Local Government Finance

Part of Oral Answers to Questions — Prime Minister – in the House of Commons at 6:34 pm on 3rd February 2010.

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Photo of John Howell John Howell Conservative, Henley 6:34 pm, 3rd February 2010

The hon. Gentleman makes some powerful points with which I agree. The Local Government Association has done some survey work showing that a large majority of people think that councillors should have the ability to make financial decisions. If anybody is to cut anything in their own area, they believe that it should be local councillors, who stood for their position, and over whom they have a great deal of democratic control and see regularly. I worry that if we carry on like this, it will be more and more difficult to recruit people to stand for election, because what will be the point of standing for election?

The challenge of running an authority with a budget of £1 billion is completely frustrated when one gets down to the £20 million that can be distributed. The talent that is out there-the people who would otherwise come in and make a contribution-will simply go elsewhere, including to the golf course. I have nothing against golf, but if I had to choose between recommending that somebody play golf in their retirement and recommending that they be a councillor, I hope that I would be able to persuade them that it was still worth becoming a councillor.

Ring-fencing has clearly made no impact whatever on the current situation. However, formal ring-fencing is only part of the problem, because even where it has been formally lifted and the funds transferred to the area-based grant-I am thinking of the Supporting People grant-it is still not possible to show genuine localism. Are the Government seriously saying that simply transferring the Supporting People grant to the area-based grant will give councillors the choice between spending on the Supporting People programme and spending on roads? That simply will not happen. In addition to legal ring-fencing, there is therefore also a practical ring-fencing that has happened with many grants, even where they have been shifted.

We also need to focus again on the need for certainty. There are some examples, which I shall come to, of the Government creating considerable uncertainty about the funding for local councils. However, I do not accept the points made by Mr. Turner about the reasons why his Government have not pursued a three-year settlement, particularly when the Local Government Association has shown that the funding gap by 2013-14 is likely to be in the region of £11 billion a year. That level of uncertainty is difficult for councils to live with.

The Secretary of State also boasted of the overall increases in local government funding under this Government's administration. However, if he is going down that line, he has to look at the totality of individual councils' settlements. He can no longer concentrate on only one side of the profit and loss account. If he is going down that line, he has to accept the other side of the profit and loss account: the cost side, and the increases in those costs. Indeed, the percentage of expenditure that is borne by council tax increased from 22 per cent. in 1996-97 to 26 per cent. in 2006-07.

Councils in my area have experienced a couple of issues that illustrate that point, and one of them is personal care at home. I know that that was covered in the House recently, but there are some specific issues about it, one of which is the cost. It is difficult to know what the cost will be. The Government have produced some airy figures, but it is difficult for councils to assess what the costs of the measure will be to them. First, there would be a loss of income from some of those who currently pay for care arranged by the council. Councils will need to assess what that loss might be, but that is not straightforward. It involves reviewing the detailed circumstances of everyone who currently receives domiciliary care to see whether they would be eligible for free personal care.

Secondly, some people will have not presented themselves to adult social care, but will decide to come forward if they can obtain care for free. Trying to work out the figures for that is almost an imponderable, but given the experience in Scotland, they are likely to be great. The other aspect of personal care at home is about placing the risk and determining where it lies. Given that the amount of grant proposed for personal care at home in the area-based grant will be fixed, all the financial risk will be put on local authorities if the costs are higher than anticipated. The Association of Directors of Adult Social Services has already made its estimate, which is considerably higher than the original costing in the Budget. There is a review of that in 18 to 24 months, so that could leave significant pressure on councils until any changes are made.

The council side of that funding is supposed to come out of more efficiency savings. I rather took exception to the Secretary of State's comment that, when councils had shared services and shared their management with the primary care trust or whatever, they could complain about being made to make efficiency savings. My own county council and district council have shared services that are in operation; in fact, I was the person at the county council who put that in. The councils have shared senior management. We share a director of public health with the PCT. My district council has shared management with the neighbouring district council. Both those councils have year after year had robust and aggressive efficiency saving targets, which year after year they have met.

Perhaps in the winding-up speech the Minister, or if he would like to intervene now, the Secretary of State would like to tell me what I am supposed to tell councils such as my own, which have already gone through the pain of that, registered that pain with their voters, come through and increased their majority at the county council elections. They will feel insulted that they are dismissed in that way and that all that effort and pain was, in his idea of things, for nothing.

Two other issues arise in respect of pressures on funding. I have no idea how widespread those issues are. I suspect that one is more widespread than the other. One is unaccompanied asylum seeker children. There have been ongoing pressures in that area in Oxfordshire since 2002-03. There was a special circumstances grant of just under £500,000 in 2008 for 2008-09, but it does not reflect the ongoing shortfall, and the current forecast for 2009-10 is for an overspend of £800,000. There is no suggestion that that will be funded by central Government.

The last illustration of an area that has not been costed is the abolition of the Learning and Skills Council. That will pose a major challenge for directorates in county councils, which will have to reorganise their services to deliver what the Government want. There is not expected to be any additional funding to enable that to happen. There are burdens, too, from the micro-management of partnerships.

At the evidence session on the Child Poverty Bill, Paul Carter, leader of Kent county council, discussed the big outcomes of the first round of local area agreements. He admitted to having been a sceptic initially, but he was won round by the size of the outcomes. However, he complained bitterly about how the LAA had descended into micro-management and had become far too complex, and with that complexity will come considerable cost.

There are initiatives that could make a big difference on the cost side. One of them has been mentioned by many hon. Members, and that is Total Place, which is not just about the money that is saved by eliminating duplication. It is also about how services can be reconfigured. I want to stick to the money part of it. There is huge criticism of the way it operates. Again, at the evidence session on the Child Poverty Bill, the leader of Kent county council made it clear:

"There is still a silo mentality across the public agencies, which are acting in isolation and not in concert. If you can get them all working together in a defined area with the totality of their budgets...public agencies will start to deliver things in a fundamentally different way." --[ Official Report, Child Poverty Public Bill Committee, 20 October 2009; c. 53, Q124.]

However, the biggest culprit as regards participating in an open way with Total Place is the Government, particularly the Department for Work and Pensions. Richard Kemp, the deputy chairman of the Local Government Association, who is a councillor in Liverpool, provided an example. He said:

"In my area, someone from Jobcentre Plus was supposed to be leading the worklessness stream, which is of vital importance in Liverpool. She pulled out because she said that it was not part of her day job, although we were trying to create a partnership to help her do her day job in that case." --[ Official Report, Child Poverty Public Bill Committee, 20 October 2009; c. 63, Q137.]

The Government really need to look at themselves if they are to establish how they are going to make Total Place work.

I mentioned the evidence sessions on the Child Poverty Bill because this provides a very good example of the master-servant relationship that we have seen between central and local government this year. I will not detain the House by recapping the Bill, but broadly speaking, the Government set national targets in the first part of the Bill and then handed it all over-just dumped it-on to local government in the second part. They ignored the fact that many councils were already doing a tremendous amount of work, and they imposed a new duty that many people, including those we took evidence from, consistently said was not necessary. They imposed a level of bureaucracy, which must have a significant cost element to it.

When it came to the impact assessment, however, it showed a minimal cost amount. That is hardly surprising because the meat of the Bill was in the secondary legislation, which had not yet been introduced. How on earth was it possible to make an accurate costing of the effect on local councils and their budgets-in other words, how much would need to come from council tax-if the very secondary legislation was not there, not even in draft form, to enable such an assessment to be made? That is highly illustrative of the Government's approach and attitude towards local government. That is another nail in the coffin for people with talent, interest and enthusiasm coming forward to take part in local government.

It is time for the Government to play fair with councils and with council tax payers. It is time for some real localism and it is time that we set out to encourage real innovation. It is lying out there among the general public. They need to be brought into local government so that they have a chance to show their innovation, particularly in the delivery of services and particularly in the costing of those services so that they deliver real value for money.

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