nobody likes to be unpopular, least of all the Liberal Democrats, who have become past masters at blaming somebody else, but they are not being straight with the people of Stockport about where the axe will fall and what the impact will be on front-line services. Instead, they are using convenient managerial phrases such as "service redesign", "restructure" and "reprioritise" when they really mean cuts.
Cuts on this scale mean big job losses. Only last week, Stockport council announced 250 job losses, which will mean unprecedented reductions in services that will be felt in every corner of our community-although given the previous form of Stockport Liberal Democrats, no doubt many of the cuts will hit the Reddish wards in my constituency hardest.
There is suspicion about where the axe will fall next. It is alleged, for example, that all the youth centres will be closed, including the one in Reddish, which does an invaluable job in keeping young people engaged with their education and away from trouble. This is a wider problem within the coalition Government and their ill thought-out plans regarding local government finance. How can they possibly create the so-called big society when the voluntary sector, which will be fundamental to it, will face such substantial reductions in its core funding as these local government cuts start to bite hard? Of course, as we heard earlier, many workers in the public and voluntary sectors are women who work in the heart of our communities as teaching assistants, care assistants, school crossing patrollers and dinner ladies. It is truly hypocritical of the coalition Government to talk about the big society, and then to attack ordinary people working in their local communities in a range of important jobs.
It is perhaps not sufficiently understood that many jobs in the private sector are dependent on local government and public sector funding. Demand will be taken out of the local economy, so many retail and service companies will suffer. Tameside pioneered a scheme called Tameside
Works First that prioritised the granting of smaller contracts to local companies to assist them through the downturn, helping local companies such as Denton-based Anvil Masters, which provided new park railings for Granada park in the town. Tameside should be lauded for pioneering such a scheme. However, the cuts will have a ripple effect in the private sector in my constituency and in every constituency.
Finally, the poorest, those who are most at risk and those who are most in need in our communities will be affected heavily by the cuts to council services. Some of the same people will be affected by the cuts to housing benefit. Recent research has shown that about 3,700 people in Tameside and 3,600 people in Stockport will lose out because of the proposed changes to housing benefit, some by as much as £42 a week. We should not forget that since the economic downturn, some households will have lost a wage and some people will have moved to lower paid jobs. That means that there are now even more low-paid families and that even more help is needed from local council services, at a time when councils are least able to help.
There is an emerging pattern across the country of who will be affected the most by local government cuts and the changes to the way in which central Government funds are handed out to councils: poorer areas in cities and metropolitan boroughs will face the brunt. The Labour Government had a strong record of increasing funding for local authorities in such areas, and of using those authorities to deliver national priorities by harnessing the best locally. Worse still, it is clear to all Labour Members that the Government have taken no account of how areas such as Denton and Reddish will fare with the massive reductions in spending. Sadly, we face a bleak future with trepidation.
Having served as a local councillor for a number of years before coming to this place, I praise the Secretary of State for deciding to free local councils from the chains of red tape that stifled local government throughout the years of the Labour Administration. In the current economic climate, there is no doubt that there will be pain and that it will apply to local government as much as to any other area.
Last Friday, my local council in Cornwall adopted an emergency budget and took the early initiative to consider where savings might be made before the settlement announcement. It is predicted that the cost of delaying that decision would have been £55,000 a day. Sadly, opposition parties in Cornwall were promoting further meetings and the delaying of decisions. Ten days of delay would have cost £500,000 and twenty days of delay would have cost £1 million. Opposition parties seem to be engaging in delaying tactics just for the sake of it.
I ask the Secretary of State to note that, on the creation of the new unitary council, the authority inherited a significant number of reserves that were held for specific reasons. Most came with a variety of commitments against them and, as such, remained untouched last year, although there was a minor review through which
some reserves were swept up corporately. A new strategy has been introduced, the main theme of which is to reduce radically the number of reserves that are held; to manage all capital reserves centrally as part of the corporate approach to capital financing; to create one budget equalisation reserve per directorate to allow minor budget variations to be funded without recourse to the corporate centre; and to ensure that the authority's general reserve is sufficient.
The council acknowledges the need to consider alternative models of service delivery, including trusts, joint ventures and arm's length management organisations, some of which involve services being delivered in partnership with the private sector.
Justin Tomlinson (North Swindon) (Con): On the sharing of services and facilities, does my hon. Friend agree that we must work across service areas with neighbouring authorities and external organisations to deliver value for money and to drive up standards?
The arm's length companies will remain under the direct control of the council, but will free up trade with partners and trade outside our borders to bring more business into Cornwall. An example of that shared service is that back-office corporate support functions will be brought together in a single organisation alongside the council's customer-facing front desk. That new organisation, although council controlled, will be able to sell its services to other partners within and outside Cornwall, generating more investment in our local economy. That will not only safeguard jobs in Cornwall but give the council a vehicle to create new employment opportunities: integrating those services will alone generate £2.7 million of savings.
Other ways of working include outsourcing, which is where organisational functions that could be delivered by in-house teams are contracted out to external organisations. The council has no intention of widespread outsourcing, but it will explore that option where it makes sense and delivers the best solution for local taxpayers.
Social enterprise is another likely model for service delivery, particularly in relation to the integration of health and social care services. Developing new models of service delivery is a radical shift, and the council has said that it will explore the details further in a series of business cases. It has said that it has a major role to play in decisions on how local health services will operate in future. It is keen to benefit from joint commissioning of care services and take the lead through its statutory role in health and well-being. Adult care services could be integrated into health services and new social enterprises, and public health services will become part of the council. The council will offer to provide a joined-up support service for GP consortiums, and there will be an integrated children's service led by the council.
"opportunity to completely rethink everything they are doing, creating a modern, flexible and innovative council."
I was a councillor for 15 years in North Tyneside, and that is nothing new to me. The big society and localism are just about reinventing the wheel, because many of us who were local councillors in the past know how hard councillors work and how much they have done to use their budgets wisely.
During my 15 years as a councillor I saw many changes. At first, I was a councillor under the former Tory Government, and when Labour took power in 1997, it was good to see changes such as how we were able to bring houses up to the decent homes standard over 10 years, and to see our neglected schools change, becoming new or refurbished buildings and providing fantastic places in which to educate our children. There was Sure Start, and in my borough there were new swimming pools. We were also able to put in place the "Fuel for kids" scheme, giving children a free breakfast at the start of the school day. For many children, that made a difference to their learning ability, and there is empirical evidence to prove that.
We were able to do many of those things when we moved to a mayoral system and had a progressive Labour mayor, who followed two years of a Tory mayor. Under the Tories many services were cut, and in fact the voluntary sector service in which I worked was closed. When we got our progressive Labour mayor, John Harrison, all the things that I have referred to flourished.
Just over a year ago, the previous Tory mayor was re-elected, and, as he has mentioned in the House, she happens to be a favourite of the Secretary of State. That Tory mayor, when leader of the council opposition, wrote to the then Housing Minister and asked him to withdraw £100 million of credits that were to be given to the Labour council to build older people's homes for the future-she simply did not want that done. Since taking office, she has drastically reduced that project, which means we will see not new, fantastic, refurbished properties, but old houses simply remodelled not to the standard people wanted. She has also prevented 800 new council houses from being built with money that would have come from the former Labour Government, because she did not want it to happen in her end of the borough.
It is interesting to see how, until tonight, the mayor has fought against so much that Labour put in place and praised the new Government. The mayor I am talking about is Mayor Arkley, and tonight, in North Tyneside's section of the Newcastle Evening Chronicle, she is pleading with her Government to have a change of heart. She has urged Treasury and other Ministers
"to think again about the speed of the cuts".
Tom Blenkinsop: It is not just in Tyneside and the north-east where Conservatives are vocally opposing the Government's measures; it is also in Teesside, where the Conservative leader of Stockton council, Ken Lupton, has said that the Con-Dem Government's position on the cuts is wrong. Also, Mayor Mallon from Middlesbrough -an independent, and not necessarily a loving friend of the Labour party-has said that the Conservative party and Liberal Democrats have declared war on the north.
"At a recent meeting with an official from HM Treasury, I have requested officials to reconsider this issue and spread the reductions more evenly over the four-year period of the Spending Review and to allow additional freedoms to local authorities to capitalise redundancy and equal payments to enable more effective planning to take place for workforce changes".
Heather Wheeler (South Derbyshire) (Con): I declare an interest, because I am still a councillor on South Derbyshire district council and am married to the new council leader. I was leader myself for three years, and was previously a councillor there for 15 years-it seems to be a popular choice. Prior to that, for four years, I was a councillor on Wandsworth council. My antecedents in local government are strong and long. I have an abiding love for it.
I am appalled at tonight's debate. It is astonishing that yet again we have hour after hour of prime television in which all the Labour lot do is scaremonger-it is hour in, hour out. There is no substance to what they say, because of the appalling way Labour councils have run areas year after year. They have never considered value for money for their taxpayers.
Tom Blenkinsop: By the sound of it, the hon. Lady has a great record in local government in South Derbyshire, so she will be aware of the Gershon savings over the past five years, under which 3% to 5% of council tax spending was looked at in terms of savings across the board. In my area, that has led to significant savings over the past five years.
Heather Wheeler: Of course, I know about the Gershon savings. I also remember the squeals about it and the synthetic savings that were made. The opportunity was not taken to look root and branch at what local councils need to do and should do, at the way they should do it and at the value for money they provide for their residents. It is hugely important that people take an innovative look at the way in which local councils work, and that they take this opportunity. The whole country is in a financial crisis, and nobody should be in position where they do not have to take their percentage of it. That would be completely wrong.
The new coalition Government are going to look at the floors and ceilings, the caps, the huge amount of ridiculous comprehensive area assessment-type targets, and the millions of pounds that all our councils have had to spend on this sort of thing. This coalition Government are about freeing people up to organise themselves in such a way that they provide the vital services that their people want at the same time as having the guts to say, "We don't want to do that any more. We'll have a referendum on it. Do you agree with us?" In our council in South Derbyshire, 1% on the rates raises £50,000. Given the floors and ceilings that I
have had to put up with for the past 13 years of the Labour Government, we have easily lost £2 million there. The same goes for the fire authority in Derbyshire, and the police authority as well.
Mr Watts: May I inform the hon. Lady that those floors were introduced to protect her local authority? Local authorities such as St Helens should have received a far bigger grant allocation every year, but we did not put right what the previous Tory Government had done, which was to take money from the most deprived parts of the community and give it to the most affluent parts.
Heather Wheeler: That is a really interesting point. All I know is that I have lost £2 million in South Derbyshire. I do not know whether it should have been £2.5 million or £0.5 million; I know that I lost £2 million.
Gavin Barwell: I should just like to put the record straight, following that previous intervention. According to the House of Commons Library, two of the local authorities that did worst, along with my own council, over the past five years under the previous Labour Government were Newcastle upon Tyne and Liverpool.
Mr Watts: The hon. Lady and the hon. Member for Croydon Central (Gavin Barwell) need to understand the amount of money that has gone into Liverpool. Under the Labour Administration, many millions of pounds went into the regeneration of the city. The Labour Government had a good record on Liverpool city council.
Heather Wheeler: What an amazing situation. We are completely blind to the reality of what has been going on. The ratepayers of South Derbyshire also know about how much money comes in. They were used to council tax rises of 9%, 13% and 17%, which was absolutely outrageous for hard-working families. It was completely ridiculous. We were left to fend for ourselves, and it just was not good enough.
The new localism Bill, and the new arrangements for the rate support grant, will have a major effect on what we do. We will be able to do away with the horrendous top-down targets that our accountancy and finance staff used to spend hundreds of hours dealing with. All of that will be swept away, and thank goodness for that. I am really looking forward to the announcements just before Christmas. There is one more Christmas present that the Minister can give me, relating to Gypsies and Travellers, but we can talk about that another time. We have had to put up with scaremongering for the last however many hours, and the debate is to go on until 10 o'clock, apparently, so goodness knows what else the Opposition will come up with.
It really takes the biscuit that we can sit here, having had 13 years of local government being raped by top-down targets, London telling us how we have to do stuff, ignoring local priorities and spending hour after hour on a meaningless load of nonsense including having different languages printed on council papers all the time-
I am really pleased that the Ministers have given robust answers from the Dispatch Box, and I look forward to hearing some quieter comments later on, along with some apologies from the Labour party for what we have had to put up with for the past 13 years.
Mr Gordon Marsden (Blackpool South) (Lab): It is a pleasure, albeit a sad one, to speak in this debate about the impact that this Government's policies have had on my constituency and my local authority. I speak not only for Blackpool, however, but on behalf of many other seaside and coastal towns that have suffered disproportionately under the policies of the Minister's Department and the Government since they were formed-I will not say since they were elected-in May.
As many Members know, Blackpool and many other seaside towns have always had significant problems that are not just particular to them, but are greatly emphasised. The problems are connected with mobility and transience, and they often have severe pockets of deprivation. It is to the last Government's credit that significant attempts were made to ameliorate the situation both through spending formulae and through the working neighbourhoods fund, area-based grants, the local enterprise growth initiative, the sea change programme and others. They helped to soften some of the particular problems faced by those areas.
I shall not stray far from the motion before us, but I want to mention, in passing, the significant assistance provided by the Northwest Regional Development Agency, and the same point applies to seaside and coastal towns elsewhere.
What has happened since June this year? First, we had the area-based grants cuts in the emergency Budget. If we look at the figures on the cuts in seaside and coastal towns generally, and particularly at those in Blackpool, we find that in most cases the cuts were
twice the level of those made in other areas. It is not necessary to take just my word for it; let me cite the words of Peter Callow, the leader of Conservative-controlled Blackpool council. On Radio Lancashire, commenting on the cuts, he said that
"it is 33 million for a part year remember which equates to £4 million for the whole year, that is a sizeable sum and what I have got to explain to government and what I am doing is saying look behind the glitz and the glamour of Blackpool there is deprivation, we are one of the most deprived areas in the land and we shouldn't be singled out like this, I understand some of the leafy lanes of Surrey and places have got away with it, well that can't be right".
Lyn Brown: I am interested in the point my hon. Friend is developing. I understand that Newham council is likely to lose approximately £70 million over three years. Newham, as my hon. Friend will know, has the sixth highest level of deprivation in the country. Richmond, on the other hand-I am sure we all who know who represents that constituency-is to lose only about 9% of its net grant, which amounts to only £4.6 million.
Mr Marsden: I am grateful for that intervention, in which my hon. Friend highlights the disparities that can arise between two boroughs in a relatively small geographical area in London. Those disparities, of course, have been reflected elsewhere. Blackpool had the cuts I mentioned, for example. Then we had the spending review.
I see in his place the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill). When he was tackled on these issues during questions immediately following the spending review, he came up with the immortal phrase:
"Those in greatest need ultimately bear the burden of paying off the debt which this country has been left".-[ Official Report, 10 June 2010; Vol. 511, c. 450.]
The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill): The hon. Gentleman could at least quote me properly. He should remember that I said that that would be the case if the deficit were not paid down. We are paying down the deficit precisely to protect the most vulnerable-something that his party singularly failed to do.
Mr Marsden: If the Minister consults the Hansard report of the day in question, he will see that he said what I have quoted, that Mr Speaker said "Order", and that we moved on to other subjects. There was no reference to what he had said.
The spending review speaks of front-loading, and we heard-unusually, coming from a blunt Yorkshireman-some quite waffly references to it by the Secretary of State. We must wait to find out whether all the waffle produces anything, but I can tell the house that the abolition of the area-based grants, and the effective abolition of the working neighbourhoods fund in the second spending review, have had a devastating effect on towns such as Blackpool, not least because-as was pointed out earlier-it is not just a question of what the
working neighbourhoods fund did for the public sector, but of what it was also able to do for the private sector in conjunction with that.
We in Blackpool, like those in several other areas, have experienced a double whammy. We have also been left off the list of areas that will receive funds for decent homes, although our borough and community feature on the index of local deprivation as the 12th most deprived in the country.
Labour Members and, to be fair, one or two Government Members have talked of the knock-on effect on other services. In my area the Connexion service, youth services and other services of that nature have already suffered badly, and are likely to continue to suffer badly if anything like the 16% overall cut that is currently being proposed for Blackpool borough council is imposed.
At this year's Labour party conference, I went to a fringe meeting that had been organised by Action for Children. It was a good, non-party-political meeting, which discussed the involvement of young people in their local communities. It was attended by some very good youth workers from all over the north-west. Virtually all those people, who were doing good work in their communities, had already lost their jobs or were about to do so, either because of the abolition of the future jobs fund or because of cuts resulting from the area-based grant system.
In case Government Members think that this is simply a bit of propaganda from the Opposition, let me remind them what the chief executive of Blackpool council wrote to me in a letter back in July about the reduction in revenue and capital support. He spoke of cuts of £3 million in the area base grant, £1.3 million in education, £731,000 in local enterprise growth initiatives, £116,000 in Supporting People, and £526,000 in the working neighbourhoods fund. The list could go on. In fact, the north-west generally faced the biggest share of the £1.17 billion of local authority cuts that were announced in June. It lost £1 of every £6 that was cut across the United Kingdom.
Gordon Birtwistle (Burnley) (LD): I was a Burnley councillor for many years. We had the working neighbourhoods fund, but we were well aware that it would end this year. Were Blackpool councillors not aware of that? We made provision for it.
Mr Marsden: I thank the hon. Gentleman for his comments. I understand that he wishes to mitigate some of the criticism that his own councillors have made of the various settlements, but I remind him that the cuts in area-based grant had to be effected in year, in this year, quite apart from what would happen after 2011.
Mr Watts: The Government keep talking about the three-year period for the working neighbourhoods fund. At that stage we had a three-year settlement, so all grants were based on three years, not just this one.
Lyn Brown: I thank my hon. Friend, who has been most generous. Does he agree that the withdrawal of the working neighbourhoods fund is a false economy? Getting just one single parent into employment through the use of the fund saves the public purse about £5,300 per year.
Mr Marsden: My hon. Friend is absolutely right. In common with many other seaside and coastal towns, Blackpool has a lot of small businesses and micro-businesses, and they are precisely the kind of businesses that benefited from the application of the working neighbourhoods fund and who are now suffering as a result of its potential withdrawal.
I want to talk about the situation in Blackpool as it is now. My local authority has told me that, on the basis of a 16% cut, it is looking for cuts of £32 million in its overall budget. Unsurprisingly, that led the leader of Blackpool council to write to the Secretary of State-he has been having quite a sustained correspondence with the Secretary of State, but without a great deal of success. On 6 October he said that he had written in June to highlight the disproportionate impact that the first tranche of funding cuts was having on a needy and deprived local authority and to make a plea that the autumn comprehensive spending review considered a more equitable sharing of any other pain. It did not do that, of course, and he then felt constrained to write again on 5 November saying that his assessment and that of many of his colleagues is that the front loading of formula grant cuts will have an adverse effect of between 12% to 16% next year, which is very significant. He said that there was the anticipation of major job losses in 2011-12 alone and that for a town like Blackpool, where nearly 30% of the working population are currently employed by the public sector and which has seen a 91% increase in JSA over the last two years, such a radical step reduction in central funding would have a catastrophic effect on the local economy. He said that he fully understood the need to reduce the overall deficit over the four-year period but he urged the Government to reconsider their approach prior to the announcement of that provisional settlement in early December.
That is also what all my party colleagues are urging. We are not suggesting that the Secretary of State has a magic wand he can wave to solve all the problems-not that I have ever seen him in Christmas panto. Rather, we are talking about sensible settlements.
We are also talking about the cumulative effect of what this Government have done, because it is not just about the cuts in the working neighbourhoods fund or local government cuts. It is also about what is being done in respect of education maintenance allowances. Some 2,500 young people in Blackpool are now going to be deprived. I went to my sixth-form college last week, where I met the brightest group of first-year sixth formers-all of them girls, incidentally. I have been meeting them for some time. They were all full of enthusiasm for where they were going, and they had all come through the Aimhigher programme. They were also all-bar one, I think-in receipt of EMA, and, of course, they were the last cohort to be receiving that. We are therefore talking about this whole conglomeration of subjects.
The fact is that, even if the Secretary of State believes he has made a significant impact on the current situation,
that is not what the journalists are saying. On 25 November, the Local Government Chronicle said that the Secretary of State
"has been rebuffed in a last-ditch plea to the Treasury for funding...Sources close to chief secretary to the Treasury Danny Alexander"-
"confirmed that the Secretary of State made an unsuccessful plea for more cash earlier this month to mitigate the impact of front-loaded local government cuts."
When we move aside all the statistics, we are talking about the impact of real cuts on real people. I want to conclude by sharing with the House the account of a visit I made to a project in the summer. It is a community garden in a very deprived area in the centre of Blackpool. Everybody had worked hard on it, but the efforts had been co-ordinated by a woman from the council who had worked with the police community support officers and the residents association. The mayor attended, and we all had a wonderful afternoon. At the end the woman from the council came forward and said a few things, and we were then all told to put our hands together and give her a big round of applause because it was her last day. Why was it her last day? It was her last day because she was one of the people losing their job under the area-based grants cut that this Government have brought forward. I do not want-and I am sure many other Members do not want this either-to spend the next 12 months going around my constituency from worthy project to worthy project having similar experiences. Therefore, despite the philosophical and ideological differences between the Government and Opposition Members, I urge the Government to think again. They should look again at the disproportionate effect these policies are having on some of our most deprived communities.
Simon Hughes (Bermondsey and Old Southwark) (LD): I am pleased to have this opportunity to speak in a debate on local government. As I said in an intervention on the shadow Secretary of State, local government is very important, as is funding local government properly, and I think it is perfectly proper for the Labour Opposition to choose the funding settlement for local government as the general subject for an Opposition-day debate. The title of the debate is therefore entirely appropriate; we should debate the distribution of local government funding and the effects of changes to it.
The only real matter of dispute that I have with the right hon. Lady and her colleagues is that many of them are making comments today as if the settlement had been announced, when instead we are, I hope, using our last chance to tell Ministers what we would like to happen. A whole succession of colleagues on the Labour Back Benches have reeled off figures as if they were the final settlement, and one has complained that one of his councils has not finally decided what cuts it should make. The hon. Member for Denton and Reddish (Andrew Gwynne) complained that Stockport council has not
finalised that. My hon. Friend the Member for Cheadle (Mark Hunter) used to be the leader of Stockport council. Those of us who know that council, and many other councils, well understand that it has not yet finalised its budget-and neither has my local authority, which happens to be run by Labour, whereas Stockport is run by Liberal Democrats. They are waiting-
Most councils wait until the provisional settlement, which will be announced next week, after which they make representations if they feel it is not fair or appropriate, and then there is a final settlement. Of course there is planning for a budget, but today's debate is an opportunity for us not to be doom-mongers about decisions that have not been taken, but to make sure we put cases and arguments publicly, that some of us have been making to Ministers and colleagues privately, as to what we believe will be the best possible settlement in the difficult financial circumstances of the time.
Barbara Keeley (Worsley and Eccles South) (Lab): As the hon. Gentleman is accusing the Opposition of saying things in a particular way, we must be clear that local councils have been pleading with Department for Communities and Local Government Ministers for a steer on this because of the unprecedented level of cuts. The comprehensive spending review clearly shows front loading, yet the Secretary of State today still calls that fiction and will still not answer questions. Does the hon. Gentleman not agree that it is right that when councils ask for a steer they should be given a steer, yet we are still not getting a single answer from Ministers?
Simon Hughes: Of course councils make representations both collectively and singly and, understandably, once councils of all parties, including those run by Liberal Democrats, heard the announcement of the CSR in October, they told the Government that they thought the front loading of the four-year settlement was not as desirable as a more evenly spread reduction. I share that view. I intervened on the Secretary of State asking him if there was an opportunity to have a flatter reduction over the four years. He did not give a final answer because, of course, that is a decision that will be left until the formal announcement, but he indicated-I agree it was not definitive-
The Secretary of State indicated that he was understanding of that point, and it is clear that the Government have done work to see if they can mitigate the effects of a more severe front loading. I, like others, will wait to see the outcome of that. I hope it will be possible to mitigate the effects. If it is, that will be a major achievement; if it is not, it is to be regretted. However, there are many good things about the settlement so far that was announced in the CSR, as there are also
some proper concerns, one of which the hon. Member for Worsley and Eccles South (Barbara Keeley) rightly enumerated.
Caroline Flint: Part of the reason that the Opposition decided to use a whole day of Opposition time to debate this subject is that we think we should lobby and pressure the Government on it. I must ask the hon. Gentleman something. Would it not have been better if, instead of having the formula grant profile announced in the comprehensive spending review show a decrease next year of 10.7%, and then reductions of 6.4, 0.9 and 5.6% for the following three years, the Government could have spread the cuts evenly over that four-year period? They have created completely unnecessary mayhem and fear out there.
Simon Hughes: I say clearly to the right hon. Lady that, as I have indicated, I have argued publicly and privately that it would be better for the spending reduction to be spread more evenly. I have been into the Department to make that case. A parliamentary committee of Liberal Democrats from both Houses has collectively made that case, and it includes people who have been leaders of local councils. I understand and share the view that it would clearly be easier for local government to manage a gradual reduction than sudden and bigger reductions in the first two years, a small reduction in the third year and then an intermediate reduction. There is no disagreement on this issue between the right hon. Lady and me, and there is not much disagreement between councils of all colours around the country, which are making that point to government. I hope that the Government and Ministers in the Department for Communities and Local Government have been able to make some progress on that point, given that they obviously have to start with an announcement made by the Chancellor which reduces their flexibility-we will doubtless hear when the settlements are made.
Joan Ruddock: I do not know where the hon. Gentleman's local authority lies in the indices of multiple deprivation, but mine is the 39th most deprived in the country. I say to him that there is a need for him to advise the Government on how to create fairness between boroughs such as ours and the Prime Minister's local authority, which has been cited and is in the 5% least deprived areas in the whole country.
The right hon. Lady would expect me to be sympathetic to that point and I have acted in the past few weeks on that very issue. I have been in to see Ministers; I went to see the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Hazel Grove (Andrew Stunell), and civil servants to discuss exactly that issue. I believe that it would be wrong if all the funding currently given to councils, including the working neighbourhoods fund, which was a top-up in order to assist deprived communities, was not taken into account as the starting point for the calculation for the next grant. I have also argued that it would be inappropriate for there to be a greater decrease in percentile terms for authorities such as hers and mine, which have significant deprivation, than for smaller authorities, just because we happen to have had a larger amount of public money before. I have been given reassurance that an upper and lower percentage reduction
will be common across all local government-a band above and below which the reduction cannot happen-and that there is a likely inclusion of at least some, although I hope all, of the other funding, not just the core formula grant.
I understand the point that the right hon. Lady makes, and she would expect me to go into bat for deprived communities, because I represent a borough that has a higher deprivation index than the next-door borough of Lewisham-I believe that is the case. Relative deprivation is not a competition we are proud of, but this is something we have to deal with. Of course one of the things that we have to do is try to get a fair settlement that reflects the needs of and deprivation in all the local authorities in that settlement. Again, I can tell her that I have been doing the job that she, my constituents and my local authority, although it is run by Labour, would expect me to do, just as I would have done when my local authority was run by my colleagues.
It is not just local government that is important; I want to pay tribute to councillors, of all parties, who serve in local government and to many extremely good officers in local government. It contains some brilliant officers, some less brilliant ones and, as in any walk of life, some people who may not be in their right vocation. Southwark council has some excellent officers, and I pay tribute to them and thank them for their courteous and regularly helpful service.
We know the background to today's debate: we have to deal with a huge economic legacy of the combination of international problems, the banking crisis and the previous Government's policies. We know that we have to save public money and we know that local government has to bear its share. I note that the Department for Communities and Local Government has imposed on itself a larger percentage reduction in its funding than it is asking local government to bear.
There will also be good things in the settlement, according to the comprehensive spending review. For example, it is clear that there will be additional money- £1 billion a year-for personal social services, in order to deal with the fact that there are more older people and people are living longer. That is a good thing. There will also be far fewer ring-fenced grants-90 will reduce to 10-and that is a good thing for most local councillors, who want to have that choice. In addition, a set of local community budgets will be trialled around the country. We should be positive about those good things.
The Government have to take two other things into account. The first is that some councils have much more reserve than others. The second is that some councils have the ability to raise much more money through council tax than others, because they serve much richer communities. Those background considerations are absolutely relevant.
On that specific point about revenue-raising ability, does the hon. Gentleman agree that this is why, regardless of philosophical arguments about dedicated
streams, the severe attack on area-based grants for councils with significant areas of deprivation has been so devastating?
Simon Hughes: That is why a debate has taken place in which some of us have been trying to discuss a formula that is fair. Some bits of funding that are nothing to do with the local government funding settlement will still go to "affluent" and to "less affluent" areas. Such funding cannot be affected by it, which means that those areas will continue to get public money because it is protected in other ways.
I hope-I was going to say this at the end of my speech, but I will say it now-that one of the things that this Government can achieve, given that they are already a Government of two parties, is to work with the Labour party to try to get a more settled, agreed formula for distributing money to local government. Of course the cake size will vary, but the way in which it is divided between county and district council, and between unitary authorities, metropolitan boroughs and London boroughs, is always the subject of terrible struggle every year and has never been entirely satisfactory. This is neither coalition policy, nor Liberal Democrat policy, but I see no reason, given that we have set up an Office for Budget Responsibility to give independent advice, why we could not have an office that does that sort of job for local government and seeks to offer independent advice as to what the formulae should be. That would take that issue out of the inevitable political bartering, which does not, in the end, necessarily produce the right answer. This involves a terribly complex set of issues and I hope that we can find a better way of doing it.
I wish to make a final generic point and then say a couple of specific things relating to today's agenda. I know that the Government have met and heard from the Local Government Association and London Councils, which are both cross-party bodies. I shall put on the record the LGA's five considerations, which I share. I have dealt with one, which is the desire for a reduction, if possible, of the impact of front loading. My right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith) has touched on another, which is the desire for an increase in capitalisation limits.
I raised that issue with Ministers the other day. The Government have set aside £200 million to pay for potential redundancy in local government. I understand exactly what the Secretary of State said, which was that we hope that many of the job losses will come through natural wastage and other things, not enforced redundancy. My noble Friend Lord Shipley managed well a reduction in staff when he was a council leader in Newcastle, working with the unions, in a way that mitigated all the worst consequences-that is how it should be done. There are good models for doing that, and they are very much supported by the TUC and its member unions. I have had good and authoritative reports that the real figure is much more like the one that the right hon. Member for Don Valley (Caroline Flint) and I have used and, thus, the total bill may be nearer £2 billion, or thereabouts, than £200 million-that clearly needs to be addressed. It is no good our thinking that local authorities can necessarily find the money that they will need if they are to reduce their staff costs.
Sir Alan Beith: It is perhaps worth reiterating that some authorities could meet a larger proportion of the redundancy requirement out of reserves and that others, through no fault of their own, are not in that position-I mention Northumberland as an example.
Simon Hughes: I remember-my right hon. Friend alluded to this fact-that the situation in Northumberland, which went through an enforced change in its local authority nature, boundaries and so on, was more difficult. Others are in difficult situations, too.
The LGA's third point concerns accounting for what it calls "missing grants". There is uncertainty about more than £1.1 billion of specific grants on which councils rely and where the Government have yet to announce future funding levels. I do not know whether the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), can tell us when he winds up whether those announcements can be made at the same time. The sooner they can be made the better.
The fourth point concerns fees and charges that are set centrally, such as licensing fees, which have often been shown to be inadequate in covering the full cost of the related services and I ask the Government to deal with that across Government. There are many sub-issues with fees and charges. I hope, for example, we stop the nonsense of having differential fees for burials depending on which side of a boundary one lives- [ Interruption. ] This is a serious point. People who happen to have moved across a boundary, having lived all their live in one authority, find they have to pay, say, 10 times as much to have their late husband or wife buried. Those things are offensive nonsense and we need to deal with them.
The last point is that we need fair grant distribution. That is where I make the strongest plea, alongside the right hon. Member for Don Valley. We must ensure that all the funds that have come from Government to local government this year are the starting point for the calculation for the next year. I have been reassured that things are moving in that direction and I want them to move completely in that direction over the next few days.
London Councils makes similar points. Southwark, like Lewisham, is a borough that has had the protection of a floor and cap, as many authorities have had to. Southwark, like London Councils, argues that funding floors should be set at the highest possible level to prevent cuts falling disproportionately on the local authorities with the highest need. That is important. Those points have been made, by and large but not exclusively, by authorities that are not Conservative-run, but authorities run by the Tories are in that boat, too, as well as authorities where there is a joint administration.
Let me make a final couple of points. Also included should be any other local authority funding that has been cut, if for understandable reasons. For example, in Southwark there was the Aylesbury private finance initiative for our largest estate, which was due to be rebuilt. Because that work had not started, the Government have said that they cannot advance the money. I understand that argument, but it needs to be taken into account as part of the picture. I make a specific plea on that point.
I am conscious that the Government will go down the road of returning business rate control to local government. That is a good thing. I am very conscious that in the
localism Bill, which I think is coming into the public domain this week, the Government will give much more discretion to local government on how it raises and spends its money. That is a very good thing. I have always argued that the Department that looks after local government should stand up to the Treasury so that local councils can have the power of general competence, including total general financial competence. For example, they can then borrow against their asset base-their housing stock in the case of Southwark-without having to go to the Government cap in hand to get permission. The Treasury's hand has been unnecessarily authoritative. I understand why, but in any other parts of the world local council spend does not count in the same way and in the same accountancy column towards public sector borrowing requirement totals.
I have a couple of messages to give local councils through the Government. Again, I shall reflect some things that have already been said. Councils must be careful not to pick on the voluntary sector when times are hard for them. It is easy to do that. It is easy suddenly to decide to take all or the bulk of the money away from organisations that are not in-house. Sometimes, councils must reduce their own management and costs. That might be a more effective way of dealing with reductions than taking money away from the voluntary sector, where local authority funding contributes towards a larger whole. I hope that there will not be any such abuse of the relationship. Voluntary sector organisations are often valuable partners and they need to be given as much support and encouragement as possible.
Siobhain McDonagh (Mitcham and Morden) (Lab): I agree with the hon. Gentleman, but does he not think that that is the basis of the debate? If the cuts are early and quick-if they have to be decided in three months-people will go for the easy options rather than the restructuring, because the restructuring will take longer to come into effect. Cutting a voluntary sector budget is almost immediate.
Simon Hughes: I will not dissent from that. I am trying to act in a spirit of consensus and I hope that we will be careful. To put it bluntly, there are both good and poor voluntary sector organisations and although I am not saying that they should not have their grants checked and revisited regularly, the good ones need protection. There is sometimes scope for rationalisation in the voluntary sector. In Southwark, the three pensioners' organisations are becoming one. That should have happened a long time ago-I argued for it-and it will make them a stronger body. I also make a plea that non-statutory youth services should be particularly protected. Colleagues on both sides of the House have argued for that.
Local government must get the message that it should not be paying anybody more than the Prime Minister. It is very simple. Salaries have been ridiculous and unjustified. It has been everybody, and it is not the fault of a council of any particular colour. They have been following each other into this competitive game. To put it bluntly, nobody in the public sector needs to earn more than about £150,000 a year. I am sorry, but I have a really hard-line view about this. We need to start to scale down the ridiculous salaries. If the public sector behaved properly, perhaps we would have some morality in going to the private sector to say that it should not pay such ridiculous salaries either.
Times might be hard, but I ask local government please not to sell off the family silver, which it might live to regret. I am having a local spat with my local council leader because Southwark council has decided that it wants to sell off the three historic metropolitan borough town halls. That is unnecessary. The buildings could be reconfigured and kept in use and they would be far better places and venues that would be far more valuable than the alternatives that have been mentioned.
I have followed the example of the hon. Member for Blackpool South (Mr Marsden) in being positive about trying to find a way of doing things much better in the future. We need common agreement on how to decide the formula. I hope that we will minimise redundancies in all cases, because nobody wants any more redundancies than there should be. I hope that when we get the settlement-probably next week-there will be the maximum collaboration between the major parties to try to ensure that where there is still unfairness, we seek to persuade the Government to make adjustments between the provisional settlement and the final settlement so that the latter is better. This will not be an easy time for local government-no one is pretending that-but I hope that today's debate will mitigate that and that we can all encourage Ministers in the Department to ensure that they win as far as possible every remaining battle they have to fight with the Treasury.
Steve Rotheram (Liverpool, Walton) (Lab): I am delighted to have been given the opportunity to speak in this important debate as, once again, yet another announcement -this time on local government funding-will see areas such as Liverpool lose out in favour of more affluent areas of the country. I have no doubt that some Tories on the Government Benches would agree with the rich getting richer-after all, it is part of their political philosophy-but they could at least come clean about it and not try to kid us that this makes things fairer.
To hear the Secretary of State tell one of my hon. Friends not to take us back to the '80s shows the brass neck of the man. That is exactly what Labour Members wish to stop. If he wants to know about that torrid decade of Tory rule, I would be happy to sit down with him for a few days to outline the devastation that the Tories wreaked on our great city and specifically on the people of Liverpool, Walton.
This decision on local government funding by this coalition Government will have a disproportionate effect on the area I represent. When I made my maiden speech, I warned-hon. Members can check Hansard-that I would fight against a return to the devastating Tory policies of the '80s that nearly destroyed places such as Liverpool. That is a fight that I will not shy away from.
The Government are rapidly gaining a reputation for saying one thing and doing another, and I fear that their gung-ho approach to local government funding is yet another shameful example of the widening gulf between the coalition's rhetoric and the harsh contradictory reality on the ground.
Gavin Barwell: The hon. Gentleman is making a powerful case against funding being cut in deprived areas and the money going to affluent areas. If I told him that, according to the Library, Liverpool, like my authority, had one of the lowest increases of the past five years-a 3% cut from the Labour Government-and that the biggest increase went to Rutland, which got a 25% increase, what would he say about the Labour Government's record over the past five years?
Steve Rotheram: I would say that it is not just about one specific funding stream; it is about an overall package. Liverpool benefited greatly under the Labour Government -so much so that the hon. Gentleman's friends on the Liberal Democrat Front Benches used to say that the Lib-Dem controlled Liverpool city council was a flagship council because it had got so much money from the Labour Government. Don't try to give me lessons about what happened in Liverpool, mate!
"the Government is satisfied that it has adopted a fair approach to making the necessary reductions."
"limit as far as possible the impact of reductions...on the most vulnerable in society, and on those regions...dependent on the public sector".
The Government never tire of reminding us that we are all in this together, in the new age of austerity, and insist that their belt-tightening is fair and progressive. So much for the rhetoric. The reality is that the proposed one-size-fits-all local government finance settlement, with its removal of ring-fenced funding for poorer regions and its top-slicing of the formula grant, is set to hit the poorest councils the hardest-none more so, unfortunately, than Liverpool city council.
Whether the Secretary of State likes SIGOMA or not-he did question its findings-its research shows that of the 20 worst-hit local authorities financially, all but two are in the top 20% of most deprived areas in the country. Conversely, of the 20 councils that do best out of the comprehensive spending review, all but two are in the top 10% of wealthiest local authorities. The SIGOMA report concluded:
"The current finance settlement perpetuates inequality rather than allowing areas to operate on an equal footing."
"will risk the recovery, increase inequality and threaten social cohesion".
Tom Blenkinsop: Some interesting facts came out today from the construction industry. The Construction Products Association said that it was going to slip back into recession and the Engineering Employers Federation said that it would not be able to pick up the slack from public sector cuts as the Government have said it would.
I thank my hon. Friend for those comments. Having been a bricklayer and an apprentice, I know the construction sector all too well. I once described myself as the only bricklayer in Parliament;
unfortunately, one of my colleagues, who is not present, also did an apprenticeship but he was not indentured, so I can still legitimately claim to be the only indentured bricklayer in the House of Commons.
In addition to the statistics I have quoted and the bodies I have mentioned, the Centre for Local Economic Strategies has noted that the areas most at risk are those with relatively few private sector jobs, high levels of unemployment, poor transport links and high vulnerability to national public sector job losses.
Brandon Lewis: The hon. Member for Blackpool South (Mr Marsden) made some comments about coastal towns, and my constituency fits that bill. When Labour came to power, Great Yarmouth had a couple of the most deprived wards in the country and they were still in the handful of most deprived wards when it left power. Surely the hon. Member for Liverpool, Walton (Steve Rotheram) must agree that it is time to try something different.
Steve Rotheram: I would love to ask the people of Great Yarmouth whether they would like some money with strings or no money at all. I think they would rather have money with strings than what you are proposing-cuts across the board. [ Interruption. ] That is about local authority spending, not how much money you get. You cannot have it both ways.
Madam Deputy Speaker (Dawn Primarolo): Order. If the hon. Member for Great Yarmouth (Brandon Lewis) wants to make a further intervention, he should stand and do so, not shout a conversation across the Floor of the House.
Steve Rotheram: I apologise, too, Madam Deputy Speaker. I am quite passionate about this. I do not normally just stand up and say things in the Chamber; I stand up when what you are trying to do affects the area that I represent. Believe me, this is one of the areas where we are going to be most affected.
Expert analysts up and down the country agree that the evidence is overwhelming that the rich will get richer and the poor will get poorer-so much for progressive politics. This might be far too grave and pressing an issue to exploit for party political reasons, but I cannot help but notice the findings of the House's own researchers that
"the average proportion of grants cut is lower for Conservative controlled authorities than the average for authorities controlled by other parties."
Tory-led West Oxfordshire district council, which is in the Prime Minister's constituency and is one of the least deprived in the country, can look forward to a budget increase of up to 37% over the four-year spending review period, while Labour-run Liverpool city council is set to lose- [ Interruption. ] I would love you to come to Liverpool and laugh in the faces of those people who are going to be forced-
Madam Deputy Speaker:
Order. The Minister knows better: if he wants to make an intervention he can do so. Let me say to the hon. Member for Liverpool, Walton (Steve Rotheram) that although he feels very passionately about this issue, he must direct his comments to me in the Chair, preferably not blaming me for the Government's
policies-or the Opposition's for that matter. He should not respond to any points unless they are made by way of an intervention.
The Labour-run Liverpool city council is set to lose up to 38% of its funding. Clearly, some of us are more "in this together" than others. I mention Liverpool, as I always try to, because it is the very reason I am here in the first place. Let me focus briefly on precisely what the new funding regime means for my neck of the woods. I should point out that the very nature, speed and extent of the cuts represent a double whammy for Merseyside, which is home to two of the most deprived councils in the country-Liverpool and Knowsley. Indeed, Liverpool is the most deprived local authority area in the land according to all the key poverty indicators, despite the transformation of our city into a true international destination of choice.
Robert Neill: As the hon. Gentleman has not seen the figures and therefore cannot know what they are for any authority, does he think it right to speculate and scare people when he has no evidence on which to base his assertions?
Steve Rotheram: I am more than happy to give way to the Minister if he can allay the fears of people in Liverpool, Walton. Can he tell them that what I am saying is not true and that Liverpool's funding will not be disproportionately cut? I did not think so.
Mr Watts: Does my hon. Friend think that the confusion about the likely size of the cuts is because the spending review that was publicised is the document that everyone is working from? If there is a problem with it, it is because the Government have done the figures wrong.
Steve Rotheram: I thank my hon. Friend. In the spending review framework, the Government committed themselves to limiting the impact of reductions on areas heavily dependent on the public sector. To meet their stated commitment to fairness, should not the Government apply the same logic to the local government settlement? I will give way if the Minister wants to answer that.
I was speaking about the Tory-led West Oxfordshire district council in the Prime Minister's Witney constituency, one of the least deprived areas, and about Liverpool, the most deprived local authority area, getting a 38% funding cut. I mention Liverpool, as I always do, and Knowsley. As an aside, both the Labour party and the Lib Dems have had their conferences in Liverpool. I ask the Tories to do the same so that they can see our wonderful city for themselves. Maybe then they would be less likely to destroy all the progress that we have made in the past few years.
George Hollingbery: I have huge admiration for the passion with which the hon. Gentleman defends his constituency. I freely admit that I have little idea how the cuts will impact on Liverpool. However, he probably has as little idea how they will impact on places such as Hampshire, which outwardly may appear to be leafy, rural and wealthy, but Hampshire has suffered a loss of £45 million of formula grant since 2003-04, and expects to lose another £20 million over the next few years. Furthermore-
Liverpool city council has established that the in-year cuts announced by the Government in May will have a more than £20 million impact in its ongoing annual reductions. Almost half of this will come from the 2010-11 area-based grant programme, the very programme designed to support deprived communities according to their needs. Funding for a programme to reduce health inequalities by reducing smoking will be cut by 48%. The local enterprise growth initiative, which the hon. Member for Bermondsey and Old Southwark (Simon Hughes) spoke about, focuses on increasing entrepreneurial activity. It will lose 14% of its monies.
The transitional employment programme, which supports the long-term unemployed back into employability and employment, will see a 13% cut in its funding. The working neighbourhood fund, which has been mentioned by other speakers, was introduced under the previous Government to tackle worklessness in deprived areas. It has been done away with altogether, depriving the city of £3.5 million this year alone; and another £3.5 million of cuts have been made in area-based grants which directly affect children and young people.
The Government have been consistently slick in their assurances that the delivery of key services need not be adversely impacted, that the vulnerable will be protected, and that the Government are serious about job creation, tackling the skills deficit and getting people back to work. That is starting to sound like a load of old guff.
The hon. Gentleman's city, Liverpool, is a fantastic city. Whatever our differences, our two parties have run it over the years and they have both contributed to it being the great city that it is. I am not speaking for the Government, but I know that they are keen to try to pull together all the effects of spending changes from all Departments as they affect a city or a
region, so that none ends up with an unfair or unnecessarily severe burden. That is a tall order. It has never been done before, but the Government are trying to do it, and I hope that people such as the hon. Gentleman and I will work together with the Government to ensure a fairer spread of funding decisions across the-
Steve Rotheram: What a shame that the hon. Member for Bermondsey and Old Southwark is not speaking on behalf of the Government and in a more elevated position. If he were, the concerns that he highlights would be brought to the attention of those making the decisions.
"Experience on the ground suggests that even at this early stage of spending cuts it is simply not possible to make such steep reductions in spending, without hitting the worst off. The impact of cuts in the area based grant also shows that spending reductions so far have been about far more than reducing waste-front line services have been affected."
I seriously begin to question at best the competence, and at worst the integrity, of the present Administration when programmes, services and initiatives which clearly contribute to the declared aspirations of the Government are held in such contempt.
I have not even touched on huge job losses, with the compounding impact of central Government cuts, or the longer-term prognosis, and there is much more that I would like to say, but I have been told by somebody not too far away that my time is almost up. I am desperately hoping to prevent the disproportionate effect on the area that I represent. I finish with a plea to the Government ahead of their local government finance settlement.
My hon. Friend the Member for St Helens North (Mr Watts) tabled early-day motion 1088. In it, he succinctly outlines issues of particular concern affecting less affluent areas of the country, makes sensible and reasonable recommendations, and calls on the Government to take serious heed of the incontrovertible facts and to deliver on their promise to ensure fairness. It is future generations that will reap the social consequences of the Government's unfair and pernicious policies, so I urge coalition Ministers to study carefully the points that my hon. Friend and many other right-thinking Members have made, and to think again before careering headlong into a finance settlement that will prove punitive, self-defeating and irrevocably damaging to those who need and deserve that the least.
George Hollingbery (Meon Valley) (Con): I pay tribute to the hon. Member for Liverpool, Walton (Steve Rotheram), who spoke with real passion for the area he represents. None of us would expect anything less of hon. Members than to defend the areas that they represent. However, there is no doubt that some cuts had to be instituted, as those on the Opposition Front Bench admitted. There would have had to be cuts, whoever was in control.
In the comprehensive spending review, my right hon. Friend the Chancellor outlined a programme of cuts and spending changes that would allow us to put the country back on a firm footing, among which were changes to local government funding. I know that my saying this is likely to arouse groans from the Opposition Benches, but there is no doubt that, as the Secretary of State pointed out earlier, if changes are to be made to the amounts paid to local government, the period in which they are granted and the amounts in each period, Opposition Front Benchers will have to identify areas elsewhere in Government they would cut. It is no good saying that there are no consequences; there plainly are.
We on the Government Benches could talk eloquently about closing hospitals and about body armour for soldiers. I shall not use that ploy, but something will have to give somewhere if we change the numbers for local government.
I shall address one or two of the points made in the document from SIGOMA. I entirely understand why an organisation of local authorities should get together to try to defend their position. Clearly, that is the right and proper role of local authorities in the current circumstances, but one of the points made in the document is about the imposition of floors. I think I am right in saying that the right hon. Member for Greenwich and Woolwich (Mr Raynsford), the former Local Government Minister, was responsible in 2002-03 for the imposition of the floors, which protected some local authorities from huge reductions in local government spending as a result of the formula having changed enormously. The floors have remained until the present day, so any disparity or inequality that might be felt across local government has been entrenched by that rule, which resulted from enormously complicated changes in local government funding rules. It is therefore very difficult at this stage to imagine that in one fell swoop we on the coalition Benches will even out the inequalities created over the past 10 years.
It is reasonable to question the funding formula itself. It has changed a great many times, as hon. Members will know, resulting in enormous confusion across many local authorities and, in my part of the world in particular, a real reduction in funding over a great many years. I have already brought up some of these examples in the House, but East Hampshire district council saw a real-terms funding reduction of 25% from 2001 to 2010, while Havant borough council saw a 13% real-terms reduction. Havant council has almost no assets. It is not a Wandsworth or a Westminster, with a huge parking income or buildings it can rent out to third parties; it is a straightforward council that takes in council tax and receives grant from the Government, yet its funding has been reduced by 13%.
Barbara Keeley: Would the hon. Gentleman like to inform the House what the balance is between the formula grant and the council tax base for those councils? That is one of the big disparities, and it is not helpful to talk just about the formula grant, because many councils in places such as Surrey and Hampshire have a good, substantial council tax base.
I absolutely understand what the hon. Lady is saying. If I remember rightly, the SIGOMA report includes a table-I think on page 4
-of the differential rates of council tax between authorities. I cannot tell her exactly what the numbers are, but the overall band D council tax charged in East Hampshire, taking in the Hampshire county council precept and the local parish precepts, is higher than in the SIGOMA authorities. There is already a disparity in the amount that local citizens pay in my part of the world towards the funding of their councils, which is taken into account in the grant settlement, as I understand it. As I mentioned in my earlier intervention-I apologise again for making it overly long, Madam Deputy Speaker-the amount for Hampshire county council reduced by £45 million between 2003-04 and this year, and it is expected to reduce by a further £20 million over the next several years.
Those are not the only sources of funding for local government-there is the business rate and council tax. The UK Statistics Authority says that 56% of local council revenues comes from the council grant. If we apply the cut that the Government propose to that 56% and look at the totality of what local government takes in, we find that the cuts amount to about 14%, or 3.3% a year. The Government have been brave and transparent in talking about the totality of cuts to the revenue grant allocations, because the cut across local government is rather less.
Furthermore, an article in the Municipal Journal from 4 November last year said that studies of Total Place had suggested that only 5% of all spending in a local area comes through democratically accountable bodies, which leaves 95% to come from central Government-funding that can continue to be spent without the cuts applying, even though there may be cuts elsewhere. Therefore, a lot of the talk that we have heard-about fire and brimstone, a cleansing across local government, and local businesses going out of business because there is no longer any money-needs to be taken in that context. Plainly, a great deal of Government money is still spent locally.
One or two points have been made about the Government not doing anything to help local businesses. Indeed, the converse point-that the cuts will have a disproportionate impact on areas with high local government employment-has also been made. The Secretary of State did not mention it, but the Chancellor has provided for national insurance contributions holidays, which are granted to small business formations and are specifically targeted on areas with high levels of employment in local government-or, indeed, in government across the board. The Government have therefore taken into account the fact that although there will be cuts in local government, new business formation will be important. Much as many of my colleagues in the south-east would like the NIC holiday to come to the south-east, we have at least some understanding of why it is not.
I do not for a moment misunderstand the fact that anybody who loses their job faces a difficult time, particularly in the current conditions. Therefore, I take seriously the loss of employment in local government. However, it is also worth pointing out-to use the cliché-that when it comes to innovation, necessity is the mother of invention. De-ring-fencing has allowed local councils a world of flexibility to find new ways of doing things: to work differently with partners, and to take budgets that were predicated on particular activities occurring in a certain way and use them differently.
Various representations have been made to the Select Committee on Communities and Local Government, from people across the country and across many subjects, but I was particularly struck by one contribution-I think it was about Birmingham; it could have been about Manchester. [ Interruption. ] Opposition Members will have to forgive me-we have had many representations. Some 15 or 20 agencies were offering similar services to the local population. If we have such duplication of services in local councils-and I believe that in some of the large metropolitan boroughs we do-there are surely innovations to be made. There is money to be saved, and there are new, different ways of doing things. I commend that to local councils.
Andrew Bingham: For the past two or three years, the council in my constituency has shared a chief executive with Staffordshire Moorlands council, which is not only in a different county but in a different region. The councils now have a shared management team and shared services, which shows the innovative ways in which local authorities can save money and preserve local services for residents.
There is a real need for local councils to work much more closely with third sector organisations in their areas. The hon. Member for Bermondsey and Old Southwark (Simon Hughes) has already made the point that we must not encourage councils to take the easy way out, which is to save money by cutting direct grants to local charities.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op): I hear what the hon. Gentleman says about reinventing local government and finding new ways of doing things. I am still a local councillor, and I agree with him, but does he agree that front-loading the cuts when we still do not have the local government settlement, but when we have had the CSR, will make it harder to do those things? Councils will have less time and will have to go for easier, quicker cuts to balance the books.
George Hollingbery: Indeed. It is difficult to make plans at this late stage, but we have known about the cuts for some considerable time. Most councils have known for at least two or three years that the economic times are difficult. My local councils have been planning for such changes for two or three years. Frankly, it is no great excuse to say at this stage that we do not yet know the level of the settlement. We all know-and we have known for a long time-that it will be difficult.
Gavin Barwell: Did not the previous Government's 2009 pre-Budget report set out clearly that public expenditure in unprotected Departments was going to fall by 25% over the course of this Parliament? Given that local government was not one of those protected areas, any local authority would therefore have been aware that such reductions were coming, whoever was in power.
My hon. Friend clearly demonstrates that there is no real excuse for local authorities pretending that we cannot do anything because we do not know
how big the cuts will be. Straightforwardly, we know that there will be cuts, and we know that they will be serious.
There are any number of innovative third-sector partners out there doing a fantastic job. I would like to pick just one example from my local area-although it works out of the constituency of the Financial Secretary to the Treasury, my hon. Friend the Member for Fareham (Mr Hoban)-which is the You Trust. I recently met Nicola Youern, who runs the trust. The You Trust has a fantastic way of dealing with new cases, which Hampshire county council brings to it, of difficult-to-house young people. The trust first asks, "What can we teach you to do for yourself?" and then asks, "What can we teach your relatives and friends to do for you that will stop us having to intervene?" The trust goes through that sequence of trying to help people, before saying finally, "The only way we can deal with this is through a public sector intervention." If there were more of that thinking across the public sector, we would get better results for less money.
I also welcome one or two changes that I think-I hope-will shortly appear in the localism Bill. The reporting changes are clearly very welcome. As the performance management portfolio holder for Winchester city council until recently, I was in charge of producing the statistics that we had to relay to central Government, almost none of which was used to create real change in the council but almost all of which were incredibly burdensome to collect.
George Hollingbery: Indeed. My favourite was on the time taken to re-let a council house, whereby the better we did in re-letting a difficult-to-let council property the worse the statistic became, because of the longer average period for which we had not re-let the house. Every time we re-let a house that had been on the books for three years because it was in a poor condition, the worse our statistic became.
The work also involved a huge amount of management time. We had specialist employees dealing with just that issue and a specialist computer system just to monitor performance management, so I very much welcome rowing back the amount of information that local councils will have to report to central Government. I also became extraordinarily fed up with the number of strategies that we had to deal with, and I would very much welcome an assurance from the Minister that we will not have to do anything like as many of those, either.
Tom Blenkinsop: I hear the hon. Gentleman's comments about reporting by local authorities, so does he have any worries about the £500 rule, whereby anything on which a local authority spends more than £500 will have to be documented?
George Hollingbery: The accounts departments already record most of that information, so I see no great difficulty in councils reporting it more widely. It is already on the books, on computers and there to be reported.
Strategies were piling up and gathering dust on shelves, but the black and minority ethnic strategy at Winchester city council was, I agree, entirely necessary in small amounts. We, like anybody else, had to be held to account for what we did in that area, but, despite only 1.5% of our population having that background, we were forced to put £50,000 into employing consultants, who produced an enormous great report telling us that what we did already was okay. That is the sort of imposition by central Government to which I hope the localism and decentralisation Bill will put an end.
The wretched Standards Board for England has also accorded a vast amount of work to local government, especially to its legal employees. The board has been used as nothing more than an excuse for the petty battering of officials and parish councillors throughout the country.
We can do more imaginative work in-house, as was said a moment ago. Winchester city, East Hampshire district and Havant borough councils now have a choice-based letting arrangement. That comment has been noted by Opposition Members, but I am sure that such schemes exist in many parts of the country. The arrangement has saved our councils an enormous amount, and we have achieved a better result for our clients. East Hampshire district and Havant borough councils share a joint management tier, and the same individuals hold all the senior management roles in the two authorities: there is one team for two different councils.
Hampshire county council now sends less waste to landfill than any other council in the country, and-furthermore-it generates power for 50,000 homes by incinerating the remainder. Hampshire built itself a new headquarters entirely without cost to the public purse, managed to halve its carbon footprint and is selling other Winchester office blocks that are redundant to its needs. It recently invested with the NHS in 10 state-of-the-art nursing homes, so it is no longer fined millions of pounds for being held responsible for bed blocking-another innovation whereby the council invested to save money. On top of all that, it has made £48 million in efficiency savings-I emphasise, real efficiency savings that can be counted-over the past two years.
"our approach in all this has been to avoid salami-slicing, and instead...re-design services, taking into account changes...made to performance reporting and inspection, planning and in other areas. We have also used that process to look at the best way of focusing on delivery of key priorities for the district, cutting out that which might be seen as lower priority."
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