Local Government Finance Settlement

Lord True Excerpts

Thursday 22nd January 2015 Lords Chamber

[Lord True (Con)]

My Lords, I declare an interest as leader of a London borough. I thank the noble Lord, Lord Beecham, for initiating this debate and I, too, very much look forward to the maiden speeches that we will hear.

During this short debate, Britain will borrow over £25 million more. To say that the public sector must go on making savings should be blindingly obvious and, amid the many strictures that we heard from the noble Lord opposite, I heard no promise from that Front Bench to reverse the downward squeeze on spending. Doubtless the noble Lord, Lord McKenzie of Luton, will correct me if I am wrong by laying out Labour’s plans to increase local government spending.

Gaps cannot be filled by new taxes, such as the vindictive homes tax that Mr Miliband seems to have picked up off the back of a rather tatty old lorry that has been abandoned by his penfriend, Dr Vince Cable. I agree with the noble Lord, Lord Mandelson: it is unreasonable to ask Londoners to pay ever more on the nominal value of homes, many of them heavily mortgaged. The average terraced house in Richmond costs £944,000 and the average semi costs £1.2 million. Already, people buying these homes face higher levels of stamp duty set on property over £937,000 in the Chancellor's otherwise very welcome stamp duty reform. These are not super-rich people; they are average people who have often made more than average sacrifices. I submit that they cannot bear more.

My right honourable friend Mr Osborne has done a fine job in handling the economy. He is also to be thanked for supporting the freezing of council tax, which is of enormous value to millions of families. Richmond has frozen council tax since 2010 and we intend to freeze again this year. That reflects greater efficiency, but the Government have made a sustained contribution in freeze grant and deserve recognition.

That is the background to tough but necessary decisions in this settlement. Yes, there is a hard squeeze on, but even in the Newcastle of the noble Lord, Lord Beecham, the online budget report tells me that it plans to spend another £5 million next year on buying new council vehicles and a further £5 million on upgrading IT. It is not enough to peddle on the doorsteps that, “It’s all the fault of Mr Pickles”. We all have to face hard challenges, and all local authority leaders have. We have to do even more to assess priorities—the right reverend Prelate set down important challenges—to pool costs and to share services with others. We must do that.

However, I believe in the fundamental value of local choice. Local government deserves more respect than it is sometimes given. If other parts of the public sector had been as good at cutting costs as councils, we would be far better off. Frankly, in my submission, a team of good local government finance directors, paid far less than top NHS bosses, could cut a swathe through the waste and inefficiency that is protected in the NHS while fully safeguarding services. The Secretary of State loves having a pop at local authority chief executives. I do not actually think that helps very much, but I hope that further thought will be given to the details of the new plan to cap public sector redundancies. It will not help with the major restructuring at the top that will often be needed. I hope that can be reconsidered.

I conclude with three requests. The first is about spending power. Richmond is given what is described as a 1.7% increase but, as others have said, this is nonsense because it includes pre-existing health money that is not available for councils to use, and the spending power measure ought to be quietly dropped. Our real reduction in grant and business rates is nearly 7%. Secondly, can local authorities have the power to set planning fees, albeit on a cost-recovery basis only? Currently my taxpayers subsidise developers to the tune of £1 million per year, or 1% on council tax. I wish that that could be looked at.

Thirdly, I point to an emerging problem in education that already affects us, but will affect others. Our DSG grant does not meet the needs of special needs pupils, and we will overspend by more than £1 million. We have England’s best primary school results. Given that, it was surprising for my chief executive and director of education to be summoned by a DfE Minister, Mr Laws, to be told that he was concerned about Richmond’s performance. I would like my Ministers to have better things to do. I urge my noble friends in the Department for Education and Skills to consider a more flexible and responsive method of calculating the DSG high-needs block, including an element of pupil-led funding.

These requests show that we will all have practical issues to raise within the funding formulae. However, it is an inescapable reality that savings must continue to be made. The Government are right, and we must act accordingly.