Lord Beecham
Main Page: Lord Beecham (Labour - Life peer)
Lord Beecham
My Lords, I thank the Minister for repeating the Statement with every apparent evidence of conviction. This Statement, like most ministerial Statements these days, began with evidence that the Government have succumbed to a new medical condition—deficit attention disorder. There is, of course, a deficit, but the Government have misdiagnosed the cause, which was not government spending—until December 2008, they had pledged to equal it—and they have prescribed the wrong treatment: they have prescribed too much of it too quickly and it is too toxic.
In interviews and Statements, the Secretary of State seems to pretend that cuts of unprecedented magnitude can be achieved relatively painlessly. He cites, for example, the use of reserves. If this were true, he should perhaps have a word with the Mayor of London, who is sitting on, to use the Secretary of State’s phrase, £1.5 billion of reserves—about 15 per cent of the total—or, indeed, with the leader of the council of which the noble Baroness was herself a distinguished leader some time ago, Kensington and Chelsea, which has the second highest reserves of any other authority, at £100 million. It is not true that these reserves are available. Most of them are earmarked and cannot be used except for prescribed purposes, as I pointed out in a debate last week. The amount of unallocated reserves is a mere £3 billion out of a £68 billion spend.
The Secretary of State has some other ideas—for example, that councils should jointly employ a chief executive or a finance director. These are facile and ridiculous suggestions. Of course, sharing services is important and it is taking place. Procurement needs to be shared across local government and shared services and joint procurement could, indeed, be extended across the public sector, but local government has demonstrated significant improvements over the past few years.
The Statement makes it clear that there is to be a council tax freeze, but there is no freeze for council or social housing tenants, who face an increase of 6.8 per cent next year, nor is there a freeze for those people who will lose 10 per cent of their council tax benefit— £450 million is being taken from those people, despite the fact that £1.8 billion of council tax benefit goes unclaimed. The freeze lasts for two years at a cost, I think, of £1.3 billion. That leaves councils ultimately with a reduced tax base, which will have to be made good, but what will happen then? In any case, this comes from money that could be used to protect services now.
The Statement makes no reference to the issue raised here and in another place about the capitalisation of redundancy and severance payments, which will be a significant burden on many local authorities. In a debate last week, I asked the noble Baroness how these payments could be made without affecting services if capitalisation was limited to £200 million nationally. I do not know whether she has briefing on that.
The Statement is also silent about capital, where the reduction is 45 per cent and has potentially significant implications not just for councils and their services but for the private sector and jobs within it, particularly, though not exclusively, in the construction industry.
There have been interesting comments in the run-up to this Statement from a variety of sources. A distinguished academic, Professor Tony Travers, in advance of the Statement, called it the harshest settlement since 1945, if not ever. He said that it was apocalyptic in the first year. Some movement has been made at the last minute to reduce the front-loading, which is welcome. It is, however, pretty limited. It may be not “Apocalypse Now” but “Apocalypse Not Just Yet”, foreshadowing serious difficulties for many councils.
In the very limited time that was available to my right honourable friend Caroline Flint and me to see the Statement, which we received only an hour ago, and to glance—it was impossible to do more—at the many tables appended to it, I applied my mind to the situation in the north-east of England, to which I am sure the noble Lord, Lord Shipley, will refer. A quick calculation produced a figure of £215 million of cuts in the next year, after the modest softening of the front-loading. However, in addition, there are the cuts that have already been sustained. This raises serious questions about what will happen. Perhaps the Minister can indicate whether she and the Government agree with Tony Travers’s description of this as the harshest settlement of the post-war period.
Can the Minister also say what impact the settlement will have on the voluntary sector? The noble Lord, Lord Shipley, and I returned home to a letter from the Newcastle Council for Voluntary Service, in which I declare an interest as an honorary vice-president. It had met the city council and had been apprised of the fact that the budget for supporting voluntary organisations—stemming in part from the working neighbourhoods fund—is to be reduced from some £10 million to £2.5 million. That is, in other words, a 75 per cent reduction for the Government’s proclaimed partners in the big society—partners with which the city council, under different administrations, has for many years been pleased to work. Is there an estimate of the impact on the voluntary sector of the reductions?
How do the Government and the Minister react to Birmingham’s proposals to cut £70 million from its budget for carers, notwithstanding the provision made for supporting social care through money from the National Health Service, albeit that that programme would have to be agreed with the NHS and may represent continuing expenditure?
Does the noble Baroness agree with her noble friend, the noble Baroness, Lady Eaton, who said:
“These cuts will hurt. We know this means that there could be fewer libraries, more potholes going unrepaired … and youth clubs closing”?
Surely the tide of reductions in service across the country will be extremely significant.
Finally, can the Minister confirm the statement made by the Prime Minister earlier this year which clearly indicated that the cuts being contemplated under the spending review would not be restored, even when the economy improved? Does that not reveal the real nature of the Government’s agenda?