Local Government Funding

Debate between Caroline Flint and Harriett Baldwin

Monday 6th December 2010 Commons Chamber

[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.