Queen’s Speech

Lord McKenzie of Luton Excerpts

Thursday 5th June 2014 Lords Chamber

[Lord McKenzie of Luton (Lab)]

My Lords, it is a particular pleasure to follow the noble Baroness, Lady Noakes. Tempted as I am to engage in the tax debate, I think I ought to stick to my prepared script and talk about local authorities.

In last month’s local elections, more than 4,000 individuals were elected in England to serve on some 160 local authorities of one description or another. Many would have been re-elected and some elected to serve for the first time. The democratic process delivered joy for some and despair for others, but for my party it delivered more than 300 more councillors and control of 82 councils. As the largest grouping on the LGA, it now falls to us to provide its chair, Councillor David Sparks, the first Labour councillor to become chair since my noble friend Lord Beecham. I propose to take this opportunity to reflect briefly on the challenges for those councillors—those continuing and those just elected—as they make their declaration of office and see what, if anything, planned for the new Session is designed to help them.

The scene has been very much set by the outgoing chair of the LGA, the Conservative Sir Merrick Cockell, who described councils as being at a tipping point, warning that council services are at breaking point. He has been reported as declaring that the current funding arrangements will not see us through for very much longer and expressed concern about the running down or wholesale closure of services such as libraries, road maintenance, school support schemes and youth clubs. We know that local authority spending on adult social care has already been cut by £1.8 billion since 2009-10, and there are 300,000 care workers on zero-hours contracts. That is before we have to face the big issues referred to by the right reverend Prelate the Bishop of Leicester.

As we have debated before, funding for local government overall has been cut by 40% during this Parliament—bigger and earlier cuts than those to any other part of the public sector—but it is the distribution of those cuts that shows the true nature of this Government. Poorer communities have been disproportionately hit, as evidenced by the fact that the 10 most deprived local authority areas lose 10 times the amount of spending power per household compared to the 10 least deprived local authorities. Liverpool gets a 27% reduction in spending power per household, while Surrey and Wokingham get an increase—so much for creating a fairer society.

At a time when we hear the Lib Dem wing of the coalition boasting about how many people they have taken out of income tax by raising the personal allowance, and Eric Pickles asserting that councils have a moral duty not to increase council tax bills, we know that hundreds of thousands of poor people are having big increases in their council tax bills because of the localisation of council tax support—delegating responsibilities but cynically not providing adequate funding. That is just one of the dilemmas confronting elected members: should they charge the poor to help pay for the very poor or should they cut services further? In the mean time, more households are being summonsed for non-payment and more are experiencing the heavy hand of the bailiffs.

If we believe that the impact on the poor is an unfortunate oversight, the plans to withdraw specific funding for local welfare provision—the successor to the discretionary Social Fund—tells us otherwise. Of course, the iniquitous bedroom tax, which we will repeal, is yet further evidence of a Government who neither understand nor care about the misery their measures are inflicting on vulnerable families.

Councillors are on the front line of having to deal with the consequences of one of the coalition's biggest policy failures, touched on by my noble friend Lady Andrews: housing. Despite a plethora of announcements and initiatives, housebuilding has been at its lowest in peacetime since the 1920s, with the number of affordable homes built last year dropping by 26%. The NAO concluded that there was little evidence, for example, that the new homes bonus has yet to make significant changes to local authorities’ behaviour in increasing housing supply.

We know that under the coalition Government, homelessness is up, rough sleeping is up and the number of families with children living in bed-and-breakfast accommodation has reached a 10-year high. Housing deprivation has ramifications across other council services. Switching government funding from investing in new homes to subsidising housing costs with housing benefit means that central government now spends more than 20 times as much on housing benefit as on building grants to support the provision of new affordable homes—as things stand, a trend that will continue.

We have seen some revival of council house building, generally led by Labour authorities, but overall, as we have heard, we are building fewer than half the new homes needed to fulfil demand, let alone to deal with the backlog. To be fair, it is not a new phenomenon and successive Governments have failed to build at the rate we once did. As a result of all that, more and more people are being locked out of home ownership and are living in the private rented sector. Across England, a quarter of adults under the age of 35 are living in their childhood bedroom. There are now 4 million households in the private rented sector, of which 1.3 million are families with children, and nearly 5 million people on local authority waiting lists. The average cost of rents has gone up by 13% since 2010 and renting is now the most expensive tenure, with renters spending on average 41% of their income on rents. Many face unpredictable rent hikes, while high and unpredictable costs are made worse by the uncertainty and insecurity of short-term tenancies of six to 12 months.

All this is helping to fuel the cost of living crisis and directly impacting on business competitiveness, especially in London. That is why we need to change legislation to make three-year tenancies the default in the market, as the Government’s voluntary approach is inadequate. We would also provide for an upper ceiling on rent increases during the tenancy, but with negotiated market rents as the starting point. There is more. We will stop tenants being hit by rip-off fees from letting agents and regulate residential lettings and managing agents to protect tenants and landlords. We will also introduce a national register of landlords and make it easier for local authorities to introduce licensing in their area, to drive standards up and rogue landlords out.

Nothing in the Government’s programme announced yesterday touches on these issues or acknowledges the problem, and nothing addresses the fundamental problems in the housing market or matches our commitment to build 200,000 homes a year by the end of the next Parliament. There is the commitment to legislate for development of a new garden city at Ebbsfleet and, as far as it goes, that is to be welcomed. However, there is a failure to ensure the provision of affordable housing or other garden city principles in that development, and the number of homes announced is some 5,000 fewer than were originally announced in 2012. The proposed reforms to planning to support small builders are ones that we could support but we will have to examine the detail. However, there is nothing to address the more deep-seated problems with the current planning system. No effective action is proposed to stop developers hoarding land with planning permission and nothing addresses the weakness in the planning system of the duty to co-operate, which is denying some local authorities the right to grow.

An incoming Government in 2015 will not be able to turn back the clock on funding but they could address the fairness in distributing the resources available. Labour councils and others are already meeting the challenges of austerity in many ways and more can be done if we build on the model of city deals throughout local government. It is crucial that we support councils to deliver economic growth in all areas of the country. This means devolving real power from Whitehall to towns and cities so that working together with local businesses—as in the city deals, where it is good that 24 have been agreed to date—they can take responsibility for transport, housing, jobs and skills and economic development. We need to be radical in breaking down the barriers to integrated working, including ending Whitehall’s silo mentality.

The Local Government Innovation Taskforce set up by Ed Miliband is looking at how Labour in local government is already innovating and responding to the challenges that our communities face. In some of the councils where we made gains last month, it is possible to see what is on the agenda. Priorities are being set locally: in Crawley, Labour will require 40% of new housing to be affordable, for example, while the priority for Croydon is to make it a living wage borough. Getting money out of the centre, from Whitehall to the town hall, is essential if we are to rebuild confidence in the power of people working together to create a future that is right for them and their communities. So, from the safety of this unelected House, I say to all those elected councillors: when the euphoria of election fades and the scale of the challenge emerges, keep the faith. Local councillors have a vital role to play for their towns and cities, their communities and, indeed, their country.