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On the question of putting salaries above £58,000 into the public domain, the point made by my right hon. Friend the Member for Don Valley (Caroline Flint) ought to be pursued. If the Secretary of State is right, and he encourages local authorities to put more and more services out to the private sector, to the voluntary sector and to social enterprise, he will find that fewer people on those salaries are employed in the local authority sector. Somebody with responsibility for a service might be "TUPE'd" outwith that service to the private sector or to a social enterprise, in which case his transparency will therefore decline. So, when services are contracted out, could the requirement for transparency about salaries of more than £58,000 be transferred as well, and applied to contractors across the piece? That would be a way forward for the Secretary of State, and his Cabinet colleagues might like to look at it as a good example of transparency in practice.
The figures on Sheffield are misleading. The figures that have been quoted are for those redundancies that have been announced so far. Many vacancies in Sheffield are being held unfilled, and they are going to affect services. We know of several hundred posts that will not be filled by one means or other, and we also suspect that the Lib-Dem administration there is trying to delay and avoid decisions, waiting to pass them on to the new Labour administration that will take office in May. The budget has not yet been finalised, however, so no one can quote a figure of 250. Several hundred jobs are likely to be lost as a result of the budget-many times the figure given today.
There are real problems with the settlement, but the fundamental question that comes across from local councils and the Local Government Association is, "Why are the cuts front-loaded?" Can the Government please provide an explanation? That fundamental problem is causing chaos in local authorities and massive cuts to services throughout the country.
Bob Blackman (Harrow East) (Con): We meet today to review the local government settlement, and no doubt councils throughout the country are looking at their budgets, examining how much they are going to spend and making local decisions. We have at last started to hear from Opposition Front Benchers the recognition that reductions in public expenditure would have happened regardless of which party won the last general election. It has been a long time coming. We have been waiting for that view to creep forward, and slowly but surely the recognition is dawning that reductions would have had to be made regardless of who won the election.
We have inherited a legacy: local government council tax has doubled, but services have not really improved at all. Under the Labour Government, there was a transfer of responsibility to local government but a transfer of funding to the council tax, and that forced local people to pay for those services, which were not really delivered.
Authorities were also inspected and monitored to the absolute maximum, and part and parcel of the settlement before us is a reduction in that monitoring and inspection, all of which can be translated directly into savings that local authorities can make.
Charlie Elphicke: Does my hon. Friend agree that, extraordinarily, all that monitoring and inspection never seemed to include the over-inflated salaries of chief executives or the ridiculous pay-offs that occurred?
Bob Blackman: I thank my hon. Friend for that intervention, which refers to another thing that took place under the Labour Government. In all those organisations, pay is determined from the top, so as chief executive pay has rocketed, so has senior pay, while the large numbers of people who work for local authorities and do a brilliant job are paid relatively small amounts of money. There is no doubt, however, that the pay of middle management and senior management exploded, and I applaud the Secretary of State's decision to publish the figures so that the public can see what type of jobs are involved.
We also saw an explosion in the creation of non-jobs, each of which required administrative support, departments and offices, all of which are costs to the taxpayer, specifically the council tax payer. We had a multitude of different grant regimes and ring-fencing so that if local authorities wanted to take decisions, they could not. I therefore welcome the merger of the different grant regimes and the removal of ring-fencing, which allows for local decision making at the right sort of level.
What Labour did was not all bad. The decision to tell local authorities what level of funding they were getting for three years was a good thing because it allowed them to plan ahead. I hope that in future times the settlement from the Front Bench will be offered not just for three years but for four or five years so that there is certainty for local government in planning ahead.
Henry Smith: Does my hon. Friend think that as well as certainty in terms of the amounts received by local authorities, it is also important that there is transparency as regards the formula for the way that those settlements are decided?
Bob Blackman: My hon. Friend anticipates a matter that I was going to come to later. The outdated Barnett formula, which has transferred money to all parts of the country with no transparency whatsoever, must go and be replaced with a formula that delivers money on a fair and transparent basis that we can all see and understand. Even Lord Barnett himself cannot believe that his formula, which has existed for some 40 years, was not removed or transformed under 13 years of Labour Government, but they did not do it. That is one of the things that has to go.
We should deal with issues relating to the front-loading of reductions in expenditure. The reality is that the Government are having to deal with a deficit inherited from the Labour Government. We get maximum benefit from making public expenditure reductions early because we get four or five years-worth of reductions as a result. That is precisely the reason for doing it.
James Morris: As the right hon. Member for Don Valley (Caroline Flint) said, Labour was committed to reducing the structural deficit in four years, which implied that 20% cuts in public expenditure would have been applied to local government. However, we did not hear a single thing from the Opposition about what they would have cut.
Bob Blackman: Indeed; my hon. Friend makes a fair point. We have heard the starting point of the apology and a little about what Labour would have done, but we do not know the detail. If the result of the election had been somewhat different, we would probably be arguing about money around the margins as regards the expenditure reductions.
I ask Front Benchers to consider the area cost adjustment. That is quite a serious issue for London and areas of deprivation, where higher costs are incurred. It appears that the area cost adjustment has not been dealt with reasonably in this settlement, and that needs to be looked at again. There are parts of the country where higher costs apply, and that is particularly true in London.
Capitalisation is just putting off paying today until tomorrow and doing it on a deferred basis. It means having to borrow or spend money on capital that could otherwise be employed. It is a wasted opportunity and the wrong way of dealing with redundancies. If councils wish to make redundancies, they should recognise that they will make savings on their revenue budget and they should use that budget to pay for the costs of those redundancies, not defer them through the capital programmes.
I applaud this Government for introducing the pupil premium. However, it will be equally applied across the country, and there are higher costs in London. Surely it must be right that in high-cost areas we increase the premium per pupil to recognise that fact. I ask Front Benchers to consider that.
We need to look at the data that are used to formulate the grant settlements. Certainly in London, those data are hopelessly out of date and inaccurate and therefore money is transferred in an unfair way. That has been true for many years, and I hope that we can put it right.
I will talk about two local authorities that I know well. The first is the London borough of Harrow, which has at last received a reasonable settlement from central Government. It is the third best in London and the 23rd best in the country. The Labour council that came in after the election inherited a transformation programme that reduces costs and safeguards services. We await its budget decisions. It should be satisfied with the settlement, after years of poor settlements from a Labour Government. In London, 27 of the 32 boroughs were on the floor under the Labour Government, receiving below inflation increases year after year. London has had to put up with draconian settlements before, and it knows how to deal with them.
The second is the London borough of Brent, where the Labour council inherited a transformation programme that would have saved £100 million over four years. Instead, it has decided to close six libraries and all the day care centres, to slash the voluntary sector programme, and to decimate services for the weak and vulnerable. That is a political decision. I suspect that that is precisely what is going on all over the country. Certain people are making decisions to close libraries, day care centres and other centres that affect the weak and vulnerable in advance of the Localism Bill, which will give local communities the opportunity to take them over and run them.
My hon. Friend is talking about London, but does he agree that what he describes is mirrored outside London? The hon. Member for Sheffield
South East (Mr Betts) spoke about areas that are deprived and hard-hit. Great Yarmouth, which is one of the most deprived areas in the country and is the hardest hit by these cuts, has said that it can deal with this situation without it affecting front-line services. It is doing so through shared services, thereby proving that this work can be done by councils that are prepared to be positive and think outside the box.
Bob Blackman: My hon. Friend makes a good point. The reality is that the councils that planned ahead, knowing that reductions would take place, however draconian, are coping best. The councils that put their heads in the sand and said that it would never happen are being caught out. They are now being called to account. If councils have not planned ahead, they will suffer.
Heidi Alexander (Lewisham East) (Lab): Like the hon. Gentleman, I represent a London constituency. My local authority faces cuts of £87 million over the next four years, out of a budget of £271 million. It is finding that difficult, having decided to protect care for the elderly and child protection, which amount to £109 million of the budget. It is a disgrace for him to suggest that it is a political choice for councils to look at other front-line services. Does he not agree that the scope for finding savings is limited, should councils choose to protect essential services for the vulnerable?
Bob Blackman: I thank the hon. Lady for that intervention. It leads me on to my menu of what councils should do. Have they eliminated unnecessary monitoring? Have they eliminated duplication and multiple handling of applications for grants and other such services? Have they reviewed senior officer pay? Have they co-operated with other local authorities to reduce costs by combining back-office services? Have they cut their communications budgets, or have they chosen to send out publications to the community on a regular basis? Have they removed vacant posts that are unnecessary? Have they rationalised their office space and found office space that is no longer required? Have they taken their efficiency savings seriously and delivered them year after year, or have they continued on the same basis as before? Have they got into smarter procurement and come together with other local authorities to use their buying power to reduce their costs? Have they considered a long-term plan anticipating all the reductions? If authorities have done all those things and still have problems, then it is right that they approach the Secretary of State for help and advice on how to construct their budget at local level, but not until then.
This Government and our Front-Bench team have produced a set of figures and budget proposals that can be supported and that will be recognised in the years to come as a dramatic step forward in ensuring that people get proper value for money in the local services that are delivered to them. I ask that we consider how more money can be raised locally through the transitional business rates and in other such ways, and I ask that we consider how to deal with deprivation in future. It is a disgrace that has gone on for far too long that the deprived areas of the country have consumed more and more money, yet continued to be the deprived areas. That cannot be right, and we have to put it right.
I also urge Ministers to continue the process of helping councils to freeze council tax not just for one or two years but on a continuous basis, so that hard-pressed tax payers do not suffer any penalty as a result of the actions of the councils that operate their services. We can all applaud our Front-Bench team for the work that they are doing.
Steve Rotheram (Liverpool, Walton) (Lab): When I spoke on local government funding in December, Government Members accused me of pre-empting the final settlement and of scaremongering. They superciliously lauded my passion but suggested that I await the Government's definitive announcements before jumping to conclusions regarding how Liverpool would fare. Well, I have done that.
The formula has been decided, the figures have been published, the maths has been done, and I repeat vociferously now what I said back then. Not only will the scale, pace and nature of these draconian measures imposed in the name of fiscal restraint have a devastating impact on Liverpool, but in the wider scheme of things, the cuts will prove an utterly false economy.
I stated in December that Liverpool would be disproportionately hit, and I repeat that claim today. I should declare at this point that I am still a sitting Liverpool city councillor, at least until May. At Prime Minister's questions earlier, a Tory Member had the temerity to say "Shame on Labour councillors" when the Prime Minister tried to blame Liverpool for his big society failures in the city. It did not take long for the malevolent Tories to revert to type and put the boot in to Liverpool, did it?
That comment shows the Conservatives' lack of understanding, because it is not just Labour in Liverpool that is saying that the Tory cuts will savage our services. The whole council-Labour, Green and Liberal and even the Liberal Democrats, who used to run the council-is up in arms. The books are there for all to see, so I am happy to invite the Secretary of State to come and have a look at them to see the dilemma that he alone has created. We in Liverpool now know that we will have to save a budget-busting £92 million in the financial year ahead, and the council has very little, if any, room for manoeuvre. For all its valiant efforts to balance the books, both jobs and front-line services are to go. As we have heard, some 1,500 redundancies are predicted over the next two years.
Before hon. Members shout me down, I fully acknowledge that Liverpool is not alone. Local authorities up and down the country are facing crippling cuts, but I shall explain what is particularly galling about the situation in which Liverpool city council finds itself. In December, the Minister for Housing and Local Government was reported as pontificating:
"If councils share back office services, join forces to procure, cut out the crazy non-jobs and root out the wild over-spends then they can protect frontline services."
The implication was clear: profligate and irresponsible local authorities needed to get their act together. The Minister was preaching to the converted in Liverpool. Having long been tightening its purse strings, it has achieved a total of £70.4 million of savings in the last three years, about £40 million of which was saved in the current financial year under a Labour-controlled council.
How Liverpool managed that might be of interest to the hon. Member for Harrow East (Bob Blackman). Liverpool did it by making proven efficiency savings in management, administration and back office services, and through economies of scale achieved by sharing, outsourcing and collaboration. Simultaneously, the authority has managed to reduce and stabilise council tax. In fact, our approach was commended in this very House by the Secretary of State.
Liverpool has been there and done all that, and is both able and willing to continue in the same vein, but it cannot perform miracles. That is why the Prime Minister was wrong today, and why Liverpool city council was absolutely right last week to refuse any longer to prop up the Government's sham, big society agenda, which was always a cover for a cynical exploitation of community and voluntary tradition to obtain public services on the cheap.
What is most objectionable is the way in which Ministers have banged on about protecting the most vulnerable communities, believing, it seems, as my right hon. Friend the Member for Don Valley (Caroline Flint) says, that if they say something often enough, people will eventually believe it to be true. Well, not in Liverpool they won't.
Our city is a city transformed. We are a great city do a business in, and once again I make the offer to the Tories to hold their party conference in Liverpool so that they can see what a great city it is first hand, just as the Lib Dems did last year and the Labour party will do this year.
Andrew Bridgen (North West Leicestershire) (Con): The hon. Gentleman has told the House of his scepticism in respect of the future of the big society. However, does he believe that the previous Government's policy of big government has served either the people of Liverpool or this country very well, considering the devastating economic landscape and legacy that they left for the coalition Government?
Steve Rotheram: Dear me. It's the same old mantra, isn't it? We have had the debate on the deficit and the argument about whose responsibility it was. The hon. Gentleman will say one thing-I think Government Members get brownie points if they stand up and mention £120 million, and the Whips must be going, "That's a good girl, that's a good lad. They'll go far in the Government"-but I am not going to rehearse the same argument today. That is why I confined my argument and contribution specifically to what is happening in my city. The Government cannot keep cutting without social consequences. My contention is that the formula that is being used is unfair to Liverpool, and the cumulative effect will be devastating.
I have explained the transformation of our city, and I hate to acknowledge this, but it is common knowledge: Liverpool is the most deprived local authority in England. I wish it was not. Seventy per cent. of its areas are classed as falling within the most deprived 10% nationally in terms of health and disability, and 57% of the population has been assessed as "employment deprived".
What is more, the city relies disproportionately heavily on the now-threatened public sector. If that does not make Liverpool extremely vulnerable in these difficult times, I do not know what does, yet the Government persist in hiding behind averages. The Government told
us earlier that the average spending power reduction is around 4.4% nationally. Okay. I will state now-without, by the way, the authority of my local council-that we will accept the national average cut. We will take that now. If we are all in this together, we will take our fair share of the pain, but Liverpool is faced with a maximum spending cut of almost 9%, even after receipt of the transition grant moneys.
It is absurd that while the most deprived community in the country faces the maximum level of spending reduction, the least deprived, Wokingham, faces a cut of just 0.63%. The Government can bandy around per capita figures until they are blue in the face, but the bottom line is that the areas facing the biggest spending squeezes-Liverpool, Manchester and Knowsley-are the poorest. So much for protecting the vulnerable. And so much for facts-not only did the Secretary of State have the audacity to claim on television recently that spending power in Liverpool would not be affected any more adversely than anywhere else, but he said that funding for supported people would be "entirely protected". That simply is not the case. Liverpool city council has advised that its supporting people funding has been slashed by 30%. But why let facts get in the way of an unsound policy and a soundbite?
Despite all this, Liverpool city council has sought to work with Ministers in a bid to comply with Government diktat. In a spirit of collaboration and compromise-allegedly so de rigueur with the Tory-led Government-the council has requested flexibility on two specific fronts. First, we are asking the Government to grant us capitalisation permission to help to meet the estimated redundancy costs of £45 million. The council does not hold out much hope, however. As we heard earlier, capitalisation permissions have been capped at £200 million for the whole of England, and a recent letter circulated to local authority leaders held out little promise of a relaxation in that limit. That leaves Liverpool city council in the invidious position of being unable to afford to keep employees on or to let them go. Believe me, it is with a heavy heart that we are making these proposed redundancies-it is not a political game.
Secondly, the council asked Ministers to rethink and recalibrate the front-loaded spending cuts, allowing it to spread them less abruptly and less painfully over the four-year spending review period. The Government are not prepared to budge on this, apparently. Instead, they will magnanimously reduce the maximum spending power cut from 8.9% to 8.8%. Thanks for the crumbs. This is a parlous state of affairs. Those who challenge the severity of local government cuts are the ones who are deficit deceivers. The so-called localism agenda is looking less and less like an experiment in local autonomy and more and more like a monumental exercise in fiscal buck passing-a wily move, but transparent.
It is becoming increasingly apparent that, for all the slick rhetoric, this is not a reconstructed Tory party, but the same old nasty Tories with a Lib Dem human shield. This Government do not give two hoots about poverty, disadvantage or inequality.
The Secretary of State has set out our position in relation to debt and the public finances. We all know that we have a structural deficit of £109 billion, and we all know how much interest per day is being paid-£120 million. The hon. Member for Liverpool, Walton (Steve Rotheram) made an impassioned plea on behalf of his city and said that we had had the discussion about the deficit and we should now move on. But that is the problem: we have had the discussion about the deficit and now we are seeing the consequence of years of overspending. We cannot get away from it. I wish we could. I did not stand for election and get sent to this House to be part of the difficult decisions that we have made. All of us as politicians love to hand out lollipops, kiss babies, cut the ribbon at the fête and do the nice things, but the sad reality is that we also have to take the difficult decisions when the nation is in the most difficult position it has been in for years.
Mr Speaker, you will recall that some years ago you sat on Lambeth council when it was under Labour control. At that time, you were a powerful advocate for the Conservative party. After your period in office, I was elected when it was a hung council. You were not able to influence events dramatically in Lambeth as you were in a minority under a majority Labour administration. In a hung situation, things were much more discursive-
Mr Speaker: Order. May I say very gently to the hon. Gentleman that although I am sure his advertisement of my curriculum vitae is well intentioned, it is on the whole undesirable for right hon. or hon. Members to invoke the past positions or experience of the Chair in support of their own arguments. I feel sure that he is dextrous enough to advance his own argument without any assistance from me.
Moving quickly to my own history, when I was elected in 1994 we had a hung council. We had a mess to sort out. All three parties worked positively together to do that and, frankly, to look at how to un-bankrupt a council that by then had £1 billion of debt. Difficult decisions were made. The emphasis was very much on ensuring better front-line services. My experience was that although we made difficult rebalancing decisions, we were able not only to protect front-line services but to improve them quite dramatically. People on the doorstep were saying that they were now getting front-line services, as opposed to excessive bureaucracy and-I regret to say in the case of Lambeth in those times-in some cases corruption, so positive changes can be made when difficult decisions are taken and things are reworked.
One thing that I particularly welcome is the council tax position. Council tax has been increased in the last decade or so-I believe that it has doubled-to the current level of £1,439. That is an awful lot of money and a massive increase. We know that, because of the deficit, it is not possible to increase local government spending on the grant settlement side of things. We also know that people have been flayed alive for over a decade, given the amount of council tax that they have been asked to pay. I therefore particularly welcome the Government's decision to work positively with local authorities to freeze council tax. That is important to constituents such as mine who live in deprived
circumstances. Many of them are elderly, and many are poor. Stopping council tax rises benefits them massively, particularly those on fixed incomes. Therefore, on the one hand, we have a set of tough decisions aimed at ensuring that we make those efficiencies, and on the other, we have managed to stop council tax rising, which is important.
I totally agree with the Secretary of State when he says that we need smarter procurement. We are doing that in Kent, with the Kent Buying Consortium. He has said that we need better asset management, too. Many people are more than aware of the position in Newham, where there is a new, flashy building that has cost an awful lot of money. We have to be much more cute about using asset management. We have the streamlining and merging of operations, and in Dover and Shepway we increasingly have shared services, so that there will be a shared chief executive and shared back office. That agenda has been embraced in Kent, which is important. It is also important to consider how best to deliver services. Suffolk county council has at times been a bit over the top with its chief officers, but it has led the way on how services can be run, with care homes operating as social enterprises. In my constituency, I am promoting the case for a care home in Deal to be transferred to a community interest company when the local authority feels unable to continue running it.
That is the right way forward. I do not think that this is a debate in which we should necessarily be partisan or throw rocks at each other, because we know the financial position. I could quote the figures showing that Labour was going to cut the budget by £5 billion-that was in Labour's pre-Budget report-and all the rest of it, but would that help matters? No, because we know the position of the nation's finances.
Andrew Bridgen: Does my hon. Friend agree that the fact that my local council in North West Leicestershire is facing budget cuts of 10% somewhat undermines the complaints made by the previous speaker, the hon. Member for Liverpool, Walton (Steve Rotheram), about Liverpool's budget being cut by 9%? Does that not prove that we are indeed all in this together? We all know who put us in it, and we should not let them forget it for one moment.
Charlie Elphicke: My hon. Friend makes a fair point. Just as when all parties in Lambeth worked together positively in the local authority's interest, it would be best if we all worked together in the national interest to ensure that all councillors, from all parties, did not try to score political points, which we have seen far too much of lately, but instead worked positively, thinking not about advancement, aggrandisement or the headlines that they might be able to get, but about their constituents. At the end of the day, we were all sent here by our constituents-whether in Liverpool, which is seeking a bit of attention, or anywhere else, it does not matter. All local authority leaders have a responsibility to give their constituents the best possible services and assistance in these extraordinarily difficult conditions.
Hazel Blears (Salford and Eccles) (Lab):
I shall keep my remarks brief, because I know that many Members want the debate to wind up. I shall have the opportunity
tomorrow afternoon to meet the Minister for Housing and Local Government together with my hon. Friends the Members for Manchester Central (Tony Lloyd) and for Blackley and Broughton (Graham Stringer). I can tell the Minister that I am looking forward enormously to looking him in the eye as I make my points on behalf of my community, which I feel incredibly strongly about.
Today, I have a terrible feeling of déjà-vu. When I came into the House 13 years ago, it was at the end of almost 20 years of Conservative Government. Before that, I was a local councillor in my community for eight years. I had spent every one of those eight years as a councillor under a Tory Government cutting budgets year on year. When I came here, our public services were on their knees. Two of my inner-city wards had 50% male unemployment, and we had 70% youth unemployment. My local council had been absolutely decimated. That was the reality of being in local government under a Tory Government, and I am sorry to say that it feels as though history might be about to repeat itself. All the progress that we have made over the past 10 to 15 years is in the process of being unravelled; we are going to go backwards instead of forwards.
Recently, I had a meeting with my chief constable, Peter Fahy, to talk about the police cuts, which we discussed here earlier today. I have a huge amount of time for him; he is an extremely good officer. He told me that what worried him most was that we would go backwards and undo all the progress that had been made. He was particularly worried that the advances that we have made for young people would be undone, because young people are the foundations for the future.
I put it to the Secretary of State that the cuts that he is imposing are unfair. They are unfairly targeted at the poorest communities, and they will undermine the foundations that we have built for the future. The education results in my city are now immeasurably improved, crime has gone down dramatically, and housing and regeneration have gone forward apace. We have Media City at Salford Quays, and we have the opportunity to build a fantastic future. This year, however, we are facing £47 million of cuts in Salford. Next year, it will be £48 million, and the year after, it will be £55 million. Those are not political choices. I do not know how the hon. Member for Harrow East (Bob Blackman) can stand up in the Chamber and make the outrageous claim that councillors who are doing their best to protect their communities are making deliberate, unnecessary political choices to cut services. That is an insult not only to Labour councillors but to Conservative and Liberal Democrat councillors. I have been a councillor, and I know how hard it is to make the kind of choices that are having to be made now.
Chris Leslie (Nottingham East) (Lab/Co-op): Does my right hon. Friend agree that some of these grant choices are not simply about fairness? For example, some of the settlements for the fire and rescue authorities could be very dangerous. In Nottinghamshire, the number of fire tender appliances is apparently going to be reduced from 36 to 30. These funding decisions are creating really serious risks.
Hazel Blears: My hon. Friend is absolutely right; we share the same concerns. The Greater Manchester fire and rescue authority has had to make even further cuts because the figures changed halfway through its budget process.
I want to make just a few observations about the position that Salford is in. The Chancellor of the Exchequer said, "We will not balance the books on the backs of the poor." However, Salford is one of the poorest authorities. We are in a consultation process with our community, and I spoke to my leader this afternoon. We are looking at the possibility of having to close libraries and one of our sports centres, as well as taking £1 million out of our youth service and £500,000 out of adult social care. Unlike many local authorities, ours has said that it still wants to provide services to elderly people who have moderate, as well as critical, needs. That has always been a priority for Salford, but we are still going to have to take £500,000 out of that service. We will also have to make a 42% cut in the Connexions service. I want my youngsters to get the skills and to have the ambition to get those jobs in Media City, but how can they aspire to that kind of future if they do not have a proper careers guidance service?
We are having to cut the citizens advice bureaux by 15%-it is the minimum we can do, but we know that people will be out of work, as we are looking at losing 450 jobs in the city. People will have debts and will need advice, so what do we have to do? We have to cut the CAB and the 60-odd independent financial advisers that we funded through the financial inclusion fund, which is about to be slashed. The amount of advice left available will be absolutely minimal. Our voluntary organisations will have to be cut perhaps by 10% to 15%. Again, Salford council is really trying to make sure that it protects those voluntary organisations, but they cannot be immune from the cuts that the rest of the service has to take.
I mentioned area-based grants. I feel strongly about them because area-based grants were specifically directed at poor and deprived areas that had extra needs. The slashing of area-based grants has disproportionately affected those living in the poorest parts of our community. In Salford, it was 11% of our total budget, and much of that money was used to tackle crime and antisocial behaviour, to provide youth services and diversion schemes and to keep young people off the streets and make the community safer. All that is about to disappear.
I genuinely feel that these cuts are unfair, despite the Secretary of State's smoke and mirrors about spending power, his new definitions and all his obfuscation of the real situation. The cuts in spending power in his area are of less than 1% next year, yet we are looking at 15% cuts in Salford. For the area of the Leader of the House, the cuts are less than 1%; for the Home Secretary's area, less than 1%; for the Culture Secretary's, the Transport Secretary's and the Education Secretary's areas, less than 1%. These are some of the most affluent parts of the country. I believe that if cuts have to be made, which they do, they must be fair-but they are simply not fair.
I say to the Secretary of State that I have a huge amount of respect for the people of this country: they are not stupid; they understand that hard decisions have to be made, but they also have a well-developed sense of justice and fairness. They will see right through what the Secretary of State is doing. Transparency will come for the Tory party's actions; people will see right through them.
I commend the campaign launched in the Manchester Evening News. It is a massive campaign against the cuts, urging local people to sign a petition. The Manchester
Evening News is not a partisan paper; it represents people right across the conurbation. They, too, can see the unfairness. Nine of our 10 boroughs in Greater Manchester have cuts higher than the national average. The only borough that does not is in the constituency of the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell); that has a below-average amount of cuts. People across Greater Manchester-people in Rochdale, in Oldham and in places right across the area-know that these cuts are deeply unfair. I have no doubt that action will be taken at the ballot box in May.
My final point is about what else could be done. We heard a lot from the Secretary of State about community budgets. As he well knows, I started off my time in the Department with Total Place, which meant bringing together and pooling budgets, co-location, integrated services, systems engineering, and service redesign-all those things that Government Members have talked about. However, for major service redesign, time for planning is necessary-it cannot be done at the drop of a hat, because different skills and competences are involved and people might have to be made redundant. We have heard about the lack of capitalisation for that sort of project; it cannot be done all at once. I echo the points made by my hon. Friend the Member for Sheffield South East (Mr Betts), the Chairman of the Select Committee. Why are these cuts front loaded, which makes it so much more difficult to do the systems redesign that could result in efficiencies without the need for front-line cuts?
The Secretary of State will tell me otherwise, but I genuinely believe that the reason for having the cuts early on is that more freedom to manoeuvre-and to be more generous-will be possible in the two years leading up to the next general election. The Government will hope to reap the rewards from that. I hope that it is not the Secretary of State's intention to make a partisan political budget in this way. I would like some reassurance that he is trying to be fair rather than to seek political advantage. When we reach the two years before the election and we will have had these massively front-loaded cuts in the first two years, I will be amazed if we do not see the Secretary of State seeking some room for manoeuvre for electoral advantage.
Mr Pickles: I am grateful to the right hon. Lady who, as always, is giving a thoughtful speech. I can assure her absolutely that that it not the intention, and I can assure her absolutely that that is why we have put in extra protection for the most vulnerable.
Hazel Blears: I think that if the Secretary of State came to Salford-as the Minister for Housing and Local Government did recently-and said that he had given extra protection to the most vulnerable members of our community, he would receive the sort of typically robust Salford reply that I could not possibly use in the House.
Over the last couple of weeks, we have heard a great deal about the big society. Apparently Lord Wei is unable to do quite as much as he used to because he no longer has time to volunteer, which I thought was a wonderful irony. As the Secretary of State will know, I strongly support the underlying principles of involving
the community, devolving power and introducing more plurality to the provision of public services. However, as has been pointed out by Dame Elisabeth Hoodless of the Community Service Volunteers, Thomas Hughes-Hallett, chief executive of Marie Curie Cancer Care, Sir Stuart Etherington of the National Council for Voluntary Organisations, and Sir Stephen Bubb of the Association of Chief Executives of Voluntary Organisations-none of whom are partisan people-while the Government talk of the need to empower voluntary organisations and local communities, they are making massive, deep, draconian cuts in the voluntary sector. That simply does not add up. It is totally contradictory, and it is increasing the sense of cynicism and disempowerment that exists in our communities.
If the Government have any genuine commitment to giving people the power to change their own lives, they must recognise the total incoherence and inconsistency that lies at the heart of their so-called big society. This is not community action; it is do-it-yourself. The Government are telling people, "You are on your own, with no back-up and no ability to take on roles of this kind." I know that some Members genuinely support these principles, but I fear that, given the cuts that we are seeing, they are going absolutely nowhere except into the sand.
My final plea to the Government relates to community budgeting. For goodness sake, let us get on with it more quickly. We will be able to ameliorate some of the pain that our communities will feel only if we can re-engineer our services, pool the budgets, achieve the necessary co-location, and start to address many of our current problems. At present that programme is minimalist. I think we have been told that four areas in the country might adopt community budgeting. We know what happened with the four big society areas. I ask the Secretary of State to enable us to support many more areas, so that they can provide services in a new and, I believe, more integrated way that could lead to a transformation in the provision of local government services.
Before any funding announcements had been made, Somerset county council's leader announced to local people that he wished to make cuts amounting to £43 million. Then, in early January, he announced that he wished to make a further tranche of cuts amounting to £20 million. He said that he would close some libraries, cut bus subsidies, cut the community safety budget by 100%-which would mean the loss of our wonderful police community support officers-cut funds for the Duke of Edinburgh award and the youth clubs by nearly 100%, and cut arts funding and the voluntary sector by 100%. He also said that he would sell the county farms, which seemed ludicrous to me given that they provide a return of some 6% or 7%-more than could be obtained from any bank.
The leader of Somerset county council seems obsessed with the idea of clearing debt. He does not seem to understand that for most businesses it is quite all right
to have a mortgage or a loan. They know what the repayments will be, and they schedule them. There is nothing extraordinary about that. I do not think that I know a farmer or small business man who has saved up all his money before buying stock. Such people go to the bank and take out a loan. They know how long it will take them to repay the loan, and it is scheduled. They increase their assets, and tuck the money back into the business. That is what has happened over many years in Somerset under the Liberal Democrats.
The leader of Somerset county council has said that he wishes to make his cuts over three years rather than four, which strikes many people as a frantic attempt to clear debt. It is a bit like people paying off their mortgage or their car or fridge loan and realising that actually they do not have any money and they cannot buy food because they are so obsessed with clearing their debt.
Chris Leslie: The hon. Lady is making an important point about how politicians who are obsessed with debt reduction at the cost of everything else may well find themselves in jeopardy. Does that not remind her of the Chancellor of the Exchequer's attitude, who I think she is supporting?
Tessa Munt: I disagree, because the situation here is that the county council has £29 million in reserves, excluding the money attached to schools, yet we have a man who wishes to put aside £15 million for redundancies, which is going to decimate the council staff, and to make cuts over three years instead of four. If he was to reschedule his debt over four years, it would be a lot less difficult for people in Somerset. Happily, as a result of campaigning by local people, three libraries have been saved: Shepton Mallet, Glastonbury and Cheddar. However, the library in Highbridge, an area that probably needs a library more than any other because there are so few facilities in that town, is still under threat.
I approached one of the Secretary of State's Ministers because I wanted to understand. There is so much confusion among local people about what is actually involved, because there is one grant and another grant, and little bits of money get thrown back and forth in conversation, and nobody really understands what is happening. I asked the Minister in question to explain to me in simple terms the situation facing Somerset. In simple terms, this year-the year ending on 31 March-Somerset has £368 million to spend, and next year, starting on 1 April, it has £360 million. That is a difference of only £8 million in spending money, which amounts to 2%. Somerset has had a fantastic deal therefore, so I do not understand the obsession that this gentleman has. Moreover, the Government have been generous in granting £42 million in capital grants. That means we can fix the roads, which are in a shocking state, and do something about school buildings. As far as I can see, the county is £20 million better off than it ever has been, and, as I understand it, the capital grant is cash, and that £42 million is about £41 million more than anyone ever expected to have.
As far as I can see therefore, Somerset has an increase in funding from central Government, and that funding is relatively generous in the current economic circumstances. I therefore do not understand why the county council leader is going to announce a series of cuts next Wednesday. If those cuts proceed and he makes those announcements
on Wednesday, I will ask the Secretary of State to give me an appointment so I can come along with the leader of Somerset county council to ask that gentleman to explain himself and his actions.
Mr Andy Slaughter (Hammersmith) (Lab): Hammersmith and Fulham council is closing nine of its 15 children centres this year, and by doing so it will generate about £2 million in savings. That is part of the £6 million savings in children's services, which in turn are part of the £13 million savings in social services, which in turn are part of the £27 million that the council aims to save in the coming financial year. The total over the three years is £65 million, or about a third of its budget.
Because of the policies the Secretary of State is pursuing, many councils are having to make unimaginable cuts of this kind. I want to focus on two points in respect of Hammersmith and Fulham council. First, in making those very difficult decisions it has chosen to target the most vulnerable people, and the services that all parties represented in this House say that they wish to be preserved. Secondly, it maintains a charade, with which the Secretary of State has colluded and continues collude, that it is doing this in a new way-that these are new cuts that will not affect front-line services.
In particular-this picks up the point just made by the hon. Member for Wells (Tessa Munt)-the council says that it will pay off debt, and in that way generate revenue income. It says that it will merge back-office services and in that way avoid affecting front-line services. I will break the spell immediately by saying that even if those two ideas-the merger and the disposals to pay off debt-are both successful, which is by no means certain, the total amount of money generated would be about £1 million, or 4% of the total cuts. That is what we are being led to believe is the new way of making cuts.
Before I came to this debate, I had two meetings this afternoon about Sure Start. The first was of an all-party group, to which the Minister with responsibility for children came to speak. He is an honourable man, as well as being an hon. Gentleman, and I believed what he said, which is what I have heard all the Education Ministers repeat. They believe that there is sufficient money to maintain the network of children's centres and that there is no need to attack their budgets, particularly the phase 1 centres that serve the most vulnerable groups.
That appears to be Government policy, but this is what is happening in Hammersmith and Fulham. First, the closure of the nine centres was announced between Christmas and new year-on page 34 of a report called "Family Support". Secondly, when that report came up for decision-by that time, thanks to the Daily Mirror and other great organs of state, a lot of the local population had been alerted to the situation-the council said, "You've misunderstood what we're doing. We're not closing any children's centres," but it then proceeded to vote through, on 10 January, the 50% budget cut that meant that those centres had to close. Having made that decision, it then began a consultation process-but that process identifies phase 1 children's centres, the budget for which is to go down from £473,000 to £19,000. Threats were made to the staff, who were not
informed before the closure of their centres was announced in the press. Heads of centres were told that they could not talk to me, or even to the Government, about what was happening.
To her credit, the Minister of State, Department for Education, the hon. Member for Brent Central (Sarah Teather), did say during a Westminster Hall debate that she was concerned about, and was monitoring, what was happening in Hammersmith and Fulham. If the Government want to hold their line on Sure Start, they need to address the situation in Hammersmith and Fulham. It is not just Sure Start centres; youth clubs are closing too. I received a deputation representing 1,000 young people who use a youth club just outside my constituency that is closing, and I am told that all but one of the youth centres will close. Council estates are being demolished.
I went to a meeting at an old people's home last Friday where, in order to raise £250,000, the air rights over the car park are being sold to a private school next door, so that no light will reach the old people's home. Some of those old people spend 100% of their time in that home. This is what is happening in a Conservative-controlled council in London at the moment. This is the reality of the "painless" cuts.
Those are the things that we do not hear about in Hammersmith and Fulham. What about the things we do hear about? What about the paying off of debt-that prudent way of reducing debt? That happened on Monday, when, at a meeting of the council's cabinet-I believe that the Chairman of the Select Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), referred to this earlier-the disposal of nine community buildings was agreed to. Those buildings include four community centres used by more than 100 voluntary groups, all of which will be made homeless, and alternative provision will not be made for them. Those buildings include Palingswick house, an imposing building in central Hammersmith in which 22 voluntary groups occupy space. My right hon. Friend the shadow Secretary of State alluded to one of those earlier: the Afghan refugee group.
Because councils have to produce equality impact assessments when they are booting voluntary organisations out on to the street, Hammersmith and Fulham did that. It produced one for the Iranian Association, which caters mainly for refugees from the oppressive regime in Tehran: the Iranian Association was told that the alternative provision was to go to the Iranian embassy. The Kurdish Association for Refugees is also based in the building, and runs not only a cultural advice centre but a museum-one promoted by Boris Johnson on his tourist trail of London. It was told that the alternative to being booted out on to the street was to go to an organisation for the south Asian population based somewhere in east London. The Afghan refugee association was told that there were two alternative sources of provision for Afghan refugees in London, one was an Afghan restaurant and the other-as my right hon. Friend the Member for Don Valley (Caroline Flint) has already said-was the southern Afghan club, for the promotion of Afghan hounds. That is how my local community in Hammersmith is being treated by a Conservative council.
Three other community centres all came up with viable business plans that would have allowed them to continue operating from their community centres and pay a commercial rent, which would have meant that over a period of two or three years, the council would not have lost money. Without listening any further to those ideas the council voted through the proposal, and all these buildings will be sold off to produce an income of about £500,000 a year. The opportunity cost for the tens of thousands of people who will no longer have those facilities available to them, including the elderly people and the 750 kids from deprived backgrounds who go to dancing classes at one of these places, is unimaginable. But this is what the council is proud of.
The other thing that the council is proud of is the merger with Westminster city council and Kensington and Chelsea borough council, which was announced yesterday. I alluded in an earlier intervention to the Secretary of State's claim last October-he associated himself with this claim-that the move would save £100 million. When the report was published yesterday, it said that in the dim and distant future-no detail was provided-this would save about £34 million between the three councils. That is already only a third of the sum that was claimed some two to three months ago. The actual quantified savings for next year, between the three councils, was less than £3 million, and the actual sum for Hammersmith and Fulham council was £500,000. That is the big new idea. [Interruption.] I hear the hon. Member for Ealing Central and Acton (Angie Bray) making a sedentary comment. She represents my previous seat, and I always give her credence. She is absolutely right that £500,000 of genuine saving of back-office cost is well worth having, but it is not £27 million, £10 million or £100 million.
That sum is worth having, save for the fact that what those merger proposals envisage is not what hon. Members would like to hear-which is that the savings would come from economies of scale, procurement, and other such administrative matters. We would all support that, but instead the proposals are about creating a new entity that is not Hammersmith and Fulham, not Kensington and Chelsea, and not Westminster. It will be entirely unaccountable to the citizens of any of those boroughs, and it absolutely flies in the face of devolution and localism. No proper risk assessment has been done of the proposal, and £20 million of the notional £35 million will come from cuts in social services. I hate to think about the number of baby Ps that there will be, and the number of elderly people who will be put at risk as a result of these crazy, ill-thought-out and half-baked proposals.
There is no accountability in the arrangement. Two of the authorities have traditionally been Conservative and one has traditionally been Labour. The clear intention is to bind the hands of that authority, so that when it returns to Labour control, as it will doubtless do in three years' time, it will no longer have jurisdiction over its own spending, because that will be centred in a holding company over which none of the individual councillors has control. Is that really the future of localism in this country? That is the brave new world that the Secretary of State's favourite council has in store for us.
Mr Slaughter: The Secretary of State may shake his head, but he is very welcome to intervene. He has called the council the apple of his eye, but it is a rotten apple of his misty eye. He needs to have a closer look and clear his vision a little.
The next time people hear about Hammersmith and Fulham council they should think not about the white heat of efficient local government, but about those Sure Start buildings that now stand empty, and the community buildings being sold to property developers or used for pet Government schemes such as Toby Young's free school. They should think, as my right hon. Friend the Member for Don Valley (Caroline Flint) has said, about the old mate of the chief executive being paid a total of £700,000 over three years to manage an arm's length management organisation at the council. They should think of the six chief officers who are paid more than £150,000 a year and the £250,000 they wasted because they could not be bothered to turn off the lights at the town hall for five years.
That is the reality of Tory local government. They do not care when they waste money, and they take pride in cutting services such as the nine Sure Start centres. The second meeting I went to this afternoon was with the heads of those Sure Start organisations, who met here to campaign to keep open one of the Labour Government's great achievements. The Conservatives say they are committed to Sure Start, but the reality of Tory local government on the ground means that those services will be shut down before we can draw breath.
Tony Lloyd (Manchester Central) (Lab): I have spent almost my whole political life not wanting to personalise politics, but I must say to the Secretary of State that he should be ashamed of himself for losing the battle in the Cabinet and the spending review so that local government has become the victim of his incompetence. He should be ashamed of himself because the settlement is divisive within the local government family. It will inflict damage on vulnerable authorities while, as we have heard from my hon. Friend the Member for Hammersmith (Mr Slaughter) and the hon. Member for Wells (Tessa Munt), some local authorities are feather-bedded and treated with kid gloves. This political decision of his is an outrage because in cities such as mine it will be the most vulnerable people who suffer, as my right hon. Friends the Members for Wythenshawe and Sale East (Paul Goggins) and for Salford and Eccles (Hazel Blears) and my hon. Friend the Member for Liverpool, Walton (Steve Rotheram) have pointed out. [ Interruption. ]
The Secretary of State chunters from a sedentary position. The reality is that, like previous Tory Secretaries of State for local government, he has no compassion or consideration for those who will lose their home help or for the children who will lose the life chances that people in his constituency will take for granted. What we have had from him and his Ministers is a campaign of ridiculous disinformation such as the nonsense that has been repeated by Tory Members today about £150,000 going on statues in Manchester or about the Twitter tsar who was an invention of the Minister for Housing and Local Government. [ Interruption. ] The Minister says something from a sedentary position that I cannot hear, but I am happy to give way to him if he wants to
make his point. [ Interruption. ] He indicates that he will reply when he winds up. No doubt that will allow him to peddle his ridiculous fantasies again.
Tony Lloyd: I have checked and there is a communications officer, whom, the House might be interested to know, was asked to have competence in new technologies such as Twitter and is equivalent to a number of people in the Minister's Department who have the same role, the same salary band and the same competences. His Twitter tsars massively outgun Manchester's ability to communicate. He should think very carefully, because trading insults at this level does nothing for the people who are going to lose adult social services. [ Interruption. ] Does the Secretary of State want to intervene?
Mr Pickles: Some of the problems that the hon. Gentleman is talking about relate to the working neighbourhoods fund, which was cut by the Labour party. Where was he then? Why was he not lecturing the Labour party about those cuts? He criticises us but he was silent on his constituents' behalf then.
Tony Lloyd: I invite the Secretary of State to come to my constituency any day of his choosing. We will walk around and talk to local people, and we will ask them about the record of local government under a Labour Government and under previous Conservative Governments. As my right hon. Friend the Member for Salford and Eccles said, when the Labour Government came into power in 1997, Manchester had seen services consistently destroyed. They were fragile and vulnerable. Under a Labour Government there was an improvement in standards in education, health-a much more difficult task-housing and crime and disorder. All those improvements strengthened our communities and put the cement back into our society.
That Secretary of State, who chunters away to his friends, is putting all that at risk and he is doing so deliberately. There was choice. There was choice in the Budget process that he lost with his friends in Cabinet. There was choice when he decided to put money into local authorities such as Somerset, and not to put money into local authorities such as Manchester. That is a particularly cruel cycle of choice and a cruel deception.
The Prime Minister stood at the Dispatch Box earlier today and told the House that he was guaranteeing that Sure Start centres would continue to operate. Let us talk about the reality in a city such as Manchester, which is having to cut children's services by some 25%. It has had to say that it will give up control of those Sure Start centres, and it hopes that the running of them will be taken over by the voluntary sector or possibly schools. There is no guarantee for the young people in Manchester that the Sure Start centres, which are praised by everyone on the Government Benches, will continue to operate.
My hon. Friend the Member for Hammersmith says the political choice of the Tory council is to cut the Sure Start centres. In Manchester, a Labour council has to put those Sure Start centres at risk because of the actions of the Secretary of State and his friends.
Charlie Elphicke: The hon. Gentleman talks of political choices. Yes, we can talk about statues, Twitter tsars, creative directors and the junket in the south of France, but the key political choice in Manchester is to axe 2,000 jobs while there is £100 million in reserves. How can the hon. Gentleman justify that?
Tony Lloyd: I think the hon. Gentleman is either a little hard of hearing or not too fast at understanding. My right hon. Friend the Member for Wythenshawe and Sale East made the point earlier. Those balances that the Secretary of State and his Ministers have traded and which they said are there as some luxury cushion are, in the case of Manchester, allocated money.
Tony Lloyd: The £64 million that will now be allocated will be for the redundancies that the Government are forcing the council to make. That is the answer to the hon. Member for Dover (Charlie Elphicke). It is a disgrace that Manchester must spend such a huge amount of money making good local government workers redundant. That is the responsibility of the Secretary of State. As a result, the things that the Housing Minister described as being merely earmarked will now not go ahead, so Manchester will lose provision and facilities because of the Government's decision.
Charlie Elphicke: The hon. Gentleman speaks of the £64 million earmarked for redundancies. What we did in Lambeth, what happens in most authorities, and what the Government are doing, is to examine the possibility of natural wastage and introduce a slower programme of voluntary redundancies, which would not mean as great a shock as the hon. Gentleman is talking about.
Tony Lloyd: Let me try to bring the hon. Gentleman forward a little in his thinking. Manchester would love to have done that. Manchester has not made compulsory redundancies-possibly it is true to say-in my lifetime. Manchester is now having to do that because the pace of the cuts that his Secretary of State is making is so rapid that it has no choice. For an authority such as Manchester, 25% of the budget cannot be taken out of the pot without that resulting in compulsory redundancies.
Paul Goggins: Does my hon. Friend agree that the comments, remarks and challenges coming from Government Members reveal a complete lack of understanding of the nature of a city like Manchester? Manchester is a world leading city. It is founded on two things-first, a strong partnership with the private sector and secondly, over recent years, having the money to invest in the communities that need it. Does my hon. Friend share my concern that their ignorance and arrogance mean that the progress that we made is put at risk?
Tony Lloyd: The only thing I disagree with is that my right hon. Friend's words are too mild, because what the Secretary of State is doing is the result of political malice. It is political malice because the simple reality is that he chose not to exercise the options that were available to him. He chose to make a local government settlement that puts at risk not only money-if it was only money perhaps we would move on-but the resources on which people depend for living their lives. It puts at risk those things that saw crime and disorder diminish in Manchester and that began to give young children in inner-city areas like mine opportunities in life that he would take for granted-the Secretary of State smiles. He is smiling while I talk about children being denied the opportunity to get on in life, because that does not matter to a Conservative Government, or to their Liberal Democrat friends and supporters. It does matter enormously, because they are brutalising our society.
Andrew Gwynne (Denton and Reddish) (Lab): Earlier, the Secretary of State mentioned extra resources for the concessionary fares for shire district councils, yet two weeks ago the Conservative and Liberal Democrat-led Greater Manchester transport authority scrapped the young people's concession and the peak-time pensioners' concessionary fare. That is the reality on the ground, and is it not another example of the unfairness?
Tony Lloyd: My hon. Friend makes an important point, because all of this is about political choice, and we have to face that squarely. The Secretary of State knows that it is about political choice, because he has form in local government. I remember when he was a national figure in local government; he is now a national figure in national government, but sadly the rhetoric and the reality have not changed. I believe that local government is fundamentally important to the lives that my constituents live. I believe that things such as swimming pools and leisure centres really do matter as part of the process of making our society more decent and more liveable and of properly giving our young people some stake in that society and some opportunity for the future. Frankly, he does not share the view that local government is the answer to our nation's problems; he regards it as part of those problems.
I must admit that I genuinely like the Housing Minister-I am sorry if I damage his future by saying so-because he is a nice man. He said that he was going to Manchester next week, so I hope that he will come and talk seriously with the people in my town hall, and perhaps in the other local authorities around Greater Manchester, because he needs to recognise that the Government have simply got it wrong. If he wants to stand at the Dispatch Box, as he will in a moment, and tell me that the cuts are not the result of brutal, cynical, malicious and political choices, he can offer to come to my city and talk through the finances. If I am right and he is wrong, and Manchester cannot possibly manage without making serious cuts in public services, perhaps he will have the good grace to admit that the Government must change their minds. I hope that that will happen, but I fear that it will not.
The Minister for Housing and Local Government (Grant Shapps):
It must have been an incredible experience to stand at this Dispatch Box for the local government
finance settlement in any of the past few years and announce on a whim yet more money being piled up and sent around the country in various directions. Unfortunately, we do not live in that kind of world today, and the sad thing is that we did not live in that kind of world even then. The previous Government thought that they had money to spend, but the truth was that it had long since been spent. A year ago, all they were doing was standing here and spending money that had never been raised, that was not available and that would actually have to come from the children of every Member of the House and of all our constituents for many years to come.
At the election, people had a choice, and their decision was to elect a Government who were primarily going to get on with cutting the deficit. Today, however, there has been not a word of apology from the Opposition for getting us into that enormous financial mess that meant that this country had the highest deficit of any country in the western world-of any OECD top 20 country. Do they recognise that as a fact? Do they understand where things went wrong? Are they here today to apologise and to show that they are going to set a new path? Absolutely not, because as we saw at lunchtime the policy vacuum on the Opposition Benches is quite literally a booklet with empty blank pages inside.
There has been no response and no sense of where those cuts would fall. The Opposition do say that there would be some cuts; it is just that we are not allowed to know where they would fall. The Opposition accept that local government spends a quarter of all government money, but it seems that none of those cuts would be in any way painful under their budget, which, they say, would halve the deficit over this Parliament.
Halving the deficit, however, is not enough. I believe there is a fundamental misunderstanding of how this country's accounts work. Indeed, perhaps that was the problem over 13 years: the previous Government did not understand that, if we only halve the deficit, we will still pile up debt. The figure of £44 billion, which we are currently spending at record interest rates just on repaying the interest alone, would have gone up to £70 billion and more, yet the Opposition have not a single answer-not a single penny-to offer up to this debate. Therefore, their contribution has been all but pointless.
Mr Betts: The right hon. Gentleman refers to past debates. Can he point to any occasion over the years when the Opposition Front-Bench spokesperson said that the Government were providing too much money to local councils? Can he provide one example of a Conservative MP saying, "My council's getting too much money in this settlement"?
Grant Shapps: The Chairman of the Communities and Local Government Committee is absolutely right: my colleagues and I have been reflecting over the past few weeks, when the representatives of many local authorities throughout the country have been to see us, on what it must have been like to have been in a previous Administration, when one could believe that money was no object-that one could simply get this thing from the money tree and spend it as one wished by giving higher and higher settlements to every authority that came to visit. How wonderful it must have been, but I am afraid that the truth, the reality, has come home to roost, and once again we are left to sort out the mess that Labour has left us with.
Having accepted that there should be some reductions, it was not as if the right hon. Member for Don Valley (Caroline Flint), who shadows the Department, was able to agree with any of the methods that might be used to make reductions without harming front-line services. In fact, she went so far as to ridicule my hon. Friend the Member for Meon Valley (George Hollingbery) because he mentioned in an intervention that Hampshire council has just announced that it will cut £7 million next year by cutting the senior management salaries and work force. That was pooh-poohed as impossible. Well, for the sake of clarity, I have managed to get hold of a copy of that detailed information, and my hon. Friend was wrong: it is not £7 million that will be saved by cutting senior management; in fact, it is £7.9 million.
The idea that money cannot be saved or that leadership cannot be shown by example when senior people take a cut, as Ministers in this Government have with a five-year pay freeze, or that that does not have an impact further down the line on the rest of senior and middle management, has been blown apart. The authorities that have taken such steps have found it much easier to sell to the rest of the authority the difficult decisions that have had to be made.
Nor is the right hon. Lady correct when she talks about the £10 billion of reserves. There are £10 billion of reserves for local authorities, as has already been pointed out in an intervention, but the right hon. Lady says that 70% of it has been earmarked, and, in that, she makes a fundamental mistake, which I am surprised about, because she was in this Department when in government. The reality is that "earmarked" is not the same as "spent" or "allocated". "Earmarked" does not mean that the money cannot be used in the intervening period to ensure that front-loaded reductions, which we have heard a lot about, can be handled in a much better way.
My hon. Friend the Member for Isle of Wight (Mr Turner) raised a serious technical issue that he had already come to ask us to look at again. We did do that, but we could not find in favour of his local authority. However, I say to him and to all other hon. Members that we thought that the concessionary fares mess that had been left by the previous Government required some assistance to sort out between the two tiers of government. I hope that that is helpful.
The Chairman of the Select Committee, the hon. Member for Sheffield South East (Mr Betts), referred particularly to front-loading. As I said to the right hon. Member for Don Valley, it is possible to use earmarked funds that are in the reserves. I invite the hon. Gentleman's Committee to look at this again, as there seems to be some misunderstanding. I welcome the fact that he welcomes the end of ring-fencing, which had been called for very widely across government and the Local Government Association. Ring-fencing has been un-ring-fenced by some £7 billion, and that has given local authorities a lot more flexibility. We have taken 90 separate budgets and combined them into just 10, meaning that local authorities that are savvy and understand that the situation has changed are able to move much more quickly.
The issue of business rates was raised by the hon. Member for Sheffield South East and others. There is a suggestion out there, which is gaining some credibility, that if business rates were collected at a higher level
than the entire local government finance settlement, then the difference could be redistributed somewhere down the line. People need to understand that if business rate collection goes up or down, the amount that goes to local authorities is identical; it makes no difference. The amount that goes to local authorities is set out in the spending review envelope; it is insured by the Treasury, as it were. I hope that that clarifies the situation.
Caroline Flint: There is huge concern up and down the country that there will be a future Tory policy to localise business rates, which would not deal with the inequalities in terms of opportunities to raise funds through businesses. Can the right hon. Gentleman assure me that that will not be a policy of this Government?
Grant Shapps: I am pleased to be able to provide the right hon. Lady with the reassurance that she needs. A redistributive approach will have to remain in whatever system is put in place. I will return to that in a few moments.
My hon. Friend the Member for Harrow East (Bob Blackman) made several good, intelligent points. He called for a settlement that is more predictable because it is provided for more years in a row. As the House knows, we have made a settlement for this year and for next year, after which time we intend entirely to reform the system to do what everyone has called for, which is to dump the failed redistributive formula grant system in which, as the Chairman of the Select Committee pointed out, everybody, even in the good years, complains that it has been poor for them.
My hon. Friend provided a very useful list of different things that local authorities could do before they start savagely cutting the front line, as in the case of some authorities in the past couple of days. Members will do well to refer back to that list in Hansard to see all those different methods. Until an authority has run through each one of the ideas that he presented, it has no right to be cutting the services of the most vulnerable in society.
The hon. Member for Liverpool, Walton (Steve Rotheram) made a very impassioned speech. I have seen some of the things that his local authority has done; the £4.5 million that it saved by cutting some of the senior management is of course the right way forward. However, he says that his council is still incredibly badly off. Let me make this simple point to him: while Liverpool is experiencing a reduction in its funding formula of 11.3%, my Hertfordshire council is experiencing a reduction of 16.1%. This Government have gone out of their way to try to protect the most vulnerable, and it is about time it was recognised that the spending formula was designed to do that.
The hon. Gentleman made another claim that was extraordinary and, as much as he may not realise it, untrue-inadvertently, I am sure. He said that his local authority is cutting Supporting People by 30%. If that is true, his local authority is getting it wrong. Supporting People is one of the budgets that we have protected way more than the general picture. There is a reduction of less than 1% in cash terms on average in the Supporting People budget over the next four years. I will give way to the hon. Gentleman so that he can put pressure on his local authority not to slash it, given that the Supporting People budget is largely protected at national level.
Grant Shapps: As the hon. Gentleman knows, the grant formula- [ Interruption. ] Members would do well to listen to this point because it affects many constituencies. The simple fact is that Supporting People is paid for through the formula grant. Given that we know for a fact that there is not a reduction in spending power of more than 8.8% in his constituency, it cannot be the case that the Supporting People budget has fallen by the claimed 30%, so I take him up on his challenge.
My hon. Friend the Member for Dover (Charlie Elphicke) made the worthwhile point that local authorities have been protected from having to raise council tax by the £650 million from central Government.
The hour is late and I do not want to detain the House. There is a clear division between authorities that have taken the necessary steps and those such as Manchester city council, which yesterday claimed that it has to make a 25% reduction.
Caroline Flint: I am aware of the time and I appreciate the right hon. Gentleman giving way. The person who stated that 25% of the net budget of Manchester city council will go over the next two years was its treasurer-a statutory officer of Manchester city council. I suggest that when the right hon. Gentleman is up there, he speaks to that gentleman, because I believe that that gentleman is right and that the right hon. Gentleman is wrong.
Grant Shapps: Here is a simple fact for the right hon. Lady: the reduction in spending power over the next two years is 15.5%. Yesterday, Manchester city council called a press conference to say what it will not do over the next two years. It says that it is going to cut the budget by 25% over that period, when the reduction is only 15.5%.
That the Local Government Finance Report (England) 2011-12 (House of Commons Paper No. 748), which was laid before this House on 31 January, be approved.
That the Limitation of Council Tax and Precepts (Alternative Notional Amounts) Report (England) 2011-12 (House of Commons Paper No. 774), which was laid before this House on 31 January, be approved .-(Mr Dunne.)
That the draft Immigration and Nationality (Fees) Order 2011, which was laid before this House on 24 January, be approved .-(Mr Dunne.)
That this House takes note of European Union Documents No. 11048/10, relating to a draft agreement, No. 11173/10, relating to a draft Council Decision on the signature of the agreement, and No. 11172/10, relating to a draft Council Decision on the conclusion of the agreement between the European Union and the United States of America on the processing and transfer of financial messaging data from the European Union to the United States for the purposes of the Terrorist Finance Tracking Program;
agrees that the programme is an extremely important tool in the global counter-terrorism effort, providing valuable contributions to numerous high profile cases; and notes that the programme has achieved an appropriate balance between counter-terrorism and data protection .-(Mr Dunne.)
Duncan Hames (Chippenham) (LD): I wish to present a petition opposing the proposed withdrawal of the mobility component of disability living allowance from those living in state-funded care homes. The petition is signed by 135 members of Chippenham Gateway club in my constituency, a volunteer-run social club for those with long-term learning difficulties or mental health problems.
The Petition of members, volunteers and supporters of the Chippenham Gateway Club,
Declares that the Petitioners are opposed to the Government's proposal to stop paying the Mobility Component of the Disability Living Allowance for disabled adults in residential care; and notes their concern that this proposal would have a devastating impact on the Chippenham Gateway Club and similar clubs for members with learning difficulties/mental health issues throughout the UK.
The Petitioners therefore request that the House of Commons urges the Government not to stop paying the Mobility Component of the Disability Living Allowance for disabled adults in residential care.
And the Petitioners remain, etc.
Pat Glass (North West Durham) (Lab): Mine is a large constituency. I have urban areas to the north-east of my constituency and a very large rural area running right up to the Cumbrian border. It includes two areas of outstanding natural beauty and many areas of special scientific interest. Very many of my constituents are "off gas" and rely on heating oil and bottled gas, and some of these would be classified as the rural poor or living in fuel poverty.
I have been made aware in recent months that there are issues in the domestic oil fuel market-rising prices and a lack of regulation and competition-but it has become clear from the level of constituency contact and from the level of desperation expressed that a crisis has been building up since summer last year.
Mr Kevan Jones (North Durham) (Lab): Does my hon. Friend agree that in a constituency such as mine, which is a rural constituency next door to hers, many people do not have a choice about whether to use oil, because there is no access to gas or another alternative fuel?
When I contacted the office of the Secretary of State for Energy and Climate Change on this issue in early December, I was told that it did not believe that there was a problem and that it did not intend to do anything about it. This contrasts sharply with the experience of my constituents. Mr Kimber, who contacted me on 6 December, told me that the price of heating oil back in early October was 44p a litre. He said:
"Yesterday I obtained a quote online and was shocked to see the price had risen to 65 pence per litre. Today I obtained another quote from the same company and the price has gone up to 79 pence a litre today. How can this be now that the roads are free of snow and passable in nearly all areas locally?"
Mark Tami (Alyn and Deeside) (Lab): My constituency is similar to my hon. Friend's and also has a rural part to it. People have told me not only that the price has gone up, but that an extra transport cost is loaded on if people want delivery within a short period of time.
"The cost of heating oil is now nearly 100% higher than just two months ago yet oil prices have increased by just 10%. How can this be justified?"
The answer is that it simply cannot be justified. Indeed, when I and other Members started to ask questions about this issue, I was contacted by a number of people working in the heating oil industry who told me that their employers were telling them to refuse to accept orders of less than 1,000 litres. That meant that members of the public were being refused deliveries unless they were prepared to pay £800, plus the cost of delivery, and let us remember that this was just before Christmas.
Tessa Munt (Wells) (LD):
I am grateful to the hon. Lady for giving way. Does she agree that that also applies in rural Somerset? We even have oil co-operatives
in rural Somerset, members of which were running out of heating fuel as the winter months came on and the weather got bad, yet they were being charged the same excessively high prices when they were taking the trouble to drive on snowy roads to collect the oil, in containers that they had to purchase for £6 or £7 a piece. Therefore, even people who were not paying delivery charges were paying the equivalent sum, which did not include delivery.
Mr Mark Williams (Ceredigion) (LD): . I also congratulate the hon. Lady on securing this debate and on reiterating how important it is to rural areas. The problem that she described, where oil companies deliver much larger quantities, was compounded by the fact that a lot of them were not telling the customers that they were doing so until the invoice arrived. People who were expecting bills of £200, which is bad enough, were then hit with bills of £800.
When I first started to investigate the domestic heating oil industry, it became clear to me that it operates in a completely unregulated market, where suppliers can do exactly what they choose. A number of takeovers and mergers in recent years have led to the supply industry being owned by two or three companies. All that has happened quietly, without reference to the Office of Fair Trading or the Competition Commission. Prices are being driven up not by world shortages or global increases in the price of oil, although there is some of that. Rather, prices in this country have gone up by 100% in a very short space of time largely because suppliers have been clearly taking advantage of people in desperate need during the coldest winter in a generation.
Dr Eilidh Whiteford (Banff and Buchan) (SNP): I am grateful to the hon. Lady not only for allowing me to intervene, but for bringing this issue to the House. Does she agree that one of the fundamental issues in this debate is the fact that people in rural areas often do not have a choice? The problem with the market is that people do not have a choice over either the oil that they use or the suppliers available to them.
Madam Deputy Speaker (Dawn Primarolo): Order. The hon. Member for North West Durham (Pat Glass) should get a word in edgeways before she gives way to another Member, if only to help me remember whose Adjournment debate this actually is.
Sarah Newton: I appreciate the hon. Lady's generosity in giving way to so many of us, because this debate is clearly about a huge problem across the country. I represent a part of Cornwall where, just as the hon. Member for Banff and Buchan (Dr Whiteford) said, there is no choice for people who are off gas. There is no choice of distributors, given what has been happening in the market.
Customers are in the worst possible situation; it is a perfect storm. The market is completely unregulated. Added to that is a lack of competition in the market, where many suppliers are owned by just one or two companies, and suppliers are prepared to charge exorbitant prices simply because they can. On top of all that is the fact that we have just had the coldest winter in living memory.
The biggest supplier is DCC Energy, an Irish company that says it supplies a quarter of this country's domestic market. It owns 41 heating and oil distribution companies and five price comparison websites. The websites of those 41 wholly DCC-owned companies state that they are independent, and none discloses the extent of DCC's hold on the British market. DCC has recently been on a spending spree, buying up regional companies. It owns five price comparison websites, including BoilerJuice.
When I and others first raised this issue in the House, The Sunday Times carried out an investigation. It found that BoilerJuice, which is owned by DCC, only compared prices between DCC-owned companies, and that its so-called best deals were up to 65% higher than those of genuine independents. If that is not a deliberate intention to mislead customers, I am not sure what is. Since The Sunday Times outed BoilerJuice, prices have dropped by as much as 63%, which DCC has said was due to "fluctuating market prices", but neither The Sunday Times nor I could find anything fluctuating in the market other than DCC's panic.
Energy experts have advised me that DCC might actually control up to 50% of this country's domestic heating oil market. GB Oils, another big company that is seemingly independent, is in fact a subsidiary of DCC Energy. NWF Fuels is another big player. It markets 14 different brands, including Pace, Fuelcare and WCF Fuels. On the surface, this looks like a market in which there are many suppliers and in which competition will work to keep down prices, but it is quite the opposite.
Jim Shannon (Strangford) (DUP): The hon. Lady has been very generous in giving way to Members on both sides of the Chamber. She said that she wanted to get input from right across the House and across the United Kingdom, and I should like to give her an example from Northern Ireland. Oil comes through the port of Belfast and is then farmed out to all the different areas across the Province. It is the same oil, yet the price fluctuates between £20 and £30 per 800 litres. Does she agree that that is another example of why regulation is much needed?
Roberta Blackman-Woods (City of Durham) (Lab): The whole House will be concerned by the points that my hon. Friend is making, not only about prices and the way in which these companies operate, but about the fact that they seem not to have been considered at all by the Competition Commission? Does she intend to refer the matter to the commission?
In its recent investigation, The Sunday Times found that, on any given day, those price comparison sites quoted exactly the same price, right down to two decimal points. DCC and the other companies that control large parts of the market deny that they are exploiting their market share unfairly to raise prices, or that a cartel is operating to fix prices, but I suggest that the Minister look at the evidence. If he does, he will be able to draw his own conclusions, as I did.
As a new Member, I have been really pleased that we can come to the House and raise issues such as these, when we see a clear injustice in the market, and that they are taken up by the press. These debates are a really powerful tool. Once I and other hon. Members started to raise this issue and the press picked up on it, I was contacted by many people from all across the country. Their interest is echoed by the interest shown here tonight. People were contacting me from places as far apart as south Kent and Northern Ireland. This is not just about my constituency; it is about all our constituencies.
I am grateful that the Government have finally agreed that there is a problem with this market. They have reluctantly and, I have to say, tardily referred these matters to the Office of Fair Trading. There are several questions that I would like the Minister to answer today. When I and others contacted the Department in early December to ask what it intended to do about this, why were we told that the Department did not believe there was a problem and that it did not intend to do anything about it? Why did it take a crisis and investigation by the press before the Minister was prepared to refer this to the Office of Fair Trading? Will he ensure that I and other hon. Members who have raised these issues are able to feed into the OFT investigation? When does he intend to regulate this market either by extending the role of Ofgem or by creating a regulator for the domestic oil and gas industry? Finally, what messages can I give to the many people who have contacted me and other MPs about the actions that the Government intend to take now and in the future to ensure that they are exploited no further?
The Minister of State, Department of Energy and Climate Change (Charles Hendry): I congratulate the hon. Member for North West Durham (Pat Glass) on securing this debate and on the persistence that she has shown in raising this matter over a number of weeks, both before Christmas and subsequently. I thank her for the correspondence I have received from her. She is absolutely right that this matter affects not just one part but every part of the United Kingdom-very much including Northern Ireland, because of the number of off-gas grid customers who live there. Every part of the country is affected, which is why we take the issue so seriously.
Speaking as a Member with a heavily rural constituency, I am sure that the hon. Lady will understand that I am sympathetic to the plight of many off-grid energy consumers-many living in rural areas, but not exclusively so-who were hit hard by high domestic heating prices and serious supply problems during the severe weather this Christmas. Many of them are fuel-poor, as the hon. Lady says, and as the hon. Member for Banff and Buchan (Dr Whiteford) said, many have no choice but to be off the gas grid because the gas grid simply does not exist where they live.
Tessa Munt: I would like to draw attention to some of my constituents who took the trouble to join an oil co-operative in a rural area, but still got hit by this problem. I was contacted, and I would like the Minister to look at the letter that I forwarded to his office. It was from a couple of pensioners who wrote to point out that they would have had to spend between three and three and half months'-worth of their pension money on fuel over the year. That makes a mockery of what is happening in this market.
Charles Hendry: I will certainly look into those matters, and I hope that the hon. Lady has also referred them to the Office of Fair Trading, because that would provide exactly the sort of evidence that it is looking for to contribute to its investigation of this market.
I have been extremely concerned about the many representations that I have received from hon. Members on both sides of the House over the past few weeks, which clearly showed me that that the market was not working as we would expect it to do. People who could not afford to pay those bills simply had to make a choice about whether to go without heating or without something else at a very difficult time of the year.
Alex Cunningham: I am grateful to the Minister. Millions of people have been taken out of fuel poverty over the last decade or so, with the help of a massive investment, but it strikes me that with the demise of the Warm Front scheme in particular, the Government are now doing less about fuel poverty. I hope that the Minister will reassure us that more will be done in future.
Charles Hendry: I am sorry that that introduces a political note into a debate that has been non-partisan thus far. The Labour Government were committed by law to remove all vulnerable households from fuel poverty by 2010-and their record was one of dismal failure. In fact, the number was up by 3 million on the previous year. That is not exactly a record on the basis of which the hon. Gentleman should be preaching to us.
Underlying many of the complaints are concerns about the challenges of supplying energy to rural communities, and about whether the current market structure provides the reassurance that consumers can get fuels for heating at a price they can afford. There is a specific commitment in the coalition programme to help those in remote rural areas with their fuel costs, as well as to extend protection and support to off-grid energy consumers.
As a shadow Minister last year, I raised many of the issues that the hon. Lady has raised now, and I was told that this was how the market had always worked. I am pleased that as a Minister, I have now been able to act on some of those concerns.
As I noted in the fuel poverty debate in January, a significant amount of concern has been expressed by the public, as well as by this House, about the domestic heating oil market. That is clear from the numerous parliamentary questions on the subject, and the issue has featured prominently in my postbag both as a Minister and as a constituency Member of Parliament.
As we all know, the price of heating oil is influenced by a range of factors. They include refinery capacity, stock levels, distribution costs, retail margins and exchange rates. Crude oil prices-which increased by 24% between the end of September the end of January-and seasonal factors also play a role. There were additional costs this winter because of the extra overtime that resulted from our relaxation of drivers' hours.
The United Kingdom has traditionally operated an open and competitive market for oil and petroleum products, which we believe provides the best long-term guarantee of competitive prices for the consumer. In the light of that, the Government cannot and should not seek to control or influence oil prices, but safeguards exist through the Office of Fair Trading and the Competition Commission to ensure that competition is fair.
As an independent and professional organisation, the OFT plays the leading role in promoting and protecting consumer interests throughout the United Kingdom, ensuring that businesses are fair and competitive. Its tools to carry out that work are the powers granted to it under consumer and competition legislation. It has a wide range of enforcement tools at its disposal. For instance, under the Competition Act 1998 it can impose heavy financial penalties on companies guilty of breaching competition law, and can refer them to the Competition Commission for closer examination. I urge Members to raise their concerns and those of their constituents directly with the OFT if they have evidence of market abuse. I know that many Members have already done so. They should note that the OFT never confirms or denies the existence of investigations of specific companies, so that it can do its work as independently as possible.
On 21 January I made a written ministerial statement on the off-grid energy market. I noted that the OFT had been consulting on its annual plan to help to determine its work programme for 2011-12. That included proposals to prioritise markets affected by high, rising and volatile commodity prices. The off-gas grid energy market is clearly one such affected market. I am keen for the reasons for the high prices and supply issues affecting domestic consumers to be investigated thoroughly by an independent professional authority such as the OFT.
The recent winter also raised various questions about the minimum volume for heating oil orders. I thank the hon. Lady for the attention that she has given to that issue. Bulk supply by tanker is the most economic form of delivery for heating oil. According to the Federation of Petroleum Suppliers, the meters fitted to most road tankers used to deliver heating oil have a minimum delivery volume of 500 litres, and below that volume the meters are not sufficiently accurate to meet regulation on weights and measures. A while ago, the hon. Lady expressed concern to me about a requirement to take 1,000 litres. That should undoubtedly be investigated, because it does not appear to be borne out by our technical investigations. Pre-packaged smaller volumes of heating oil in containers are available, although the price per litre is often significantly higher than tanker delivery prices, owing to the additional packaging, storage and distribution costs.
As I said in my written ministerial statement, in response to the OFT's consultation on its annual work programme I wrote to John Fingleton, the chief executive
of the OFT, on 19 January asking him to bring forward its competition and consumer study of off-grid energy. The issues involved became particularly acute during the immediate run-up to Christmas. When I tried to order oil for my own home in early December the price was 40p a litre. Three weeks later it was 70p a litre. The severe weather compounded the problems, making a difficult situation potentially catastrophic. We owe a debt of gratitude to the delivery companies and their drivers, who worked long hours, often in difficult conditions, to try to ensure that they reached every home that was running out of oil before Christmas. They did not quite reach everyone, but they improved the position massively.
I also suggested to John Fingleton that the study should explore longer-term consumer issues such as lifetime payback, consumer standards, and labelling for alternative energy sources or supplies. Such a study would provide an independent assessment of the off-grid market, and would be immensely helpful in establishing what further action might be necessary to ensure that it worked properly.
Following my letter and other discussions with my Department, I was pleased when the OFT announced on 25 January that it had brought forward its study to allow time to consider any recommendations before the next winter, and in the light of increasing public concerns about aspects of the market. There will be a market study under powers granted by the Enterprise Act 2002 to examine all issues concerning energy supply to off-grid customers. The OFT is now consulting on the precise terms and scope of its study before the investigation itself formally begins in March.
The OFT proposes that the study should cover the whole of the UK, and has suggested a number of themes including the following: how well competition provides choice for consumers at a local and regional level, in respect of which the monopolistic issues to which the hon. Lady referred are clearly relevant; whether the terms and conditions of supply provide consumers with clear information, competitive prices and fair terms and conditions, which should include addressing the issues the hon. Lady raised in relation to websites which the public would assume are independent; and the experience of customers. The OFT proposes to survey the views of off-grid energy users around the UK. In addition to the Department of Energy and Climate Change, the Scottish Government, the Welsh Assembly Government, the Northern Ireland Executive, the Department for Business, Innovation and Skills, the Department for Environment, Food and Rural Affairs and trading standards departments will be involved in this work, to ensure that the full range of concerns are taken properly into account.
The OFT will work closely with Ofgem where issues overlap with those within Ofgem's jurisdiction. While the study's focus is not specifically on access to, or use of, the gas and electricity networks, the OFT will be working closely with Ofgem to assess the interaction between access to networks and the development of the off-grid renewables market. The OFT proposes that the market study should consider the supply of off-grid energy, to cover a wide range of domestic energy sources including heating oil, liquefied petroleum gas and renewable energy from a range of sources.
As the Competition Commission completed an in-depth investigation of the LPG market in 2006, with market orders from 2009 to enable switching between suppliers,
the OFT also proposes to focus on the effect of those orders so far. The OFT retains an ongoing statutory duty to consider from time to time whether the orders are being complied with. Market studies by the OFT involve an analysis of a particular market with the aim of identifying and addressing any aspects of market failure, from competition issues to consumer detriment, and the effect of Government regulations. This can result in a range of different outcomes. There can be enforcement action by the OFT. There can be a reference to the Competition Commission. There can be recommendations for changes in laws and regulations. There can be recommendations to regulators, self-regulatory bodies and others to consider changes to their rules. There can be recommendations to specific businesses. There can be campaigns to promote consumer education and awareness. Alternatively, a clean bill of health can be issued. It is at this point that we will need to decide whether additional regulatory powers are necessary.
The consultation by the OFT closes on 28 February. The OFT has asked to receive representations from interested parties on the planning scope and issues for the study before formally carrying out its investigation of the off-grid energy market. I re-iterate that a market
study is distinct from an investigation. A market study is not about any particular company or business, but instead considers the overall market structure. Investigations into specific companies will be prompted by direct evidence of market abuse, and be undertaken separately.
I therefore encourage hon. Members on both sides of the House to participate actively in the investigation, and to raise their constituents' concerns directly with the OFT. We have listened to the concerns expressed from every part of this country, from every political party and from all types of different communities, and we have decided that a full investigation into the way this market is working is now appropriate.
I am very pleased that the OFT is going to take forward that work formally. I believe that it will enable us to ensure that we can learn from the problems experienced this winter and go forward into next winter with a market that is more fit for purpose, so that all our constituents can benefit as we would wish them to do.
That this House takes note of European Union Documents No. 9606/10, relating to a Council Regulation establishing a European financial stabilisation mechanism, No. 12119/10, relating to a draft amending budget No. 7 to the General Budget 2010-Statement of expenditure by Section-Section III-Commission, and No. 17361/10, Commission Communication on the European Financial Stabilisation Mechanism; supports the Government's view that whilst it is in the interests of all Member States to support a stable and fully functioning euro area, financial assistance for euro area Member States should primarily be provided by other euro area Member States; and supports the Government's position that the United Kingdom should not be required to contribute to the European Stability Mechanism that will permanently replace both the European Financial Stability Mechanism and the European Financial Stability Facility.
That the draft Police and Criminal Evidence Act 1984 (Codes of Practice) (Revision of Codes A, B and D) Order 2010, which was laid before this House on 17 November, be approved.
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