Communities and Local Government (CSR)

David Lammy Excerpts

Thursday 13th January 2011 Westminster Hall

[George Hollingbery (Meon Valley) (Con)]

I will attempt not to repeat points made earlier, in the interests of time.

There is no getting away from the fact that this matter must be considered in the context of the overall Government settlement, the overall level of spending across Government and the spending plans that we inherited from the previous Government. There was much muttering from the right hon. Member for Tottenham (Mr Lammy) earlier about how this was wrong, irrelevant and did not matter. The simple fact is that the right hon. Member for Edinburgh South West (Mr Darling) announced spending cuts of 20% in the Budget in March last year. The spending cuts announced by the Chancellor this fiscal year are 19%.

If we are to change the settlements for local government, if we are to change the timings—which are as important as the amounts, because a pound saved this year is one saved next and the year after—the Opposition have to make some effort to tell us what they would cut instead. I am a local government specialist; it is my area of expertise, if I have any at all. I spent 11 years in local government and very much believe in the worth of local government to local people. I understand that there are other services out there that will be cut if we get improvements. A simple question to the Opposition: what will they be? Here comes an answer.

[Mr David Lammy (Tottenham) (Lab)]

May I remind the hon. Gentleman that this is a Back-Bench occasion? I know that he understands economics and will appreciate that in seeking to deal with our deficit, the pace at which we deal with it is pertinent, but so is the nature of the tax take. Therefore, there are decisions on tax about which Back Benchers would rightly want to make their views known. The position in relation to the banking levy is felt strongly by the Opposition. It is disingenuous to caricature this as solely a debate about cuts.

[George Hollingbery]

Plainly, this is not a debate only about cuts, and plainly it is an occasion for Back-Bench contributions. It should centre on the evidence given to the Select Committee. Those points were raised in the Select Committee, which is why I refer to them. I notice that the right hon. Gentleman did not answer the question; he did not seek to identify what else he would change. That is fair enough; he is not obliged to do so. However, I posed the question and it was not answered.

The Department has led from the front, and it is right to identify that. The hon. Member for Sheffield South East (Mr Betts), the Chair of the Committee, talked about a 68% reduction in spending within the Department. We have had a small debate this afternoon about whether that is the right number. I understand the point he made about the Department needing to identify exactly what money is being transferred down, such that the figure drops from 68% to 33%. In evidence to the Select Committee, the Secretary of State was adamant that it was 33%, and I think that at this stage we must take that as given. The number of directors general is being cut from six to three; and the number of directors from 26 to 20 in the current year and 16 in the following year. That is a Department leading by example, and we should applaud that.

Considerable efforts have been made in the settlement to protect the most vulnerable authorities. Plainly, those authorities that receive the most grant are those that represent the most vulnerable people. It is a truism that in times of cuts and grants to local government, those that receive the most are likely to see the biggest cuts. We have to admit that that is the case. That is bound to be the case in absolute terms. The Minister for Housing and Local Government admitted such in his evidence. However, the Administration bent over backwards to try to mitigate the effect of those cuts. They would have been very much worse if mechanisms had not been put in place to damp the effects. We saw the new banded floors, the adjustment of the relative need formula and, of course, £85 million of transitional funding.

While there is a correlation in the graph produced by the Scrutiny Unit that shows that some of the most deprived areas will see the biggest cuts, the effect was hugely reduced by the actions that were taken. I do not think that in the circumstances the Government had any alternative but to reduce spending. Therefore, there was always going to be that effect. However, they have done as much as they possibly could to mitigate that effect.

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[George Hollingbery]

It is particularly galling that the leader of Manchester city council should say that. If we look at the raw figures we can see that Manchester is receiving £354 million this year for 480,000 citizens, whereas Hampshire is receiving £185 million for 1.3 million citizens. Although there are deprived areas of the country that need more money, we must look at scale.

I shall cut down my remarks quite considerably because a number of Members still wish to speak. Let me mention the plight of Winchester and of East Hampshire. I know that the Minister is aware of the issue of South Downs National Park funding and that he is meeting my hon. Friend the Member for East Hampshire (Damian Hinds) to talk about it. None the less, it is a difficult pill for East Hampshire to swallow. Hampshire county council, like many other councils from which the Committee has heard over the past weeks and months in our Localism Bill inquiry, is being very innovative and is undertaking an enormous amount of exciting work that will produce new ways of doing things across the piece.

It is interesting to consider what a reduction in service is. Is the closing of a library a reduction in service? It seems self-evident that it is. However, I am not entirely certain that it is. What if someone wants to run their library service in a different way? If they can close down libraries but, at the same time, provide a better service that offers more books to more people in the right place at the right time, is that a reduction in service? I am not entirely convinced that it is. There is a wider argument to be had here about what these changes may mean.

[Mr Lammy]

Let me say gently to the hon. Gentleman that a pensioner who uses their library not just as a place to get books but as somewhere to be warm and to have company might find very hard to swallow the idea that shutting it down is not a reduction in service.

[George Hollingbery]

I understand the right hon. Gentleman’s point, but using a very large and poorly insulated building as a drop-in centre for elderly people seems a rather expensive way of providing social care. It is like providing post offices in rural locations as a social support network. If that is the service that the right hon. Gentleman wishes to provide, perhaps there is a different way of funding it that is cheaper and offers better value not only to the citizens in the area but to the people receiving the service. I am not being flippant. I genuinely understand the right hon. Gentleman’s point that such services provide wider benefits, but perhaps councils should think about how they provide their services.

The other day the leader of Hampshire county council made a useful point to me. Many councils make assumptions about what is important to local people. The leader was very clear that the council had to survey local people to find out what they wanted to see protected if reductions were required in front-line services. The results were very surprising. The obvious things that one would think were terribly important, such as roads, were not necessarily what people came up with. In fact—I welcome this—nearly everyone said that protecting services for the vulnerable was the thing that should be done up front and if that meant having a few more potholes, so be it.

I challenge councils to ensure that, when they reduce services, they understand what they are reducing and why, and find out whether their citizens think that they are the right things to reduce.

In November 2009, an article on the Total Place initiative in the Municipal Journal said that only 5% of all local spending was under the control of elected councils. So when we talk about substantial reductions in local services, through local councils, there is plainly some truth in it, but huge amounts more of Government spending go on in local areas than just what goes through local councils.

I will pass over the extensive evidence of innovation that we have had from councils across the country. As a Committee, we have been greatly encouraged by the fact that there is a lot of innovation. That will be further helped by the removal of ring-fencing, which will allow councils to spend more money in the way they see fit. Of course, the Localism Bill itself contains a large number of provisions that will make that easier, including the general power of competence, the community right to challenge, provisions for pay accountability, the transfer of community assets and the abolition of the standards board. Those are just a few measures in the Localism Bill that should help to reduce costs, increase flexibility and allow innovation.

In conclusion, this is a challenging time for local councils, and nobody who is interested in local government should pretend otherwise. Nevertheless, there are enormous opportunities out there to innovate. The ring fences have been removed and the gloves have been taken off for local councils; they can do things in different ways, but they must re-examine their services, look very carefully at what local people want and look innovatively at providing better services in newer ways that provide better value for money and are better tailored to their local areas.

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[Bob Blackman (Harrow East) (Con)]

I will bear in mind your earlier remarks about brevity, Mr Robertson, and as this is the first time I have spoken under your chairmanship, I suspect that that will be measured the next time I speak under you. I do not wish to repeat what Members have said already, but I think that we cannot consider this year’s local government grant settlement in isolation; it is not a one-year issue. We must look at it in the context of previous years and experiences.

I ran local authority finances for a considerable time before entering the House and have served in a position in which we received from a Labour Government drastically lower levels of grant, way below the rate of inflation and pegged every year for three years. Of the 32 London boroughs, 23 were on the floor and were receiving half the level of inflation year on year. That meant that local government had to be efficient and clear about how it would obtain its finances and run its services.

The previous Government often said to local government, “We’ll give you a new duty and ring-fence the money.” Slowly but surely, the money for the basic services was starved and the new duties and services were ring-fenced. The rationale was that the Government wanted to ensure that the money was spent in the areas where they dictated it should be spent. It was a centralised approach to running local government. Local authorities got used to area-based grants, which could be spent only on certain services, and to performance level grants, which could be spent only if performance against a complex series of assessments was achieved. I am delighted that in the current settlement, and, I hope, in further measures that the DCLG team takes, all that will be swept away. The ring-fencing will be removed so that local authorities will have the opportunity to determine local priorities.

An example from my experience that I would like to use is that of working neighbourhood funds. In the London borough of Brent, we set up and used the money specifically for the purpose of ensuring that unemployed people in Brent got jobs, and we were so successful that there was a reduction in unemployment. However, at the height of the recession the previous Government decided to remove all the money. A borough that had been successful and used the money appropriately lost the funding at a time when it was desperately needed, while those boroughs that had not succeeded continued to receive it—a great reward for our success. Actually, it was a great reward for failure elsewhere. There is a key issue that experience from local government has shown to be true.

As several Members have said, every local authority in the country knew that following the general election, regardless of which party won, there would virtually be a public sector recession and that everyone would have to plan for reductions in expenditure. The two authorities that I know well—the one I used to serve in and the one that I have the privilege to represent part of in this House—had planned for a 10% reduction every year for the next four years, but fortunately they will not have to suffer that under the wise settlement that the Government have brought forward. I would say to any authority that did not put plans in place for expenditure reductions that have come down the line that it is no good complaining now, because they did not plan for a future that was almost certain. Local government must transform itself and the services it provides and look at doing things radically different from how they have always done them.

As has been alluded to, that is a direct challenge to many local government officers, but it is important to remember that that is part and parcel of the challenge that has been set down by central Government. I do have concerns, however, for example on what the London borough of Harrow is doing. It has decided to reduce its voluntary sector funding by 30%, decimating the people who deliver services for vulnerable people. It is an easy cut to make, but a short-sighted one, because the people who are being cared for by voluntary services will get worse more quickly and throw themselves on the local authority much earlier, which will be more expensive. It is a foolish way to approach the cuts.

In the other London boroughs—we see this right across the piece—proposals are being made to close libraries, day-care centres and various other services on which vulnerable people depend. With regard to library services, I take the view that libraries are more than just places where books are provided; there are computers there and facilities for vulnerable and deprived people who need the space to study in. When I was leader of the London borough of Brent, I remember being dubious about our plan to open a library on a Sunday for the first time, but there were queues of students at the door at 9 o’clock in the morning because they wanted to study. I say to every local authority that they should not cut such services, even though they seem to be easy cuts to make. They should examine other things before doing that.

[Mr Lammy]

The hon. Gentleman and I agree on many things, particularly our choice of football club. He is firmly on the centre ground, and I appreciate the manner in which he puts his remarks. Does he agree, when he makes his points as well as he has, that too severe cuts to crucial services could lead to huge costs downstream for local communities? I am thinking of policing costs, social exclusion, and cohesion. From his experience in Brent, he will understand where I am going.

[Bob Blackman]

I thank the right hon. Gentleman for that intervention. I agree that there is concern about the level of reduction taking place in local government funding. I recognise that that is a key concern, and also that it is possibly more front-loaded than other areas of Government expenditure. However, one of the things that has happened in areas of greater deprivation is that over previous years they have gained substantially in central Government funding and grant. That is why it is difficult to make comparisons year on year. They gained far more by having deprivation. Actually, studies show that deprivation has not reduced as a result of central Government funding, so has that been a good thing or not?

Naturally, as the Government have decided to change the formula and grant regime, areas of greater deprivation are experiencing greater reductions. That is, of course, a serious concern to local authorities that are experiencing it. However, certainly in my experience, the plan was there that that would happen. If they have not planned for it, they have been short-sighted, and that is serious.

In the time that I have available, I wish to mention a series of concerns, the first of which is about the suggestion of capitalising redundancies and some services. I was a great proponent of capitalisation—I thought that it was an excellent way of doing things—until the prudential borrowing regime came in. I urge caution, because if one capitalises expenditure, all one is doing is borrowing. One must fund that borrowing on the revenue account, which will probably lead to a huge amount of cost in the future, year on year, for a one-off payment. That is not a good plan of action at all, particularly at a time when we know that local authority funding will be reduced over a four-year period.

My second concern is about the consequences for the voluntary sector. It is easy for local authorities to reduce the voluntary sector slightly—it will not impact on the core services that they provide. Actually, that is a short-sighted view. I urge local authorities across the country to ensure that they safeguard voluntary sector services that are coping with the weak and vulnerable, and doing it cost-effectively. I suspect that in future years that very same voluntary sector will be crucial to delivery of services in the big society that we all support.

The next area of concern is visible services. There is an obvious thing that is often missed. Having been in local government for a long time, I know that when it comes to reductions, local government officers always come forward with what can only be described as the bleeding stumps. It is easy to say to councillors who want to reduce funding that they have to close this day centre, close this library, do this, do that. Never does one hear from local government officers, “Actually, we will reduce staffing by 10% in the administration area.” I am not one of those who says that just by merging services and joining forces with another local authority the gap will be bridged, but at a time of great challenge, all those areas have to be examined and challenged, before one looks at the visible services on which the public rely.

The overwhelming majority of people who work in local authorities are on relatively low salaries and wages, and we should ensure that they are supported. However, over the past 10 years, there has been an absolute explosion in salary levels for local government officers, chief officers in particular. I, for one, am sick to death of reading almost weekly of a local authority chief executive or chief officer departing from one job with a golden goodbye only to walk into another local authority to do a similar job on a hugely increased salary. The excuse made for that across local government is that they have to pay more to attract the best people. I have no problem with rewarding experienced people who do a good job, but that has gone much too far in local authorities. Now is the time to examine those salaries, and I applaud local authorities that are reducing salaries rather than increasing them.

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[Mr David Lammy (Tottenham) (Lab)]

I am grateful to the Backbench Business Committee for granting this debate, and I want to associate much of what I say with the comments of my hon. Friend the Member for Sheffield South East (Mr Betts), who is a good friend. I agree with a lot of what Members from all parties present have said, and I do not want to phrase my remarks in too partisan a way.

I want to talk about the impact of the cuts on the very poorest communities in the country, particularly those in London. As the MP for Tottenham, I know something about the issue. What has just been said about the sensitivity around cutting services for the most vulnerable too fast and too deeply is important, because there could be huge social consequences. I hope hon. Members understand that it is hugely important to talk about these matters and to reflect on the history of my constituency.

In representing Tottenham, I represent London’s second poorest constituency. Cuts on this scale will have a huge effect, and there are authorities that are worried not just about the nature of innovation and about back offices and how they share services to make the savings, but about the profound effect on statutory services. Some of those services cut to the heart of the centrality of the kind of civilised democracy that we have to be. In relation to the London borough of Haringey, I am particularly worried that the front-loading of the cuts means that its financial settlement represents a far greater reduction than was expected. We have heard some comments about the preparation that councils could make for the changes, but there are authorities across the country that could not have imagined the scale of the in-year savings that they are being expected to make. Haringey’s funding shortfall for this next year requires it to find £46 million of savings, and a further £41 million over the next two years. The loss comes on the back of the ending of the local authority reward grant, and of the funds from the Department for Work and Pensions for the future jobs fund and from the £2 million in the school development grant.

On the subject of the future jobs fund, my constituency has the highest unemployment in London. A debate is taking place outside the House on a bid for the Olympic stadium, which might involve the Tottenham Hotspur football club leaving the Northumberland Park ward in my constituency. The ward has the highest unemployment in London, and the biggest private employer might be about to leave. Who will pick up the mess if that happens? It will be Haringey council, who will have to step in to provide for the very poorest. Concern for the poorest is not unique to one party; it should be something that we all share. I make my remarks not in a partisan way, but simply to say that we have to think very carefully about the effects of the cuts as they are felt on the ground, and that is particularly important for a local authority that has seen some of the most significant failures in the protection of vulnerable children.

Over the past two years, Haringey has focused on securing improvements to its safeguarding children services, following the death of Peter Connelly and the widely reported problems with the safeguarding of vulnerable children. That has led, however, to Haringey becoming a borough in which 1.2% of all children under the age of 18 are in care—a huge 40% increase since March 2008. In December 2010—just last month—600 children were looked after by the local authority, and our rate per 10,000 was 123. Those figures represent a very high number of young people, and there is a cost attached to them, in particular if we are to ensure that children in care do not continue to come out of care with dire prospects in relation to social mobility, education and all the things that we have seen in this country’s past. There is now a real concern that because of the huge effort to deal with the consequences of the Baby P and Victoria Climbié cases, the cuts will reduce Haringey council’s ability to properly provide the statutory services that the country rightly expects.

I think it is right to say, and the figures will be published shortly, that the increase in the numbers of children in care is not just in the borough that has had the scrutiny—Haringey. All Members, certainly those who represent large conurbations, have experienced constituents coming to them and saying, “My children have been taken into care.” We get both sides of the story, and we have seen an increase in the case load. When we see the figures very shortly, I think that right across the country we will recognise the huge consequences of that story from just two years ago.

[George Hollingbery]

The right hon. Gentleman makes a powerful and emotional case for the needs in his constituency and throughout his two boroughs. I have enormous respect and great admiration for that. But does he agree that in other areas of the country, which are more prosperous and where budgets are lower, the people who are being helped by those budgets are the poorest in those areas, and that the cuts are felt equally throughout the country whether or not there is more money going to a certain area?

[Mr Lammy]

I do not want to disagree with the hon. Gentleman, except to say that all local authorities have fundamental statutory services that they must provide. Children are in care in every local authority throughout the country, and local authorities cannot scrimp on services for those young people, and young people at risk of harm. Having seen that acutely in my constituency, I want to impress on the Minister—I do not expect a response on this––the need to look carefully at the situation in the London borough of Haringey and other local authorities, to ensure that the means to provide those services and the pressures of front-loading do not militate against those very high standards that they are rightly now being set.

I hope that the Minister appreciates––he will be familiar with the issues, but they have not been raised today––that as I represent an outer-London authority, it is right for me to raise the serious concerns that exist about homelessness and its costs, and about the decision that has been made on housing benefit, and the costs that are flowing from it. The London borough of Haringey also has the highest homelessness rate in London, with 5,000 people on the register as I speak. The consequences of the decision on housing benefit are already being seen in relation to where people are now being housed by local authorities such as Westminster and Camden, who are already saying, on the record, that they are now placing 70% of their homeless people in outer-London boroughs. That brings real pressure at a time of cuts, and it is not clear where those funds will come from.

I do not want to put this in unnecessarily extreme language, but I am deeply worried about excessive overcrowding in constituencies such as mine. One sees it in other European countries, and I do not want to see it on that scale in the city of London. These are statutory services that local authorities must provide, never mind the libraries and support for the voluntary sector, and it is not clear to my local authority how this will pan out, and where the funding will come from to meet these statutory obligations. Will the Minister say something about that, and about his liaison with his colleagues at the Department for Work and Pensions, given that it is they who have landed him, in part, with the problem?

A point has been made about the voluntary sector. I am deeply concerned about some of the services that are offered in cities such as London that involve close liaison with the Metropolitan police and mental health in particular. There are some very excluded communities in this country; there are young men in this country who present as extremely vulnerable, who are subject to extreme views. I might say that once upon a time, I was one of those young men. When I was growing up under a previous Conservative Administration, when things were tough and there were real pressures between the police and the local community, Neil Kinnock spoke to me sufficiently to keep me in the mainstream, and I was not seduced by some of the extremism that was around.

I hope the Minister appreciates that some of the services that fund some of the voluntary sector in constituencies such as mine, working in youth services and liaising with the Metropolitan police––the hon. Member for Harrow East (Bob Blackman), who has experience of Brent, will be familiar with such services––are absolutely crucial. The funding for a Turkish liaison officer who is working with some of those involved in the extreme gangland criminality that we are seeing in parts of that community is being cut. That funding, which came from the local authority, is no longer there to support that work with the police. I am very concerned about the consequences of that. Will the Minister reflect on other parts of the DCLG empire, and what that means for social cohesion?

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[John Robertson (in the Chair)]

Will the hon. Gentleman please sit down?

[Mr Lammy]

I am grateful for all the help that I received in the city of Peterborough. It is a great city, but the hon. Gentleman will know too that it is a city with tremendous challenges, partly for the following reason. There are communities in Peterborough, as in mine, that do not have the necessary capacity. I am therefore very nervous about the springing up of wells in the “big society” and the expected support. Money must come from somewhere, which is why I spoke as I did.

I am grateful for the time that I have been allocated, Mr Robertson. I wanted to make three central points and I have done so.