Local Authority Grants: Impact of Cuts

Lord Parekh Excerpts

Thursday 9th December 2010 Lords Chamber

[Lord Parekh]

My Lords, I thank my noble friend Lady Thornton for securing and introducing this debate. It could not be more timely or on a more important subject. Local authorities will suffer an overall reduction of 26 per cent in their revenue funding over a period of five years, which averages about 7.25 per cent a year. They will also suffer a reduction in capital expenditure of 30 per cent. I do not think that cuts of this magnitude are warranted by our economic situation. They seem to be driven by factors other than what the economy requires. They form part of an economic strategy that is likely to do us a lot of damage in years to come.

However, these cuts are being made, and I want to start with that. What are the likely consequences of these cuts? The Government say that savings can be made, and I agree. They can be made by removing all traces of waste, maximising efficiency and productivity, sharing departments or curbing excessive senior pay, but these actions have their limits and can take us only so far. Therefore, sooner or later, jobs will have to go and services will have to be cut. The question for us is: who will bear the brunt of these job losses and reductions in services?

The Home Secretary has said that there is a real risk that the cuts will affect women, ethnic minorities and other groups disproportionately. The IFS has said that the poor will be disproportionately hit more than others. Cuts therefore need an equality audit. After some confusion and hesitation, the Government seem to have realised that they have an obligation under the law and therefore some kind of equality audit is being done in relation to women but, so far as I know, no such assessment or audit has been done in relation to ethnic minorities, and I wish to know why. There are people, such as my good friends Professor Michael Keith of Oxford University and Professor Modood of Bristol, who have been doing some counting on how these cuts will affect ethnic minorities. The picture that emerges is grim and I want to share it with the House. There are four levels.

First, cuts in government employment will affect just under 500,000 people and about 100,000 jobs will go in local authorities, which is one in 10. Ethnic minorities are disproportionately represented in the public sector, and therefore they will be the first to suffer. Given the fact that few of them are in senior positions and the sad reality of racism in certain sections of our society, they will obviously be made to bear the brunt of services that have to be cut. Cuts in police funds are also likely to affect ethnic minorities more than other groups. I am particularly concerned about police community support officers, who enjoy the support of the local community, are drawn from local communities, predominantly from ethnic minorities, and do most valuable work.

The second area that worries me is social housing. Seventeen per cent of the white community, 41 per cent of the Afro-Caribbean community and 47 per cent of Pakistanis and Bangladeshis depend on social housing. Ethnic minorities will therefore bear the brunt of cuts in housing benefit. These cuts are more likely to affect larger households where ethnic minorities are more represented. There is therefore a real danger of residential segregation or what the Mayor of London called “ethnic cleansing”. That is exactly what happened in Chicago under Reagan when he followed similar policies.

Thirdly, the Government say that they will protect education and health, but the question is: how are resources going to be distributed and used in those areas? Primary education and the special educational needs of ethnic minorities will certainly suffer and although the NHS budget is ring-fenced in real terms, job losses will occur and many services will be cut, particularly in relation to ethnic minorities, such as mental health or translation for those who cannot speak English. Let us remember that ethnic minorities make up 11.4 per cent of the NHS workforce. Few of them are in managerial positions and therefore are likely to be the first to bear the brunt.

Finally, I turn to the voluntary sector. In the past two years, there has been an increase of around 80 per cent in the demand for services from ethnic minority voluntary service organisations. But their resources are limited and cannot cope with the increase in demand. Some 42 per cent of ethnic minority charities have an income of less than £10,000 and rely on public sector funding. Some 49 per cent of their budget comes from central government; 26 per cent comes from local government; and 16 per cent from the health authorities. When these budgets and grants are cut, ethnic minority organisations will suffer most.

I want to raise a larger cultural or philosophical problem, which is of great importance. As the state shrinks and offloads its functions to other organisations in the name of the big society, things of a peculiar kind begin to happen. As the state retreats there will be vast gaps, which will have to be filled. Who will fill those gaps? We are told by the Prime Minister that the big society will fill the gap, but the big society is an abstraction. It consists of a number of institutions, some of which are better organised than others. Therefore, there is a real danger that religious organisations, especially churches, will step in to fill the vacuum left by the state. This has happened and continues to happen in the United States.

Churches are better organised. They have large sums of money available to them and have networks of voluntary workers. As the voluntary sector suffers the squeeze, churches will step in as they are already beginning to do. I am particularly worried not just in relation to the white population or the Christian community, but equally worried in relation to the Muslims because many of them are in need. They are the most unemployed and the most alienated. They would want to turn to mosques or mosque-related charities to help them with the problems that the state has offloaded on them. I shudder to think of where, as a consequence of this, the mosque and mosque-related charities will get their money.

Finally, I have three questions. First, will the Government undertake an equality audit in relation to ethnic minorities? Secondly, will they continue to monitor the situation periodically for the next four years? Thirdly, will they ensure that the voluntary sector is well funded and does not fall into the hands of religious organisations of this or that kind?