Queen’s Speech

Lord Shipley Excerpts

Monday 13th May 2013 Lords Chamber

[Lord Shipley]

My Lords, I declare my interest as a vice-president of the Local Government Association. I welcome the comments of my noble friend the Minister, reflecting his and the Government’s support for faster growth by devolving greater financial powers to local government and local enterprise partnerships, particularly from 2015 with the proposals for the single pot. They are hugely welcome.

In the gracious Speech itself, I welcome in particular the proposals on national insurance, which will cut NI for small businesses through the £2,000 employment allowance, thus generating new jobs. I welcome High Speed 2, which will increase passenger capacity, freight capacity and speed in linking the north of England, Scotland and the Midlands together and linking them in turn with London and the south. Better connectivity will drive faster growth.

I welcome the Energy Bill, or its continuation, which will create green jobs and growth, with up to 250,000 jobs in the private sector following an estimated £110 billion of investment. However, in terms of energy, that growth needs to be achieved without ever-spiralling costs to consumers. Today it is reported that almost one-third of UK households say that the cost of gas, electricity and water has become their biggest worry, and the Government will need to pay very close attention to that trend.

I thank my noble friend Lord Bradshaw for his comments on the A1 in Northumberland and the need for it to be dualled throughout its length. On grounds of safety, volume of traffic and access to east coast ports, particularly from Scotland, and to grow the local and regional economy of the north-east, the case is unanswerable, and I hope progress will be made soon. I thank my noble friend Lady Kramer for her constructive and timely suggestions around regional banking, which could be a major catalyst in driving regional growth.

I shall refer to three strategic issues relevant to the gracious Speech that could help the Treasury: first, reducing public spending where it is higher than it need be by investing more in prevention; secondly, reducing overhead costs caused by duplication in public service provision; and thirdly investing further in social rented housing.

In terms of prevention, I am very disappointed that no Bill is yet proposed on the minimum pricing of alcohol. Recent research from Canada has shown that a 10% increase in average minimum price would result in a 9% reduction in hospital admissions and a 32% reduction in wholly alcohol-caused deaths. The costs to the NHS, the police and local councils in dealing with the consequences of alcohol abuse and excess are substantial. It is in the interests of the public purse that minimum pricing is introduced. The same is true of smoking, where good work has been done to reduce it. Reducing it further through plain packaging would save the NHS yet more.

As a third example of how investing in prevention can help to cut costs, I shall mention concessionary fares for pensioners. I declare that I am a holder of a concessionary bus pass. I raise this in the context of the forthcoming Care Bill and proposals for the support of children. There has been some discussion recently about the justification for such passes, but too often it is considered only in terms of its immediate cost. Concessionary bus fares should be seen as part of the support system for carers. They enable older people to travel to give help to families and friends. Demands on the public purse for care could rise without the availability of those bus passes. In addition, without the income from bus passes to bus companies, many bus routes could close down or else would require higher public subsidies to keep them running, which would be of no help to those trying to get to and from work. There are no plans, of course, to change the policy on concessionary passes, but could we look again at levels of reimbursement to local authorities and make them reflect actual usage of buses rather than simply a population split? As a national scheme with national funding, the distribution of the budget needs to reflect the higher costs in those areas with lower car ownership, more bus routes and hence more passengers.

Next I shall speak about the potential for reducing public spending through reducing the overhead costs of public sector organisations that we now know can be achieved through whole community budgeting. There have been whole place pilots in Greater Manchester, west Cheshire, Essex and the London boroughs of Hammersmith and Fulham, Westminster, and Kensington and Chelsea. This latter tri-borough community budget pilot concluded that it could within five years deliver savings of approximately £80 million per annum across all public services through initiatives to drive growth, build homes, create jobs, reduce dependency and rehabilitate offenders. That report was published in October last year. Essex has estimated £127 million cashable savings. West Cheshire and Greater Manchester also forecast substantial savings. The evidence from the Local Government Association is that savings of between £2 billion and £5 billion a year across England can be generated, depending on implementation. In the context of a forecast £16.5 billion funding gap for local government by 2019, it has become clear that some of it could be made up for by community budgeting. It has become vital that this process is progressed speedily.

I agree substantially with the noble Lord, Lord Eatwell, on housing and social rented housing in particular. It is not enough to try to stimulate new housing simply by subsidising mortgages, which is likely in any event to lead to higher prices. The priority has to be increasing the housing supply at levels of affordability, which is why relaxing the housing borrowing cap for the local government rented sector matters. More properties for social rent could reduce significantly the Government’s housing benefit bill in the more expensive private sector. Local authorities have further headroom to borrow without it being counted as public sector borrowing since their local housing accounts are now trading accounts.

There are two Bills in which I shall take a close interest. The first is the local audit Bill. A key role of the Audit Commission was to assess good practice and value for money, and I do not want to see it lost as new audit arrangements are introduced. The second is the water Bill which will reform the water industry in England and Wales. I welcome, in particular, the proposal to ensure that flood insurance remains affordable in areas of high flood risk. When we debated the Growth and Infrastructure Bill, I raised concerns that the duties on Ofwat might be insufficiently strong to drive economic growth strongly enough by guaranteeing an adequate water and sewerage system deliverable to all premises. The Minister indicated then that my amendment was probably unnecessary, and that may indeed be so. However, there might be an opportunity during the passage of the water Bill to make Ofwat’s obligations even more explicit, and I hope we can look at this further.

Finally, making the economy stronger is central to this gracious Speech. The role of our universities will be central to that process. Universities working with their regions and with regional banks will help to underpin the work of LEPs and local authorities. But in repairing our economy, can we put youth unemployment at the top of list of priorities? The Government have done good work with apprenticeships, but the current scale of youth unemployment is deeply worrying. All proposals for investing in growth, of which there are many, should be tested for the number of long-term jobs that they can generate for young people because we cannot permit a lost generation, as seems to be happening in some other parts of Europe.