Communities and Local Government (CSR)

Stephen Gilbert Excerpts

Thursday 13th January 2011 Westminster Hall

[Stephen Gilbert (St Austell and Newquay) (LD)]

It is a pleasure to serve under your chairmanship for the first time, Mr Robertson. I will try to heed your earlier comments about brevity. It is clear to everyone here that local government has had one of the toughest settlements for many years. As we tackle the largest deficit in our peacetime history and face up to the legacy that has been left to this coalition Government, the sector will come under pressure. The hon. Member for Sheffield South East (Mr Betts) set out his perceptions of some of those concerns, but he failed to mention how big a role his party played in getting us into the position where some of these measures are necessary. There is no doubt that the settlement will be extremely challenging for local councils. However, there are some aspects of it that should be welcomed.

As my hon. Friend the Member for Peterborough (Mr Jackson) said, it is clear that the ministerial team has worked extremely hard to soften the impact of the inevitable impact of the spending reductions. Indeed the Department here in Whitehall is taking a significant budget hit, which will, no doubt, be keenly felt, but it is being done to ensure that as much money as possible can make it out to local authorities in the country. What is also welcome—the Chairman of the Select Committee acknowledged this—is the fact that £85 million of transitional funding will help the 37 authorities that would otherwise have seen sharp falls in their spending power.

Like most Members, I welcome the ending of the ring-fencing of most grants. I also welcome the new public health grant and the streamlining of other grant funding. The fact that there were more than 90 individual grants was clearly a symptom of the centralising, top-down, “Whitehall knows best” approach of the last Government. As a result of actions taken by this Government, councils will have more freedom to spend the money that they receive on the things that matter to the communities they represent, although clearly that will have to be done in the context of a very challenging funding settlement. It is my view—I hope it is shared by other Members in Westminster Hall today—not only that it is better that decision making happens at the most local level possible but that, in most cases, better decisions are taken at that level.

As my hon. Friend the Member for North Swindon (Justin Tomlinson) has already done, I welcome the Government’s commitment to a council tax freeze. The fact that £650 million has been made available by the coalition to achieve that freeze in councils that opt for it will take the pressure off many hard-working families who are struggling to make ends meet.

However, I would like to put on the record my concerns about the possible impact of the spending reductions on three areas, particularly in view of continued increases in cost pressures. Those areas are housing, adult social care and flood defences, all of which are key issues in my constituency of St Austell and Newquay and I am sure in many other constituencies.

I fundamentally believe that Governments of all political persuasions have failed on housing policy. Today, 1.8 million families in this country languish on social housing waiting lists. If the first duty of any Government is to protect their citizens, in my view the second duty is to ensure that people are able to access decent, secure accommodation at a price that they can afford. I therefore welcome the Government’s commitment to spend £4.5 billion on delivering 150,000 new affordable homes during the next four years, including £2 billion for the new affordable rent programme. Of course, that is not nearly enough but it is a vast improvement on recent years. Indeed, right hon. and hon. Members might be surprised to learn that this coalition Government will be the first Government to make a net addition of homes to the social housing sector since 1979. The reform of housing finance, to give financial independence to council landlords, is also a significant step forward. However, I share the concern that the hon. Member for Sheffield South East expressed—

[Alison Seabeck]

I acknowledge the hon. Gentleman’s point about net additions to social housing stock, but will he acknowledge that the reason there has been no net addition has been the right-to-buy policy? Under the last Conservative Administrations, twice the number of social homes were lost under that policy than were lost under Labour.

[Stephen Gilbert]

I thank the hon. Lady for her contribution. However, as she will know only too well, the reality is that under the last Labour Government there was a net loss of 43,000 social homes in 13 years. That is not a record to be proud of; it is a shameful record and I hope that she may be able to share some of the regret that her hon. Friend the hon. Member for Sheffield South East expressed when he said that he felt that the last Government had not gone far enough in tackling that problem. In fact, I was about to agree with the hon. Member for Sheffield South East again—I will try not to make a habit of it—by saying that I remain concerned that the Treasury will continue to retain 75% of receipts from future right-to-buy sales and I would appreciate it if the Minister could explain the thinking behind that approach.

I also want to take the opportunity to give a bit of a plug for the Department for Communities and Local Government. The Government’s consultation on housing ends on Monday and I encourage Members here today and those who may be watching these proceedings to make their views known.

On adult social care, we know that the transfer of learning disability funding from health care to social care is being achieved through the introduction of a specific grant. All other funding related to adult social care has been rolled into the formula grant, including Supporting People funding. Also, a welcome £l billion of extra funding for personal social services was announced in the spending review.

However, despite the measures that the coalition Government have taken to protect vulnerable people, Cornwall county council has decided to cut spending on Supporting People services by 40% and is pressing ahead with those cuts despite having healthy reserves. In addition to terminating several contracts completely, the council has written to providers of somewhere between 70 and 80 services, cutting the contract prices by 40%, and has given providers of the remaining 15 services to understand that they will be subject to similar cuts shortly. That is likely to lead to a massive hit for vital services that are provided to very vulnerable people, such as those provided by Cosgarne hall in St Austell, which is dedicated to the alleviation of homelessness among vulnerable and socially excluded people. Most of those services will find that hit difficult to absorb and some will find it impossible.

I do not pretend to be an expert in local government finance; indeed, I have yet to meet anybody who does pretend to be an expert in local government finance. [Laughter.] However, I have studied Robert Davies and Shehla Husain’s letter of 22 December on the DCLG website, which explains the workings of the formula grant in relation to the Supporting People grant; and the settlement figures. From that, it seems to be the case that the amount of formula grant that Cornwall will receive for 2011-12 that is attributable to the Supporting People programme will be somewhere between £13.8 million and £14.3 million, which is almost no change on the figure for 2010-11 of £14.2 million.

In that context, the cut of 40% by Cornwall county council is utterly disproportionate to the change that the coalition Government have made to the council’s funding. The savage cuts that the council are carrying out will deprive many hundreds of the most vulnerable people in Cornwall of the vital services on which they depend. I do not believe that that is fair. Indeed, it represents very short-sighted decision making, as money spent on supporting vulnerable people is likely to save money in the long run. Indeed, my right hon. Friend the Secretary of State has said on the record:

“Most sensible local authorities will come to the conclusion that every pound spent on Supporting People is probably going to save them five or six quid further down the line.”

I do not expect the Minister to respond to me today about whether I have correctly interpreted those figures; I stand ready to be corrected, because as I have said I am certainly not an expert in local government finance. However, I would appreciate it if he could take a look at the issue in Cornwall and drop me a line about it.

Finally, I want to mention flood defences. As Members will no doubt be aware, my constituency suffered from severe flooding just a few weeks ago. Following the Flood Water and Management Act 2010, a new grant of £20.9 million in 2011-12, rising to £36 million in 2012-13, will be paid to reflect the new responsibilities that have been given to local authorities. That is a welcome step forward. However, it seems that although the Government are giving with one hand they are taking away with the other. There will be a transfer away from the formula grant of £21.5 million in 2011-12 and £42 million in 2012-13, to reflect assumed savings on the maintenance of private sewers. From October this year, when the Act comes into force, those sewers will be the responsibility of utility companies.

The impact assessment for the draft Bill and the subsequent Act by the Department for Environment, Food and Rural Affairs calculated that local authorities spend more than £50 million a year on private sewers across various departments, including environmental health, technical services, building control, engineering, housing and planning. That assessment was based on a 2002 survey of only 12% of authorities, which supplied mainly estimated figures, which at the time even DEFRA advised should be used only as a guide. No local authority that I have been in contact with recognises the figures that have been used in DEFRA’s calculations or agrees that their authority is spending anything like the assumed cost. There is very little clarity about DEFRA’s base data or the methodology used to assess current costs.

Mr Robertson, you might wonder—indeed, you might wonder quite rightly—why I am mentioning that assessment in a debate about the Department for Communities and Local Government, but there is a clear implication for local government funding in the future. I hope that the Minister will ask his colleagues at DEFRA to revisit the survey of costs to authorities, in order to get a better picture. In my constituency, we have quite clearly seen that the first responsive organisation is the local authority and we must ensure that it has the tools and resources not only to deal with floods after they have happened but hopefully to prevent them.

To conclude, there is no doubt that local government will face a challenging period now and in the next couple of years and it is more important than ever that this Government live up to their rhetoric on localism. I urge my hon. Friend the Minister to take heed of some of the concerns about front-loading of the proposed reductions and to look with vigour at the potential savings from place-based budgeting. There is much to welcome in the Government’s approach to the funding settlement and the broader localism agenda, which in my view will finally take Whitehall out of the town hall. However, I for one am anxious that we get that approach right, both for local authorities and for the vulnerable people that they represent.

--- Later in debate ---

[Alison Seabeck]

Manchester city council said that it will try to achieve voluntary redundancies, but even those may be hard to bear, as I am sure the hon. Gentleman will agree. Manchester is one of the best performing councils in the country, despite being the fourth most deprived, and for years has worked to increase efficiency and to share back-office work with other local authorities throughout the region.

My hon. Friend the Member for Sheffield South East (Mr Betts), Chair of the Communities and Local Government Committee, made, as ever, a well-informed and well-argued opening speech in which he highlighted comments made during the evidence session. The Committee was clearly as bemused as local authorities are about the reasons and logic behind the CLG taking a 28% hit overall. I suspect that comments made by the Secretary of State, in which he indicated that he was prepared to pass on the pain to local councils, have never been gainsaid and I would be interested to know whether the Minister is willing to do that today.

My hon. Friend also raised the issue of business rates, and that was followed up by the hon. Member for Harrow East (Bob Blackman). If that policy is pursued, there is clearly a question about whether there should be some sort of redistribution. We also heard contributions from the hon. Members for Peterborough (Mr Jackson), for Halesowen and Rowley Regis (James Morris), for North Swindon (Justin Tomlinson), and for Meon Valley (George Hollingbery). They all showed experience, expertise and interest, and provided a thoughtful consideration of the difficult challenges faced by authorities across the country. There is clearly cross-party concern in some areas, and the Labour party would like to see further exploration of those issues. In some areas, however, the gulf between the parties is huge and difficult to cross.

The hon. Member for Harrow East spoke about the redistribution of reserves, and I would be interested to hear the Minister’s comments on that idea. My colleague from the south-west, the hon. Member for St Austell and Newquay (Stephen Gilbert), said that he wanted Whitehall out of the town hall. That is a good sound bite, but his speech was slightly contradictory. He sought direct interference from the Minister in what Cornwall county council is doing with the Supporting People programme. He cannot have it both ways.

[Stephen Gilbert]

Will the hon. Lady give way?

[Alison Seabeck]

I will not give way at the moment; I may return to the hon. Gentleman later. He also raised genuine concerns about the future cost implications for CLG of the private sewer network. I urge the Minister to look at that; I thoroughly support what the hon. Gentleman was saying. Costs are coming.

My hon. Friend the Member for Nottingham East (Chris Leslie), who is sadly no longer in his place, touched on the Supporting People programme. He must wonder what the Secretary of State was thinking when he said during the evidence session:

“I’m glad you have noticed that we have protected Supporting People.”

That is clearly not the case in Nottingham.

The comments of my right hon. Friend the Member for Tottenham (Mr Lammy) reflected a deep understanding of his constituency and the people he represents. Having lived in Tottenham and worked in Tottenham high road for many years during the 1970s, I understand the area well. His point about the importance of local authority services to community cohesion cannot be ignored.

In the negotiations between Whitehall Departments and the Treasury, the Secretary of State simply did not step up to the crease on behalf of local services and the Government funds on which local people depend. Rather than try to work with councils, he tried to squeeze himself into the club with the Prime Minister and Chancellor by settling early, irrespective of the consequences on local services. [Interruption.]

Let me explain for the benefit of Hansard that there are chuckles in the room. That may be for the image of the Secretary of State squeezing himself in anywhere. However, I do not believe that he is interested in hearing what local councils think. Perhaps the Minister can tell us how many local authorities the Secretary of State has visited since taking on the job—I think it was five; just five out of hundreds. The cuts being brought forward to local councils are greater than in almost any other area of government. It is a shame that the Secretary of State did not take time out to listen to the concerns of local councils.

For months we were told by the Secretary of State and his ministerial colleagues that there would be no front-loading of cuts to local services; we were told that the Labour party was scaremongering. Shortly before Christmas, we saw the figures from the Minister’s Department, and contrary to all the claims, the cuts were front-loaded. That will impact on front-line services. Although local authorities had pleaded for the cuts to be spread across the period of the comprehensive spending review in a way that would allow for the preservation of some services with a delivery model adapted to fit the funding cuts, there was only the cold reality of front-loading. That will see services halted, not transformed.

As I have mentioned, we heard from Baroness Eaton. She is a loyal member of the Conservative party and an experienced local government leader. She said:

“Local councils knew the cuts were coming”—

—that is true whether a Labour or a Tory Government were elected, and that point has been made by other hon. Members today—

“and had planned prudently to reduce spending over the coming years. We cut more than £l billion from our budgets in the middle of last year, rolled up our sleeves and got on with the job.”

That is what one would expect from local authorities.

“But the unexpected severity of the cuts that will have to be made this year will put many councils in an unprecedented and difficult position.”

The Government are beholden to revisit that matter before coming to any final decisions on funding and they should consider those comments carefully.

The Secretary of State does not even seem to acknowledge the difficulties faced by local authorities from front-loading. He sees it as a virtue, despite the comments from Baroness Eaton. It appears that no one was listening to local people and their representatives. The Secretary of State said:

“I think that the amount of front-loading, as it exists—there is a fair bit this year and a fair bit next year—is very important to encourage local government to deal with this whole question of restructuring.”

It is important that we remind ourselves what cuts to local services mean, and my right hon. Friend the Member for Tottenham made that point extremely well. The impact will be on adult social care for the elderly, day care centres, child protection, fostering and adoption, children’s centres, the quality of local housing and a host of other areas. The cuts will result in real damage to the levels of service that people rightly believe they deserve when they pay their council tax.

It would be wrong to say that only the Labour party opposes the cuts—we have a coalition of our own against the measures. The Conservative leader of Bury council said:

“it is almost impossible to absorb such vast figures in the time that we have available”

and it is on the time and speed of what is being proposed that the Labour party most disagrees with the Government.

The Liberal Democrat former leader of Liverpool city council, one of the most deprived local authorities that will be among the hardest hit by the Government proposal, said of Ministers:

“Either they really do not know how serious the situation is that they have created...or they are deliberately trying to distract attention from the problems that they have created.”

I ask the Minister: which is it?

As a result of initiatives by the previous Government, including Total Place where there were benefits of joint procurement, councils of all political colourings are already sharing back office functions. They are cutting executive posts and looking at executive pay. We all expect them to do that in the current circumstances. However, if every local authority cuts the post of chief executive and of every member of senior management, the money that would raise would not scratch the surface when set against the cuts that the Government demand from local councils. The argument about executive pay is valid; many councils have already addressed that and others will follow. However, when set against the lack of action on bankers’ bonuses, the Government lose all credibility.

The situation in Manchester that has dominated the news today will be replicated. Ministers should stop taking the public for fools and come clean about exactly what the cuts will mean to local services. They must stop trying to wind up the public into believing that this is all about the salaries at the top—the public are not stupid and will see through that smokescreen. Once the cuts start to appear, they will know that it is not simply a question of executive pay.

The CLG response to the CSR has been weak in terms of the fight to protect services for the most vulnerable. The way that the cuts have been distributed across local authorities is unfair, and the way that they have been front-loaded is reckless. I look forward to the Minister’s response.