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Orders of the Day — Local Government Finance

Part of the debate – in the House of Commons at 7:41 pm on 1st February 1995.

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Photo of David Clelland David Clelland , Tyne Bridge 7:41 pm, 1st February 1995

I shall speak about the problems faced by the city of Newcastle upon Tyne, although similar problems face the metropolitan borough of Gateshead, which, as a recent written answer to a question asked my hon. Friend the Member for Coventry, North-East (Mr. Ainsworth) showed, has the unenviable record of being eighth out the 10 authorities that have lost the largest sum through the changes to the education standard spending assessment formula.

Tyne and Wear fire and civil defence authority is facing a £1.8 million cut in its budget, which will result in a loss of jobs and will affect our emergency services, with consequent threats to life and limb. In that context, I draw the House's attention to early-day motion 489, which 27 hon. Members and I have signed.

Hon. Members have drawn attention to the fact that the settlement is harsh. I must remind them that it is harsh not on Labour councils, which no doubt is the intention, but on the people who will lose their services and the many who will lose their jobs.

Newcastle's SSA is £224 million. The provisional capping criteria allow the city to spend 0.5 per cent., when, as the hon. Member for Great Yarmouth (Mr. Carttiss) has just reminded us, inflation is 2.5 per cent. If the capping criteria are unchanged, Newcastle will have to cut £5 million from its budget of £239 million to meet the cap limit.

Cuts of £5 million require a £2.3 million net cut in education, a £750,000 net cut in social services and a £650,000 net cut in leisure services. Two million pounds will be taken from schools, which will result in the loss of the music service, £100,000 will be taken from libraries, which will result in branch closures, £300,000 will be taken from child care services, which will result in the closure of nursery and welfare rights projects, the number of social workers and occupational therapists will be reduced and residential homes for the elderly, respite day provision and day centres will close.

Those cuts will be made despite the fact that in the past five years £40 million—almost 20 per cent. of the budget—has already been cut, resulting in 1,500 redundancies, the loss of 2,500 jobs and a loss of services. I say to Conservative Members who accuse us of spreading scare stories that since 1989 pupil-teacher ratios in Newcastle have risen from 14.4:1 to 16:1 in the secondary sector, eight homes for the elderly, three residential homes for children and two day centres have closed, the library book fund has been cut by 28 per cent., branch library opening hours have been reduced by 13 per cent. and the arts budget has been cut by 15 per cent.

All that has happened despite Government recognition, under city challenge and other initiatives, that the city needs more, not less, help. How can it possibly make sense that a day nursery in Scotswood in my constituency faces possible closure, when the policies of the same Government made that place the centre of the city challenge area? If the Government's present policies persist, Newcastle will face a further three years of cuts worth £20 million, resulting in the loss of another 1,000 jobs.

None of that is desirable and none of it is wanted by the people of Newcastle. The stark reality is that none of it is necessary. When the Government's revenue support grant to the city is added to other income and to council tax income, the total is sufficient to maintain services at current levels and to avoid the painful cuts to which I have referred. The nonsense of the capping criteria is such that the council cannot spend at that level and is therefore obliged to cut council tax by £70 in band D, rather than maintain jobs and services.

That was explained to the people of the city by the local evening newspaper, the Evening Chronicle. In a survey of opinion, it reported that people were in favour of maintaining the council tax at its current level to avoid cuts by a ratio of 20:1. That opinion has been further confirmed in the city today, where a huge demonstration against Government-imposed cuts has taken place.

If Newcastle were allowed to freeze its council tax and set a budget at that level, there would be no net service cuts in the city. If Newcastle were given the inner-London capping criteria, the cuts would be reduced by £1.7 million and council tax would fall by £50 in band D and 'by £33 in band A. If the city were given the same support as Westminster, it would be able to improve services and give council tax payers money back.

If the capping criteria are not changed, Newcastle will be forced to consider for the first time the possibility of setting a budget above the provisional cap, just as Shropshire and other councils are. Like Shropshire, the appeal to the Secretary of State to recognise Newcastle's problems was supported by Tory and Liberal Democrat councillors from the city.

All those facts are a vindication of Labour's policies to decentralise power and give it back to local communities. When the people of Newcastle, or anywhere else, are prepared to pay for a service in their own communities, based on their knowledge of the needs of their community, why should some Minister in an ivory tower in London tell them that they cannot make those decisions and that they will have to cut taxes, despite the consequences and their own wishes? It is a clear example of the erosion of local democracy under this Government and it emphasises the importance of Labour's policies to restore to the people of the regions, the nations and the localities of Britain the power to pursue their policies according to their priorities and at their pace. All those who believe in local democracy should join us in the Lobby and vote against the motion.