Autumn Statement (Coventry)

Geoffrey Robinson Excerpts

Tuesday 7th January 2014 Westminster Hall

[Mr Geoffrey Robinson (Coventry North West) (Lab)]

I am pleased, Mr Crausby, to serve under your chairmanship. I congratulate my hon. Friend the Member for Coventry South (Mr Cunningham) on securing the debate, and I thank Mr Speaker for allowing this important local debate on the impact on Coventry of the autumn statement.

My hon. Friend covered well and succinctly the overall impact of the autumn statement on the country as a whole. We have at last had some small growth, which is very welcome, with a continued reasonable increase in employment, but there is no point in trying to kid ourselves that we are anywhere near where we said we would want to be. Furthermore, the Government should not kid themselves that they are anywhere near where they want to be on the deficit, because the deficit has not been tackled to anything like the extent that they said with such confidence that it would be when they took office in 2010. As a result, we are still facing the cuts, an increasing level of cuts, that we are discussing this afternoon.

Coventry, which is anything but one of the richest cities, has suffered a massive collapse. All Members who know the west midlands or live near there will recall that in the first period of the Thatcher Government up to 1983, we lost something in the order of 30% of our manufacturing capacity—certainly more than that in Coventry—and the city has never really recovered. Whether that was necessary is not for today’s debate, but the hangovers and the legacy are still with us, meaning that Coventry is quite simply not a rich city and cannot bear the level of cuts being imposed on it.

Since 2010-11, we have lost £45 million from the core support to Coventry, which is 20% over about three years. I have heard it said by various business men, in the House and in particular elsewhere, that 10% of any company’s budget can be cut and it will survive quite well. Frankly, I have done that myself—it can be done. I have never heard any sensible business man say, however, that that should be done for three or four years running and then tried for another two years at an even higher level of cut than 10%. I have certainly never attempted to do that myself. It simply cannot be done, but the figures show that in effect that is what the Government are trying to do.

The figures given by my hon. Friend bear repeating, I am sorry to say. In 2014-15 we face a 10.6% cut, and in 2015-16 a 15.2% cut. I am well aware that that is not the entire income of the company, if we want to regard the local authority as a company. Nevertheless, that is a substantial and continuing sustained cut to its core budget, from which it has to deliver the key services.

Put together, the cuts from 2010 through to 2016 in Coventry, I think, come out as something in the order of a 65% cut in the core budget—making allowance for inflation and all the other things that the Government do not necessarily allow for in their figures. I do not invite the Minister to bandy her figures against ours—we all know that local government finance is an extremely complicated and tiresome matter, which can be twisted in any way and used to prove almost any argument—because that would not be helpful.

Instead, I ask the Minister to address two questions asked by my hon. Friend, to see whether we can get clear answers. I think that she has passed a message back to the officials about one of them, which—to quote from a note received from the local council—is:

“Coventry’s capital allocation for Schools Basic Need has, without prior explanation, been reduced to zero for 2015/16”.

That is surely a mistake. The council cannot believe it. How will it maintain its school buildings? The worst thing a school can do is neglect its buildings. I remember that when we took office in 1997, schools had buckets underneath the holes in their roofs where the rain was coming in. Difficult though it was, the first thing we did was to release £1 billion from the tax on utilities’ excess profits to deal with that situation. It costs a lot more in the long run to deal with such situations in that way. What I read out must be a mistake; I am sure that the Minister will be able to reassure us on that point.

The other specific point put to us by the Coventry local authority, to which my hon. Friend the Member for Coventry South also referred, is that the local welfare provision grant will end from 2015-16. That is worth £1.4 million to Coventry. That is not a lot of money, but it is a line in the budget until 2015-16. There has been a line in our budget for local welfare for as long as I can remember.

My right hon. Friend the Member for Coventry North East (Mr Ainsworth) referred to what we are seeing in our surgeries. People turn up destitute: they have nowhere else to go or to look. A constituent came to my surgery with two young children and asked, “What am I going to do?” I said that we had to release some funds from what I think we call the hardship fund—that is the vernacular for it. That fund, too, has disappeared as a line in the budget. I would like the Minister to note that.

Now, if a line in a budget disappears, we can bet our bottom dollar that the money for that line in the budget has disappeared as well. We had a temporary holding reply from the Government—I do not think that is good enough—on this matter, which says that the money is still there, but is simply in the whole total rather than being identified separately. Nobody is going to buy that—if a line has disappeared, the money has disappeared. We are facing a 16% cut in the year. It is simply not possible to believe that that money is still there. The money comes from core funding, and has gone down by 16%, yet we are being asked to believe that the money is still there. It is not.

Those are the two fundamental errors in the settlement that we are discussing this afternoon, and we need a reply on each. There are many other problems in Coventry, of course, that are very sad. The hon. Member for Rugby (Mark Pawsey) spoke of the small amount of help on business rates: every help is welcome, especially from this Government, and so we welcome the measure. But then one thinks of what could be done for small businesses. We could get rid of national insurance for new small businesses, or get rid of NI for businesses taking on new employees. There are so many imaginative measures that could grasp the attention of small businesses—particularly in the west midlands, where we have not done so well and could do so much more. But none of that was in the local government settlement in the autumn, and we did not imagine that it would be.

I ask for three things. The level of cuts should be re-examined; they are simply unmanageable in their present form. They cannot happen. They are just too big. Will the Minister also please answer the two specific points I raised, if possible this afternoon? If not, will she answer them in writing as soon as she is able to?

--- Later in debate ---

[Nicky Morgan]

I thank the hon. Gentleman for that intervention. There was certainly an issue with the banks that had to be bailed out. I was not in the House when that happened; his colleague, the former Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), made the decision to do so—rightly, in my opinion—but the point is this: from the early 2000s, the then Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), was running a deficit budget, which means that a huge gap now needs to be plugged. The previous Government consistently spent more than they raised, which means that the achievement of this Government in cutting the deficit by a third—indeed, the Office for Budget Responsibility is forecasting that the deficit will be halved by next year—is an enormous one and should be welcomed by all people in this country.

[Mr Robinson]

If I could take us all back to the situation in Coventry—we could argue indefinitely about local finance and about the Government’s economic policy—I wanted to raise one other point, and apologise to the Minister for not having mentioned it before. I will write to her about, and hope that she will take note of, another issue arising directly from the cuts in Coventry, concerning the Meriden Street Housing Co-operative, which is facing cuts of 60%—a figure she will recall. I promised to raise that matter today, and I look forward to her reply.

[Nicky Morgan]

I look forward to the hon. Gentleman’s letter. Either I shall answer or I shall ensure that a colleague in the Department for Communities and Local Government answers if the issue is more within its remit than within the Treasury’s. He is right: today’s debate is about Coventry. When I was handed the brief I was amazed and impressed—although I should not be, as I am an east midlands Member of Parliament and Coventry is in the west midlands—at the amount of investment that both the Government and the private sector are making in Coventry. I will come on to the city deal that was announced recently, but I am also impressed by the number of new jobs that have been created in Coventry. Only yesterday, I was reading an article in the Coventry Telegraph about a software company, Phocas, which is choosing to locate its global headquarters in Coventry, bringing jobs with it. That should be welcomed and I am sorry that the hon. Member for Coventry South chose not to make a single mention of job creation or of companies choosing to locate in the midlands, a part of the country that I would agree is a fantastic place for companies to locate.

I will leave aside statistics on the autumn statement, and will talk about ensuring fairness. The hon. Gentleman failed to mention the rise in the personal allowance that came into force last April, and the further rise that will come into force this year: from this April people will be able to earn up to £10,000 without paying any income tax. If he thinks that that is not making a difference to the pockets of hard-working families in Coventry, he is very much mistaken. I can tell him from my constituency casework that it is very much making a difference to the hard-working families in Loughborough and the east midlands.

The autumn statement delivered an average saving of £50 in household bills. It will maintain support for the poorest families and provide new home owners with incentives worth up to £1,000 to undertake energy efficiency measures. That package of support will also help more than 2.3 million households in the west midlands with the costs of their electricity bills. We are freezing fuel duty for the remainder of this Parliament, saving motorists in Coventry £11 every time they fill up their tanks.