Communities and Local Government (CSR)

Debate between Bob Blackman and David Lammy

Thursday 13th January 2011 Westminster Hall

[Bob Blackman (Harrow East) (Con)]

I will bear in mind your earlier remarks about brevity, Mr Robertson, and as this is the first time I have spoken under your chairmanship, I suspect that that will be measured the next time I speak under you. I do not wish to repeat what Members have said already, but I think that we cannot consider this year’s local government grant settlement in isolation; it is not a one-year issue. We must look at it in the context of previous years and experiences.

I ran local authority finances for a considerable time before entering the House and have served in a position in which we received from a Labour Government drastically lower levels of grant, way below the rate of inflation and pegged every year for three years. Of the 32 London boroughs, 23 were on the floor and were receiving half the level of inflation year on year. That meant that local government had to be efficient and clear about how it would obtain its finances and run its services.

The previous Government often said to local government, “We’ll give you a new duty and ring-fence the money.” Slowly but surely, the money for the basic services was starved and the new duties and services were ring-fenced. The rationale was that the Government wanted to ensure that the money was spent in the areas where they dictated it should be spent. It was a centralised approach to running local government. Local authorities got used to area-based grants, which could be spent only on certain services, and to performance level grants, which could be spent only if performance against a complex series of assessments was achieved. I am delighted that in the current settlement, and, I hope, in further measures that the DCLG team takes, all that will be swept away. The ring-fencing will be removed so that local authorities will have the opportunity to determine local priorities.

An example from my experience that I would like to use is that of working neighbourhood funds. In the London borough of Brent, we set up and used the money specifically for the purpose of ensuring that unemployed people in Brent got jobs, and we were so successful that there was a reduction in unemployment. However, at the height of the recession the previous Government decided to remove all the money. A borough that had been successful and used the money appropriately lost the funding at a time when it was desperately needed, while those boroughs that had not succeeded continued to receive it—a great reward for our success. Actually, it was a great reward for failure elsewhere. There is a key issue that experience from local government has shown to be true.

As several Members have said, every local authority in the country knew that following the general election, regardless of which party won, there would virtually be a public sector recession and that everyone would have to plan for reductions in expenditure. The two authorities that I know well—the one I used to serve in and the one that I have the privilege to represent part of in this House—had planned for a 10% reduction every year for the next four years, but fortunately they will not have to suffer that under the wise settlement that the Government have brought forward. I would say to any authority that did not put plans in place for expenditure reductions that have come down the line that it is no good complaining now, because they did not plan for a future that was almost certain. Local government must transform itself and the services it provides and look at doing things radically different from how they have always done them.

As has been alluded to, that is a direct challenge to many local government officers, but it is important to remember that that is part and parcel of the challenge that has been set down by central Government. I do have concerns, however, for example on what the London borough of Harrow is doing. It has decided to reduce its voluntary sector funding by 30%, decimating the people who deliver services for vulnerable people. It is an easy cut to make, but a short-sighted one, because the people who are being cared for by voluntary services will get worse more quickly and throw themselves on the local authority much earlier, which will be more expensive. It is a foolish way to approach the cuts.

In the other London boroughs—we see this right across the piece—proposals are being made to close libraries, day-care centres and various other services on which vulnerable people depend. With regard to library services, I take the view that libraries are more than just places where books are provided; there are computers there and facilities for vulnerable and deprived people who need the space to study in. When I was leader of the London borough of Brent, I remember being dubious about our plan to open a library on a Sunday for the first time, but there were queues of students at the door at 9 o’clock in the morning because they wanted to study. I say to every local authority that they should not cut such services, even though they seem to be easy cuts to make. They should examine other things before doing that.

[Mr Lammy]

The hon. Gentleman and I agree on many things, particularly our choice of football club. He is firmly on the centre ground, and I appreciate the manner in which he puts his remarks. Does he agree, when he makes his points as well as he has, that too severe cuts to crucial services could lead to huge costs downstream for local communities? I am thinking of policing costs, social exclusion, and cohesion. From his experience in Brent, he will understand where I am going.

[Bob Blackman]

I thank the right hon. Gentleman for that intervention. I agree that there is concern about the level of reduction taking place in local government funding. I recognise that that is a key concern, and also that it is possibly more front-loaded than other areas of Government expenditure. However, one of the things that has happened in areas of greater deprivation is that over previous years they have gained substantially in central Government funding and grant. That is why it is difficult to make comparisons year on year. They gained far more by having deprivation. Actually, studies show that deprivation has not reduced as a result of central Government funding, so has that been a good thing or not?

Naturally, as the Government have decided to change the formula and grant regime, areas of greater deprivation are experiencing greater reductions. That is, of course, a serious concern to local authorities that are experiencing it. However, certainly in my experience, the plan was there that that would happen. If they have not planned for it, they have been short-sighted, and that is serious.

In the time that I have available, I wish to mention a series of concerns, the first of which is about the suggestion of capitalising redundancies and some services. I was a great proponent of capitalisation—I thought that it was an excellent way of doing things—until the prudential borrowing regime came in. I urge caution, because if one capitalises expenditure, all one is doing is borrowing. One must fund that borrowing on the revenue account, which will probably lead to a huge amount of cost in the future, year on year, for a one-off payment. That is not a good plan of action at all, particularly at a time when we know that local authority funding will be reduced over a four-year period.

My second concern is about the consequences for the voluntary sector. It is easy for local authorities to reduce the voluntary sector slightly—it will not impact on the core services that they provide. Actually, that is a short-sighted view. I urge local authorities across the country to ensure that they safeguard voluntary sector services that are coping with the weak and vulnerable, and doing it cost-effectively. I suspect that in future years that very same voluntary sector will be crucial to delivery of services in the big society that we all support.

The next area of concern is visible services. There is an obvious thing that is often missed. Having been in local government for a long time, I know that when it comes to reductions, local government officers always come forward with what can only be described as the bleeding stumps. It is easy to say to councillors who want to reduce funding that they have to close this day centre, close this library, do this, do that. Never does one hear from local government officers, “Actually, we will reduce staffing by 10% in the administration area.” I am not one of those who says that just by merging services and joining forces with another local authority the gap will be bridged, but at a time of great challenge, all those areas have to be examined and challenged, before one looks at the visible services on which the public rely.

The overwhelming majority of people who work in local authorities are on relatively low salaries and wages, and we should ensure that they are supported. However, over the past 10 years, there has been an absolute explosion in salary levels for local government officers, chief officers in particular. I, for one, am sick to death of reading almost weekly of a local authority chief executive or chief officer departing from one job with a golden goodbye only to walk into another local authority to do a similar job on a hugely increased salary. The excuse made for that across local government is that they have to pay more to attract the best people. I have no problem with rewarding experienced people who do a good job, but that has gone much too far in local authorities. Now is the time to examine those salaries, and I applaud local authorities that are reducing salaries rather than increasing them.