Local Government Finance Settlement

Lord Whitty Excerpts

Thursday 22nd January 2015 Lords Chamber

[Lord Whitty (Lab)]

My Lords, I very much welcome the noble Baroness to this House. Everybody in the House will appreciate her speech, her passion for local government and for her local community and the problems that are faced there. In her speech she combined a lightness of touch with very serious content. The House will appreciate that and the other contributions she will make. Of course, she is from Kirklees, which used to regard itself as the greenest council in the country. I had the privilege of serving on the board of the Environment Agency with two former leaders of that council—one Labour, Sir John Harman, and one Tory, Robert Light. Now the noble Baroness is joining me, I have the full Kirklees set. I think her presence will be appreciated by the whole House.

My positioning between two maiden speeches does not in practice mean that I need to be non-controversial. Indeed, that is the end of my consensual stuff. Like my noble friend Lord Beecham, I am profoundly despondent about the prospects for local government as a result of the strategy being pursued by George Osborne and Eric Pickles. Their strategy seems to show—not just in this year’s settlement but in what they have done already and what they intend for the next five years—that they intend to ensure that the bulk of the cuts in public expenditure and a disproportionate amount of the costs of austerity will fall on local authorities and thence in practice on those who depend on their services. Within the diminishing total central support for local government, there is a deplorable—and, I would say, systematic—favouring of better-off areas over more deprived areas. If the Government, whoever they are after the next election, blindly stick to this strategy for another five years, contrary to all the talk about localism and devolution, we will have to adapt to a much diminished role of local authorities in our national life. That would be extremely unfortunate.

My noble friend Lord Beecham has spelt out what this year’s cuts actually mean. I agree with the noble Lord, Lord Tope, that the definition needs pinning down, but the Local Government Association’s view is that a 1.8% cut actually amounts to an 11.8% cut in things that the local authorities themselves can control. Whatever the precise statistics, it is clear from next year’s figures that there will be very substantial cuts in services—in schools, police, fire and, as the right reverend Prelate said, local welfare assistance. Spending on public health is being frozen and, in housing, the top-slicing of the new homes bonus effectively means that there is a cost to urban authorities to benefit the shires. If we look at the long-term effect of cuts in support over the past five years, by the end of next year there will have been a 40% cut since the Government came to power, and that is intended to continue. That contrasts with slightly over a 1% cut of total government expenditure. It is therefore clear that the pain is concentrated on English local authorities and the poorer element within them.

The distribution of the cuts can be seen as a north/south divide but that is only one part of the equation; it is also true within each category of local authority. In London, Hackney has a cut of £200 per head; in Richmond the noble Lord, Lord True, has done rather well with an increase of £37 per head. Among the urban districts, Barrow has a cut of 6.4% and Cambridge has an increase of 2.2%. Among the rural districts, West Somerset has a cut of 5.9% and Horsham an increase of 2.9%. Even among shire counties, which are by and large favoured, Northumberland has a cut of 1.7% and Surrey an increase of 3.1%. That is a shift by anybody’s definition—this embedded regression and a systematic transfer from the poorer to the richer areas.

The right reverend Prelate who is about to give the next maiden speech is the Bishop for an area I lived in for most of my life. Although I no longer live in Southwark, I am still Lord Whitty of Camberwell, so I hope he might be able to elucidate for me what was always a puzzling piece of scripture:

“For he that hath, to him shall be given: and he that hath not, from him shall be taken even that which he hath”.

That does seem to be Eric Pickles’s approach to local government finance.

If we continue to go down this road, we will be in very serious difficulty. The role of local authorities in our society will inevitably diminish. We need a constructive new Government who will engage in encouraging co-operation between local authorities, in city deals or whatever, allow local authorities to raise their own taxes in many respects, end ring fencing and predetermining expenditure, allow local authorities to borrow in housing and infrastructure and accept that there will be differences in priorities and outcomes between authorities. We need to give local authorities power, which is at present tightly restrained by Whitehall. The next Government, in contradistinction to this, need to create a properly financed and truly decentralised state.