Local Government Budgets

Marcus Jones Excerpts

Wednesday 12th January 2011 Westminster Hall

[Mr Marcus Jones (Nuneaton) (Con)]

Thank you for allowing me to speak today, Mrs Brooke. I congratulate the hon. Member for Coventry South (Mr Cunningham) on securing this important debate, although some of his opinions on the overall situation in local government in Coventry and the west midlands may well differ from mine. Despite what the hon. Gentleman said and the synthetic rage from Opposition Members, local government had known for some time that whichever party formed a Government following the last general election, budgets for councils in the west midlands and for most councils across the country would reduce dramatically. That is not a hidden fact and not something that we should forget. Nor should we forget that the public know that the country has a massive deficit. We can talk about how that was caused. Obviously, the bankers are very much at fault, but the previous Government were also very much at fault for not having a proper system of regulation in place for the banks. The banks failed on their watch. They cannot get away from that point.

[Mr Cunningham]

Obviously, the hon. Gentleman is entitled to his point of view, but he certainly was not in the House, although I and my colleagues were, when the issue of Northern Rock arose. The then Opposition—the hon. Gentleman’s party—had no solution to that. In fairness, the Liberal Democrats said that we should nationalise Northern Rock. We said that we would have a look at that. Equally, if we look at the record of the last Parliament, we see that the hon. Gentleman’s colleagues always argued against regulation. Whether we were talking about banks or the private sector, they argued against regulation, and the only regulations that they are talking about abolishing now are those on health and safety.

[Mr Jones]

I thank the hon. Gentleman for his comments, but we cannot get away from the fact that his party were in government; the banks failed on his party’s watch. We saw the first run on a bank for more than 100 years. That happened on his party’s watch. His party, not my party, was responsible for regulating the banks and it failed. The public know that and know that we must deal with the deficit. It is running at such a level that we are paying £120 million a day in debt interest alone. If we do not deal with that, not only will public services and the amount of money that we have for public services be vastly reduced, but the point also needs to be made that we risk putting this country in a situation like that which we have seen in Ireland, Greece, Spain and, probably, Portugal.

Let me return to the Government settlement in relation to councils. The better councils, including those across the west midlands, have been planning for several years for how they would deal with the inevitable cuts in local government funding. We should acknowledge that there have been reductions in formula grants for many councils over a number of years. The public have been looking to councils to show some leadership and show how they can deal with the very difficult situation that we all know we are in.

The previous Conservative administration at one of my local councils, Nuneaton and Bedworth borough council, did an enormous amount of work before the elections in May with Rugby borough council. That was about saving money through merging back-office functions, reducing the amount of management and sharing management. They were on course to save in excess of £2 million to £3 million. Unfortunately, the current—now Labour—administration in Nuneaton and Bedworth has politically abandoned that work and decided not to pursue saving money by reducing back-office functions. I am surprised by that because the previous Labour Government advocated it as a way for councils to save money in what they knew would be difficult times, and the current Government also advocate it.

I fear that Nuneaton and Bedworth council will look to make up its budget through massive rises in parking charges, as it has already shown by implementing a 25% rise in charges in the past couple of weeks. Inevitably, it will also make large increases in fees and charges elsewhere and, I am sure, huge cuts to front-line services through lack of foresight and forward planning.

On the grant settlement and the formula grant, I would like to discuss the disparity in settlements across the country that the hon. Member for Coventry South mentioned. Disparity is nothing unusual, because under the Labour Government, Warwickshire county council, for example, was particularly disadvantaged by its grant settlement year after year when compared with councils in areas such as the north-east. They received huge increases in grant funding while Warwickshire’s funding decreased and was continually behind the curve.

Looking beyond the grant settlements, we have seen some positives from the Government recently, which I welcome, such as allowing councils more freedom to deal with the issues that they face. Performance indicators have been the bane of many councils over a number of years—the comprehensive area assessment and the local area agreement. In reality, performance indicators have done very little either to improve the quality of local services to the people or to increase and improve outcomes, and particularly to reduce the gap between rich and poor. We now know that during the Labour Government, inequalities between rich and poor increased—they got worse, not better. Millions of pounds, even in very small authorities, have been wasted. Hopefully, authorities can put that into front-line services, rather than into writing a ridiculous number of plans or strategies, which have little or no effect.

The formula grant is a complex animal. It offers no transparency to local people over how local services are provided. People in local government, and possibly people in the Department, do not have a great understanding of the formula grant and how it is arrived at. What can be done to simplify the minefield of local government finance to make things more transparent for local people, so that they understand fully how taxes are raised to pay for local government and how its finance is allocated?

One area of concern within the current grant settlement is the transfer of concessionary travel from borough and district councils to county councils. That affects us in the west midlands in two-tier authorities, and particularly affects the two local councils in my constituency—Nuneaton and Bedworth and North Warwickshire borough councils—which is obviously of great concern to my constituents. With the recalculation of the grant, Nuneaton and Bedworth is likely to be disadvantaged by the loss of about £200,000 and North Warwickshire by about £300,000. I would like to know what the Minister can do to mitigate the effect that the transfer of the responsibility will, potentially, have on local services in Nuneaton.

I conclude by reiterating that this is a tough settlement. We all know that we have a tough settlement and it is incumbent on local authorities to work with local people and to ensure that they deliver on the priorities for those people. There are also certain anomalies that the Government need to mitigate, particularly the transfer of responsibility for concessionary travel. I look forward to hearing the Minister’s response.