Lord Watts
Main Page: Lord Watts (Labour - Life peer)
Caroline Flint
We are dealing with a package, which is what local councils will face. Even on the coalition Government’s most extravagant predictions of what we might have cut, with which I do not concur, the cuts proposed by the coalition Government, of whom the right hon. Gentleman is an ally, would have meant another £2.2 billion worth of cuts over a four-year period, and they are front-loaded in a way that is dangerous for local communities and the services that they need.
Mr Dave Watts (St Helens North) (Lab)
Is my right hon. Friend amazed to hear that question, bearing in mind that the Government have not announced what cuts are to take place? It is likely that local authorities will not know that until December, giving them just a few months to adjust the budget.
Caroline Flint
My hon. Friend is right: we do not know what the settlement announcement will be at this stage, but what we do know is that local authorities have been told that they will face cuts of 27% in their funding over a four-year period. As I will set out in more detail, much of that is being front-loaded in an incredibly short period of time, which makes no sense at all.
Caroline Flint
I am very much looking forward to the missives I can hear being typed out in town halls in London and across the country to put the Secretary of State right on that one.
Mr Watts
Is my right hon. Friend aware that the changes to the grant system are only putting right what the previous Tory Government had done? When I was the leader of St Helens council, the then Tory Government, in one year, took more than £13 million of grants from St Helens—a deprived community—to give to their friends.
Caroline Flint
As he did during a Westminster Hall debate last week, my hon. Friend lays out the real choices that are being made here about fairness and unfairness. What is happening is unfair and is not right.
Caroline Flint
Thank you, Mr Speaker. I will not hold the hon. Gentleman too harshly to account for what he said in the heat of the debate.
We must recognise that the deficit has to be reduced—and we do. [Interruption.] We have been very clear about that. There are choices to be made, however, about how far and how deep the cuts should be. What does the hon. Member for Tamworth (Christopher Pincher) have to say to Baroness Margaret Eaton, Tory leader of the Local Government Association, who only last week issued a press release on the “unprecedented” levels of the cuts and the impact of front-loading? It is not just Labour people talking about this—[Interruption.] I hear an hon. Gentleman shout “What would you do?” from a sedentary position. We would not front-load the cuts in this way for a start, and we would not have gone as deep.
Caroline Flint
I am afraid that there is another motivation, and it has absolutely nothing to do with the deficit. I think I am right in saying that the Office for Budget Responsibility report suggested that a surplus would start to appear in a few years’ time. Given how the coalition Government like to sing from the rafters about OBR reports, it is a shame that they do not think about areas where they could use that information to minimise the damage of the cuts that local authorities face and adopt a much more thoughtful approach to their impact on the ground.
There is no doubt about it—the impact on local communities up and down the country will be harsh and, I think, undeserved. Whatever plans local authorities might like to make—working with the voluntary sector and the private sector and looking at ways to share functions and of delivering services differently are all, I think, subjects worthy of debate—they can do only so much in the time available. That time is simply not enough.
The Secretary of State for Communities and Local Government (Mr Eric Pickles)
I am most grateful to the right hon. Member for Don Valley (Caroline Flint). I could hear the gentle scribble of history being rewritten. I think that had Winston Smith been part of the process, he would have been down to his second stub of pencil by now. I would happily have walked into Room 101 just to hear the end of it.
We are really very pleased, in a way, that the motion has been tabled. We in the Department are very sensitive people, and we felt that we had done something wrong as far as the right hon. Lady was concerned. She doesn’t phone, she rarely writes, she asks few questions, and she seems to be unaware that we have laid statements. We thought somehow that she was not all that interested. So we are very pleased that she is now back in action, and is taking an interest in the Department. Admittedly it seemed a weird time for her to do so, given that the settlement is just a few days away, but then it occurred to me: she has a plan.
It is all about the business of the blank piece of paper. The right hon. Lady is actually going to write something down. She is going to give us some Labour policy. We are going to be told, in this debate—[Interruption.] I am optimistic. We are going to be told what percentage of cuts the right hon. Lady thinks reasonable. The Local Government Association has already given us a percentage. If the right hon. Lady—who spoke for hardly any time—wants to give us a percentage that she considers reasonable for the coming year, I will happily give way to her.
Mr Pickles
I will happily give way for a trip down memory lane. What does the hon. Gentleman want to tell us about the 1980s?
Mr Watts
It is the 1960s that I want to talk about. The Secretary of State is trying to take us back to them. Can he explain why he is front-loading the cuts? Everyone knows that he is doing it because a general election is coming. [Hon. Members: “What?”] Well, he knows when the election will come. Can he tell us why he is front-loading the cuts? It is a simple question.
Mr Pickles
The hon. Gentleman may be wondering why he is sitting on that side of the House. We have had a general election. His party lost and we won, which is why we are on this side of the House. As for the front-loading—[Interruption.]
Mr Pickles
My hon. Friend is right. There is increasingly a trend towards reducing backroom services and I welcome the support from the right hon. Member for Don Valley. Perhaps the clearest message that should go out from the Chamber today is that there is broad consensus on the sharing of services and it would be a very wise chief executive and leader of a council who continued with that process.
Of course, part of the problem is that the so-called operational savings that the Labour party promised were simply not met. When I opened the Department’s books, I noticed that almost £1 billion of planned efficiency savings promised by the Department and announced in the 2007 spending review and the 2009 Budget were never delivered by Labour Ministers.
We know that Labour had secret plans for cuts for local communities, but it did not have a route map to get there through constructive reform. The Labour Government had 13 years to improve the system of local government funding but they fluffed it. They introduced 10 different Acts that affected local government finance. They scrapped capping, then they reintroduced it. They gave pensioners an extra payment for their council tax, then they dropped it. They passed a law to hold a council tax revaluation, and then passed a law to delay it. They published a local government finance Green Paper, then a White Paper, then they held a balance of funding review, and then they held the Lyons inquiry review. They then extended the Lyons inquiry review and when the Lyons inquiry reported, they did not even bother to issue a formal response.
In the 2010 Labour manifesto, we were promised a cross-party commission on local government finance. Perhaps Labour just ran out of ideas and wanted to ask us. The final Labour initiative, with the third leader in three years, is the famous blank piece of paper. No wonder the shadow Housing Minister, the hon. Member for Plymouth, Moor View (Alison Seabeck), has admitted
“we won’t rush into policy making”—
[Interruption.] I am glad she has confirmed that. Perhaps they are waiting for the next Labour leader. I suspect that that will not be long now—like with buses, one waits around for ages and three come along pretty quickly.
Mr Pickles
I am sorry, but if I wanted to visit the 1980s I would watch an episode of “Life on Mars”.
I welcome the opportunity to lay to rest some of the reckless scaremongering that the Labour party has peddled in recent weeks, and particularly in the past few moments. We are a few days away from the settlement and it is important that we do not create a climate in which wacky, fictitious figures end up scaring people unnecessarily without adding anything to the debate.
Mr Pickles
I always enjoyed it when the right hon. Lady occupied my role, so I am sorry to tell her that this is not like a deficit; we have to pay down the debt in relation to non-domestic rates, so the money that she suggests will be available will not be available for what she suggests. In case she thinks I am just making a rhetorical point, I am willing to write to her, copying in the right hon. Member for Don Valley, explaining this issue. If £5.5 billion were suddenly available, I think I might have used it by now.
The points that SIGOMA makes could be made by the county councils network, the district councils network, the SPARSE Rural group and my dear chums at the London councils. They could produce similar figures on how the funding system seems to channel more money to certain areas. Before Labour jumps on these bandwagons, it needs to realise that it cannot play the mets against the shires and then campaign honestly at the May district council elections.
Mr Pickles
We will listen to all representations. We are moving to meet the points made by the Local Government Association and other interested parties. We intend to deliver a fair and sustainable settlement that protects the most vulnerable communities and spreads the impact in a manageable way.
Mr Pickles
The hon. Gentleman seems to have left the 1980s for the 1970s and “Jim’ll Fix It”. There is no intention to fix this or to hit vulnerable communities the hardest. We will be doing our best and I hope that the hon. Gentleman will be ready to praise me next week when we produce our proposals. Frankly, he should take with a pinch of salt some of the more alarmist predictions of jobs cuts that have been fed to the media by the unions and others. Such dossiers are based on looking at local media and projecting them out. We see unions being upset by stories that unions themselves have placed.
Reducing the number of posts is not the same as job cuts, as staffing can be reduced through natural wastage and freezing. The unions have intentionally misled on the issuing of section 188 notices, which allow the terms and conditions of workers to be changed to save money. The GMB has claimed that 26,000 staff in Birmingham face “the threat of redundancy”. Indeed, that would be a shocking figure—26,000 workers faced with redundancy. In fact, the process seeks to reform car allowances and staff parking, and is nothing more than that. It is designed to reduce the scope for redundancies. Even Leon Trotsky at his worst would not have taken to the streets over car parking. Such reforms reduce the scope for redundancies and do not increase them.
Heather Wheeler
Of course, I know about the Gershon savings. I also remember the squeals about it and the synthetic savings that were made. The opportunity was not taken to look root and branch at what local councils need to do and should do, at the way they should do it and at the value for money they provide for their residents. It is hugely important that people take an innovative look at the way in which local councils work, and that they take this opportunity. The whole country is in a financial crisis, and nobody should be in position where they do not have to take their percentage of it. That would be completely wrong.
The new coalition Government are going to look at the floors and ceilings, the caps, the huge amount of ridiculous comprehensive area assessment-type targets, and the millions of pounds that all our councils have had to spend on this sort of thing. This coalition Government are about freeing people up to organise themselves in such a way that they provide the vital services that their people want at the same time as having the guts to say, “We don’t want to do that any more. We’ll have a referendum on it. Do you agree with us?” In our council in South Derbyshire, 1% on the rates raises £50,000. Given the floors and ceilings that I have had to put up with for the past 13 years of the Labour Government, we have easily lost £2 million there. The same goes for the fire authority in Derbyshire, and the police authority as well.
Mr Watts
May I inform the hon. Lady that those floors were introduced to protect her local authority? Local authorities such as St Helens should have received a far bigger grant allocation every year, but we did not put right what the previous Tory Government had done, which was to take money from the most deprived parts of the community and give it to the most affluent parts.
Heather Wheeler
That is a really interesting point. All I know is that I have lost £2 million in South Derbyshire. I do not know whether it should have been £2.5 million or £0.5 million; I know that I lost £2 million.
Heather Wheeler
That was a very helpful intervention. Fortunately, someone has some facts at their fingertips, rather than the usual pure emotion.
Mr Watts
The hon. Lady and the hon. Member for Croydon Central (Gavin Barwell) need to understand the amount of money that has gone into Liverpool. Under the Labour Administration, many millions of pounds went into the regeneration of the city. The Labour Government had a good record on Liverpool city council.
Heather Wheeler
What an amazing situation. We are completely blind to the reality of what has been going on. The ratepayers of South Derbyshire also know about how much money comes in. They were used to council tax rises of 9%, 13% and 17%, which was absolutely outrageous for hard-working families. It was completely ridiculous. We were left to fend for ourselves, and it just was not good enough.
The new localism Bill, and the new arrangements for the rate support grant, will have a major effect on what we do. We will be able to do away with the horrendous top-down targets that our accountancy and finance staff used to spend hundreds of hours dealing with. All of that will be swept away, and thank goodness for that. I am really looking forward to the announcements just before Christmas. There is one more Christmas present that the Minister can give me, relating to Gypsies and Travellers, but we can talk about that another time. We have had to put up with scaremongering for the last however many hours, and the debate is to go on until 10 o’clock, apparently, so goodness knows what else the Opposition will come up with.
Mr Marsden
I thank the hon. Gentleman for his comments. I understand that he wishes to mitigate some of the criticism that his own councillors have made of the various settlements, but I remind him that the cuts in area-based grant had to be effected in year, in this year, quite apart from what would happen after 2011.
Mr Marsden
I am indebted to my hon. Friend. He is, of course, absolutely right.
Simon Hughes
The right hon. Lady would expect me to be sympathetic to that point and I have acted in the past few weeks on that very issue. I have been in to see Ministers; I went to see the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Hazel Grove (Andrew Stunell), and civil servants to discuss exactly that issue. I believe that it would be wrong if all the funding currently given to councils, including the working neighbourhoods fund, which was a top-up in order to assist deprived communities, was not taken into account as the starting point for the calculation for the next grant. I have also argued that it would be inappropriate for there to be a greater decrease in percentile terms for authorities such as hers and mine, which have significant deprivation, than for smaller authorities, just because we happen to have had a larger amount of public money before. I have been given reassurance that an upper and lower percentage reduction will be common across all local government—a band above and below which the reduction cannot happen—and that there is a likely inclusion of at least some, although I hope all, of the other funding, not just the core formula grant.
I understand the point that the right hon. Lady makes, and she would expect me to go into bat for deprived communities, because I represent a borough that has a higher deprivation index than the next-door borough of Lewisham—I believe that is the case. Relative deprivation is not a competition we are proud of, but this is something we have to deal with. Of course one of the things that we have to do is try to get a fair settlement that reflects the needs of and deprivation in all the local authorities in that settlement. Again, I can tell her that I have been doing the job that she, my constituents and my local authority, although it is run by Labour, would expect me to do, just as I would have done when my local authority was run by my colleagues.
Simon Hughes
I will not give way, as the hon. Gentleman has intervened several times in this debate and I want to press on.
It is not just local government that is important; I want to pay tribute to councillors, of all parties, who serve in local government and to many extremely good officers in local government. It contains some brilliant officers, some less brilliant ones and, as in any walk of life, some people who may not be in their right vocation. Southwark council has some excellent officers, and I pay tribute to them and thank them for their courteous and regularly helpful service.
We know the background to today’s debate: we have to deal with a huge economic legacy of the combination of international problems, the banking crisis and the previous Government’s policies. We know that we have to save public money and we know that local government has to bear its share. I note that the Department for Communities and Local Government has imposed on itself a larger percentage reduction in its funding than it is asking local government to bear.
There will also be good things in the settlement, according to the comprehensive spending review. For example, it is clear that there will be additional money— £1 billion a year—for personal social services, in order to deal with the fact that there are more older people and people are living longer. That is a good thing. There will also be far fewer ring-fenced grants—90 will reduce to 10—and that is a good thing for most local councillors, who want to have that choice. In addition, a set of local community budgets will be trialled around the country. We should be positive about those good things.
The Government have to take two other things into account. The first is that some councils have much more reserve than others. The second is that some councils have the ability to raise much more money through council tax than others, because they serve much richer communities. Those background considerations are absolutely relevant.
Steve Rotheram
I have already allowed enough interventions, as hon. Members must admit.
Steve Rotheram
I thank my hon. Friend. In the spending review framework, the Government committed themselves to limiting the impact of reductions on areas heavily dependent on the public sector. To meet their stated commitment to fairness, should not the Government apply the same logic to the local government settlement? I will give way if the Minister wants to answer that.
I was speaking about the Tory-led West Oxfordshire district council in the Prime Minister’s Witney constituency, one of the least deprived areas, and about Liverpool, the most deprived local authority area, getting a 38% funding cut. I mention Liverpool, as I always do, and Knowsley. As an aside, both the Labour party and the Lib Dems have had their conferences in Liverpool. I ask the Tories to do the same so that they can see our wonderful city for themselves. Maybe then they would be less likely to destroy all the progress that we have made in the past few years.
Andrew Percy
I will not give way any more because I have detained the House already and do not wish to whine on for too long.
Division has been created today by the image that many Tory shire authorities around the country are about to get a windfall and are doing very nicely, whereas everybody else faces cuts. No doubt there will be the slaying of the firstborn and all the other extreme language that we have come to expect from Labour Members. Such arguments are not helpful. I represent Goole and East Riding, which have some of the most deprived communities in England. East Riding suffers from being part of a larger authority that has very wealthy areas, with the consequence that its funding settlement has been among the worst in the country for the past decade. The council has tried incredibly hard over the years.
Andrew Percy
No, I will not, because the hon. Gentleman has had a lot to say today.
As the hon. Member for Barrow and Furness said, large rural authorities, as well as having considerable pockets of deprivation, face other challenges that are not taken into account. One of my two authorities is the largest unitary authority in the country. It is time that we looked at the structure of the grants system and made it take account of issues of rurality. For example, we know that rural poverty is hard to identify.
If the hon. Member for Scunthorpe (Nic Dakin) speaks, I am sure that he will talk more about our Labour local authority, which seems to take a different line on the spending cuts. I will allow others to conclude whether that is for political reasons, given that there are elections next year. However, my Conservative-run authority of East Riding has accepted that it will be tough. It has made decisions to prepare for that over the past two years, because it has known that it is coming. It knew what the Labour party was saying about 25% cuts—some of the biggest cuts in history—coming its way, so it started to make decisions accordingly. Even after the comprehensive spending review, one of my local councils said clearly:
“The programme involved a carefully planned reduction in expenditure in response to anticipated funding cuts.”
The council had been planning for the cuts already. Any half-decent leader of a local authority should have had that in mind, not least because they should have seen the previous Government’s plans. It is nonsense suddenly to pretend at this late juncture that it is all wicked and terrible, that nobody could have seen this coming, and that it would not have happened in the strange world that the Labour party currently seems to inhabit.
I have highlighted some of the waste and inefficiency that I saw as a local councillor. There are some very good people working in local authorities and providing services. The challenge for local authorities is to navel gaze, to look closely at what they are doing at the moment and to decide whether they can do that better. I give way one last time.
Mr Dave Watts (St Helens North) (Lab)
I am delighted to be able to take part in this important debate. I do so not only as the MP for St Helens North but as the chairman of the all-party parliamentary group on the special interest group of municipal authorities. Several Members have referred to the SIGOMA document, and I would recommend reading it to anyone. I know that the Minister has already read it. I would also recommend that he read the document produced by the Alliance group entitled “Hard Times”, which will nail some of the lies we have heard over the past few hours. I know that the Minister has read it, but I doubt whether the Secretary of State has done so.
Before I move on to my main points, may I say to the hon. Member for Bermondsey and Old Southwark (Simon Hughes) that it will not wash if he tries to take no responsibility for the cuts that are heading his constituents’ way? He said he did not want to see cuts in voluntary sector budgets, or in leisure and youth service budgets. He said that he did not want to sell the family silver or sell off any assets, but he is going to see cuts in all those areas because it will be impossible for his council to make the cuts that are heading its way without doing many of the things he does not want to do.
When the Minister responded to an Adjournment debate recently, he got very excited. I notice that he has also got very excited today. May I suggest that he keeps cooler than he did in the previous debate, because a number of us are worried about his health, and we do not want anything to happen to him before he has the chance to sum up the debate?
I should like to touch on the background to the cuts, the fairness of the last round of cuts, and the question of who will be affected by the cuts heading their way. I should also like to address the key issue of what the Government need to do to prove their own message that we are “all in this together”. I want to make it clear from the start that, like my own party, I accept the need for some cuts in public expenditure, and that local government had to make its contribution. There is no doubt that we had to reduce the deficit, and my party has been responsible for setting out how we would do that. The difference between us and the Government is the mix of tax increases and cuts. We also have a different view of the period over which the cuts packages should be spread. We would spread them over a much longer period than the Government propose, and we would not front-load them. We have heard a lot about front-loading today, and it has been suggested that the Secretary of State is going to review the position on that. The reason that most local authorities and communities are concerned is that the spending review made it quite clear that that is what the Government intend to do. I suspect that they are now trying to retreat from that position, knowing the implications of their proposals in their own areas as well is in ours.
My constituents accept that there has to be some pain and some cuts, but they do not like the fact that this same Government, while making dramatic cuts in public services, have allowed the banks to continue to pay massive bonuses to their staff and given the banks—the banks again!—a £1 billion tax cut. The Government have also now reneged on a promise to publish the details of those bankers who were being paid large bonuses. My constituents accept the need for cuts, but they do not think that the Government have been fair with them. They want to see a much fairer package of cuts and tax increases to address the plight we are in. My constituents—and, I suspect, those of the Minister—know who is at fault for the present financial crisis: it is not the previous Labour Government but the bankers, here and across the world, who turned the world economy upside down some months ago. It was only the straightforward action of the previous Labour Government that prevented the kind of recession that we saw under the last Tory Government.
What do my people want? They want a fair system of cuts. If there are to be cuts, they want to ensure that they are fair. They want to ensure that the most deprived communities and the most deprived people are protected, and that the cuts that have already been made in our communities are taken into account in any future round of cuts. They also want the cuts to be adjusted so that councils—not just ours but Liberal and Tory councils as well—will have the time to adjust their budgets. That means that we want to see more back-loading, rather than the front-loading that the Government are proposing.
It has been suggested that this is also about efficiency. The Secretary of State is quite good at putting out stories about the cost of plant pots in the Department for Communities and Local Government but, quite frankly, that is a smokescreen. These cuts will hit some of the most well run local authorities, including my own. My local authority, of which I was leader until I came into this place, is a five-star authority. It has excellent education and social services, and other council services. It has kept its council tax increases below the rate of inflation for the past 10 years, yet it faced massive cuts in its budget in May. It now faces cuts of up to £12.7 million in 2011-12, and £24 million worth of cuts in 2014-15. That nails the lie that it is only the wasteful councils that are being hit; some of the most efficient and effective are also being hit. My council will experience great difficulty because it is already efficient. Councils that are already efficient are going to have to cut services to the bone. Some of the comments from those on the Government Benches have suggested that their councils could make some savings, and I suspect that that is because they are very inefficient, compared with authorities such as my own.
I want to comment on the fairness of the proposals. I think that the Secretary of State has suggested that my contributions hark back to the 1970s and 1980s. The only good thing about being my age is that I have some experience of the previous Tory Government. I was the leader of the council when it lost £13 million and had to find a way of implementing that cut overnight.
I raised Westminster council with the Minister on last Tuesday’s Adjournment. It has been in contact with and written to me because it is upset about some of the things I said; I will respond in due course. Under the system that was in force under the previous Tory Government, if St Helens had received the same level of grant as Westminster, we would have had no cuts whatever, we would have had to pay no council tax whatever and we would have had enough money left over to send every one of my constituents to Spain for a week. That shows the level of fiddling that went on under the previous Tory Government, so we will take no lectures from this Government about fiddling the system.
The Minister said that we were going to cut the neighbourhood renewal fund—that is not true, and Government Members know it. The only argument they have relates to the three-year review, but all the grant systems were for three years. That did not mean that we were going to do away with the fund; it meant that we would reassess local government spending over the next three years. I am prepared to blame my own party for not introducing the changes as quickly as it should have, which meant that millions of pounds from our authorities went to some of the richest areas, including Westminster and many others. We did not move fast enough—
