Local Government Services (Leicester)

– in the House of Commons at 9:40 pm on 20th February 1997.

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Motion made, and Question proposed, That this House do now adjourn.—[Mrs. Lait.]

Photo of Dr Jim Marshall Dr Jim Marshall , Leicester South 10:01 pm, 20th February 1997

I am pleased to see that there are more Members in the Chamber than normal for an Adjournment debate, but I am sure that the number will drop to its customary level within a matter of seconds.

I am delighted to have secured this Adjournment debate, but I am sad that it has to highlight the threat to local government services in Leicester as a consequence of the Government's revenue support settlement. I discussed Leicester in the local government finance debate two weeks ago, but received no satisfactory reassurances on that occasion, which is why I seek to revisit the subject today.

During that debate, Member after Member said that, despite Government assurances to the contrary, the proposed financial settlement would lead to increased pressure on service provision. I think that my colleagues from Leicester would agree that nowhere is the problem more acute. At a time when the city is preparing to take on major new responsibilities as a unitary authority, it is faced with the worst budget settlement in its history. Inevitably, that will have dire consequences for service provision and development.

Perhaps at this juncture the Minister will seek to answer two specific questions. First, why is Leicester the only 1997 unitary authority to be capped at its notional 1996–97 budget plus l per cent? Secondly, why does Leicester face the lowest budget settlement of any reorganising authority this year or last?

I appreciate that the Government can reasonably argue that, in a budget of over £260 million, some savings should be possible, but the scale of the proposed cuts takes them out of the league of efficiency savings. I should like the Minister's comments on those two questions, and on what he feels would be reasonable efficiency savings in a budget of £260 million.

As I said on a previous occasion, Leicester is non-metropolitan district council that is permitted to overspend in the current year 40 per cent. above standard spending assessment. It gives me no pleasure to make the point again, as I realise that the Minister may use it to attack the city's position, but that is the reality, and to argue that it is wrong and that it is the root of the problem will do nothing to resolve the difficulties that the city will face in the next financial year.

As a unitary authority, Leicester will have a spending limit of some 2 to 2.5 per cent. above standard spending assessment. Unless the Government are prepared to make late changes, that will entail cuts of about £70 million to existing budgets. I am sure that the House will realise that no service can be protected from such a savage reduction in budget.

The city council is already having to look closely at many sensitive areas. There is a proposal to cut £1.7 million from the schools budget, some £500,000 from elderly people's homes, and £1.3 million from employment training. The leisure services in Leicester will be decimated, with the possible closure of St. Margaret's baths. Housing renewal strategy that assists owner-occupiers in the inner city will be hard hit, neighbourhood centres throughout the city may face closure, and all voluntary organizations—that play a vital part in confronting many social problems—will have their funding affected.

Some organisations, such as the Federation of Moslem Organisations, will cease to receive funding altogether. That is a particularly unhappy decision in a multi-ethnic city such as Leicester.

Perversely, while services are being cut, the capping limit will lead to an £80 fall in band D council tax. Leicester could spend an extra £5.8 million next year and still deliver a reduction in council tax. It will come as no surprise that there is real disquiet among council employees about the impending threat of redundancy. According to the latest calculations, some 300 to 400 staff will be affected, and up to 275 people will face compulsory redundancy. The threat of redundancy is having an adverse affect on staff morale, and inevitably that will persist long after the vesting day of the new unitary authority in April 1997.

The cuts and their consequences have provoked anger and alarm in the community. There have been many public protests and demonstrations at council meetings, calls for industrial action from trade unions, coalitions seeking a budget above cap, and a huge quantity of correspondence seeking reassurance that clearly cannot be given about specific projects.

I hope that, even at this late stage, we can convince the Minister and the Government that it would be a disaster for the new unitary authority to start life with large service cuts and redundancies as a consequence of the unexpectedly harsh revenue settlement for Leicester. The city council recognises the need to rationalise and review services following unitary status, but this is not the time to do it, given the immense pressure imposed by the level of cuts. It is not the best or the most cost-effective way to proceed. The city requires time and a slightly more generous settlement.

The Minister will be aware, because there has been correspondence between his Department and the city council, that there is an option open to the council—if the Government are prepared to agree—and that is for the council to maintain council tax at its present level, and to set a budget above the cap. That would produce an extra £5.8 million, which would offer some protection to key services.

I hope that the Minister will be able to indicate some sympathy towards this proposal. If it was to be adopted and given sanction by the Government, it would afford some further protection to key services, which is undoubtedly necessary at the present time.

Photo of Mr Greville Janner Mr Greville Janner , Leicester West 10:10 pm, 20th February 1997

I congratulate my hon. Friend the Member for Leicester, South (Mr. Marshall) on raising this matter in the House, and thank him for giving me—with his typical courtesy and kindness, which I have enjoyed for so many years—a little time in which to speak.

This is likely to be my last speech in the House, after some 27 years of service. It is right that my last speech should be, as the first was, so long ago, a plea to the Government for fairness and justice for the people of the city of Leicester. I am deeply indebted to those people and especially to my constituents from Leicester, North-West and now from Leicester, West for re-electing me for so long.

At one time I was the first Labour Member north of London up the Ml, and, alas, the only one in the city, and I remember that grim evening so well. I have survived, however, and have done so because of the confidence and kindness of my constituents. I wish them to know how much I appreciate them, as do my family, and as did my wife.

The purpose of being here in this House is to help my constituents and the people I serve to have better lives, but that has not been easy with this Government, partly because they keep cutting the funds and resources available to the council, so that it cannot provide the services it should. They do that in the hope, of course, that the council will be blamed, and that, when it comes to election time, it will be the Labour councils and the Labour candidates who are blamed for what is the disgraceful behaviour of the Tory Government.

I have read the proposals, and I echo every word that my hon. Friend has said tonight. I hope that the Minister will look again—please—at the capping on the budget, and will lift it sufficiently to enable the council to do its job. It is irrelevant to me whether my constituents who seek my help voted for me or not; it should be irrelevant to him and to the Government who controls the council they seek to cap. It is the job of the council to serve the citizens, and it should be job of the Government to enable the council to do so.

Finally, I wish to pay my tribute to the all the people of the city of Leicester of all parties who have been so kind to me, and, indeed, to my father for some 25 years before that. Our friendships have crossed boundaries, and the courtesies and kindnesses that we have received have not been of party, although I am deeply grateful to Councillor Janet Setchfield, to Councillor George Billington, to Councillor Ray Flint and to all my other friends who have helped me within the Labour party.

As a final gesture, I ask the Minister to do a final kindness to me, and to reconsider the Government's proposals, so as to enable Leicester city council to have the funding it needs to do the job that it should.

Photo of Paul Beresford Paul Beresford Parliamentary Under-Secretary (Department of Environment) 10:13 pm, 20th February 1997

It is an unusual debate that contains a swan song, and the hon. and learned Member for Leicester, West (Mr. Janner) gave an interesting speech. I know that he is as grateful as I am to the hon. Member for Leicester, South (Mr. Marshall) for this opportunity to discuss the problem that Leicester is experiencing. I am sorry that, with his intellect and ability, and as a member of the Labour party in Leicester, he was unable to help the council to straighten out its finances. As I think he suspected I would explain to him—and as I suspect, in his heart, he knows—that is where the incompetence lies.

Leicester's circumstances should first be considered in the context of the local government financial settlement as a whole. The settlement was tight; last year's was tight. Next year, with a new Conservative Government, again it will be tight—and that is the way it should be. Local government expenditure is about 24 per cent. of central Government expenditure; it needs to be tight for the sake of the economy of a competitive United Kingdom, and it must continue to be tight.

Forward-thinking councils throughout the country have recognised the importance of that, and have sought efficiency savings year after year. Year after year, Leicester obviously has not. It is murally dyslexic—unable to read the writing on the wall.

Although the settlement was tight, it provides all local authorities with sufficient resources to provide good-quality services at affordable cost to council tax payers. In taking our decisions, the Government took account of all the pressures on local authorities, as well as the potential to make savings.

The House should be aware that Leicester's standard spending assessment is the second highest of all unitary authorities, at more than £255 million. Its population is comparatively high, but its SSA in pounds per head of population is the highest in its class. We know that Leicester will make spending plans for provision of new services in its first year as a unitary authority, but the standard spending assessment takes that into account.

The SSA system, used in distribution of revenue support grant for authorities in an area that is subject to local government structural changes, simply reflects the change in circumstances. The same methodology is used for all authorities with the same service responsibilities, and is, of course, based on the relevant data for each authority's area. Reorganising authorities are therefore treated fairly, both individually and relative to other authorities.

As it is a new unitary authority, one of the other influences on Leicester's spending next year is the notional amount calculated to act as a base budget for capping purposes. I know that Leicester had wisely worked very closely with the county to agree disaggregation of the county's budget as part of the notional amounts process. That has ensured that Leicester will be able to budget to spend at least as much in its area next year as was spent this year, if it chooses.

As with many Labour authorities, Leicester considers that it needs an increased share of resources, and that its provisional capping is too low. The permitted increase is a direct reflection of the level of the settlement. Capping is an essential tool to require authorities to play their part in restraining local government expenditure, which accounts for about a quarter of public spending. Its other purpose is to protect council tax payers from higher than necessary council taxes, which would result from excessive increases in local government budgets.

Leicester has a 1 per cent. permitted increase under the provisional capping limits, which is the class permitted increase for those unitary authorities. It therefore needs to consider its performance, which has been studied by the Audit Commission. If we consider the percentage of council tax collected of the amount payable, we find that the average for Conservative authorities is 96, and that for Labour authorities is 92, but for Leicester it is 89.83.

If we consider housing benefit applications processed in 14 days—helping people in need—we find that, for Conservative authorities, the average is 87 per cent., for Labour authorities 81 per cent., and for Leicester 72.7 per cent. If we consider council tax benefit claims processed within 14 days, we find that, for Conservative authorities, the average is 84 per cent. and for Labour authorities 77 per cent., but Leicester collapsed again, to 73 per cent.

If we consider the source of business—development—and measure that by the percentage of planning applications decided within eight weeks, we find that the Conservative average is 79 per cent., the Labour average 76 per cent., but Leicester barely makes it over 52 per cent. If we consider the percentage of rent allowances worked out within 14 days—also helping the poorer people in the area—we find that the Conservative average is 83; the Labour average 72. What is Leicester's average? Less than 63.

It behoves the local authority to get its act together. It has had the opportunity; it has been pointed out before.

The capping principles will not be confirmed until after authorities have set their budgets. If Leicester wishes to budget above its provisional cap, it is, of course, free to do so. We shall take into account all the circumstances of an authority before deciding on a final cap that is reasonable, appropriate and achievable, and I think that we have set that.

Additional resources have been made available to Leicester under a scheme allowing reorganising authorities to bid for supplementary credit approvals to meet the one-off indirect costs of reorganisation. The arrangements for the scheme mean that, in general, authorities will not be required to meet borrowing or interest costs for at least three years, by which time savings should have been realised. I know from my experience in local government that that is an opportunity to make savings instantly, and it appears to have been lost.

Leicester has so far received £6.2 million from the scheme. That includes the allocation made just before Christmas for 1997–98, when Leicester was awarded an SCA maximum amount of £3.1 million.

While we are considering this matter, we should look at some of the local media reports on Leicester councillors. At the beginning of this year and the tail end of last year, Labour councillors in Leicester awarded their leader a £22,145 special responsibility allowance, in addition to his £4,000 allowance. I understand from the local papers that for themselves they adopted a scheme that will result in a massive rise in councillor allowances. Their basic allowances will increase by 606 per cent. As in Doncaster, they have gone wandering off elsewhere.

Photo of Dr Jim Marshall Dr Jim Marshall , Leicester South

I am sorry that the Minister has stooped to that level of political dogfighting, particularly as he has given an incorrect figure. He referred to an increase in members' allowance of 600 per cent. The press forgot to take into account, and the Minister has also clearly failed to take into account, the fact that that ignores the removal of the previous allowances that councillors were paid. The figure is therefore simply incorrect.

I do not wish to lose sight of the real problem. The figures to which the Minister referred amount to less than 0.001 per cent. of the council's overall budget and of the £17 million cut in the real budget. I want the Minister to deal with that problem rather than make cheap political jibes.

Photo of Paul Beresford Paul Beresford Parliamentary Under-Secretary (Department of Environment)

Will the hon. Gentleman refer back to the first figure I gave? I said that the average council tax collection rate for Conservative councils is 96 per cent.; the Labour average is 92.7 per cent.; and the figure in Leicester is 89.83 per cent. That represents millions of pounds.

The hon. Gentleman should also reflect on what I am trying to point out, without going through the budget blow by blow, which I do not wish to do—if Leicester Labour councillors cannot do it, perhaps they should stand aside and let someone else do it. I am trying to point out that their attitude of mind is at fault. Even if it is a small percentage, it is a poor show that those councillors have taken the opportunity at this time to increase their allowances. If the hon. Gentleman reflects on how he voted at the tail end of last year—I do not know how he voted—it might cause him to think again.

Leicester's new unitary status this year gives it an opportunity to recognise that year on year expenditure needs to be based on decent, efficient services. Council after council throughout the country can manage it. The status and needs of Leicester council have been reflected in its SSA and its status compared with other unitary authorities in the same position. It is at the top of the list for Government grants and for SSA, but it still fails to meet the needs of its local people.

Question put and agreed to.

Adjourned accordingly at twenty-three minutes past Ten o'clock.