Local Government Finance Settlement

Lord Liddle Excerpts

Thursday 9th January 2014 Lords Chamber

[Lord Liddle (Lab)]

My Lords, it is with great pleasure that I take part in this debate, which was excellently introduced by my noble friend Lord Smith of Leigh. I declare an interest as the newly elected county councillor for the Wigton division in my home county of Cumbria, although it is not my first experience of local government. I have not as long a record as my noble friend Councillor Lord Beecham, but I was elected in 1971 as a Labour councillor to the old County Borough of Oxford when I was 23. Those were heady days for local government. Nowadays, the Conservatives think of Keith Joseph as the trail-blazer for Thatcherism, but then he was Secretary of State for Social Services and was encouraging us to increase our social services budgets by 10% a year in real terms. Well, it all had to come to an end, and it was my adolescent political hero Tony Crosland who, in 1975, told us, “The party’s over”. I am afraid that, in the late 1970s, that phrase applied not just to the increase in local government spending—my own party went pretty near the brink.

Indeed, my second spell in local government was in the London Borough of Lambeth in 1982, where I was fighting the lunacy of Ted Knight’s illegal refusal to set a rate. I hope to God that we never have to live with that kind of experience again. The contrast in local government between today and the early 1980s could not be more striking, I think, in two respects. First, the cuts now being demanded of local government are massive and unprecedented. I think that I am right that, in 2010, Cumbria’s total budget for capital and current together was £720 million and there were £88 million of cuts to be achieved by April 2014, but it will be necessary to achieve another £88 million from within that £720 million by 2016-17. Of course, if George Osborne gets his way on requiring £25 billion of further cuts over the following two years, it will be a pretty gloomy picture.

I say to the noble Lord, Lord Shipley, that I do not think that many people on our side of the House sincerely dispute that cuts had to be made in 2010, because of the impact of the global banking crisis on a very exposed UK economy. If Labour had been elected, as Alistair Darling made clear in the run-up to the general election, there would have been deep cuts in public spending. I agree with the noble Lord, Lord True, that there was fat that could be cut. The question is whether the extent is now reasonable.

My second point is about local government’s response. Think of the early 1980s and the contrast could not be starker. Local authorities, including I think virtually all the Labour-controlled councils, have behaved with realism and responsibility in this very difficult situation. Many of them have planned and pioneered innovative ways of delivering services at lower costs—I think of my old London Borough of Lambeth where I was a councillor, which is now a model of innovation in local government. That is a tremendous success for the modern Labour Party. It would be nice if, for once, Eric Pickles could at least acknowledge that local government has met this situation with realism and responsibility. Of course I would not want to equate the Minister in any way with the Secretary of State, who often lacks the ability to reach out across the party divide in order to recognise the tough decisions that local government has responsibly taken.

There is a very serious question about the sustainability of what is planned for the future. I think that the Government should now be, as the noble Lord, Lord Smith, suggested, not only thinking about what would happen if local authorities became insolvent, but carrying out a major study of whether and how a sample of authorities will be able to sustain their present pattern of statutory activities with the financial outlook that we have.

Already in Cumbria, the Labour/Lib Dem administration is being forced to pare back virtually all non-statutory services. Our budget consultation in the coming year, for instance, assumes that the authority will withdraw from providing free school transport for all post-16 schoolchildren. In a sparsely populated county, it could have extremely negative implications for equality of opportunity if children from poor homes can no longer access the best A-level provision. Similarly, we are proposing to withdraw all bus subsidies in Cumbria. Bus subsidies are the lifeblood of communication in communities made up of small towns and ex-mining and agricultural villages.

In my division of Wigton, I am facing a very tough battle with the leadership of my council, with whom I get on very well, to rescue and repair the swimming pool that has been closed. I know that if we can find the money to repair that swimming pool the county will not be able to sustain it over the future years—it will have to become a community responsibility and the community will have to take charge of running it and finding a way to finance its deficit. The big society may sound a noble aspiration, but I have to say that from the present Secretary of State all you feel is a vicious kick in the backside and a lot of disingenuous information and bluster.

The Government claim that the overall reduction in the spending power of local authorities is only 2.9% next year and 1.7% the year after. Many speakers in this debate have demonstrated how that is not so. Without the NHS money, which is not free money, coming into local government the reduction in central government support for local authorities is going to be 15.9% over the next two years. That is a huge body blow. Cumbria as a shire has done a bit better than the mets—our reduction is only 8.5%—but, frankly, the Conservatives have looked after their own in this local government settlement and I think it is a bit of a disgrace.

We are required to make savings. There is a trifling scarcity grant, but in fact the cost of providing services in rural areas is very great. The Government need to explain what they are doing with the grant for local welfare provision, which many noble Lords have referred to, because this is a serious problem. In Cumbria, for instance, we have one division in Workington where life expectancy of people is 19 years less than in the most prosperous division, next to Penrith, yet the Government are withdrawing all support for us in dealing with the circumstances of poor families.

Of course further efficiency savings could be made, but we really need from the Government a rethink of their present approach. It is time that the realism and responsibility that local government has shown in the past three and a half years are matched by a similar attitude on the part of the Secretary of State.