Local Government Finance Settlement

Baroness Donaghy Excerpts

Thursday 9th January 2014 Lords Chamber

[Baroness Donaghy (Lab)]

My Lords, I congratulate the noble Lord, Lord Smith of Leigh, on introducing what is now his annual new year greeting. When I read the briefing from the Library for this debate, it struck me that we could all make the same speeches that we made this time last year and comment on the discourtesy of government in making the financial settlement for local government so late in the day for planning purposes, the unfair distribution and the end of local government as we know it. However, I am not sure how useful that would be.

Similarly, I listened to the interesting debate introduced by the noble Lord, Lord Shipley, in December on reviewing the Barnett formula. I remember thinking, “Good luck with that”, because the formula for distribution is only one element of our challenge. Centralisation by successive Governments—I agree with what the noble Lord, Lord Tope, has just said in that regard—is a much bigger challenge, and it is hard to take when it is carried out in the name of local government autonomy. Time and again we see evidence that one of the key engines for growth in an economy is strong regional government with real powers. If the Government are in doubt about this, why not try an experiment and give one of our cities the independence they had 130 years ago? Call it the Birmingham Independence Bill or, given the number of speakers from the north-east, the Newcastle Independence Bill. I am not talking of elected mayors, which I think are an abomination, concentrating on style over substance, but of real power for regions or cities. This is about not just the survival of local government but the future health of our economy. There is a human cost to what is going on. Half a million local government jobs have disappeared, mainly affecting women. This is the equivalent of 372 jobs disappearing every day. These people had a commitment to public service and cared about what they were doing. There is real and sustained damage to services which are vital to maintaining the social fabric and supporting community cohesion. The public are being misled about claims of a fair settlement for local government and that efficiency savings can make up the difference. Does the Minister really believe that a consultation period lasting from 18 December to 15 January, which is next Wednesday, is adequate?

The austerity measures will affect the most vulnerable in our communities. For instance, the lesbian, gay, bisexual and transgender housing advice service has reported that there has been an all-time high in calls for support, with 25% of younger LGBT people already street homeless. The LGBT officer in UNISON has reported:

“Another recurrent theme was marginalisation, guilt and isolation. People expressed concerns that their needs as LGBT people were treated as less important than others … They felt guilty for asking that their needs be met in a climate of austerity. Cuts were leading to less acceptance”.

There is a price to be paid for the loss or diminution of social cohesion, and it would be dishonest to claim otherwise. If local government is reduced to offering only the statutory social care elements of its functions, and the vast majority of the population has no interface with those services, one wonders what the impact will be on the democratic buy-in to local government in the future. We have heard at least two examples this week in this House of the potential impact of local authority cuts: first, from the noble Lord, Lord Elystan-Morgan, on how desperate the effects of the floods are in Aberystwyth, and his comment that he did not believe the Government were aware of their seriousness; and, secondly, from the noble Baroness, Lady Murphy, about cuts in social services, which meant that social services were no longer able to do preventive work which might minimise the number of troubled families.

The cuts in total support from central government and the impact on less well-off people are but one aspect of the financial pressures on a local authority to which my noble friend Lord Smith of Leigh has already referred. Local authorities face further costs due to inflation and increased demands from an ageing population. There will also be extra costs in relation to pensions, because of the abolition of contracting out, and the costs of flood damage. The Government appear to have money to splash around for bin collections, which have had virtually nil take-up, and for referenda on council tax, which the LGA has said are,

“an unnecessary and a costly burden that will put growth generating investment at risk”.

However, these are tiddlers compared with the proposals for funding the bill for care. Other noble Lords in this debate are much better qualified to speak on this but, as we know, the Better Care Fund is a pooled budget for health and social care services shared between the NHS and local authorities to deliver better outcomes and greater efficiencies through more integrated services for older and disabled people. No one would disagree that pooled funding should be an enduring part of the framework for the health and social care system beyond 2015-16, which was a commitment in the Autumn Statement in December. However, according to the LGA, the fund simply brings together local government and NHS resources that are already committed to existing activity—it does not address the financial challenges facing councils and clinical commissioning groups. Indeed, the LGA has accused the Government of double counting.

Underfunding of the reforms to social care could turn out to be the biggest con trick by this Government—perhaps even bigger than the spare bedroom tax. My fear is that it will not lead to a peasants’ revolt—which the noble Lord, Lord Heseltine, has called for in relation to local government regeneration—but will be represented by thousands of sad stories of single old people living out their lives in cold and misery and the disabled being stuck in their homes instead of having the full life to which they have been told they are entitled. Some of us have fought all our lives to improve standards of pay, standards of living and equality of opportunity for the disadvantaged in our society. One woman whose home had been flooded over Christmas told the Prime Minister, “Nobody came to help”. I wonder whether that will be the strapline under the record of this Government.