Local Government Financing
Debate between Chris Leslie and Mark Spencer
Chris Leslie (Nottingham East) (Lab/Co-op)
Members on the Benches opposite are, understandably, repeating this desperate mantra about “unavoidable cuts”. I suppose they think that if they can cling to that enough and repeat it often, somehow it will become true. These announcements of reductions—these swingeing cutbacks of public services—are not unavoidable; there are alternative strategies. Taking out 25% of public spending in these unprotected departmental expenditure limits within such a short period of time—four years—is to act too quickly and too harshly. There is no consensus among economists—that is certainly the case globally, let alone in this country—that this approach is the only way to protect our triple A rating and is essential in order to avoid a Greek-style arrangement. I suspect that either there is a little naivety on the part of the Liberal Democrats in propping up this ideological zeal to reduce public spending, which has always been present in the right wing of the Conservative party, or the Liberal Democrats—at least some of them—have sold their souls in order take on the trappings of high office. I hope that is not the case, but I am sure it is beginning to look to many of my hon. Friends as though it might be.
In my constituency, in Nottingham, the first tranche of service cutbacks—taking out the £6 billion and having £1 billion of reductions in local government spending—meant £4.5 million taken out of Nottingham’s front-line services. Some £2.7 million has been taken out of the education area-based grant—that money is not just for the one-to-one tuition that we were hoping to have for children in most need, but for the school transport budget, the special educational needs budget and so on—and £1.2 million has been taken out of the working neighbourhoods fund. The title of that fund does not really capture what it does, because the fund helps to combat teenage pregnancy and ensures that welfare rights advice is given to people. It provided the money that went hand in hand with the future jobs fund to help to get young people off benefits and into work. Millions of pounds have been taken out of these services, with £350,000 being removed from road safety spending and £2 million from the transport capital grant.
Chris Leslie
I know that will affect the constituency of the hon. Member for Sherwood (Mr Spencer), as it neighbours mine.
Mr Spencer
Does the hon. Gentleman agree that Nottingham city council might have been assisted if it had not had to dispose of three chief executives before their contracts expired, because they could not get on with the Labour-controlled city council, and pay them settlement fees in excess of six figures?
Chris Leslie
No, I would not agree. The tactic of the hon. Gentleman and of many hon. Members on the Benches opposite is to pick one or two anecdotal examples of problems, creating from those a whole story about how the public sector is rife with inefficiency and difficulties, and has to be culled. I presume he thinks that the only way forward is this fantastic private sector drive, which is always correct in all circumstances. There are examples of poor practice in the public sector, just as there are in the private sector. All I say to him is that taking 25% of public spending out of these vital services within four years will affect his party and the Liberal Democrats at the ballot box, particularly in the local elections next year; it will be interesting to see the reaction from the Liberal Democrats then.
We are all constrained by time in this debate, but I wish to raise a couple of points, especially on the local government finance particulars that have not been addressed so far. Some of my hon. Friends have mentioned the difficulties created by the in-year reductions in the first wave of announcements. Strangely, there will probably be four chops of the axe: the first announcement at the end of May/beginning of June; the Budget; the spending review coming up in the autumn; and another Budget in March. One consequence is that the ability for any sensible local authority to plan ahead carefully, cautiously and sensibly on a medium to long-term framework containing some understanding of what settlements it might achieve, given that the vast bulk of local government money comes from grant, has gone entirely. No sane or sensible local authority will be able to make any decisions about how it proceeds for the medium term until it has heard what is in the spending review. The danger in making some of the reductions within this mid-year period is that the short-termism will create extra harm, because changes will not be thought through or evidence based, and unfortunately they will probably hit those in most need.
Another consequence of this short-termism is that it affects some of the carefully constructed partnerships between public agencies within localities, which we have all been hearing about. We all, of course, want Total Place and we want local authorities to work together, be it at local strategic partnership level or under the local area agreement frameworks. Those partnerships have been shattered into smithereens because each public agency will retrench into its shell, with local authorities having to focus very much on their own situation and being unable to pool discretionary resources with other agencies. I am sure that the same will be the case in respect of police authorities, health bodies and others, and I very much regret that move.
The Government also decided to scrap the local area agreement reward grant. Again, this is a technical area, but the grant was important in process terms because it encouraged some sharing of objectives between central and local government. Not every front-line service is determined by a local authority alone. Of course, as we have heard, all sorts of services depend on central and local government working in tandem. Driving a coach and horses through the local area agreement framework will mean that local authorities will have absolutely no incentive to work in partnership with central Government, because in doing so all they have been given is a slap in the face. That is a great pity, because although this approach may not necessarily be noticed by our constituents, it is a crucial piece of the jigsaw that made a big difference.
The notion that the Government have been so generous in removing the ring-fencing from a series of grants after they took the axe to area-based grant that already exists is worrying. If the first thing that the Government decide to cut is that budget, which already contained a degree of flexibility and involved local authorities having an amount of freedom—local councils were getting used to working without the constraints of the centre—and straight away the front-line thing that goes is the area based grant and that flexible money, what will be the reaction of any local authority when the next tranche of money is magically un-ring-fenced? Naturally, those will be the next sums of money to go through the exit door, be they for the de-trunking of roads or for housing market renewal—the Government say they are removing some of the ring-fencing from that. Those will be the items of expenditure that will probably be cut next, because that is the signal that the Government are sending.
Mr Spencer
A number of schemes have been tied up in bureaucratic nonsense, and local authorities have had to jump through a number of hoops to deliver centrally issued targets that create an enormous amount of bureaucracy for local authorities. I shall say more about that shortly.
It is little wonder that the country’s national finances were brought to the brink of an abyss, given the last Government’s lack of vision and basic financial understanding. We only just avoided the intervention of the IMF in our finances; we were very close to that, as has been widely recognised.
Chris Leslie
What evidence has the hon. Gentleman that we were on the brink of having the IMF called in?
Mr Spencer
It was widely recognised—globally—that this country’s finances were in dire straits. Global economic markets were betting against our economy. We were saved only by the markets’ recognition that an election was coming, and that hopefully a Conservative Government would take over. We are in the fortunate position that the coalition has tackled those issues and saved this country from the enormous abyss it was facing.
The only way to deal with local government is to give power back to local government. Local people are much better placed to make local decisions. I welcome the decentralisation of local government and its management, and I sincerely hope that when we pass that power down the structure, better decisions will be made. I am very much encouraged by the thought that that will happen.
I am quite frustrated by the number of Opposition Members who have said that the leafy shire counties are all right thank you very much. Hon. Members should come and look at Nottinghamshire and at Sherwood. We have some challenges and some areas of real deprivation, such as Ollerton, Rainworth, Blidworth and Bilsthorpe right in the middle of Nottinghamshire county.