Local Government Finance Settlement

Lord True Excerpts

Thursday 9th January 2014 Lords Chamber

[Lord True (Con)]

My Lords, I congratulate the noble Lord, Lord Smith of Leigh, who is an outstanding and highly respected servant of local government, on securing this important debate.

I declare an interest as, and speak from the standpoint of, the leader of a London borough that may be a neighbour of Epsom and Surrey but is actually the worst resourced in London. Grants provide less than a quarter of our budget and the borough has to raise about 70% of its budget directly from council tax. Incomprehensibly, it is a tariff authority for business rates. My director of finance will be surprised—and I agree with what the noble Lord said about spending power—to discover that we are told that our spending power will actually rise in 2015-16. It does not feel like that on the ground. I think that spending power is a highly questionable measure.

All those of us who care deeply about local government will want to see efficient local councils as well resourced as is practicable, and, even if this sets me up as an Aunt Sally for this debate, I believe overall that in the present circumstances we are. Also, as the noble Lord, Lord Smith, said, in terms of the Autumn Statement, and indeed this settlement, there is evidence that the Government are listening and have listened to representations about the system. Therefore, I do not share the view that the draft settlement put before Parliament—which I agree was regrettably late in the year and without an Oral Statement—is the beginning of the end of the world. Indeed, in the context of a country that still plans to borrow £11 million every hour next year, some will say that it is arguably on the generous side.

No doubt we will hear about difficulties today. I candidly acknowledge that there will be colleagues who will have difficulties, as will we, so there will be some shroud-waving. I looked up what the noble Lord, Lord McKenzie of Luton, whom I hugely respect for his great contribution to local government, said about the 2012 settlement. We have heard about the risk of insolvency. The noble Lord said in 2012 that the then settlement would push many local authorities “to the brink” and put,

“their long-term viability in question”.—[Official Report, 19/12/12, cols. 1604-05.]

It did not turn out quite like that then and I doubt that it will this time. Indeed, Luton’s current council tax booklet tells me that Luton council,

“has kept its tax the lowest in Bedfordshire and the tax rate is well below the average of other unitary councils”.

It says that Luton,

“has kept costs down with a range of money-saving and income-generating ideas”,

and that the council,

“has been able to set a balanced budget while continuing to protect vital services”.

It speaks of £4 million of growth. If that is the brink, some of us would like to be on it.

In an immensely difficult period economically for this country as a result of the disastrous legacy of waste and unsustainable overspending which our coalition Government inherited in 2010, local government had to, and has to, share the burden, and I thank my noble friend and the Secretary of State for the efforts they have made to ensure that local government is given support financially. For example, the ludicrous farce of comprehensive performance assessment—remember all that—has been swept away, saving hundreds of millions of pounds.

We have seen consistent support through the freeze grant for councils that restrain their expenditure, which has now been extended to both 2014-15 and 2015-16. I am particularly pleased by the announcement that the funding for the next two freeze years will be built into the spending review baseline. The noble Lord was quite right to say that there were inevitable fears about a cliff-face effect when it eventually disappeared. So that was good news. Incidentally, I hope that the noble Lord, Lord Beecham, who follows me, will confirm that Labour supports and would continue the freeze of grant policy and entrenchment in the baseline.

I do not have a particular beef about overall spending. The reality is that in the easy money era of 1997 to 2010, spending by my authority—one local authority alone—rose by 50% in real terms, after allowing for inflation. Against that background we have all been able to make savings, and we still can. In our case, as with many other local authorities—there is nothing particularly special about our authority—public satisfaction with services has actually risen, as we now share services, and costs and waste have been pared. Indeed, the residents’ survey published in our authority this month is the best that we have ever had.

Central government has a great deal to learn from local government when it comes to saving money and good management. Frankly, you only have to glance for a second at the staggering waste in the NHS bureaucracy to see the truth of that. I think that I may find more common ground across the House when I say that equally, I wish central government—not only this Government but their Labour predecessor, who were in some ways even more dictatorial—would stop interfering and regulating what should be local policies. Why are local councils the only bodies banned from proposing new schools or neighbourhood plans? Why are we not more trusted?

We should consider the vital duty of promoting local business, which is absolutely central to any debate on local authority finance. Businesses need premises, but what do we get? Are we trusted to do locally what is right to secure them? No—we get the dogmatic imposition of the automatic right to convert office space to residential use. I was disappointed that, jointly with Islington’s Labour council, we were unable to persuade the High Court of the unfairness of this policy. Given the staggeringly high land values in south-west London, we are quite predictably being hit heavily by it. Already there have been 140 prior approvals for automatic permitted development. This has so far lost some 20,000 square metres of office space—a high number in our local context—dented opportunities for future business development in an area where we want to promote small IT businesses, and involved so far the eviction and termination of almost 50 existing business tenancies.

Let me share with the House an unsolicited e-mail that I saw this morning on the way to this debate from a small local specialist IT company. The managing director wrote:

“We have been operating at our address”—

in Twickenham—

“for the last eight years; at the end of July we received a letter from the Landlord giving us notice, as they put in an application for change of use; they are now building fourteen one bedroom flats and we had to move all our office equipment into storage as we have not been able to secure a lease in the area. Most of the offices we went to see are also changing into flats. We are a small company and have had to let three people go until we find premises”.

It is very sad. That is just one example of what is going on, and not only in our area.

My dismay at this back-of-the-envelope planning policy, imposed from on high over the reasoned objections of local councils, in which a short-term dash for profit is cutting an irreversible swathe through strategic provision for small business, will not come as news to my noble friend. I wish that whatever Government come—Labour, Conservative or Liberal Democrat—will be localist and will listen to advice from those with local experience and understanding in some policy areas.

My noble friend is a good listener and will not mind a little bit of “saying it as I see it” from a fellow Nottinghamian on that point, particularly when I return to my central consideration. I believe that this Government have been as fair and as supportive in financial settlements as local government can expect in these difficult times. Like many others, I remember all too well the dark years of Gordon Brown’s tenure of the Treasury, when average band D council tax bills in England more than doubled. Since 2010, by contrast, council tax has fallen as a proportion of the family budget. Many people up and down the land will share my thanks to my noble friend and to the Chancellor for that.