Local Government Funding

Debate between Caroline Flint and Rob Wilson

Monday 6th December 2010 Commons Chamber

[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.

--- Later in debate ---

[Mr Rob Wilson]

Will the right hon. Lady give way?

[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.