Financial Sustainability (Local Government)

Debate between Chi Onwurah and Baroness Stuart of Edgbaston

Tuesday 7th January 2014 Westminster Hall

[Ms Stuart]

Those were not my words—the comparison of England with France, Italy and Germany —but the words of the Minister of State, Cabinet Office, the right hon. Member for Tunbridge Wells (Greg Clark), who has responsibility for cities.

Previously, the Labour Government embraced devolution. We devolved power to Wales, Scotland and Northern Ireland, and we restored London’s city-wide government in 2000, led by a directly elected executive Mayor. England outside the capital, however, remains unfinished business. It is a shame that the Government imposed police and crime commissioners, but presented us with a rather botched referendum on directly elected mayors in some of our cities.

I regret that our major cities do not have directly elected mayors, because such leaders need the support of the whole electorate and not only a small cabal of their own councillors. They need authority. To be frank, the names of the leaders of the core cities ought to be rolling off the tongue in the same way as we can name Cabinet Ministers, but they do not. Running a city the size of Birmingham is probably a far more difficult task than many a Cabinet post, yet we do not give those leaders the political authority that they ought to have.

A small way to remedy the situation, citing the noble Lord Whitby of Harborne as a precedent, might be for retiring council leaders to join the House of Lords, giving some representation for local government. I am not sure that the Mayor of London would be terribly keen on a place in the House of Lords after he finishes his term, but it is worth a try.

My second contention is that local government funding is not actually local. To quote again from the cities Minister:

“At the root of the problem is a lack of local control over the cities’ own affairs and spending”.

When talking about taking up his post, he said that he had to do two things, the first of which was

“to persuade the Cabinet to accept the principle to have licensed exceptions to national policy”,

so that cities could come up with their own way of dealing with things. If I remember rightly, in questions to the Deputy Prime Minister today, a number of Members also suggested that the presumption about deviations from national strategy should be that they were allowed, rather than having to prove the case.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

I congratulate my hon. Friend on securing the debate and making such excellent points. In response to my recent debate on local government finance hold-backs, the Under-Secretary of State for Communities and Local Government, the hon. Member for Great Yarmouth (Brandon Lewis), who will respond to this debate, claimed to be freeing local authorities to stand on their own two feet. Does my hon. Friend agree that it is the height of hypocrisy to claim to be freeing up our great cities when actually the Government are taking key powers into Whitehall, such as on inward investment, housing, skills, economic development and European funding?

[Ms Stuart]

Indeed, and I shall make that case with regard to Birmingham. Presumably, a true liberal regards the freedom to fail as a freedom, and that is one of the freedoms that our cities have been given.

The cities Minister also said:

“The second thing is to liberate from the central government barons funding that can be better spent locally.”

I cannot improve on his observation. Quite a number of colleagues will agree, in different ways, that the current funding structure is not sustainable. If there were some great vision of how our cities can succeed, we could engage with that, but what is happening at the moment is that, to quote Sir Albert Bore, the leader of Birmingham city council:

“Politicians in Westminster are systematically dismantling services that maintain the very fabric of culture and community here.”

Birmingham’s total budget for 2013-14 was £3.4 billion. That sum has to cover a whole number of things that the council must do and a number of things that the council might do. The money comes from a variety of sources, and the structure of the system is virtually impossible to explain to our voters.

I am wary of quoting figures, for two reasons. One is that we throw the words “millions” and “billions” around as if the difference is a change of just one letter. I have always found it useful to remind myself that 1 million seconds is 11 and a half days, whereas 1 billion seconds is 31.7 years. There is a massive difference. The second reason is that whenever I think I have a handle on the cuts, things change. I turned on the television yesterday and found that the Chancellor was in the west midlands announcing another £25 billion of cuts. I am not entirely sure where they will come from.

The latest figure for Birmingham is that we need to find savings totalling just under £840 million between 2010 and 2018, including £120 million of cuts in the financial year 2014-15.