Local Government Finance Settlement

Lord Smith of Leigh Excerpts

Thursday 22nd January 2015 Lords Chamber

[Lord Smith of Leigh (Lab)]

My Lords, first, I declare my interests as the leader of Wigan Council and chairman of the Greater Manchester Combined Authority. I am also a vice-president of the LGA and vice-chairman of SIGOMA. I congratulate the two maiden speakers on their contributions. The right reverend Prelate showed his experience of urban affairs and I agree with him entirely about prevention work, which can save lots of money downstream. The noble Baroness, Lady Pinnock, has a lot of experience in local government. No doubt her contribution was aided by her treasurer from Kirklees, David Smith, who was pinched from Wigan. Not only did he move from Wigan to Kirklees, he changed allegiance from Wigan Warriors to Huddersfield Giants.

My noble friend Lord Beecham showed the fantastic record of knowledge, passion and care for local government that he has built up but I thought that he was a bit unfair on himself. I will give him that he may be short but I do not think that anyone would ever describe him as nasty and brutish. He outlined the scale of the loss of moneys to local government and the fact that it has not been distributed by any means fairly. Like the noble Lord, Lord Shipley, we should congratulate local authorities. Despite all the cuts that many of them have had to make, their financial stability has remained very good. Whether that can continue, as he suggests, may not be the case. We have also managed public expectations quite well. Some of us thought that if we were to make the reductions that we have been making to a number of services, there could be riots on the streets. However, that has not happened, although it may have contributed to the alienation mentioned by the right reverend Prelate the Bishop of Derby.

One of the disadvantages of speaking towards the end of the debate is that everyone has used your language, so I want to move on. Faced with loss of funding as we have, local authorities have a limited number of options. There are efficiencies in local government but we have taken all the low-hanging fruit and there is not a lot left. We can work to transform services but the DCLG unfortunately does not seem to understand. It is not an instant solution and one needs to work hard on that. There has been reluctance to increase council tax, although I see from reports in the media today that in the next year council tax might go up by more in most places. But no one will challenge the referendum. We always said that that was the case.

The real option is making cuts in services. Yesterday, Age UK showed that £1 billion had been taken out of care services. One-third of adults who were receiving home care visits no longer have them. That is the scale of the impact of the cuts to care. It cannot be said that care services must not be cut at all because, given the scale of cuts needed, care services must take a share. However, we hear daily about the crisis in the NHS, particularly in A&E. The contribution of local authorities is a return to the state of bed-blocking. Because we cannot get care packages for people who are in hospital, they are blocking beds and preventing those beds being used for people coming in at the front door in A&E. We need to recognise that.

Being in local government for this period has been a bit depressing. It has been a bit difficult to make the cuts, but we in Wigan have always believed that we would not let Eric Pickles decide our budget. There would always be something in our budget that reflected the values that we have in Wigan, not the values—whatever they are—of the Secretary of State. We have introduced new services that benefit local people. We introduced the living wage, got rid of zero-hours contracts and invested in the community. We have a programme which gives disadvantaged youngsters a chance to get a job. A cost-benefit analysis showed that that scheme saved £4 to the public sector for every £1 we invested. More than that, its impact on vulnerable young people is quite remarkable.

However, we need to think about the future. This settlement is for one year only, and the concern in local government is about what will happen in future years. I remember that in 2010 we suddenly had to face in-year cuts, which was very difficult indeed. I hope we do not have more of those. Everybody I know in local government is revising their forecasts downwards. We have to do better on transformation; this is the only way forward. We can do more in terms of devolution but, as was noted by the noble Baroness, Lady Williams of Trafford, there is more to collaboration among local authorities than sitting down in a room. It takes a lot of work. We have to do that in partnership, with local authorities and central government recognising the problem and working on it.