Local Authority Grants: Impact of Cuts

Lord Bates Excerpts

Thursday 9th December 2010 Lords Chamber

[Lord Bates]

My Lords, it is a privilege to speak in this debate and to follow the noble Baroness, who has presented a reasoned case and some interesting ways of looking at the issues that we face on personal care.

The noble Baroness mentioned the sums and the budgets being cut too quickly and too deeply. There are many Members of this House who are extremely well placed to speak on the important matters of personal care, but it may be helpful if I place this debate in some kind of context. It is not the case that the Government somehow arrive at the Dispatch Box and dream up that the budgets ought to be cut by 28 per cent in real terms over four years. There is a context to it. We inherited the worst budget deficit in the G20, while overall government borrowing had increased by £400 billion over the past few years and continues to rise. The total debt that needed to be serviced is costing £120 million per day. There was significant unease on the international financial markets about the state of the public finances and we were on the verge of being downgraded by the rating agencies, which would have sent interest rates soaring, as we have seen in Ireland, and would have hit millions of homeowners and businesses. That is why we have proposed to get the deficit under control over the next four years.

In fairness to the party opposite, it too had recognised that this was a major problem. That is why, before the election, while it was still in government, it proposed £52 billion of cuts, but it kept us guessing as to where those would fall. Interestingly, though, the Pre-Budget Report showed that the cuts would be front-end-loaded, with £14 billion of cuts falling in 2011-12.

There is a second point of context that flows out of that, and it needs to be made. Once you decide that you need to reduce overall spending and the case is made—I think that that is generally agreed—you then need to ask: where are you going to apply the cuts? The answer for this Government, which I totally support, was that they wanted to protect spending on health, welfare and school budgets, as well as, importantly, to increase the overseas aid budget. Again in fairness to the party opposite, it too had said that it wanted to protect health and schools budgets and maintain overseas aid spending.

My point is that if you agree that there is a problem at a macro level, which both sides agreed on, and you agree that there is a need to make substantial cuts—whether that is £52 billion, £65 billion or £72 billion is a matter for debate—then you need to decide that the axe has to fall somewhere. Someone needs to feel the pain. There is no painless alternative to this. So the Government are proposing to reduce resources spending to local government by 28 per cent in real terms. As someone who is proud to be a vice-president of the Local Government Association, I do not underestimate for one second the pain that that will cause in town halls up and down the country, but again that needs to be set in context. Indeed, if you were to take even the most generous estimates of what the effect would have been of a cut in the overall budget of £52 billion while ring-fencing those important areas that we have talked about, had the Opposition been in power, then the figure probably would have been not 28 per cent but between 20 per cent and 25 per cent. It is worth placing on record that that is the context in which we are having this debate.

Because of those realities, it is also not true that the reality of the spending settlement and the expected reductions in local government grants by 28 per cent somehow came as a shock. It has been forecast over the past two years at least, and many local authorities have already been preparing for that and making adjustments in their spending.

What the Government are proposing is not so much an exercise in arithmetic, of trying to make the budget balance. Rather, they are trying to reinvent the whole way in which we deliver services at a local government level, and that involves a massive devolution of power to local communities and to individuals. Some of the examples that were given there about personal care fit very much into the whole area of Total Place, of place-based spending. Rather than having multiple bodies all spending money, organising and operating in the same places, it is right to bring them together, introducing efficiencies and improving the service at the same time. The previous Government started that process, albeit 12 years into their 13 years, and this Government are saying, “Listen, we want to build upon that”.

We have also said that there are too many silos of funds from which people have to draw. The Government have proposed that in 2011-12 they free up some £7 billion of currently ring-fenced funding. Seeing the number of grants that need to be applied for reduced from 90 to 10 will mean a massive increase in power for local authorities and local communities. It will also mean a massive reduction in bureaucracy.

The same applies to other targets that were there—for example, the comprehensive performance assessment regime and the corporate governance inspection regime, which would issue hundreds of targets that local government had to follow and track down. My favourite target was the one that required local authorities to count how many park benches had arms on them. For some reason, that was important to Whitehall. We are saying, “Listen, this is ridiculous”. We want local government to concentrate on what it does best, which is delivering high quality local services. What has been proposed by this Government, while we recognise that it is tough, is an opportunity to reinvent the way that local services are delivered in our communities so that all will benefit.