Local Government Bill [Lords]

Debate between Caroline Flint and George Hollingbery

Thursday 21st October 2010 Commons Chamber

[Caroline Flint (Don Valley) (Lab)]

I am looking forward to a number of exchanges with the Secretary of State across the Dispatch Box in the months—but, hopefully, not too many years—ahead. Just for the record, the right hon. Gentleman and I did attend a conference in Paris, but I am pleased to say that Mrs Pickles was there, as was my husband.

Characteristically, the Secretary of State made an attempt at an entertaining speech, but in doing so, he completely ignored the views of people in Exeter and Norwich and their desire for true localism in their communities. He exercised a typically liberal relationship with some of the facts. Following yesterday’s announcement of devastating cuts to local councils, the future of local Government is on all our minds. As we highlighted during Question Time, the cuts are much worse than those faced across the board in Whitehall Departments and far deeper than is necessary to deal with the deficit—and they are cuts of his choosing, not of necessity.

Let me make it clear at the outset that Labour believes in the benefits of unitary authorities, and we support the aspirations of Norwich and Exeter to achieve unitary status. Each application must be considered on its merits and on a case-by-case basis, but in principle we believe that strong local leadership and clear accountability are harder to achieve where local government has a two-tier structure. The Conservatives used to believe that too. The last time that they were in power they created 100 new unitary authorities.

The Liberal Democrats used to believe it as well, but—like their pledge not to increase VAT and their six-point plan to scrap tuition fees—their commitment to unitary authorities in Norwich and Exeter has been thrown on to the scrap heap of abandoned promises. Their policy paper, approved at Liberal Democrat party conference, states:

“Having several tiers of government can not only lead to confusion over which tier is responsible for what, but can also mean that some councils seem very remote from the communities they serve. The Liberal Democrats therefore believe that there should be a single tier of local government.”

Let me deal with a few of the arguments advanced by the Secretary of State. He says that the decision to set up unitary authorities in Norwich and Exeter does not represent value for money. He says that it will cost £40 million. That is simply not true. What he fails to mention is that the very same document from which he got those figures—the impact assessment, produced by his Department—also shows that in the same period savings of £39.4 million would be made; and in the years after that, annual savings of £6.5 million would be made. Now, if the Secretary of State does not understand the difference between up-front costs and ongoing savings, I fear that we really are in trouble in the stormy waters ahead. As his Minister in the other place, Baroness Hanham, was forced to admit, if Norwich and Exeter were given unitary status

“there ultimately would be savings”.

That is the reality.

Granting Norwich and Exeter unitary status would save the taxpayer money. The Government’s position is voluntarily to forgo the opportunity for Norwich and Exeter to save the taxpayer £6.5 million a year. The Secretary of State is within his rights to reject the application—that is his prerogative—but let him at least do it on the basis of the facts.

As for the letter of instruction from the permanent secretary, let me say this. In the end, officials are there to advise. They do not take decisions and are not accountable to Parliament. Ministers must make decisions and I believe that the previous Secretary of State was right to take the decision that he did. What the permanent secretary said was that creating unitary authorities to include the entire counties of Devon and Norfolk would create greater savings. The only problem with the proposal, however, was that it was never a viable option. The only people who appear to have supported the proposal were the permanent secretary and the Boundary Commission. It had no local support whatever, either from the cities of Norwich and Exeter or indeed from the counties of Norfolk and Devon, and it would not have met the criteria laid out by the Secretary of State.

What the permanent secretary did not say, as the Secretary of State suggested, was that the existing arrangements offered better value for money than creating unitary authorities in Norwich and Exeter. How could the right hon. Gentleman say that? As we have seen, the impact assessment produced by the Department shows clearly that after the initial up-front costs—amounting to £600,000—there would be year-on-year savings of £6.5 million. The worst value-for-money option—the most expensive option—is the current arrangement, but that is the one for which the Secretary of State has opted. So much for value for money.

Let me also deal with the points made in the High Court ruling. Of course, we accept the judgment. However, this is a political issue and it is right that it should be hammered out and determined by Parliament. The provisions relating to Exeter and Norwich were not imposed by anyone. They were debated in Parliament for more than seven hours, voted on, and approved in both Houses of Parliament. In this House and in the other place, a clear majority supported creating unitary authorities in Norwich and Exeter.

Let me remind the House that Mr Justice Ouseley made no criticism whatever on the merits of creating unitary authorities in Norwich and Exeter. He was absolutely clear that the Secretary of State was entitled to make a decision on the matter, and that it was perfectly reasonable for him to take the prevailing economic circumstances into account. He simply said that the consultation process was not adequate. The Secretary of State was not able to consult more fully than he did because of the length of time that it took for the proposals to reach him. Owing to a series of judicial reviews and legal challenges, the proposals were twice postponed and took a year longer than expected to reach the Secretary of State, which substantially reduced his ability to consult more extensively.

Mr Justice Ouseley was at pains to emphasise that his ruling in no way prevented the Secretary of State from bringing forward the proposals again after a short period of consultation, but this Secretary of State has chosen not to do so. He has chosen to deny the people of Norwich and Exeter the chance to run their own cities. The fundamental point here is what is right for Norwich and Exeter.

[George Hollingbery (Meon Valley) (Con)]

Can the right hon. Lady remind me who set up the rules and regulations under which this process made its way to the judicial review, and can she remind me of the outcome of that review in terms of the process followed by the previous Government?

[Caroline Flint]

The criteria were set up by the Labour Government as guidelines to inform the Secretary of State when making decisions about this case. Every proposal, as I have said, has to be dealt with on a case-by-case basis, taking into account the circumstances when the applications are made and reaching the point of final decision.

[George Hollingbery]

rose—

[Caroline Flint]

I wish to make some progress and I hope to deal further with some of the points that the hon. Gentleman has raised. I will be happy to give way to him again later.

The Government’s assessment of the original bids in respect of Exeter and Norwich found that they satisfied all the criteria except for the payback period for the transition costs, which was estimated to be six years rather than five. However, given the small transition costs owing to the year-on-year savings—and given the economic circumstances at the time and the overriding priority of supporting economic growth and creating jobs—we believed that there were compelling reasons to create unitary authorities in Norwich and Exeter.