Caroline Flint
Main Page: Caroline Flint (Labour - Don Valley)(13 years, 5 months ago)
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Caroline Flint (Don Valley) (Lab)
I beg to move,
That this House notes with concern that local councils will lose, on average, 27 per cent. of their funding over the next four years, compared to 11 per cent., on average, for Whitehall departments; regrets the frontloading of reductions in funding which means that the heaviest cuts will fall in the first year; believes that the unexpected severity of the cuts will result in substantial job losses in the public and private sector, undermine the voluntary sector and hit frontline services; regrets the inadequate level of capitalisation available to local councils to deal with redundancy costs of up to £2 billion; further notes the commitment in the coalition agreement to ensure that fairness is at the heart of decisions and that those most in need are protected; is disappointed that the most deprived areas will be hit hardest by the reductions in funding; and calls on the Government to revise its proposals before making the provisional finance settlement to ensure that any reductions in funding are more evenly spread over four years and do not fall disproportionately on the most deprived communities.
There is common cause across the House in recognising the need to reduce the deficit. Labour had a plan to halve Britain’s borrowing over a four-year period. That would have meant cuts in spending and would have resulted in reductions to local government funding, but not like the Government’s cuts. I will not let the coalition pass the blame for cuts of their choosing, their design and their timing on to us. Let me, once and for all, nail the myth that there is no alternative. The Government had a choice.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
That would be a reasonable position for the right hon. Lady to adopt if she set out in some detail how Labour’s programme of cuts would impact on local government.
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.
Mr Jim Cunningham (Coventry South) (Lab)
Does my right hon. Friend realise that Coventry city council, for example, will lose not only front-line staff, but £45 million over the next two or three years in different types of grants? Is that not an horrendous thing to inflict on the people of Coventry?
Caroline Flint
It is absolutely dreadful. As we will see in this debate, not only are the cuts unfair for the whole of local government; they will attack the poorest communities up and down the country. That is neither fair nor right, and it is not something that we would have done. This Government had a choice. They have chosen to cut deeper and faster, taking a huge gamble with jobs and growth. They could have shared the reductions in spending between Whitehall and town halls, but instead, they have chosen to dump cuts on local councils up and down the country. The Government could have spread the cuts evenly over four years, giving councils time to plan where savings could be made, but instead they chose to front-load them, so that councils are crippled by the heaviest cuts falling in the first year.
Rehman Chishti (Gillingham and Rainham) (Con)
Does the shadow Secretary of State agree that a freeze in council tax will help hard-pressed families, who were hit by the previous Government’s year-on-year increases in council tax bills?
Caroline Flint
The irony of the hon. Gentleman’s point of view is that the most affluent areas will benefit from the freeze in council tax and the transition payments that the Government are providing. Those in the poorest areas, with the lowest amount of take from council tax, will have a double whammy, because to pay for the council tax freeze, the 2.5% is being top-sliced from the formula grant. The Government could have ensured that the cuts were spread fairly, but their choice was not to do so. Those are the risks that they are prepared to take. The danger is that communities up and down the country will pay the price, and we will not let the Government forget it.
Hazel Blears (Salford and Eccles) (Lab)
Is my right hon. Friend aware that the chairman of the Tory party, Baroness Warsi, said to the Manchester Evening News in September:
“Regions like Greater Manchester will not suffer disadvantage under the coalition government…If anything the regions will be protected and supported to ensure they grow”?
With Salford council facing £40 million to £45 million of devastating cuts and West Oxfordshire district council—which contains Witney, the Prime Minister’s constituency —getting a 37% increase, how can this possibly mean that regions such as Greater Manchester are to be protected?
Caroline Flint
As usual, my right hon. Friend makes an excellent point, based on facts, and the facts are that the cuts to local government will have a devastating impact on our poorest communities. Not only that, but local authorities up and down the country, of whatever political persuasion, are facing a huge task in having to tackle the front-loading of cuts in a matter of weeks, which is not good for either services, jobs or communities.
The Government like to talk about localism—about devolving power to local councils and empowering local communities. In fact, the coalition agreement boldly states that the Government will
“promote the radical devolution of power and greater financial autonomy to local government and community groups.”
Well, the cuts have come, but we are still waiting for the localism. For all their talk of localism, this Government have imposed the largest cuts to local government funding for a generation—cuts that are much deeper than those to other Departments or those originally forecast in the Budget in June; cuts that fall heaviest in the first year and hit the most deprived communities. So much for fairness, localism, and devolving powers to local councils and community groups. The only thing that this Government want to devolve is the blame for difficult decisions.
Joan Ruddock (Lewisham, Deptford) (Lab)
I wonder whether my right hon. Friend recalls the Chancellor saying:
“I am not going to balance the budget on the backs of the poor.”
Does she agree that what we are seeing is breathtaking hypocrisy?
Caroline Flint
I do, and whether in local government, education or health, it is the poorest and vulnerable who are being hit the hardest, as well as those hard-working families who pay their way, but who also depend on local services to provide for themselves and their families. They do not ask for much from the Government, but they ask for them to be on their side—to make sure that work pays and that they can look after their families—and this Government are not providing that security. The whole House knows why that has happened—why local councils will lose almost one third of their funding over the next four years.
Simon Hughes (Bermondsey and Old Southwark) (LD)
A debate about local government is welcome, because local government and its financing are important, but as the right hon. Lady launches her attack on the Government, as she is entitled to do, will she make her position clear,? Did not her Government, when in office, say that there would be a £52 billion cut in public services? How much of that would have fallen on local government? Was the decision to end the working neighbourhoods fund and to cut regeneration funding not taken in March by her Government’s Chancellor of the Exchequer, when he was in office?
Caroline Flint
On the working neighbourhoods fund, I am afraid that the hon. Gentleman has fallen into his Tory coalition partners’ trap. The Tories say, and he repeats the claim, that we planned to scrap the working neighbourhoods fund and had already cut money from it. In the March Budget we did announce savings, including £300 million through rationalising the regional development agencies, but we clearly distinguished between those programmes that were not a priority and would therefore be scrapped and those, including the working neighbourhoods fund, to which we were committed but would look to find savings in. It was a three-year programme in which, in November 2009—[Hon. Members: “Three years.”]. Three years’ funding is more than the one year that we used to have under Tory Governments, and more than the non-existent funding that poorer communities had under the Tory Government from 1979 to 1997.
Indeed, in November 2009 we announced a £40 million boost to the fund, worth £1.5 billion from 2008-09 to 2009-10. Of course, we had to look at programmes, but there is no evidence whatever to suggest that we would have scrapped the working neighbourhoods fund. That is not the case.
Robert Halfon (Harlow) (Con)
The right hon. Lady talks about devolution, but her Government took £13 million out of the housing budget in Harlow, where 45% of housing is social housing. The current Government are ending that and guaranteeing Harlow housing money for Harlow people.
Caroline Flint
I am afraid that is rubbish. The Labour Government, in so many different ways, contributed not only to boosting the refurbishment of homes that had been left to languish for too many years under the Tory Government, but to ensuring that there were ways and means for local councils, with other housing providers, to provide more homes.
The National Housing Federation, I think I am correct in repeating, says that, once the homes that Labour funded in its last period in office have been built, under the coalition Government’s plans, no more homes will be built. In relation—[Interruption.] The Minister for Housing and Local Government says “nonsense”, but let us just wait and see, because even in a time of recession, it was Labour money that worked in partnership with others—[Hon. Members: “Taxpayers’ money”.] It was taxpayers’ money with which a Labour Government decided that we should promote the building of more social homes. Even in the teeth of recession, I think we built at least 55,000 homes to provide for people who could not afford a house on the private market.
We all know why that front-loaded package is happening: because the Secretary of State gives the impression of being more interested in trashing local councils, chasing cheap headlines, calling councillors stupid or lazy and telling local authorities to grow up. The hundreds of thousands of decent, honest, hard-working people who work in local government, and the millions of people who depend on the services and support that they provide, hardly seem to warrant a second thought, but they will be the ones who pay the price for this Government’s decisions.
To make matters worse, local councils are being forced to make deeper cuts than they expected and to do so much quicker, because the reductions in local government funding are front-loaded. As much as 50% of the cuts could fall in the first year. Councillors are looking at cuts of 14%, 16% or 18% to their budgets within weeks, but the Secretary of State still denies it. He says that it is a fiction, but he is about the only person left who still thinks so.
Sir Paul Beresford (Mole Valley) (Con)
I hope that the right hon. Lady will not forget that from 1997 onwards the then Deputy Prime Minister, the Secretary of State responsible for local government funding, changed the formulas three times, each occasion moving money north to Labour authorities and away from London and the south-east. In one year, the year-on-year effect in Surrey, for example, was a £39 million loss.
Caroline Flint
I think I am right in saying that, for every year we were in power, there was an above inflation increase in local government spending. I am not going to apologise for trying to show leadership in addressing need, inequality and poverty in this country. Perhaps that is something that the Secretary of State and his hon. Friends on the Government Front Bench do not want to champion anymore.
Lyn Brown (West Ham) (Lab)
My right hon. Friend talked about the cuts being front-loaded. Figures from Newham council suggest that a large proportion of the nearly £40 million cuts for Newham—13% of the 25% total cuts that are being proposed by the Government—will take place in year one.
Caroline Flint
That is another example of the devastating impact of the cuts in the first year. I say to the Secretary of State: is that a fiction?
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.
Stephen Lloyd (Eastbourne) (LD)
Talking of hypocrisy, does the right hon. Lady agree with her party’s leader, the right hon. Member for Doncaster Central, who said on the “Today” programme in April, “as we look forward” regeneration spending is
“not the biggest priority we face”
as there are “other competing priorities.”? Is that not hypocrisy writ large?
Caroline Flint
The constituency of the leader of the Labour party is actually Doncaster North not Doncaster Central.
As I opened the debate, I did not hesitate for a moment to say that reductions and cuts would have had to be made. The question is how much, how deep and how fast. It is not just Labour politicians who are saying that; the chair of the Local Government Association, Baroness Eaton, a Conservative peer said:
“The unexpected severity of the cuts that will have to be made next year will put many councils in an unprecedented and difficult position.”
I could not have put it better myself.
Caroline Flint
I will give way shortly.
Grahame Lucas, the President of the Society of District Council Treasurers, said that front-loading was happening —not that it was fiction, Mr Secretary of State—and that its consequences would be disastrous. Even the Secretary of State’s Parliamentary Private Secretary, the hon. Member for Wimbledon (Stephen Hammond) knows that there is a problem. At County Councils Network conference on 22 November, he told council leaders that front-loading
“has exercised ministers for some time”.
He asked them to “wait for the settlement.” Who knows, perhaps today’s debate and the cries from their own people across the country will have an impact. Today, we are trying to tell the Government that they should listen and try to do something to avert the disaster that will happen in a few weeks’ time.
Andrew Percy (Brigg and Goole) (Con)
I thank my constituency neighbour for giving way to me. May I say gently and in the most friendly way possible, that I served on a metropolitan northern authority for 10 years and the picture was not quite as rosy? Although there might well have been some extra resources, all too often, what came with that were huge burdens that were not fully funded—whether that was free swimming, local bus passes or whatever. Local tax payers, who are some of the poorest tax payers, had to pick up the bill.
Caroline Flint
The hon. Gentleman is indeed a neighbour of mine in Yorkshire. Correct me if I am wrong, but I cannot remember that there were many Tory-controlled councils that did not want free swimming when it was being offered or that did not want a number of other benefits for their communities. However, I would have to say to the hon. Gentleman, in the nicest possible way, that if people thought it was not rosy then, they must now be in despair about what is ahead.
We are hearing from councillors of all parties that if councils are not given enough time to plan which cuts to make, they will be forced into making rushed decisions with no time to plan for the consequences, which could end up costing more than they save.
Caroline Flint
I will give way shortly to hon. Friends and to Government Members. I want to be generous because this is such an important issue.
The Secretary of State—I agree with him on this—wants councils to think how they might transfer assets to the community, which we enabled when we were in government, and involve voluntary groups and share back-room functions, which we also encouraged when we were in government. There is absolutely nothing wrong with the principle, but it cannot be done in a few rushed months: it takes time and planning, which the Government refuse to give to local authorities. As a result, the worry is that councils will simply go for the easiest and quickest cuts instead of thinking about how they save money while minimising service cuts and job losses.
Henry Smith
The right hon. Lady said that we are apparently yet to see any localism or devolution to local government, but does she concede that greater flexibilities and the ending of the ring-fencing of many budgets will give exactly the flexibilities that many local communities need? It will certainly be welcomed by my local authority, West Sussex county council, which suffered eight years of the lowest possible Government settlements under the previous Government.
Caroline Flint
I recognise the hon. Gentleman’s experience in local government; I believe he was leader of West Sussex county council.
The Secretary of State says that local councils have a choice:
“They can panic; they can slash and burn services regardless of the impact that will have. Or they can take the opportunity to completely rethink everything they are doing, creating a modern, flexible and innovative council.”
Councils should be modern and should embrace flexibility and innovation, but by imposing such huge, unprecedented front-loaded cuts on them he denies them that very choice. How can councils completely rethink everything in a matter of a few weeks?
Mr Cunningham
Does my right hon. Friend think that we have here a re-run of the ’80s, when the Conservatives cut the rate support grant and the housing allocation, local authorities were forced to sell old people’s homes and there were reductions among teachers and front-line staff. The House should not be filled up with that lot over there—they are using the recession as an excuse to inflict Thatcherite policies. Last week the Prime Minister admitted to being a child of Thatcher. Does not this House recognise what is going on right under its nose?
Caroline Flint
It is actually worse than the ’80s, because these cuts are deeper and faster, and they leave local government with very little choice. There are positive aspects to devolving power; we did a lot of it while we were in power. [Interruption.] It is true. I know that the Secretary of State likes to issue his diktats from the Department like some Joe Stalin, but rewriting history is a stretch too far.
Hazel Blears
My right hon. Friend is making a characteristically powerful case against the front-loading of these cuts. I ask her, as I hope to ask the Secretary of State, to consider whether, as there is apparently likely to be a £3 billion surplus in national non-domestic rates, it would be a good idea to distribute that sum to smooth out the effects of the cuts next year and the following year. Would that not seem to be an eminently sensible course of action that may well commend itself across the House?
Caroline Flint
I understand that the Secretary of State has had a letter from John Merry on this important issue. What we are asking is pretty reasonable. We are saying: “Have another look. See whether you can stagger these cuts in a better way. See if you can dampen the cuts to tackle inequality, but also look at other opportunities that are available to get this right by minimising the impact on front-line services and the unnecessary loss of jobs.” That is what we are talking about: the people who will pay the price in their jobs.
Mr Gordon Marsden (Blackpool South) (Lab)
My right hon. Friend rightly talks of what we did in government. Does she share my amazement and that of many hon. Members at the joviality of Government Members? In their first few months in office, the Government ignored the impetus that had been created by the Labour Government with Total Place? The Government had to be dragged, screaming, by their advisers to reconsider, and even then they renamed it.
Caroline Flint
There is a rewriting of history with regard to these good ideas. When I picked up one of the Sunday newspapers to read about changes to planning, I recognised a few changes that had been initiated when I was Minister for Housing and Planning and had been carried on by my right hon. Friend the Member for Wentworth and Dearne (John Healey). Total Place was a very good idea. It was a system by which different organisations came together in common cause to tackle challenges in the community, and to share their funding and budgets. The scheme has had two names since the coalition Government came to power: place-based budgets and community-based budgets. The fact is, it was our idea. I am sure that my hon. Friend the Member for Blackpool South (Mr Marsden) will agree that such innovation is all very well, but that it is difficult to imagine the Total Place concept hitting the ground running in the context of the cuts faced not only in local government but in policing and through the reorganisation of primary care trusts.
Mr Rob Wilson (Reading East) (Con)
The right hon. Lady is being most generous in giving way. May I clarify her position on cuts? She seems to be saying that her party would cut more slowly than the Government. Does she understand the implications of that? It would mean the Government borrowing more and paying more interest, because they would be borrowing over a longer period. Does she really think that taxpayers would thank a Labour Government for paying back money on their behalf to foreign Governments such as the Chinese Government?
Caroline Flint
The price being paid in this country is that of people being put on the dole and therefore not paying tax. The price will be paid by local economies and private businesses that depend on local government contracts and by the voluntary sector, which depends on local government to fund its services. There are prices to be paid and choices to be made. We would not have chosen to front-load the cuts in such a way as to fundamentally break the fabric of our communities.
Organisations that research this issue have shown that parts of the country, through no fault of their own, depend on public sector jobs to keep their communities afloat. Despite all the warm words in Government statements, the coalition agreement and the comprehensive spending review document about fairness and protecting the most vulnerable communities, there has been little sign in the statements of the Secretary of State, the Chancellor and the Prime Minister of how they will ensure that the cuts do not disproportionately affect our poorest communities. I hope we will hear something in the financial settlement. That is why we are having this debate today. At the moment, I am afraid that Government Front Benchers are not listening.
John Woodcock (Barrow and Furness) (Lab/Co-op)
Does my right hon. Friend appreciate the alarm that the people of Barrow and Furness are experiencing? According to modelling in yesterday’s Local Government Chronicle, their community could be among the top three places in the country to experience the deepest cuts, despite its having many of the most deprived areas.
Caroline Flint
My hon. Friend’s point about his constituency applies to others. It is clear that some of the most deprived communities in our country face the biggest impact and the brunt of the cuts, not those who are better off. I wish that every area was better off, but it is not like that. That is why we must tackle inequality and be fair. We must be a civilised and decent society, but that is not what is going on.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Does my right hon. Friend share my concern that it is not only deprived communities that will suffer because of the way in which the cuts are being implemented, but women—and thereby children—because they make up approximately 73% of local authority employees?
Caroline Flint
My hon. Friend hits the nail on the head. About 74% of those who work in local government are women. It is rather ironic that on the day the Fawcett Society is again challenging the coalition Government’s Budget in court because of its disproportionate effect on women and children, women are yet again being asked to pay the price. Women who work in local government, often part-time at the lower end of the pay scale, face the complete disruption of their family and working life.
Caroline Flint
I have been very generous in taking interventions, and I am conscious of the number of Members who wish to speak in the debate. [Interruption.] I do not think that hon. Members can accuse me of not being generous in giving way. I will take more interventions later, but I should like to make a bit of progress.
Caroline Flint
The hon. Gentleman heard what I had to say—I am going to make a bit of progress, but I may take more interventions later.
People will pay the price with their jobs. The Secretary of State likes to give the impression that savings can be made without causing job losses, as though simply by freezing recruitment, natural wastage, redeploying people and scrapping or sharing back-room functions, local councils will find the savings they need to make without hitting front-line services. Local councils cannot deliver such savings so quickly on top of the £1 billion of savings they have already made this year without cutting jobs or reducing services. Paul Carter, the Tory Kent council leader, said:
“There is only one way of bringing budgets into line. One is to employ less people and the other is to do fewer things.”
In fact that is two, but I take his point. Up and down the country, local authorities are already cutting vital front-line services and shedding staff.
Andrew Bridgen (North West Leicestershire) (Con)
Will the right hon. Lady give way?
Caroline Flint
No, I will not give way.
Councils are cutting not just staff in back-room functions but teaching assistants, social workers and street cleaners—hundreds of thousands of people delivering essential front-line services. There will be 140,000 of them this year alone, according to the Local Government Association, which has upped its prediction from 100,000. In Birmingham, 26,000 staff have been warned that they could lose their jobs, and in Bradford the figure is 10,000. They, along with the people who depend on the services they provide, will pay the price for the coalition Government’s choices.
It is no good the Government trying to use last week’s Office for Budget Responsibility forecast to obscure the heavy job losses that will be inflicted on local government. The OBR forecast shows that Whitehall Departments will lose fewer staff than had been feared, because the cuts were slightly less than had been predicted in the Budget. However, the cuts to local government are deeper and faster than had been expected, and, as a result, the LGA says that more workers, not fewer, will lose their jobs this year—40,000 more of them, all because the Government chose to impose such heavy front-loaded cuts on local councils.
Caroline Flint
No, I will not.
It is unclear how local councils will meet the costs of laying off so many staff. The LGA believes that redundancy costs alone could be as high as £2 billion, but the Government’s capitalisation arrangements, which were set up to help councils with the cost of cutting jobs, come to only £200 million. That could be as little as one tenth of what is needed. If councils are not given more support and more flexibility to cover the costs of redundancy payments, it will simply mean more cuts elsewhere and ever deeper cuts to vital front-line services.
Local councils cannot deliver the savings they need simply by trimming a few salaries at the top, scrapping council newspapers or encouraging councils to dip into their reserves. Local councils have a duty to find the best deal for council tax payers, which includes ensuring that councils’ executives are not paid over the odds. Labour introduced more transparency in chief executive pay, and restraint is vital, particularly in the current economic climate. It is absolutely fanciful, however, to suggest that reducing a handful of executive salaries across the country will solve the problem of huge front-loaded cuts, and the Secretary of State knows it.
Harriett Baldwin (West Worcestershire) (Con)
Will the right hon. Lady give way?
Caroline Flint
In a moment.
Nor is encouraging councils to dip into their reserves any sort of solution. As the Secretary of State well knows, most of the money is already earmarked for specific purposes. I had a look at the reserves in Ministers’ areas compared with those of our shadow team and found that their areas have £100 million more reserves in their bank accounts than ours. Burnley, one of the areas likely to be hit hardest by cuts in funding, could lose anything between 25% and 29% of its funding over the next four years, and it has just £1.1 million in unallocated reserves. Unless the Secretary of State wants to nationalise council reserves and redistribute them to the councils hardest hit by the cuts, this is just another red herring.
Caroline Flint
I will give way shortly—and I will give way to the hon. Member for West Worcestershire (Harriett Baldwin) shortly too, because she caught my eye as well.
Let us be in no doubt that cuts of this magnitude and imposed this quickly will hit front-line services. Roads damaged last winter will go unrepaired this year, too; potholes will go unfixed, pavements will go unswept, street lights will be turned off, youth clubs will close, libraries will shut and, at a time when more people than ever need help with social care, fewer will find their local council able to help.
Harriett Baldwin
The right hon. Lady mentioned a handful of council chief executives who make significant salaries. In fact, a total of 129 make more money than the Prime Minister.
Caroline Flint
What I said is on the record. I am not going to defend some of the pay in local government, but the Secretary of State has appointed a new permanent secretary on, I think, £170,000 a year. He had the chance to ensure that he earned less than the Prime Minister, but he refused to do so. To claim that chief executives’ pay equates to the level of cuts that local government is facing is to live in fantasy land—it is ridiculous.
The poorest communities will be the hardest hit. The Government have made much of their commitment to fairness. The coalition agreement reads:
“Difficult decisions will have to be taken in the months and years ahead, but we will ensure that fairness is at the heart of those decisions so that all those most in need are protected.”
Those are fine words, but the Secretary of State’s own figures show that the councils worst hit over the four-year settlement include Hastings, Burnley, Blackburn with Darwen, Hull, Barrow-in-Furness and Hartlepool—all in the 10% most deprived councils in the country—along with Liverpool city council, which is the most deprived local authority in England.
Julie Hilling (Bolton West) (Lab)
Does my right hon. Friend agree that it is unbelievable and wrong that children and young people in particular are facing enormous cuts? Youth services throughout the country are being destroyed, and youth workers throughout the country are getting their redundancy notices. Young people are only young once and need support and services now—it is no good their having them in the future—and they should not be paying a disproportionate cost in the cuts.
Caroline Flint
I am afraid that the coalition Government clearly do not care. On top of what they are doing to local government, they are scrapping the education maintenance allowance, which is the best chance to get young people to stay on in education or training at 16 and possibly go on to university or other further education courses. They have scrapped the future jobs fund and the working neighbourhoods fund, much of which was directed at ensuring that young people did not leave school and enter a period of inactivity, whether out of work or training and education. They simply do not care.
Stephen Mosley
From what the right hon. Lady said, it seems that the more prudent councils have been preparing for this day for a couple of years, but many councils across the country have not been so prudent. Should she not aim her anger at councils that have been wasting money, increasing council tax and providing poor services over the past few years, rather than at Government Front Benchers, who are trying to do something about it?
Caroline Flint
Here we go again—let us bash local government and local councillors up and down the country trying to do their best, and let us tell them it is their fault. I do not think there is a local authority in the country that was preparing for this level of cuts. The suggestion is quite ridiculous.
Gordon Birtwistle (Burnley) (LD)
As the MP for Burnley, which has been mentioned on numerous occasions, I would like to advise Members that the Liberal Democrat-controlled council is doing its best under the circumstances. Does the right hon. Lady remember that in the last three years of the Labour Government Burnley received a 0.5% increase in grant from national Government? The Labour Government nailed councils to the wall in their last three years by not financing them properly. It is strange that she is having a go at the coalition Government given that Labour bankrupted the country in the first place.
Caroline Flint
I would rather defend an increase, no matter how small, than defend the indefensible, as is happening here today.
Let us look at the disparities. As I have said, a number of councils, including Burnley, are facing the most devastating cuts. At the same time, a handful of district councils in the south-east, including South Cambridgeshire and West Oxfordshire—two of the least deprived areas in the country—could see not a reduction but an increase of up to 30% in their funding, as a consequence of funding that was previously ring-fenced for deprived authorities being rolled into the overall grant.
Graham Jones (Hyndburn) (Lab)
I am delighted that my right hon. Friend has managed to give way. She mentioned Burnley, the neighbouring constituency to my own. Housing market renewal worth £9 million to Burnley and £8 million to Hyndburn has just been cut, and the working neighbourhoods fund, which is worth £2 million, has also been slashed. Burnley borough council has been funded in the past two or three years by enormous sums from the Government, as has Hyndburn, and I do not accept the point made by my colleague, the hon. Member for Burnley (Gordon Birtwistle).
Caroline Flint
It is always helpful to have a wider debate, and I thank my hon. Friend for that contribution.
Caroline Flint
I have already given way to the hon. Gentleman, and I will not do so again.
How is it fair that the communities most reliant on public sector employment will lose the greatest number of jobs? How is it fair that the areas most in need will find their services most cut? How is it fair that the communities least able to shoulder the brunt of cuts to local councils will bear the heaviest burden? Yet that is exactly what will happen, as the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill) let slip earlier in the year, when he said:
“Those in greatest need ultimately bear the burden of paying off the debt”.—[Official Report, 10 June 2010; Vol. 511, c. 450.]
The same is true of the Government’s plans for a council tax freeze. It might sound fair, but it is not, because it gives the most to the wealthier councils with the biggest council tax yield—the councils with the broadest base of middle and high band properties—and the least to poorer councils with more modest properties. This involves money that has been top-sliced from local councils’ funding, resulting in a double whammy for our poorest areas.
It is not just people who work in local government who will lose out. Hundreds of thousands of people across the country who work in the private sector—plumbers, builders, electricians, IT companies and office suppliers—depend on local council contracts. Local councils spend nearly £35 billion every year procuring services and supplies from the private sector, with more than £20 billion going to small and medium-sized businesses. Some of those firms rely on public sector contracts for 50% or 60% of their business, and if local council contracts dry up, some of them will have to lose staff and might even go out of business altogether. PricewaterhouseCoopers forecasts that for every job lost in the public sector, another will be lost in the private sector, so cuts in local government funding will hit not just those who work in local government and those who rely on its services, but the wider local economy.
What of the Government’s suggestion that if local councils do less, voluntary groups will miraculously emerge and seamlessly fill the gap left by local authorities? The week before last, the Secretary of State warned the House that local councils would “rue the day” they cut funding to voluntary organisations, but what choice will they have? When nearly a third of voluntary organisations rely on funding from local authorities, and local authorities are losing nearly a third of their funding—much of it this year—voluntary groups will lose out. Local councils and voluntary groups are not adversaries—they work together and rely on each other. Voluntary groups reach parts of the community and fulfil certain roles that local councils sometimes cannot, and local councils have the resources and support at their disposal that voluntary groups do not always have. Without each other, they are both weakened.
Christopher Pincher
I am indebted to the right hon. Lady for giving way. It is nice to hear her support for the big society and voluntary groups, but she seems to have rather a selective memory. May I remind her of the BBC report published on 1 March this year, when her party was still in government? It stated that very significant cuts in local government would have to be made, whichever party was in power, to deal with the depth and scale of the recession that her Government had created. The right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) also said that there would have to be economies. With friends like those, does she need enemies?
Mr Speaker
Order. Before the right hon. Lady responds, I will make two points. First, interventions are becoming rather long and need to get shorter. Secondly, for the good conduct of the debate, I want to touch on an earlier intervention by the hon. Member for Eastbourne (Stephen Lloyd). I did not hear it clearly at the time, but reference was made to the alleged hypocrisy of another Member. Such references must not be made on the Floor of the House. Making a personal accusation of hypocrisy is disorderly. I recognise that the hon. Gentleman is a new Member, but I hope that what I have said will be helpful for the House as a whole.
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.
Caroline Flint
I will give way to the hon. Member for North West Leicestershire (Andrew Bridgen), but after that I shall take no more interventions. Hansard will show that I have already taken more than my fair share.
Andrew Bridgen
I thank the right hon. Lady for giving way. My local council in North-West Leicestershire is already right-sizing its top management to protect essential front-line services. Is that not the way forward? She will be well aware that almost a third of Government spending is channelled through local government, so no credible deficit reduction plan can leave local government immune. Without a credible plan, and in the absence of her telling us what a Labour Government would cut instead of local government—perhaps defence, health or education—she has no credibility whatever in the debate.
Caroline Flint
I agree with the hon. Gentleman in so far as there has to be a sharing of the reductions across the different sectors of public spending, but I do not agree that the disproportionate expectations of local government are fair. I just do not think they are fair. In a less partisan arena, the hon. Gentleman might agree that even if we were to pursue the level of cuts proposed by the Government, it would be worth thinking about staggering them over the four-year period rather than expecting the largest amounts to be cut in the first year. Local authorities have been set an incredible challenge in that respect. In a more reasoned environment, most sensible people would recognise that fact and say, “Let’s do something about it before the financial settlement is announced and try to put right some of the wrongs created by the package following the comprehensive spending review.”
In so many ways, the motion says that the Government are not listening. Let me tell the House and the country that Labour is listening and that there is an alternative. The financial settlement is yet to be settled; there is time to put this right. Savings need to be found and, yes, cuts will need to be made in local government—but not like this: not in this way and not in this time scale.
Today, the Government have a choice. They can plough ahead with their plans and impose huge cuts on local councils, forcing them to find savings in the next few weeks—councils will have to decide their budgets by February 2011. They can impose cuts that will unnecessarily cost jobs, undermine the voluntary sector, hit front-line services and create huge uncertainty in the private sector. They can force through cuts that will hit the poorest communities the hardest, or they can choose to listen. They can listen to Members throughout the House—publicly or privately—who I know will take the opportunity here today, and in other forums, to speak about the damage that huge front-loaded cuts will cause. They can listen to the people who work in local government and provide the services on which we all rely, often with very little reward. They can listen to the voluntary sector, and to the small business community.
Will the Secretary of State ensure that any reductions in funding are more evenly spread over four years? Will he introduce more flexible capitalisation arrangements, so that local councils are not forced to make even deeper cuts in services and jobs to meet the cost of redundancy payments? Will he introduce damping measures to stop our poorest communities being hit hardest? Those are the three questions that the Secretary of State must answer today.
I commend the motion to the House.
Mr Pickles
I am most grateful to the right hon. Lady for that, and, to start on a positive note, may I say that the entire Front-Bench team likes her new hairstyle?
There is not a £3.5 billion surplus in non-domestic rates in the year coming. There is a potential £2 billion surplus in 2013-14. It is hoped that the new system of local government finance, which I will be making some reference to in the statement, will be in the process of being brought in, so it is theoretical at this stage.
Caroline Flint
The right hon. Gentleman teased the House a few seconds ago when he told us to wait and see what the financial settlement provides. Local council leaders have been pressing him to give some hint on, and recognition of, the problem of front-loading and whether that can be looked at. Can he not give some steer that the Government have listened to some of those concerns, because at present they are planning for huge cuts, based on what they expect to have to deliver come April 2011-12?
Mr Pickles
May I reassure the right hon. Lady both that we will be making a statement to the House, unlike last year when the statement was relegated to a written ministerial statement, and that we are going to ensure that the distribution is fair?
Mr Pickles
The right hon. Lady’s council has just £1 million short of £60 million in reserve. The decision that has been taken is its own, and I would urge it now to look at other measures. I would urge the council to look towards a joint—[Interruption.] It might not be for the right hon. Lady—I know she lives a champagne lifestyle—but £60 million is a lot of money. Let the council look towards sharing a chief executive, or sharing an education authority or planning authority. Let it look at working together right across back-office services.
At the heart of the settlement, we want to ensure the protection of hard-working families and pensioners; support for vulnerable individuals; help for vulnerable communities; and fairness, for both north and south, and rural and urban England. Practical policies to protect the vulnerable include: £1 billion in extra grant for social care and a further £1 billion from the NHS; a new role for councils in public health, backed up with extra funding; £2 billion for decent homes, improving the quality of life for those in poor-quality housing; and £6.5 billion to support people and allow the vulnerable to lead independent lives. Labour talks about fairness, but when it was in government council tax more than doubled—in some years, above inflation—thanks to fiddled funding and unfunded burdens.
Caroline Flint
The right hon. Gentleman mentions funding for public health, which is estimated to represent at least 4% of the NHS budget. Will that move across to local government?
Mr Pickles
The right hon. Lady is playing a game whereby if money moves from the health service it represents a cut in the health service, but if it moves to local authorities it fills a hole. Conservative Members have been saying for years that there is a role for councils in public health, and we are backing that. I recall, at the Opposition Dispatch Box, asking the then Government for the kind of financial commitments that we are currently giving to deal with adult social care. Frankly, the right hon. Lady should be thanking us—[Interruption.] Well, I’m glad you’re supporting it. Just get behind the programme then, dear. That’d be marvellous.
Working families, pensioners and, indeed, the squeezed middle were hit the hardest. The hikes were equivalent to 3.5p on income tax, and the Labour Government were planning further local tax rises, as their local government manifesto for a fourth term revealed: removing the retail prices index cap on business rates, hammering local high streets; a council tax revaluation and rebanding, hitting cash-poor pensioners; and new taxes to empty bins, punishing struggling families. Labour’s answer to every policy problem was an extra rise in tax or more red tape. But, in six months, the new Government have scrapped Labour’s bin taxes, called off the council tax revaluation, increased small business rate relief and found £650 million a year of funding in each of the next four years to help to freeze council tax next year. Let me make it clear: that is completely new money; it is not top-sliced.
I intend this settlement to be the last ever to rely on such a complex and outdated system, which is not fit for purpose. It has trapped too many councils, making them financially dependent on central Government, and there is no incentive for them to invest in their local economy, given that the proceeds simply vanish to central Government to share out nationally. It makes planning difficult, weakens local accountability and stifles local innovation. It is part of the same trend that has led to some areas of the country becoming almost completely dependent on the public sector.
All that will become clearer when I present the full settlement to the House, but let me reassure Members that I and my ministerial team are doing everything possible to ensure that local government has a fair and sustainable settlement, to the good of the country and to the good of local communities.
Simon Hughes
Of course councils make representations both collectively and singly and, understandably, once councils of all parties, including those run by Liberal Democrats, heard the announcement of the CSR in October, they told the Government that they thought the front loading of the four-year settlement was not as desirable as a more evenly spread reduction. I share that view. I intervened on the Secretary of State asking him if there was an opportunity to have a flatter reduction over the four years. He did not give a final answer because, of course, that is a decision that will be left until the formal announcement, but he indicated—I agree it was not definitive—
Simon Hughes
Wait a minute; I want to deal with the question from the right hon. Lady’s colleague first.
The Secretary of State indicated that he was understanding of that point, and it is clear that the Government have done work to see if they can mitigate the effects of a more severe front loading. I, like others, will wait to see the outcome of that. I hope it will be possible to mitigate the effects. If it is, that will be a major achievement; if it is not, it is to be regretted. However, there are many good things about the settlement so far that was announced in the CSR, as there are also some proper concerns, one of which the hon. Member for Worsley and Eccles South (Barbara Keeley) rightly enumerated.
Caroline Flint
Part of the reason that the Opposition decided to use a whole day of Opposition time to debate this subject is that we think we should lobby and pressure the Government on it. I must ask the hon. Gentleman something. Would it not have been better if, instead of having the formula grant profile announced in the comprehensive spending review show a decrease next year of 10.7%, and then reductions of 6.4, 0.9 and 5.6% for the following three years, the Government could have spread the cuts evenly over that four-year period? They have created completely unnecessary mayhem and fear out there.
Simon Hughes
I say clearly to the right hon. Lady that, as I have indicated, I have argued publicly and privately that it would be better for the spending reduction to be spread more evenly. I have been into the Department to make that case. A parliamentary committee of Liberal Democrats from both Houses has collectively made that case, and it includes people who have been leaders of local councils. I understand and share the view that it would clearly be easier for local government to manage a gradual reduction than sudden and bigger reductions in the first two years, a small reduction in the third year and then an intermediate reduction. There is no disagreement on this issue between the right hon. Lady and me, and there is not much disagreement between councils of all colours around the country, which are making that point to the Government. I hope that the Government and Ministers in the Department for Communities and Local Government have been able to make some progress on that point, given that they obviously have to start with an announcement made by the Chancellor which reduces their flexibility—we will doubtless hear when the settlements are made.