Caroline Flint
Main Page: Caroline Flint (Labour - Don Valley)(13 years, 10 months ago)
Commons ChamberI will give way in a few moments, but I shall make a little progress, if the Chairman of the Communities and Local Government Committee will forgive me.
The changes make the system fairer and more progressive than it has ever been. The second thing that we did is try to marry the need to tackle the deficit with the need to help councils to adapt, as I told my hon. Friend the Member for Cities of London and Westminster (Mr Field). In December, I said that no council would face more than an 8.9% reduction in spending power and that we would provide a grant to cushion councils that would otherwise have had a sharper fall. Today, we are going further by increasing the transition grant to councils from £85 million to £96 million next year, which means that the average reduction in spending power is just 4.4% and that no council will see a reduction of more than 8.8%.
Let us look at one of the problems that we faced. Concessionary bus travel is a classic example of how the previous Government did things—they made a grand promise without any clue about how it would be funded. Administration of concessionary bus travel under Labour was a shambles. I do not think that councils should have to pay for the misjudgment of the Labour Government, so I am topping up the formula grant by a further £10 million next year to compensate shire districts.
Thirdly, we are committed to protecting local taxpayers. Council tax bills more than doubled under Labour, while front-line services such as bin collections halved. It is only right that we give hard-working families a helping hand.
Does the Secretary of State agree with the sentiments of his colleague, the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell), who in writing to Liberal Democrat councillors about the final settlement, says:
“This final settlement certainly does not solve all problems, nor does it add significantly more money into the pot. I know it will still be very disappointing for many councillors.”
We have heard it all this afternoon. We have heard every possible excuse and cop-out, but we have not heard a single word of apology to the thousands of councillors up and down the country who give up their evenings and weekends, and much else besides, to make their community a better place to live and who are now being forced to implement the Secretary of State’s cuts. We have heard no apology for the fact that this Government have chosen to impose huge front-loaded cuts on local councils the length and breadth of the country. Those cuts will be deeper and faster than those made by almost any other Whitehall Department, and they will fall hardest on the poorest places. They will cost jobs and threaten vital front-line services.
Today the Secretary of State has tried to pull a fast one, but he has not convinced our own Labour councillors, or even many Tory or Liberal Democrat councillors. In fact, I do not think that he has convinced anyone at all. Once again, he has come up with a whole host of reasons why this finance settlement—which, by common agreement, is the worst funding settlement for local government in living memory—is not as bad as it sounds, but he is not fooling anyone.
Over the past few months the Secretary of State and his team have given us reasons why local authorities should not have to tackle difficult decisions about front-line services in their communities. They have told us that there are other ways in which local authorities can make savings. We have heard that councils are sitting on piggy banks with £10 billion-worth of reserves, yet 70% of that money is already reserved for specific projects, so the figure is nowhere near as high as £10 billion.
More to the point, the cuts to local councils go so deep and fall so heavily that three quarters of single-tier and county councils have less in their reserves than the cuts to this year’s funding. Even if they took up the Secretary of State’s suggestion and spent all their reserves trying to mitigate the damage the Government’s cuts have caused, it would still not be enough. And when next year came, councils would face an even worse funding crisis—but this time with no reserves to call on. That, Madam Deputy Speaker, is
“the economics of the madhouse”.
Those are not my words; they come from a letter from the Conservative leader of Derbyshire county council, Andrew Lewer, who chastised the Secretary of State for peddling “misleading” myths about council reserves. We all know that the right hon. Gentleman likes to talk about bins, but when even his own colleagues tell him that he is talking rubbish, perhaps he should sit up and listen. If he will not listen to them, he should at least take note of his Front-Bench colleagues. However loyally the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell) nods his head in agreement this afternoon, we know what he really thinks from a private letter he sent to Liberal Democrat councillors. He freely admits that in some cases the figures quoted by the Department for Communities and Local Government were rejected as inaccurate. As I mentioned earlier, another quote from the letter reveals the Under-Secretary’s disappointment that so little has been put into the pot, despite the representations of his Liberal Democrat colleagues.
Another area Ministers have looked at is how to plug the gap by dealing with executive pay. Councils were told that if they could not use their reserves, they could cut executive pay. If they did that, they were told, it would be enough to protect jobs and services. I have made it clear time and time again that local councils have a duty to find the best deal for council tax payers—and that includes ensuring that council executives are not paid over the odds and cutting down the size of management teams at the top of councils. In fact, we have gone further than the Secretary of State’s proposals on pay and transparency in the Localism Bill, and I urge him again to include consultants and contractors hired by local authorities when pay details are published.
The suggestion, however, that simply trimming executive salaries by a few thousand pounds here and there is enough to plug a funding gap of £6.5 billion is just fanciful. If every chief executive of every local authority took an immediate 50% pay cut, it would yield less than 0.5% of the savings that need to be found. Even if the entire senior management team of every council in England reduced salaries by 25% overnight, 97% of the cuts would still need to be made.
Does the right hon. Lady agree that it is not simply a question of excessive pay, but of excessive pay-offs? Nottingham council was mentioned, and a brief piece of research shows that Sallyanne Johnson received a £250,000 pay-off, Michael Frater £230,000, Adrienne Roberts £500,000, and Tim Render £200,000—all in recent times. Will she condemn the administration of Nottingham council for wasting that money?
We can all trade examples, so let me provide the hon. Gentleman with one from Hammersmith and Fulham council—one of the Secretary of State’s favourites. Is it acceptable to hire for £1,000 a day a consultant who has already been retired, on a £50,000-a-year pension, on grounds of ill health from another council?
Value for money and accountability for senior pay are important, which is why we supported those elements in the Localism Bill—but we are going further than the Government suggested, and we hope to gain support for that. However, the reality is that for all the grandstanding on this issue, it does not make a dent in the amount that councils have to find to deal with the front-loaded cuts that the Government have chosen to impose on them.
My right hon. Friend mentioned the letter sent by the Under-Secretary to Lib Dem councillors on Stockport council; she will be aware that his postage bill will go down quickly, as Lib Dems are leaving the Lib Dem group because they know the truth about this settlement. Does my right hon. Friend agree that the Secretary of State is talking nonsense when he speaks about giving power to local authorities and being fair, because local democracy is, in fact, taking a much bigger cut than his own central Government Department?
My hon. Friend has made a very good point about the unfairness of the cuts. The Government are passporting the blame on to local councils, and that is not fair. My hon. Friend, like other Labour Members, has long experience of local government that can inform our debate. We are in touch with local government, which is one of the big differences between us and those on the Government Benches.
The right hon. Lady suggests that cuts in executive pay constitute a mere pinprick in the savings required. Yet according to a press release from Hampshire county council that I received yesterday, the council expects to save some £7 million in executive pay in the current year. That is just shy of 20%—[Interruption.] Opposition Members suggest, in sedentary interventions, that £7 million in a single year may be an unlikely figure, and that may be so, but even if it is over three years—[Interruption.]
I know that the hon. Gentleman heard me earlier; he clearly saw me. Interventions must be short.
I do not know how to follow the hon. Gentleman’s intervention, because it is a good example of the grandstanding that has been going on. I should love the hon. Gentleman to send me the figures from Hampshire county council. Seven million pounds a year? I should very much like to see those figures, because I am not sure that they relate only to senior executive pay.
I have made it clear that I am not standing up for those who pay over the odds. [Interruption.] I have made that very clear, as the Minister for Housing and Local Government will see if he consults Hansard. What I am saying is that it is a distraction to suggest that the sort of cuts in executive pay that I have described, whether they involve 50% of chief executives or 25% of the senior management team, can make a significant dent in the savings that councils are having to find.
We are often told that if councils cannot use their reserves and if cuts in executive pay are not enough, they can make their savings by sharing services or merging back-room functions. Let us leave aside the fact that more than 200 councils are already sharing services or facilities, or are planning to do that. If creative service redesign could protect services and stop unnecessary job losses we would support it, as would our local Labour colleagues, but by front-loading the cuts as the Secretary of State has chosen to do, the Government have given councils no choice other than to find immediate savings, which will actually mean cuts in services and jobs.
We have heard a great deal today about Westminster, Kensington and Chelsea, and Hammersmith and Fulham, but as ever, the devil is in the detail. When we go beyond the headlines, we find that although those councils will lose more than £50 million in funding this year, savings for this year amount to only £5 million. We can only conclude either that the Secretary of State is so detached from the real world that he does not understand that, or that this is a deliberate tactical attempt to distract attention from the problems created by the Tory-led Government. In either event, councils and the communities that they serve deserve better.
Is not one of the remarkable aspects of the settlement the fact that, in these difficult times, the Supporting People grant has been relatively protected by the Secretary of State? He has done precisely what I think the right hon. Lady wants to do, which is to ensure the protection of the most vulnerable. Should not the right hon. Lady be celebrating that?
I am not sure that there is anything to celebrate. Whether we are talking about the Supporting People grant or Sure Start, one thing is certain: neither has not been ring-fenced, and therein lies danger. Manchester city council, for instance, faces a 35% cut in its Supporting People grant.
I am sure that the right hon. Lady would not want to put an incorrect statement on the record. Will she confirm that the Supporting People fund was not ring-fenced under the Labour Government?
Unlike the Secretary of State’s hon. Friends, we put money into the Supporting People grant to support local initiatives. Now councils face cuts in their Supporting People funding, and have no alternatives to the decisions that they are having to make.
I will talk about the myths of Hammersmith and Fulham later if I have the opportunity, but for now may I correct my right hon. Friend by pointing out that £2.9 million is the saving for the three boroughs next year—£500,000 from Hammersmith and Fulham—out of £27 million in total savings? The sum the Secretary of State said the three councils would save when he launched the initiative last October was £100 million. That is the sort of voodoo economics we are dealing with here.
My hon. Friend always enlightens us as to the true nature of what is happening in Hammersmith and Fulham. Only in the last week we have heard about a building that houses some 30 charities, from which many of the charities are being evicted. I heard only the other day that Hammersmith and Fulham council is so in touch with the big society that refugees from Afghanistan who were seeking support were directed to an Afghan society that happened to be an Afghan hound society. That shows how in touch those people are with the concerns of their residents, and the extent of their knowledge of the charitable and voluntary sector.
In the last Parliament the Communities and Local Government Committee conducted a report on Supporting People. It accepted the removal of the ring fence, but said that spending on Supporting People should be monitored. Perhaps as a result of that, the day after the Secretary of State appeared before the Select Committee in December, Westminster city council announced a £1 million cut in its Supporting People services.
I always bow to the experience and knowledge of my hon. Friend. This will all come to light in the weeks and months ahead as the budgets are set, and I think we will see that no Members on the Government Benches will stand up for Supporting People. We know that the losses on the ground are affecting people, and the services they have relied on for so long.
As all the excuses have fallen away, and as the reality of the pace and depth of the Government’s cuts hits home, so Ministers’ accusations and attacks on local government have become more desperate and outlandish. The real impact of these cuts is becoming clearer day by day. Some 450 libraries around the country are under threat of closure, including four in the Prime Minister’s constituency, 250 Sure Start centres serving 60,000 families look set to close by the end of this year, and despite all the Secretary of State’s exhortations, because of the cuts he has imposed half a million British home owners have had their weekly bin collections scrapped. As for housing, his cuts in the housing budget mean that, for all the current Government’s criticism of the last Government’s record, once the homes that Labour started building are completed no new social homes at all will be built for the duration of this Parliament.
When 70p out of every pound councils spend goes on staff, it is madness to believe that people will not lose their jobs. The only advice we have from the Government comes from their big society guru, Lord Wei, who this week told council workers to cut their hours and their pay and spend more time volunteering. That will be of little comfort to the tens, if not hundreds, of thousands of people who lose their jobs this year. According to Unison, 100,000 people in council, health, police, fire and education services have already been warned their jobs are at risk. The GMB has kept a running tally of the number of workers who have been told their jobs are under threat, and, as of last week, it suggests more than 155,000 posts are at risk.
Let us talk about the organisation that has actually conducted some research in this area: the Local Government Association. It believes that 140,000 council workers will lose their jobs this year. I saw the Minister for Housing and Local Government on TV only last night attempting to argue otherwise, but the LGA’s figures are based on evidence—on research covering 202 councils employing 1.85 million people. The Minister’s arguments are based on the hope that, “If we say something enough times, eventually people will start to believe us.”
Why is Liberal Democrat-controlled Sheffield city council making only 250 people redundant, yet the figures for Labour-controlled Manchester city council and Liverpool city council are 2,000 and 1,500 respectively? Could it be that the Labour councils are not interested in making proper savings, whereas the Liberal Democrat and Tory councils are?
Well, so far as Sheffield is concerned, part of the problem is that the Liberal Democrats are running scared. They have deferred the decisions because they think they can pull the wool over the eyes of the people of Sheffield, but I have to say to the hon. Gentleman that that is not going to work.
I want to say something about back-room staff in local government. Efficient administration: yes, of course we need that, but every organisation needs people in the back-room as well—even the Secretary of State’s Department. It is a pretence to believe that administrative jobs are not necessary. Worst of all is the unfairness. The communities who rely the most on the services that their council provides will be hardest hit. Every time the Government hit the airwaves we are told how progressive this settlement is—but I am afraid that they do not know the meaning of the word. What is fair about the most deprived communities facing cuts four times as deep as those in the most prosperous areas? What is progressive about a finance settlement in which every resident in Hackney loses £180, while people in the Prime Minister’s constituency lose only a fiver? Even Liberal Democrat and Conservative councillors know that that is neither fair nor progressive.
The Tory leader of Blackpool council, Peter Callow, told the BBC that this Government had “let down poorer areas”. Perhaps that is why David Faulkner, the Liberal Democrat leader of Newcastle council—the Liberal Democrats’ flagship council in the north-east—agreed that the Secretary of State is
“the worst Secretary of State we have had”.
Perhaps that is why, in a private e-mail sent to Liberal Democrat councillors from the Local Government Association just last week, we learnt that—[Interruption.] I know that the Secretary of State does not want to listen to this. We learnt that
“concerns about the weakness of the Secretary of State have been raised within all three of the main political groups at the LGA and the message has been heard loud and clear by leading figures in the Government. The situation has been likened to having a republican in charge of the monarchy.”
As for the big society, with every day that passes it looks more and more like a big sham. We have heard from Volunteering England, which accused the Government of undermining charities. Last week Liverpool City council had to pull out of the big society pilot because it saw how ridiculous it was for the Government to laud the virtues of the voluntary sector on the one hand, while pulling the rug from underneath it on the other. Just this Monday, Dame Elisabeth Hoodless of Community Service Volunteers warned that the “draconian” cuts to local government were “destroying volunteering”. But as the Prime Minister said earlier this afternoon, what does she know? She is only the mother of the big society, the executive director of Britain’s largest volunteering charity.
Up and down the country, as a direct result of the choices of this Government, councils are being forced to cut back funding to community groups and voluntary organisations. If they cannot pick up the reins, who will take responsibility for providing the services that this Government have dismantled?
However, Ministers’ most insidious claim is that councils that have built up good services to help poor, elderly or vulnerable people will deliberately cut those services, rather than bureaucracy, in order to cause suffering for political gain. That is an outrageous slur, and it is beneath the dignity of Ministers to level the claim. It is a sure sign of how empty the Government’s arguments are that they drag out that myth in order to slander the reputations of decent councillors.
The blame for all this lies solely and squarely with this Tory-led Government, because the biggest myth of all is that there is no alternative. Madam Deputy Speaker, there is an alternative. We do not deny that there is a deficit and that it needs tackling, but the Government’s decision to eliminate the deficit over this Parliament is a choice, not a necessity. Labour’s plan was to halve the deficit over four years. That would have meant local government cuts, but not cuts as deep as this. The Government’s decision to front-load the cuts, so that the heaviest reductions fall in the first year, is a choice, not a necessity. We would have spread the cuts more evenly over four years, giving councils time to plan where savings could be found. The Government’s decision to skew the funding system so that the poorest councils are hardest hit is a choice, not a necessity. We would have shared the cuts much more fairly, ensuring that those with the broadest shoulders bore the greatest burden. The Government have made their choice, and they must take responsibility for the consequences.
Flush with cash from their chums in the City, this Government may be laughing all the way to the bank, but local councils and the communities they serve are crying out for more help and more time. In every part of the country and in all communities, people are rallying together, standing side by side, shoulder to shoulder, against this Government’s reckless cuts. They are the real big society, and they are telling this Government that they are going too far, too fast. The teaching assistants, social workers and street cleaners marching for their jobs: they are telling this Government that they are going too far, too fast. The pensioners occupying their local libraries and clearing the shelves of books: they are telling this Government that they are going too far, too fast. The families going door to door with petitions to save their local Sure Start centre: they are telling this Government that they are going too far, too fast.
The Government are not listening but we are, and that is why, today, Labour will vote against a local government settlement that reflects none of the concerns of councillors and communities about going too far, too fast. I urge all Members to stand up for their communities and the services they hold dear, and join us in the Lobby tonight.
I have to announce the results of the Divisions deferred from previous days. In the Division on the question relating to the financial stabilisation mechanism, the Ayes were 297 and the Noes were 45, so the Ayes have it. On the question relating to police, the Ayes were 501 and the Noes were 18, so the Ayes have it. On the question relating to taxation of the financial sector, the Ayes were 295 and the Noes were 223, so the Ayes have it.
[The Division lists are published at the end of today’s debates.]
The Chairman of the Communities and Local Government Committee is absolutely right: my colleagues and I have been reflecting over the past few weeks, when the representatives of many local authorities throughout the country have been to see us, on what it must have been like to have been in a previous Administration, when one could believe that money was no object—that one could simply get this thing from the money tree and spend it as one wished by giving higher and higher settlements to every authority that came to visit. How wonderful it must have been, but I am afraid that the truth, the reality, has come home to roost, and once again we are left to sort out the mess that Labour has left us with.
Having accepted that there should be some reductions, it was not as if the right hon. Member for Don Valley (Caroline Flint), who shadows the Department, was able to agree with any of the methods that might be used to make reductions without harming front-line services. In fact, she went so far as to ridicule my hon. Friend the Member for Daventry (Chris Heaton-Harris) because he mentioned in an intervention that Hampshire council has just announced that it will cut £7 million next year by cutting the senior management salaries and work force. That was pooh-poohed as impossible. Well, for the sake of clarity, I have managed to get hold of a copy of that detailed information, and my hon. Friend was wrong: it is not £7 million that will be saved by cutting senior management; in fact, it is £7.9 million.
The idea that money cannot be saved or that leadership cannot be shown by example when senior people take a cut, as Ministers in this Government have with a five-year pay freeze, or that that does not have an impact further down the line on the rest of senior and middle management, has been blown apart. The authorities that have taken such steps have found it much easier to sell to the rest of the authority the difficult decisions that have had to be made.
Nor is the right hon. Lady correct when she talks about the £10 billion of reserves. There are £10 billion of reserves for local authorities, as has already been pointed out in an intervention, but the right hon. Lady says that 70% of it has been earmarked, and, in that, she makes a fundamental mistake, which I am surprised about, because she was in this Department when in government. The reality is that “earmarked” is not the same as “spent” or “allocated”. “Earmarked” does not mean that the money cannot be used in the intervening period to ensure that front-loaded reductions, which we have heard a lot about, can be handled in a much better way.
My hon. Friend the Member for Isle of Wight (Mr Turner) raised a serious technical issue that he had already come to ask us to look at again. We did do that, but we could not find in favour of his local authority. However, I say to him and to all other hon. Members that we thought that the concessionary fares mess that had been left by the previous Government required some assistance to sort out between the two tiers of government. I hope that that is helpful.
The Chairman of the Select Committee, the hon. Member for Sheffield South East (Mr Betts), referred particularly to front-loading. As I said to the right hon. Member for Don Valley, it is possible to use earmarked funds that are in the reserves. I invite the hon. Gentleman’s Committee to look at this again, as there seems to be some misunderstanding. I welcome the fact that he welcomes the end of ring-fencing, which had been called for very widely across government and the Local Government Association. Ring-fencing has been un-ring-fenced by some £7 billion, and that has given local authorities a lot more flexibility. We have taken 90 separate budgets and combined them into just 10, meaning that local authorities that are savvy and understand that the situation has changed are able to move much more quickly.
The issue of business rates was raised by the hon. Member for Sheffield South East and others. There is a suggestion out there, which is gaining some credibility, that if business rates were collected at a higher level than the entire local government finance settlement, then the difference could be redistributed somewhere down the line. People need to understand that if business rate collection goes up or down, the amount that goes to local authorities is identical; it makes no difference. The amount that goes to local authorities is set out in the spending review envelope; it is insured by the Treasury, as it were. I hope that that clarifies the situation.
There is huge concern up and down the country that there will be a future Tory policy to localise business rates, which would not deal with the inequalities in terms of opportunities to raise funds through businesses. Can the right hon. Gentleman assure me that that will not be a policy of this Government?
I am pleased to be able to provide the right hon. Lady with the reassurance that she needs. A redistributive approach will have to remain in whatever system is put in place. I will return to that in a few moments.
My hon. Friend the Member for Harrow East (Bob Blackman) made several good, intelligent points. He called for a settlement that is more predictable because it is provided for more years in a row. As the House knows, we have made a settlement for this year and for next year, after which time we intend entirely to reform the system to do what everyone has called for, which is to dump the failed redistributive formula grant system in which, as the Chairman of the Select Committee pointed out, everybody, even in the good years, complains that it has been poor for them.
My hon. Friend provided a very useful list of different things that local authorities could do before they start savagely cutting the front line, as in the case of some authorities in the past couple of days. Members will do well to refer back to that list in Hansard to see all those different methods. Until an authority has run through each one of the ideas that he presented, it has no right to be cutting the services of the most vulnerable in society.
The hon. Member for Liverpool, Walton (Steve Rotheram) made a very impassioned speech. I have seen some of the things that his local authority has done; the £4.5 million that it saved by cutting some of the senior management is of course the right way forward. However, he says that his council is still incredibly badly off. Let me make this simple point to him: while Liverpool is experiencing a reduction in its funding formula of 11.3%, my Hertfordshire council is experiencing a reduction of 16.1%. This Government have gone out of their way to try to protect the most vulnerable, and it is about time it was recognised that the spending formula was designed to do that.
The hon. Gentleman made another claim that was extraordinary and, as much as he may not realise it, untrue—inadvertently, I am sure. He said that his local authority is cutting Supporting People by 30%. If that is true, his local authority is getting it wrong. Supporting People is one of the budgets that we have protected way more than the general picture. There is a reduction of less than 1% in cash terms on average in the Supporting People budget over the next four years. I will give way to the hon. Gentleman so that he can put pressure on his local authority not to slash it, given that the Supporting People budget is largely protected at national level.
As the hon. Gentleman knows, the grant formula—[Interruption.] Members would do well to listen to this point because it affects many constituencies. The simple fact is that Supporting People is paid for through the formula grant. Given that we know for a fact that there is not a reduction in spending power of more than 8.8% in his constituency, it cannot be the case that the Supporting People budget has fallen by the claimed 30%, so I take him up on his challenge.
My hon. Friend the Member for Dover (Charlie Elphicke) made the worthwhile point that local authorities have been protected from having to raise council tax by the £650 million from central Government.
The hour is late and I do not want to detain the House. There is a clear division between authorities that have taken the necessary steps and those such as Manchester city council, which yesterday claimed that it has to make a 25% reduction.
I am aware of the time and I appreciate the right hon. Gentleman giving way. The person who stated that 25% of the net budget of Manchester city council will go over the next two years was its treasurer—a statutory officer of Manchester city council. I suggest that when the right hon. Gentleman is up there, he speaks to that gentleman, because I believe that that gentleman is right and that the right hon. Gentleman is wrong.
Here is a simple fact for the right hon. Lady: the reduction in spending power over the next two years is 15.5%. Yesterday, Manchester city council called a press conference to say what it will not do over the next two years. It says that it is going to cut the budget by 25% over that period, when the reduction is only 15.5%.
To conclude, it is that side of the House and those authorities that are failing to protect the most vulnerable in society. Thank goodness for the coalition Government.
Question put.