Local Government: Finance Settlement

Baroness Smith of Basildon Excerpts

Thursday 17th January 2013 Lords Chamber

[Baroness Smith of Basildon]

My Lords, I am grateful to my noble friend Lord Smith of Leigh for providing the opportunity to have this debate about the local government settlement. It is clear from the speakers’ list and from what we have already heard that there is a huge amount of experience in your Lordships’ House. I suspect that across the Chamber our reasons for taking part in this debate are similar—we value and support local government, not as an entity in itself but for what it can achieve. I spent eight years as a county councillor in Essex, my degree is in public administration, I have worked in local government and was a Local Government Minister here and in Northern Ireland. There were times as Minister when I felt that I was a poacher turned gamekeeper, turned quarry—as I am sure the Minister will understand. I am also a vice-president of the LGA.

We have heard details of level of cuts and I want to focus on the impact of the financial settlement. My noble friend Lord Smith was clear; we are not against efficiencies or genuine savings, but this settlement goes way beyond that in its expectations. In 2011, Secretary of State Eric Pickles, in his inimitable style, told his party conference that local government could, “do more for less”. This financial settlement is certainly testing that premise. Joanna Killian, who chairs the Society of Local Government Chief Executives and is the chief executive of Essex County Council, expressed her concerns that the,

“local government settlement confirms that local government will continue to bear the brunt of public sector cuts”.

She warned:

“This settlement will increase the risk of more councils being financially unviable”.

That view is supported by a recent report by the Audit Commission—soon to be abolished by the Government —which states that auditors consider 43% of larger single-tier councils and 34% of district councils to be at short-term or medium-term risk. There is no party-political divide on how dangerous the situation has become. That is a professional assessment from auditors, councillors and officials. The leader of Kent County Council, Conservative councillor Paul Carter, warned,

“the tank is running on empty”.

Sir Merrick Cockrell, the Conservative chair of the LGA, called the cuts unsustainable. The notion of making changes at the margins, cutting back on some services, and increasing or introducing reasonable charges has gone. We now face a fundamental re-evaluation of what local government is able to do.

While the Government talk of localism, every action they take removes not just money from local authorities but the power to tackle those very problems in society that the Government are exacerbating. I accuse Ministers of misleading local government about their intentions regarding what local government can and should do. When the Localism Bill received Royal Assent, Ministers hailed the legislation as,

“the biggest transfer of power in a generation, releasing councils and communities from the grip of central government”.

When Eric Pickles became Secretary of State, there was a view that as a former council leader he knew the value of local government. He even spoke of the “power shift” from national to local. A hugely entertaining read, in retrospect, is his speech from the Conservative Party conference in 2011. He said that in comparison to Whitehall local government has been the most “efficient part” of the public sector. “My friends”, he said,

“you can feel that power is shifting … from Whitehall to councils … Together we will shake off the shackles of Labour and Britain will become great again”.

I allow some leeway for conference rhetoric but Ministers perpetuated this myth as they pushed the Localism Bill through Parliament.

We often hear talk of power without responsibility but the way in which this Government are treating local authorities is the reverse. This is passing on responsibility without power. Ministers repeatedly state that budget decisions are the responsibility of local councils and that they should decide where the axe will fall. But it is central government—despite warm, meaningless words from Eric Pickles that local government is the most efficient part of the public sector—that hands down the budget on which councillors have to balance the books.

If central government decides the funding levels it holds the power and all that local government is left with is the responsibility—responsibility for trying to manage cuts to have the least impact. This is passing the buck. While local councils are trying to provide services, most of them statutory ones that the Government say that they must provide, the Government are removing the resources that allow them to do so.

Here are some examples. Labour-controlled Thurrock Council, which is a unitary council, is seeking to manage cuts of £13 million this year. One of its difficulties has been the relatively new government concept of “spending power” that assumes councils are able to raise the same level of council tax next year as they are this year. The new local council tax support scheme that replaces council tax benefit means that there is a significant difference. In Thurrock that will be a reduction of more than £8 million. I wonder if the Government really understand the impact of their policies.

Conservative-controlled Southend Council, along with many other councils, 10 of which are Conservative, has rejected the Government’s plans for a further freeze on council tax as being unworkable, despite having to make significant and damaging cuts. Recently, Southend Council leader Nigel Holdcroft said:

“We no longer have any leeway and we have to make real cuts to services … to balance our books—and that involves making some very hard choices”.

Even Conservative councils, which clearly do their best to support their Government, find the Government’s financial settlement unworkable. Southend is not alone. A number of other Conservative councils have not taken the Government freeze this year.

Earlier this week at the council of my home town, Basildon, virtually every member of staff was handed a personal letter headed, “Transformation programme: collective redundancy consultation”. In all my years involved in local government I have never seen anything like it. I quote:

“The reduction in resources and the expectation of localism means the council needs to work together with partners and local people to create an environment where everyone can thrive ... The role of the council is changing from simply doing things for people to one of working with them to do more things for themselves”.

That may be worthy of “Yes Minister” but it goes on to promise,

“a varying degree of change for all of us”.

Not quite all, as I shall come on to. The real purpose of the redundancy consultation is to warn staff that,

“there is a risk that the council will be unable to continue to provide work for all its employees”.

In other words, not a single member of staff, other than the most senior, I understand, has job security. Everyone who has received that letter is being made aware that their job is at risk. Why otherwise would they be sent the letter? The deputy leader of the council has already said that he expects up to 200 redundancies in the next few months. And there will be more to follow. How did those staff, many long term and not on high salaries, feel when they went home that night—numb, scared? They were certainly demoralised. As I have mentioned before in your Lordships’ House, this is the same council which, apparently against advice from the Secretary of State, will pay a part-time executive director £100,000 a year and according to reports from council documents paid its top 12 earners £200,000 more than in the previous year, 2011.

The council refuses to release information to the public to confirm and explain this arrangement, despite having received a letter from the Secretary of State that ordered it and every other local authority to release details of salary and perks paid to senior executives. Is it a coincidence that a council that behaves in this way to its staff has seen long-term sickness almost double? In six months from April to September 2012, mental health has been the main cause of long-term sickness absence and has risen from fewer than 100 days to more than 200. That information comes from a publicly available council document.

There is a serious implication here for administration. Cuts in staff have an impact on the scrutiny of the administration. Last week, when Councillor Gavin Callaghan received an inadequate response to an inquiry regarding unused and vacant buildings locally, he was told that it would do its best to provide information but that it was “quite short staffed”. The information was required for a meeting last night. He asked for the information more than a week before. However much they wanted to, the staff was unable to help. Effective governance needs effective scrutiny. Opposition councillors can fulfil their scrutiny role only if they have the information to do so.

My final point on Basildon Council regards apprenticeships. Yesterday the council issued a press release congratulating itself on participating in a careers convention for schools and its offer of apprenticeships. I am hugely supportive of apprenticeships but I am very concerned at reports that as staff numbers are reduced apprentices are moved into their desks to undertake some of their work. This of course is much cheaper.

My last comment on the settlement is to remind ourselves that police and fire services are also affected by these cuts. I am appalled that Essex no longer has a single 24-hour police station. Only yesterday, we saw the London police and fire and rescue services respond so quickly to the dreadful helicopter crash at Vauxhall Cross. London fire services are facing the loss of 12 fire stations, two of which attended Vauxhall, 18 fire appliances and around 520 staff.

Some weeks ago I met representatives of the Metropolitan Fire Authorities about the budgetary pressures that they face. They were pragmatic and professional but clearly very concerned. Ministers will have to be very confident indeed that there are no public safety implications if they go ahead with these significant cuts to the fire service. To find a way forward, a representative of the Metropolitan Fire Authorities has asked the Minister whether the discretion afforded to the eight fire and rescue authorities to raise council tax precept by just £5 can be extended to all fire and rescue authorities, given that their precept levels are relatively low. I hope that the Minister understands their anxiety and can give a response.

Local government services range from the major life-changing and enhancing to the mundane but include those services that bind and connect communities and make a difference to their way of life. I am known to be pragmatic and practical, so I am not exaggerating when I say that this Government are putting too much of that at risk. I hope that the Minister can reassure me that that is not the case.

[Baroness Garden of Frognal]

My Lords, I remind noble Lords that timing is very tight. I ask noble Lords to sit down as soon as the Clock hits 10 minutes.