I inform the House that I have selected the amendment in the name of the Prime Minister. To move the motion, I call Mr Grant Shapps- [ Interruption. ] I beg the hon. Gentleman's pardon; I apologise. I call Mr John Denham.
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Force of habit, Mr Speaker.
I beg to move,
That this House
regrets the decision of the Government to introduce £1.165 billion of cuts to local government funding in England in the current financial year;
regrets the Liberal Democrat members of the Government supporting cuts they opposed during the general election campaign;
notes the promise in the Coalition Agreement to "ensure that fairness is at the heart of those decisions so that all those most in need are protected";
regrets that this programme of cuts fails to meet this test of fairness, as they fall disproportionately on the hardest-pressed communities;
notes with concern the principle set out by the Parliamentary Under-Secretary of State on
condemns the failure of the Secretary of State to tell the House or local authorities where £504 million of cuts to funding will fall;
further regrets the failure to consult local government on the allocation of the cuts;
further notes with regret that the Government's further decisions on the Future Jobs Fund, housing and support for neighbourhood policing will weaken the ability of local councils to shape and deliver services in their areas;
regrets the failure to make any progress on implementing the previous administration's commitment to Total Place, enabling local authorities to deliver real efficiency savings and contribute to reducing the deficit while protecting frontline services;
and resolves that decisions affecting local government spending should be based on the principles of fairness, protection of frontline services and promotion of growth.
I was interested to hear the earlier exchanges about Ministers not turning up for debates. May I say how disappointed I am that the Secretary of State for Communities and Local Government has not bothered to turn up for this one? In 10 years as a Minister, I always respected the strong convention in the House that if a shadow Secretary of State chose to lead an Opposition day debate, the Secretary of State would respond. I am very disappointed that, on the first Opposition day debate on a Communities and Local Government topic, the Secretary of State could not be bothered to be here. The truth is, of course, that he is too scared to be here. He is too scared to explain the series of blunders that he has already made over these cuts. He is so scared of defending what he is doing that he prefers to treat the House with disdain. So we shall have to make do with the Minister for Housing, Grant Shapps instead.
I remember when my right hon. Friend John Healey and I insisted that building firms who took public money to build social housing should train apprentices. When they did so, the current Minister described it as ludicrous and counter-productive. We have all seen the minutes of his meeting with the Prime Minister's adviser on local government, the leader of Hammersmith and Fulham council, at which it was agreed that it was a priority to raise rents in the social sector to equalise those between social housing and the private sector. So we know where he is coming from-he has got form.
I have something of an interest in what goes on in Hammersmith. I heard the Minister for Housing say from a sedentary position that he was not at that meeting. Perhaps he would like to clarify that, because my understanding is that he was not at the main part of the meeting, discussing the demolition of council estates and the ending of social tenancies-although he has learned the lesson and is now proposing to do just that-but he did get there for drinks and canapés at the end.
My hon. Friend makes a good point. Indeed, he owes his re-election to the awareness of his constituents of exactly what the Tory agenda for local government was in his constituency. I will return to that point later.
While reflecting on the past, would the right hon. Gentleman like to apologise for the unprecedented situation that occurred when he was Secretary of State and his own permanent secretary disavowed the key policy of unitary status for various areas? The permanent secretary had so little faith in that policy that he went public with his view that it was a waste of public money.
I am sure we all wish the former permanent secretary at my Department well in his new position as permanent secretary to the Scottish Government. I took the right decision on Norwich and Exeter, and I was right to back the desire of those cities to run their own affairs. It was a decision that I reached after many months of careful consideration, along with my right hon. Friend the Member for Wentworth and Dearne. I have to say that it was all too typical of this Government that, within two days of the new Government being formed, the Secretary of State-who talks about localism-decided to quash the aspirations of those councils to run their own affairs, in a timescale that meant that he could not possibly even have read the evidence that had been submitted by so many councils. I will return to the attitude of the Secretary of State in due course.
"If we took Tory advice and cut spending and raised taxes precipitately, growth would stop. Unemployment and benefit spending would rise further. Tax revenue would stall."
But now he has taken Tory advice, and he will be held to account for what happens.
Now the Lib Dems support these cuts, and their credibility as a progressive alternative to the Tories is shot to pieces. These are cuts that no local government council had any chance to prepare for, coming as they do well into the financial year. As the Tory leader of West Berkshire council told us:
"This is unprecedented. We have never faced cuts in the middle of the year."
As the Tory leader of Telford said,
"this is money that we had planned to spend this year and will now have to be cut."
My right hon. Friend is right to be furious that the Secretary of State is not attending the debate. The Secretary of State seems to see himself as some sort of Conservative John Prescott. Does my right hon. Friend share my feeling that that fine gentleman would have been proud to stick up for his Department instead of letting it take the majority of the cuts and would have come here to defend his decision rather than skulking off to the scene of former crimes?
My hon. Friend makes a good point. Despite some apparent superficial similarities between the two gentlemen, one thing is clear: John Prescott never ran away from a debate or argument, unlike the Secretary of State- [Interruption.] I did not say he never ran away from a fight; I just said he never ran away from an argument.
The truth is that the cuts were not only made too fast, but made without consultation. There was no discussion with local councils about whether or how they could be made. The Local Government Association initially put out a press release welcoming the fact that it had been promised consultation, but ended up sending a desperate letter two weeks later saying, "Will you please tell us what's going on?" The cuts came ahead of the Budget, which sets out cuts of 25, 30 or 35% to local council services.
My hon. Friend makes two important points, both of which I will deal with, about the unfairness of the cuts and the real agenda l behind them. Of course the deficit needs to be tackled, and we set out our plans to reduce it by more than half over four years. That was a tough enough target, but the cuts now laid out go much further than we would have gone; they go much faster than we would have gone; and are being done in ways we would not have done them.
Does my right hon. Friend share my concern that the cuts will be felt disproportionately in heartland areas that have suffered a great decline in manufacturing, such as Stoke-on-Trent? I am particularly concerned about their impact on the Supporting People programme and the money providing care for people in the community. How can we plan for that?
This is an important debate. The way in which the Secretary of State is handling these first cuts warns us all of what lies ahead and the unnecessary damage that will be done to the local services on which the people we represent rely. When he made his cuts, he had choices to make about how to make them-to make them fairly, or not to make them fairly. So let us remember the promises that the right-wing coalition made:
"Our core aim is to hard-wire fairness back into national life", said the Deputy Prime Minister during the election campaign. The right-wing coalition document states that
"we will ensure that fairness is at the heart of those decisions so that all those most in need are protected."
So what did the Secretary of State do?
Let us take two boroughs next door to each other in the same conurbation. One is 15th in the deprivation index; the other 178th. One has 27,000 people on housing benefit; the other has 13,000. One has 11,000 unemployed people; the other has 8,000. One has an average weekly income £40 below the other. One is poor; the other comfortable. So what does "We are all in it together" mean? Which one gets the bigger cut under the right-wing coalition? The poor one, of course! Salford loses twice as much as Trafford. And that is not an isolated example. According to the Secretary of State's own figures, Newham, the sixth most deprived borough in the country, loses £4.6 million, while Richmond, the 309th most deprived borough, loses less than £1 million. In the Prime Minister's district council, there will be no cut. His county of Oxford, which has a deprivation index of 10.85, gets a cut of 0.7%.
If we look at the Deputy Prime Minister's area, we see that Sheffield has a deprivation index of 27.8 and a 1% cut-perhaps the real price of coalition. As for the councils losing the highest proportion of the their income, they are in places that have been left behind-the Lancashire mill towns like Burnley, the ex-coalfield areas like Ashfield and the struggling seaside towns like Hastings. Among the metropolitan boroughs, it is the poorest that lose most. Why? Because it is what these Tories and Liberal Democrats believe in. As the Under-Secretary of State for Communities and Local Government, Robert Neill-who I see is not here to answer this debate either-said at oral questions with refreshing honesty:
"Those in greatest need ultimately bear the burden of paying off the debt".-[ Hansard, 10 June 2010; Vol. 511, c. 450.]
The poor will pay most, and that is what this right-wing coalition is all about.
The right hon. Gentleman cannot honestly defend the previous funding regime that saw authorities such as mine in East Riding receive hundreds of pounds less per pupil than those in neighbouring Hull. Is he suggesting that he wants to have cuts dished out to authorities that are already disproportionately doing badly out of the funding, which would mean deprived pupils in my area doing even worse than deprived pupils in neighbouring authorities?
There is the true voice of the Tory shires. The truth is that the local government funding formula-widely debated, widely discussed, widely consulted on-does give a weighting towards those areas with the highest social need and the highest deprivation because the challenge of delivering services in those areas and of bringing about the equality of outcomes that we should all seek is greatest there. I do defend that. I do defend programmes like the working neighbourhoods fund, which has been targeted by this coalition Government, and through which money has of course been spent in areas of higher worklessness. It is because of that that those areas saw more people coming off incapacity benefit as local authorities used that money to help get people off benefit and into work-something we hear so much cant about from Government Members. So I say to the hon. Gentleman, yes, I do defend that approach.
Is my right hon. Friend aware that during the opening of yesterday's debate on the Budget in an exchange about cutting benefit to the long-term unemployed who are seeking work, the Secretary of State for Work and Pensions referred to pensioners living in houses that were too big for them and that they were unable to look after. Does that not give away what is really behind these benefit changes-that the pensioners and the poorest in our communities are going to pay the price?
That would fit with a Budget that increased VAT on everything pensioners buy with no attempt whatever to protect those pensioners from the increase in their living costs, so my hon. Friend indeed raises a good point.
Does my right hon. Friend agree that another area where the coalition's words are just not matched by its actions is in the talk about big societies and strengthening civic society? The reality of the cuts in Birmingham is a slashing of grants to those very voluntary organisations that our city relies on to provide the services that supplement those of the local authority and statutory agencies, which ordinary people need.
I have some sympathy with my hon. Friend, as I have been involved at a local level in working the voluntary sector's Shopmobility scheme, which the local Conservative council wanted to cut. Here was an organisation that had only a small amount of public money but engaged huge numbers of volunteers, enabling thousands of people to get around the town centre. It is funny, is it not, that that should be the Tories' first target, despite all the talk about the big society?
I shall give way again in a few moments, but I want to make a little progress.
What is quite clear is that all this is not an accident; it reflects the values of the coalition. I have talked so far about the Secretary of State's figures. When he published the written ministerial statement, he said with great flourish that no council would lose more than 2% of its budget this year. That is bad enough; it is not trivial. It feels about 30% worse than that, however, if we take into account the cuts implemented from today. By the time most councils have been able to put cuts into practice, it is going to feel twice that level of cut.
The truth is far worse, because the Secretary of State consciously withheld the true situation from the House. In the figures that were published, over £500 million of the £1.16 billion of cuts was not allocated to local authorities, so no one could tell what the impact would be: it was kept secret-kept under wraps, kept from this House. A few days before, the centralising, dictatorial Secretary of State had instructed local authorities, under threat of punishment by law if they refused, to publish details of every item of spending over £500. As his hapless Minister told the House, no one had even bothered to work out what that would cost local taxpayers; it was just another diktat from behind the big man's desk. Yet the same Secretary of State who can tell councils what to do down to the last £500 could not manage to tell this House or local councils where he was cutting £500 million. It is ridiculous.
Does my right hon. Friend agree that the current cuts in local government belie any notion of fairness or progressiveness? The London borough of Tower Hamlets is the third most deprived borough in the country yet it faces one of the largest cuts: £9 million, of which £1 million is from the working neighbourhoods fund. That is in addition to a likely £55 million of cuts over the next three years. We should compare that with the figure of £1.3 million for the London borough of Richmond upon Thames, which includes the seat of the Secretary of State for Business, Innovation and Skills, Vince Cable. How is it possible that the poorest have to suffer so much compared with one of the richest boroughs in the country?
My hon. Friend makes a very good point, and also underlines the point I am about to make, because on the original figures published by the Secretary of State, the Tower Hamlets cut was nowhere near as big as that. Earlier, I used the example of Newham, for which his table gives the figure of £4.6 million, which was the biggest cut in London. Now that the dust has settled, however, we find that Tower Hamlets is up there as well with a figure of about £9 million and Hackney loses £8.6 million, but as my hon. Friend said, "Don't worry because Richmond is still doing all right."
I rise to say a few words in the interests of fairness, because the right hon. Gentleman obviously thinks that, apart from eating babies, there is very little the coalition does not do. Can he tell us which of the £40 billion of unallocated cuts the Labour party was likely to implement were going to fall on local government? That would be a transparent, open, rational and reasonable thing to do.
The hon. Gentleman needs to explain something to his constituents: why he is supporting a cut that goes tens of billions of pounds deeper than the plans we set out. That is what is causing the pain. During the election campaign, he opposed the cuts I am talking about. He and his party colleagues said that these £6 billion of cuts would damage the economy. He is the one with questions to answer to his constituents, such as how he managed to run an election campaign being against a VAT increase and these cuts, yet here he is standing up in the House defending the cuts-and no doubt in due course defending the VAT increase as well.
I thank the right hon. Gentleman for giving way. Why does he treat Members as if they are fools? If he wants the truth, it is that his Labour Government's funding formula was based on petty party politics and had absolutely nothing to do with the needs of individuals. If we want to use examples, the schoolchildren in my constituency of Bromsgrove get £900 less per annum than those in neighbouring Birmingham. The reason for that is very simple: over the past 13 years areas where there are Labour voters got far more money, and the truth is that what we are doing is, in this terrible economic climate, restoring some fairness back into the system.
I think the whole House should take full note of that intervention, because the statement of principle we have just heard from the hon. Gentleman flies in the face of the commitment made during the general election by the then shadow Chancellor, now Chancellor, who said:
"We are all in this together. I am not going to balance the budget on the backs of the poor."
We have now heard the authentic voice of the Conservative party, however. Irrespective of any economic challenges faced by this country, the Conservatives would have wanted to hammer the poor, and that is what they intend to do. It will not come as any surprise to Labour Members to know that that is what the Tories stand for. What the Liberal Democrats are doing supporting it, I have no idea.
Does my right hon. Friend not agree that the interventions he has just taken from the hon. Members for Brigg and Goole (Andrew Percy) and for Bromsgrove (Sajid Javid) both demonstrate that the coalition is intent on redistributing grant away from the poorest boroughs and the poorest education services and toward the better-off? Does that not completely give the lie to the idea that the so-called pupil premium will put more money back into the very boroughs and authorities that those Members have just attacked?
My right hon. Friend, as always, is absolutely right.
I must say that this debate is turning out to be rather more useful than I expected. Just a small scratch on the surface of the Government's supporters tells us what they really believe, stand for and intend to do. As a number of Members have said, this has got nothing to do with the economic crisis or the deficit; they just think that our spending more money in the areas of greatest need was the wrong thing to do. Let us agree that that is the difference between the Government and the Opposition.
I wonder whether my right hon. Friend is experiencing, as I am, a slightly spooky feeling of déjà vu. If we think about political gerrymandering, we all remember the days when Westminster and Wandsworth were able to levy zero council tax because of the fix that had been done on the allocation and distribution of grant. What we are seeing from Government Members is history replaying itself. We are seeing not a new, centrist, Cameron-friendly Tory party but the same old right-wing Tories, determined to balance the books on the backs of the poor.
My right hon. Friend is right. She also did the job that I did until the election, and she knows that there are many people in local government who are not of our party, but who have a genuine commitment to the communities they serve and by whom they were elected. Among the people who have been kicked in the teeth by these budget cuts are the locally elected representatives of this Government. The Tory leader of Blackpool council said,
"we are one of the most deprived areas in the land and we shouldn't be singled out like this."
He had better not go to the East Riding or Bromsgrove, because he will get a different message. He continued:
"I understand that some of the leafy lanes of Surrey and places have got away with it; well that can't be right."
The Lib Dem leader of Burnley council said,
"we are a deprived borough but once again we are suffering. I am disappointed and sick of us being kicked by budget cuts in Burnley."
I am grateful to my right hon. Friend, who is making a very good case. Is he as surprised as I am that members of Liberal Democrat-controlled Stockport council, who were extremely vocal in the run-up to the election about the fact that their grant settlement was not enough, have not uttered a single word of protest at the cuts now being forced on them?
They have obviously been nobbled, but it remains to be seen whether they will stay nobbled once people at local level in my hon. Friend's constituency understand what is really happening to them.
If I may, I will just complete the point I was making by giving one last example.
We were told that there would be a 2% limit on cuts; however, Corby council faces a cut of 15% in one year, because the figures did not include the housing and planning delivery grant. Corby council did the right thing: it gave planning permission for houses and economic development-and now it has had to pay for that with a 15% cut. I now give way to the hon. Member for Croydon Central.
I am very grateful to the right hon. Gentleman for giving way. He is trying to make the point that the previous Government allocated money on the basis of need. Does he recognise that the result of the introduction in 2006-07 of the fourth block into the funding formula, according to the London Councils report, has been a shift in local authority funding
"from a relative needs basis towards a per capita basis, causing an arbitrary redistribution in funding between high-need and low-need authorities"?
That is the result of the policies his Government introduced, and he did nothing to correct those decisions.
If what the hon. Gentleman says means anything, he is arguing that we should have shifted more priority towards the poorest and that we actually made a mistake back in 2006. That does not fit coherently with the approach of his hon. Friends.
Does my right hon. Friend agree that we should not be too surprised at what this Tory Government are doing to shift the balance towards the wealthier areas of Britain, because every pit in Bolsover was shut by the previous Tory Government, throwing thousands of people on to the dole and creating deprivation that hitherto did not exist? Now the Tories are doing it again, but there is a difference because this time they are doing it under the cloak of so-called "respectability", using those tinpot Liberals to cover for them-the Liberals will undoubtedly have to pay for it at the end.
My hon. Friend is absolutely right about that. One of the things that we need to recognise is that, sadly, in large areas of the country, particularly in my own area of the south, as well as in the south-east and the eastern region, local government has for too long been divided between the Tweedledum of the Tory party and the Tweedledee of the Liberal Democrats. The Liberal Democrats have often got away with claiming that they were a progressive alternative to the Tories, but that will no longer be allowed to stand. Somebody has to speak up for the people of the areas suffering cuts and it will be the Labour party.
There are perhaps two arguments here. One argument is about whether the cuts should be made now or later, and the other is about how they should be allocated. My personal view is that we must ensure that we fund local authorities on a needs basis-there is no question about that. The basic questions in this debate are about whether or not cuts should be made earlier and whether the quantum should be the size it is. If we do not do this, the interest rates will be higher. If we follow the Labour party's advice, we will actually have greater cuts because we will have to pay a higher interest rate on a higher level of debt. That is the fundamental truth of this argument, so the right hon. Gentleman is arguing for greater cuts in the long term.
The hon. Gentleman is right to say that there are two arguments-the cuts should be made now or they should be made later-but he has the unique distinction of having argued both of them within recent weeks.
No, I am not going to give way, because it was not worth it last time. The hon. Gentleman spent an election campaign saying that the cuts should not be made now, but he has spent every week since the election saying that they should be. That is ridiculous and he cannot expect to be taken seriously.
When I was in my office, after a meeting, I heard the right hon. Gentleman take the name of Corby in vain. May I point out to him that the cuts allocated to Corby borough council are merely 1.1%, which puts it in the lower half of councils receiving cuts? Is the shadow Minister aware that Pat Fawcett, the Labour leader of Corby borough council, complained bitterly at the funding settlement that Corby received when his Government were in power?
I will send the hon. Lady the letter from Corby borough council setting out why its cut had turned out to be much bigger than the 1% that it had originally been told by the Secretary of State.
I should make some progress, because I have further important points to make to the House-unfortunately, the Secretary of State is not here to defend them. When he made his announcement, he tried to sweeten the pill by promising local councils greater freedom in spending what was left of their money; he said that £1.7 billion would be taken outside the local government ring fence. That was fair enough, because that is the same direction of travel that the Labour Government had set and I am not going to argue with it, but what has happened since? This Government have now been forced to admit that it was all a mistake and that the figure was not £1.7 billion after all, but £1.2 billion, so we have another disappearing half a billion pounds. How could that be? The truth is that the Secretary of State and his Ministers are not on top of their brief, and they do not understand how local government finance works or where the money goes.
All that would be bad enough, but that is not all. What is being revealed bit by bit is this Government's limited vision of local democratic government. The country faces a major challenge as we and the world recover from a global recession, and effective, democratically accountable local government must be part of the solution, not part of the problem, but it is now clear that this right-wing coalition does not understand how important local government must be.
It is not just about the unfair cuts, the impact on front-line services and the impact on growth. It is quite clear that there is no decision so small that it is too small for the Secretary of State to intervene. We wanted local councils to be able to decide whether planning powers should be used to control the spread of houses in multiple occupation and to let them decide what was best for local people, but now the Secretary of State is tearing up those rules. Who is going to decide what is best for local people? He is. We wanted local councils to have a say in the big planning decisions that affected more than one district. Who will decide now? The Secretary of State. He wants to set the council tax in every council, how often the bins are collected and how often councils can communicate with the public. He imposes cuts from the centre and will not talk to local councils about how to do it-no wonder he will not turn up to speak in the House. Remember the power of general competence? Remember the Prime Minister, when he was Leader of the Opposition, saying that councils would be free to do whatever they like as long as it was legal? That did not last long under this Secretary of State. He needs to learn that there is a lot more to localism than sitting behind a desk in Whitehall giving orders to local councils.
Councils need to be leaders, shaping and delivering services in their area. Under Labour, councils were better financed-we reduced ring-fencing and targets and believed that local councils were often best placed to decide what was best for local people. Labour local councils had the lowest council taxes and Tory councils had the biggest increases. We trusted councils to deliver the things that local people wanted. That is why local councils were the right vehicle to deliver the 18 million free swimming sessions for pensioners and kids that will now be scrapped. The views of the Tory leader of Derby council will be shared by many. As he said:
"The withdrawal of funding for the free swimming scheme is very disappointing because we consider this to be a resounding success in Derby."
It was our belief in local government that made us see why local councils should be the lead on council and social housing and in supporting the Kickstart schemes, all of which are now on hold or scrapped. That is why local councils were the right people to lead in tackling worklessness and why so many local councils, including Tory councils such as Kent and Hampshire, were big bidders for and big users of the future jobs fund. They could see that it was right to offer real jobs to young people in their communities. Now, up to 80,000 jobs for young people will be lost.
We trusted local councils-Tory, Lib Dem and Labour. Yes, sometimes they let us down. I remember when the Tory-Lib Dem coalition in Birmingham failed to spend its working neighbourhoods fund money; perhaps we should have realised that that was the shape of things to come. However, many other councils repaid that trust many times over.
It was right that local councils led on Building Schools for the Future. There are now 750 schools in 90 local authorities whose schemes are on hold and in doubt.
My right hon. Friend has set out in an extremely worrying way the effect of this right-wing Tory-Liberal Democrat coalition and of its cuts. Does he acknowledge that the coalition has not in any way flagged up the potential savings before going straight into the cuts programme? The Total Place project was one through which Tory councils in London and elsewhere said that they could make significant savings of tens of millions of pounds, yet there has been no mention of it from the Government. Will my right hon. Friend comment on that?
My hon. Friend is absolutely right and I shall move straight to that point. It is very clear that the right-wing coalition is handling these cuts in a way that is creating much deeper damage than is needed. My hon. Friend should not be in any doubt: cuts would have had to be made under our deficit reduction programme. They would not have been as big or as fast, but difficult decisions would have had to be made none the less. There are big efficiency savings to be made, many of which were set out in the report that we published before the election, written by Sir Richard Leese, leader of Manchester city council, and Sir Steve Bullock, mayor of Lewisham. They set out very clearly the savings that could be made from sharing services, sharing staffing and reducing layers of management, but those changes need to be properly planned and implemented consistently over several years, always putting citizens first. The Government's approach of badly planned, short-term, unfair cuts and arbitrary suspension of key investment makes efficient savings impossible and ensures that the cuts will fall on front-line services and their users, not on the back office.
In government, we recognised-this was the point that my hon. Friend Alison Seabeck made-that the only way to make the best use of local public service spending was to look at it as a whole. We need to look at all the money spent on children, older people, offenders and drug and alcohol problems as a whole. Rather than worrying at the outset whether it is police money, health money, school money or council money, we need to look just at how best to use it.
We know that the most expensive children-the ones who are disruptive at school-are often those whose families are of most concern to social services. They cause the most nuisance to local people and the police and they probably have the highest need of adolescent mental health services. So we worked with local government and the Local Government Association to show that we could produce better services much more efficiently if we brought together all the money that is spent on that group. Our Total Place pilot showed that when we do that, we get a better service at lower cost.
The LGA says that government as a whole could save £20 billion over five years. I am cautious about the details behind that figure, but it is significant. That is what councils think they could offer to cut the deficit while protecting front-line services. That should be taken seriously.
I completely agree with my right hon. Friend's analysis of Total Place. It is a way forward; it is not going to deliver immediate savings, but with proper planning it could deliver. However, it cannot be delivered properly through central diktat from the Secretary of State. If improvements are to be delivered, there has to be a real transfer and devolution of power not merely from the Department for Communities and Local Government, but from the Department for Transport, the Home Office and all other Departments, to allow local authorities to take the lead at local level.
I agree with my hon. Friend and I welcome him to his position as Chair of the Select Committee on Communities and Local Government, to which he will bring considerable experience and knowledge. That is exactly what we offered local government and local services in our last Budget, which offered a wide range and scope for local services to pool their money and use it in new ways. That is why I was confident that we could both deliver our deficit reduction programme and protect front-line services, but as my hon. Friend says, it can work only when it is backed from the top. There is no mention of it in the Budget or in the Red Book, and every Government policy works against that sensible, coherent approach. The Government are not just slashing local spending: they are fragmenting it. There is no point in giving councils more and more control over disappearing funds if, at the same time, school spending is disappearing into academies and free schools, if the chance to work with health money disappears into hundreds of GP budgets or if police funding rides off into the sunset with an elected sheriff. [ Interruption. ] I am sure that George Hollingbery is right. I shall come to him in due course.
I am very grateful to the right hon. Gentleman for giving way. First, I make the point that in 13 years of Labour rule, there was little or no integration across local services. Indeed, we could honestly say that silos grew a great deal more than they merged together. We do not need central rules to make that integration happen; in Hampshire, we have Project Integra and PUSH-the partnership for urban South Hampshire-so he will know that there is plenty of co-operation at local council level.
On central control, does the right hon. Gentleman agree that when Winchester city council, of which I was a member for 11 years, made an assessment of the amount of spending it could control under the last Labour Government, it was below 5% of total spending?
It is useful to have a discussion with a Hampshire MP, as we are both familiar with PUSH, but this is exactly my point: that partnership is very good and very important, but it is limited to the powers held by the local councils. Until those councils are able to help to lead and shape health spending and law and order spending in the area, we will not get the changes that we need.
The hon. Gentleman's second point is also reasonable, but he overstates it. He calculates that Winchester council did not have the budget for Winchester university-well, no, but nor should it. Winchester council did not have the budget for Winchester prison, or for the benefits bill in Winchester. Not every piece of spending is amenable to transfer to local authorities. However-particularly over the last few years, and with local government-we set out strong provision for local government. I am desperate that we should not lose that provision, and not just for the purpose of a party political debate here.
The integration of local services is critical now. If the Government prove me wrong I shall be the happiest person in the world, because we shall then have the chance to deliver front-line services that people want in a way that genuinely saves money. Every Member, on whichever side of the House they sit, should be interested in that debate.
What the Prime Minister said constituted a fair warning. As some of my hon. Friends have already observed, what we are seeing is not the unavoidable consequence of a global recession or even of a Labour Government. The aim of the Tories, limply propped up by the Liberal Democrats, is and always has been to roll back an effective, caring and active state. Their vision is of the budget airline council, the sink-or-swim council, the no-frills council, where town halls offer only the bare minimum of service and people must pay twice to get a good service. I think of councils such as Wandsworth, whose leader said that the council wanted to
"increase charges as far as possible beyond inflation...It is worth taking a trial and error approach".
I think of councils such as Hammersmith and Fulham, which promise to protect the elderly and then hike up their charges. That council's leader has said:
"To continue building and publicly investing in the 'social rent' template...makes no sense."
I think of the Tory councils in London that want to knock down the homes of secure tenants and offer them insecure homes at a much higher rent, and of the threats to the future of secure council tenancies that the Minister for Housing has never denied. It is all there.
Yes, the country faces hard decisions as we recover from the global recession, but none of that justifies an ideologically driven attack on the basic idea of decent local services provided by well-run councils. We all know what the Tories are up to, but what are the Liberal Democrats doing supporting them? The answer is that they have sold their souls, and have forfeited the right to call themselves a progressive alternative to the Tories.
I beg to move an amendment, to leave out from "House" to the end of the Question and add:
"regrets the doubling of council tax under the last government, its cuts to services such as rubbish collections and its legacy of public debt;
expresses concern that the prospect of paying for £70 billion a year in debt interest represents a total of more than is currently raised from council tax, business rates, stamp duty and inheritance tax combined;
welcomes the new Government's immediate support for frontline services by protecting £29 billion of formula grant, removing £1.2 billion of ring-fencing and abolishing red tape such as the Comprehensive Area Assessment;
backs the support for hard-working families and pensioners through a council tax freeze and the abolition of the previous government's plans for new bin taxes;
further welcomes the scrapping of the unfair ports tax which threatened to harm Britain's whole manufacturing sector;
supports the reductions in business rates for small firms;
acknowledges the significant efficiency savings already delivered by local government but believes that there is further scope for savings through joint working, professional procurement practices and radical town hall transparency;
and asserts the importance of delivering local economic growth to all local communities across the country, assisted by new financial incentives, and of giving new freedoms to councils to allow them to focus their help on local priorities and those most in need.".
I was a bit surprised to hear Mr Denham attack the Secretary of State, who had taken the trouble to write him a personal note-it was delivered by hand to his office at 11.30 this morning-explaining that he was attending a regional Cabinet meeting in Yorkshire to talk about the announcement that was first made in the Budget statement last week of a £1 billion fund to help the very areas of the country that the right hon. Gentleman has just complained will lose funding.
Before I respond to the point of order, I shall be happy to hear a statement or clarification from the Minister, from whose lips I think the words came.
The fund was announced in the Budget, Mr Speaker. If Clive Efford was present last week, he will have heard the Chancellor of the Exchequer announce it at this Dispatch Box. Let me clarify another point. My hon. Friend Stephen Hammond also mentioned that he had telephoned the office of the right hon. Member for Southampton, Itchen to check that the letter had been received. I am very surprised by the rather discourteous and disingenuous comments about my right hon. Friend the Secretary of State.
Is this the £1 billion that the Government have just announced that they are withdrawing as a result of the abolition of the regional development agencies, which they promised before and after the election that they would abolish only if there was no support at local level?
I will come in a moment to the RDAs that were set up by Lord Prescott. In the meantime, I can tell the right hon. Gentleman that this is a new £1 billion-the regional development fund £1 billion announced in last week's Budget and designed to help- [Interruption.] Labour Members do not want to hear about this, but it is designed to help in exactly the kind of constituencies that they have come here today to complain are being underfunded. They do not want to know that this coalition Government are doing something to help those areas. That is the truth.
We live in grave financial times, with the previous Government bequeathing a scorched-earth policy. As Labour's departing Chief Secretary declared, "I'm afraid there's no money left. Good luck." [Interruption.] They do not want to hear that either, but it was what the note said, and it also happened to be true.
We inherited spending commitments funded by a litany of IOUs scrawled on the back of fag packets and a toxic legacy of debt from an Administration who went on a spending spree with the nation's credit card. Our most immediate priority is therefore to reduce the nation's chronic public spending deficit to pave the way for economic recovery.
The hon. Gentleman describes again this picture of deals scrawled on the back of fag packets. Would he like to make a comment to my constituents in Wirral who work for companies that spent a great deal of time working hand in glove with the RDA and the Government to protect our local economy and have been thrown into disarray by the policy being made on the hoof by the new Government? I will listen to anything the Minister has to say that will help us protect our local economy, and I will be grateful for his comments.
I welcome the hon. Lady's intervention. She was not here in the last Parliament, but had she been she might have read our Green Paper, which describes in detail our plans for the RDAs. Labour Members seem to think that when there is a change of Government, policies should just roll on even if they have not worked. The RDAs were a case in point of policies that cost a lot of money and got us nowhere.
The prospect of paying £70 billion in debt interest is of deep concern, but apparently not on the Opposition Benches, where it is as if the money has not run out, the party is not over and we can just carry on spending imaginary funds. That £70 billion in debt repayments is more money than the council tax, business rates, stamp duty and the inheritance tax collect put together. That is the size of the deficit we are up against. So we need to tighten our belts. Ministers are cutting their pay, and it is also fair to ask local authorities to pay their part towards the £6.2 billion public sector savings required this year.
Does the right hon. Gentleman believe that it will help the nation's finances to cut the future jobs fund and the working neighbourhoods fund and to throw more young people on the dole so that they will not be paying tax and national insurance? Does he really think that that adds up to a credible economic policy?
Well, I heard with interest what the right hon. Member for Southampton, Itchen had to say about some of the funds. The truth is that existing commitments are being honoured and a new fund is going to be set up to pull together the many different streams that currently help people get back to work. It seems to me that again Labour Members see any change that did not emanate from Labour during the 13 years in which it was in Government as a problem and are willing to attack it.
I shall give way in a moment after making a little progress.
So the £6.2 billion immediate savings this year are the priority to tackle the inherited £156 billion deficit. It is worth saying it again-£156 billion. [Interruption.] They do not want to hear it because the figures were in danger of bankrupting this country; of putting us into a Greek-style crash. But to hear the right hon. Member for Southampton, Itchen today from the Dispatch Box, one would not believe that he was speaking for the same party that sat on the Government Benches and took this country to the edge of that fiscal position.
Now with this fiscal challenge we also have an opportunity. Our actions to rebalance the public finances give us a chance to decentralise power, to weaken the command-and-control apparatus of the central state. Devolution is the solution; the centralised state the problem. We need to cut wasteful spending, but let us put local councillors and local people back in the driving seat.
On that very point, we hear a lot about how we could have saved money from efficiency savings, and that is a laudable thing to talk about, but the Lyons report in 2007 said that targets and inspections inhibited councils' ability to serve their locality. We know that targets and inspections cost more than £2.5 million a year, so if Opposition Members were so anxious to find efficiencies why did they not start by stopping that ridiculous top-down inspection regime?
I am very grateful to my hon. Friend for mentioning some of the top-down inspection regimes, such as the comprehensive area assessment, a £39 million programme responsible for-get this-wasting 151,000 days of local government officers' time each year, and for what purpose, what advantage, what great body of knowledge that could somehow be used? The answer is that the previous Government did not know when the money had run out and carried on spending it ad infinitum.
We certainly will have inspections and a basic template. The question is: how much inspection do we need? I invite any Opposition Member to explain how spending 151,000 days of officer time answering a comprehensive area assessment was of any use to local residents. Opposition Members talk about localism, but they do not get it. They talk about the principles of handing over power, but they do not understand that when-according to 2006 research-officers in town halls spend 80% of their time servicing the needs of Ministers and Whitehall and only 20% of their time looking after local residents, they no longer serve the democratic values of local people. That is not localism; what we are describing today is localism.
In these tough times it will be our goal to protect those in the greatest need-local residents and, especially, struggling families and pensioners. Under Labour, council tax more than doubled. We will work with local councils to freeze council tax for a year and, if we can afford it, for another one. Scotland has done it, with band D council tax now £290 a year less than the comparative figure south of the border. We want that to happen in England, too.
The right hon. Gentleman just mentioned the need to protect those most in need. Will he comment on the remarks by Blackpool's Tory council leader, Peter Callow, who said:
"We are one of the most deprived areas in the land and we shouldn't be singled out like this, I understand that some of the leafy lanes of Surrey and places have got away with it, well that can't be right"?
I may be living in a parallel universe, but I and Government Members were here last week for the Budget, when all that was described in a great deal of detail, including in the Red Book, which explains that the fund is new and comes out of the total spending envelope. It is fairly straightforward.
Let us make some progress. We will scrap Labour's plans for new bin taxes, which meant even higher tax bills for local families and harmed the environment by encouraging more fly-tipping and more backyard burning. We need to go green, but we cannot have the bin bullies and the town hall Taliban who seemed to look after town halls before. Instead, we are going to embrace opt-in schemes, such as Windsor and Maidenhead's recycle bank initiative, through which families are rewarded for recycling and doing the right thing. We will encourage people to do the right thing, rather than punish them when they do not.
Incentives can work for councils, too. Let us reward local authorities for driving economic performance in their area, and for building new homes. Incentives can work for councils in all sorts of ways.
On the issue of building new homes, I understand that one of the areas under threat is the Kickstart programme, which was to support private construction by getting sites that had fallen during the recession under way again. Does he agree with the chairman of the Home Builders Federation, who said:
"Cutting Kickstart money, that creates immediate benefits in terms of local jobs and for the wider economy is a cut on investment not waste. Public money invested through Kickstart pulled in many more times that in private sector investment"?
Is there not a false economy in the cuts that are going ahead, which put more homes in jeopardy and do not make sense to the business community?
The right hon. Lady will share the concern that I had at turning up at a Ministry and being told that the £1.5 billion that had been presented to the Building Britain's Future fund exactly a year ago, in July 2009 when programmes such as Kickstart were announced, just did not exist. We are now having to do what we can to support those important programmes. She can expect to hear further announcements on this front.
If all the programmes that the Opposition are concerned that we will cut were so valuable, why were so few houses built under the last Administration? Why are there 1 million people not in education, employment or training-NEETs-in this country if the programmes were working so well?
I am grateful to my hon. Friend, not least because of what happened in the debate on housing here just last week. The Opposition claim to be passionately interested in housing, but there was nobody at all on the Opposition Benches then-not a single Opposition Member turned up for a debate on a subject that they claim to care about so passionately.
Perhaps the answer lies in the figures on housing. We have only to look at the figures for house building last year, for example-fewer homes were built than during any peacetime period since 1924. It is not as if the top-down approach was working; the more the previous Government tried to centralise, dictate and impose housing on local communities, the fewer homes were built. That is why we intend to turn their policy on its head and ensure that in future incentives drive house performance and house building in this country.
Will the Minister clearly explain what his targets are for the number of social houses that should be built in this country each year? How will the building of such housing be achieved? What policy mechanisms will he use, and where is the funding to deliver the programme?
I am grateful to the hon. Gentleman. We are not going to set targets because they did not work. [Interruption.] There you go-they have heard it. We all remember the target of 3 million homes by 2020. Remember the former Prime Minister standing at this Dispatch Box and announcing that target? We all remember the 240,000 homes that were to be built every year. What is the figure for house building this year? Probably about 110,000 to 118,000-something in that region. There is no point in announcing targets that do not happen; all that does is bust aspiration. Instead, we will take a practical approach in which communities are encouraged with powerful financial incentives to build homes. Our matching of council tax revenues for a six-year period will achieve a great deal of that.
I want to make a bit of progress, then I shall give way again.
We are going to drive economic growth through local action and initiatives such as the incentive plan and by replacing the Lord Prescott's and Lord Mandelson's regional development agencies with locally led partnerships, based on natural economic areas-not arbitrary Government offices for the regions that happen to suit Ministers. We will also drive growth by giving councils new powers to levy business rate discounts for local shops and firms, by finding practical ways to introduce automatic small business rate relief and by abolishing Labour's unfair ports tax, which threatened to harm the entire manufacturing sector in this country-at least the bit that the party had not already harmed through its economic policies.
We are doing all we can to help local government under difficult and pressing circumstances. No local authority will face a reduction of more than 2% in any revenue grant that has already been allocated.
Why does the council in my constituency face a cut of 1.08%, whereas no Government Member's local authority is facing cuts of anywhere near that? Is that an act of ideology or malice? Or is it that, as the Minister with responsibility for planning said,
"Those in greatest need ultimately bear the burden of paying off the debt".-[ Hansard, 10 June 2010; Vol. 511, c. 450.]?
I am grateful to the hon. Gentleman for that, but district councils all over the place are taking larger cuts. If the Opposition are now going to spend their time looking at random distributions, trying to pick out patterns and then playing them back, I am afraid that that just demonstrates that they really have not got it. They have not understood the financial crisis in which they had taken this country right to the edge or appreciated the depth of the problems that they had taken the country into. That is clearly demonstrated by their input today.
The Minister will recall that a few moments ago, when I tried to raise the issue of school funding, my concerns about deprived areas such as those in Goole that I represent were laughed off with some smugness by Labour Members. Can we have an assurance that unlike the situation under the previous Government, who simply ignored the problem, pupils who live in very deprived areas in Goole will not be penalised for the simple reason that other parts of the East Riding are wealthier?
I am grateful to my hon. Friend. Of course, the pupil premium is designed to achieve precisely that. We are absolutely doing everything we can to try to protect people and share out the burden of the very difficult decisions that have to be made-decisions that were ducked by the Opposition when they were in government. Labour Members could not outline one penny of how they would have reduced the local government budget-not one single penny. I invite the right hon. Member for Southampton, Itchen to come to the Dispatch Box if he now wants to explain where the cuts were going to come from. Until Labour Members acknowledge that they had no answers and were not proposing alternatives, they will not have earned the right to be able to lecture anybody about what should and should not be done by way of making these difficult cuts, because we have not heard anything about it from them.
We have protected the £29 billion formula grant-the main source of funding for front-line services such as rubbish collections, street cleaning and libraries. Moreover, we have not cut any of the main Supporting People budget, which is in excess of £1.6 billion, despite needing urgently to cut funds from this year.
Does the right hon. Gentleman share my mystification as to why Labour Members are fussing about whether there is a cut of 1.08% or 1.1% given that the real situation is that over the next five years we potentially face cuts of 25% in real terms, and we should be planning and preparing for that now?
My hon. Friend is absolutely right. The simple truth is that Labour Members still have not understood the depth of the problems that they have got us into. Until they acknowledge that and start to address it themselves with some real plans, and identify where some of the money is coming from, nobody will take seriously their complaining and calling of Opposition day debates about this subject.
We will continue to remove the ring fences from non-school revenue and capital funding. This year, we have de-ring-fenced £1.2 billion, and we intend to go a lot further. This gives councils the extra flexibility they need to concentrate on local priorities and to protect these front-line services. We are also reducing the management burden imposed on local authorities from the centre, cutting down on undemocratic and unaccountable quangos, and putting local government front and centre in meeting local residents' needs. When we took over, there were 27 different quangos relating to the Department for Communities and Local Government. Again, I invite the right hon. Gentleman to come to the Dispatch Box and explain how he was going to hand power back to local people by removing even one of his 27 quangos.
As with every profession, local authorities will need to take some difficult decisions about how to prioritise their spending. Local authorities have already made great strides in achieving efficiencies, but they need to do more. There is still a lot more potential to gain through new practices-for example, shared services, joint working and smarter procurement. Perhaps most important, however, will be radical town hall transformation. We must be clear that councils will need to build in improved productivity as a matter of course. They need to learn from the best commercial practices. Sainsbury's does not go out and tell people that good food costs more when it comes from Sainsbury's, but that it costs less, and public services are going to have to do the same thing. In the public services, in future, we have to get more for less. I know that that is a concept that Labour Members struggle with, but it is the reality of the financial mess that they have left us in.
I am proud that in Great Yarmouth our council, which faces a 2% cut, has reacted by saying, "We can deal with this. We realise the situation that the previous Government has left us with, and we've got to get more efficiencies." That is a good and positive move forward. In my view, having spent many years as a councillor and council leader, the best thing for our councils is to get rid of some of the ring-fencing and the tick-box culture that wastes officers' and members' time and given them back the ability to make real decisions about real things locally, which means they are more accountable and that our residents will care more about what they do. Does the Minister agree?
I am most grateful to my hon. Friend, who gives us an opportunity to talk about matters such as the comprehensive area assessments, which somehow, through ticking boxes and using- [Interruption.] Mr Slaughter says from a sedentary position that we have done all that, but the truth is that £39 million was still being spent on that budget on the day we entered office.
Rather than having a tick-box culture, in which town halls are answerable to Ministers, there is a better way, and it is the one that my hon. Friend Brandon Lewis has identified-local people being the ones to whom officers are answerable, through the ballot box. That is a radical concept that can be expanded much further by allowing councils, by the end of this year, to publish online details of all their spending, tenders and contracts over £500. That will be proper transparency and empower a new army of armchair auditors to go through local authorities' books and help identify wasteful spending, helping to protect front-line services. [Interruption.] I hear Opposition Members calling out, "Well, that will help." As a matter of fact, we really do think that it will help in a dramatic way, and I will explain why.
We are going to extend the idea to national Government with a higher limit of £25,000, and this is how it will work. In my Department alone, openness and publishing this stuff online would have avoided, for example, the scandal of £134,000 being spent on 28 luxury socialist-red sofas by a Parisian designer, Ronan and Erwan Bouroullec, which were built as part of new Labour's-get this-efficiency initiative. That pretty much sums up its approach.
Transparency would, I imagine, also have stopped the scandal of my Department spending £73,000 on a serene green tranquillity room for stressed-out staff and Ministers to
"relax and refuel in a natural ebb and flow."
Proper accountability would surely have stopped the £6,000-apiece deluxe chrome coffee machines fitted at each of the white elephant regional fire control rooms, which are completely empty, by the way. Come hell or high water, we would at least have known in future that officials would have had a nice cup of cappuccino even as disaster struck and the phone system failed, as it famously does in those buildings. That is what transparency and openness will deliver-it will mean that people can see what is going on inside government, both nationally and locally.
I wish the Secretary of State had bothered to come, partly because this is so incoherent and we might had something a bit better but mainly because I wanted to pay him a compliment for proposing to cut a bit of town hall waste. He said at the weekend:
"Councils should spend less time and money on weekly town hall Pravdas...our free press should not face state competition from propaganda on the rates dressed up as local reporting".
My Conservative council spends £750,000 on just that type of propaganda. When will the Government cut that, and in addition to consulting the councils themselves, when will they consult local people, MPs and newspapers about the problem? It is a disgrace.
I thank the hon. Gentleman for his particularly eloquent contribution. Local authorities spending their time publishing weekly newspapers, or weekly Pravdas as the Secretary of State described them, is just not their role. We talk about front-line services, supporting people, homelessness and priority programmes to ensure that the sick, elderly and vulnerable are protected, but Opposition Members want to talk about local weekly Pravda newspapers published by local authorities. It simply is not the answer. What we want to do is ensure that local authorities are engaged in front-line services that help their population, not services that rival the local newspapers. We want to allow the local newspapers to operate without interference from local authorities.
Everyone knows that money is tight. Every strategy that we employ nationally and locally should focus on getting more for less. Innovation and efficiency must be king. The emergency Budget makes it clear that there are challenging times ahead. We want to ensure that local government is fully engaged with the next spending review. In particular, we expect councils to be involved in the series of events over the summer to discuss and debate various aspects of public spending. We will use the spending review to drive decentralisation across local government and national Government.
The Minister has said a couple of times that councils will have to do more for less. As a member of the best value and efficiency scrutiny panel on Chesterfield borough council for the past seven years, I know just how hard our council and many others worked to produce the efficiencies demanded under Gershon. Can the Minister tell us of any council leaders who have not been trying to give more for less in the last years of the Labour Government?
I accept that the hon. Gentleman and local authority leaders and councils throughout the country work hard to do those things. However, sometimes just doing something in a closed situation is not enough and we have to invite the whole general public to take part. We need to publish the stuff online, make it fully transparent and let people see what is really going on. As I explained in the context of my Department's responsibilities, if that had been done, I do not believe that those tens of thousands-and even hundreds of thousands-of pounds would have been wasted on pointless projects. On a smaller scale, there will be examples in town halls throughout the country of money being spent on unsustainable projects, which best value committees sometimes do not reach, but a large army of armchair auditors will. It is called the general public; it is called transparency, and it will work effectively.
Central Government obviously have a large budget-[Hon. Members: "Ah!"] They do have a large budget, so the limit will initially be set at £25,000- [Interruption.] Opposition Members are making a great deal of noise, but each of the projects that I mentioned a moment ago would have been captured under such a system. We would have known about the red sofas, the tranquillity centre and all the adverse expenditure. That would have helped. One has to wonder at the Opposition-after 13 years without such transparency and openness, when the coalition offers to open up government, they just want us to go further. That is fantastic, but they had 13 years in which to go much further, but they did not and they wasted taxpayers' money.
The coalition agreement makes clear what to expect. The time has come to transfer power away from Westminster and Whitehall into the hands of communities and individuals. We will make rapid progress because we have already announced several shake-ups of power. The move to a more democratic planning system will sweep away arbitrary top-down targets and hated regional spatial strategies, introducing powerful financial incentives to local people instead.
The previous Housing Minister is no longer in the Chamber, but I am a fan of his blog. I note that this week he writes:
"DCLG ministers are changing the planning system."
"Ours was too top-down".
Hon. Members can read that online-a road to Damascus conversion from Labour, now in opposition. The new coalition intends to prove that Ministers can be localist in government, just as we can in opposition. There will be no switch-around.
In the spirit of transparency, will the Minister confirm that the £1 billion fund that he mentioned earlier is the regional growth fund to fund regional capital projects in 2011-12 and 2012-13, to which the Red Book refers? If so, the Red Book mentions no figures, but he has gone a little further. Would he care to speculate on whether he will decide who gets the regional growth fund, or will he hand it over to local authorities to determine their own regional capital projects?
Yes, that is the same fund, and it was mentioned to the House verbally, at the Dispatch Box, by the Chancellor on the day. No, I cannot confirm how it will be divided up. Members would quite properly expect that to be announced in a statement to the House from the Dispatch Box, and they would not expect me to do that today, because today's debate- [ Interruption. ] It is a bit rich of Labour Members to express surprise. We had 13 years of spin and statements on every breakfast TV sofa in the country but, now that they have now switched sides and gone into opposition, they are making a big deal of this. I can assure Dr Whitehead that that statement will be made to the House from the Dispatch Box in due course.
I am fascinated by the disclosure about the tranquillity room. I have had many people coming into my surgery recently who have been really struggling with their household budgets and housing problems. The idea of a tranquillity room is quite entertaining, but it is also deeply insulting to hard-working British people. How will the Minister use the tranquillity room? What does he intend to do with it?
I think that it would be only right to invite people to come and try out the tranquillity room. It was paid for with the hard-earned money of the people outside the House, when the previous Government seemed to think that it was a good idea to spend hard-earned taxpayers' money on building tranquillity rooms and putting in expensive sofas. This is an indication of how they talked about helping the poor when they were really helping themselves by refurbishing their offices with bizarre and extraordinary furniture.
I cannot tell my hon. Friend how the approval process used to work, but I can tell him that, in the new Department for Communities and Local Government, that kind of expenditure would never be signed off without someone political taking the decision right from the outset.
We have announced that we will move away from the wasteful inefficiency of central targets and towards incentives involving more carrot and much less stick. Last week, we scrapped the comprehensive area assessment, saving the taxpayer £39 million.
It will help us over the next five years if the right hon. Gentleman can give us an answer to this question. Is he seriously suggesting that every sum over £5,000 spent in government will be individually signed off by a Government Minister?
No, I did not mention the figure of £5,000, but I did say that decisions approaching anything like the levels of the £134,000 spent on Parisian-designed sofas would require sign-off-and they would not get that sign-off, either.
We have introduced a Bill to stop council restructuring in Devon, Norfolk and Suffolk, which will save the taxpayer £40 million of unnecessary costs. This was a botched restructuring; even the accounting officer at the DCLG had no confidence in it, and issued a letter of direction to the former Secretary of State about its being carried out. There was no reason to spend that £40 million, but the Labour Government did not believe that the country was in a financial mess. They seemed to miss that point entirely.
There is more to come. We will promote locally led joint working, building not just on the Total Place pilots, but on innovations-such as joint chief executives- being championed by many councils. In the Queen's Speech, we announced a localism Bill that will free local government from central control and give voters more power over local government and over the way in which money is spent. As part of this, we will introduce a new general power of competence for local authorities, so that they are free to give local communities exactly what they want.
The public coffers are nearly empty, and the nation's credit card is maxed out. Shadow Ministers are fighting the wars of yesterday, trying to justify why their pet projects were notionally signed off by the Treasury, but ignoring the huge elephant in the room, in the form of a looming public debt of £1.4 trillion. But in these tough times, we are defending the interests of families, pensioners, small firms and the underprivileged. We are empowering councils to put the front line first, and to make the right choices on how best to protect the vulnerable and the needy in our society. We are putting councillors and the people in charge of going through the state books and highlighting waste and inefficiency, rather than relying on unelected and unaccountable quangos and regional structures. There is a difference between this Government and the last one: we trust people. That is something that the centralising, nanny-state, interfering Labour Government never did.
Order. As the House will see, this is a very popular debate. Mr Speaker has imposed a 10-minute limit on speeches, but if Members do not take 10 minutes, more will get in.
I am still trying to understand what the Minister has just said. It seems to me that he is applying the solutions of the 1980s. I do not know where he was at the time, but some of us were in local government and on the receiving end. I am sure that some of my colleagues will remember how capital programmes and rent revenue accounts were capped. The Minister talked about transparency, but I remind him that the Labour Government introduced the freedom of information legislation, so there are no accolades for him there. When I was involved in local government in the 1980s, we used to get a green memo-he mentioned Government interference-prodding us to privatise all sorts of things, from public transport to public toilets. So we need no lessons from the people over there.
I hope that the Minister will clarify the position on regional development agencies. What will happen to Advantage West Midlands? Many people will know that it has been very important to the west midlands economy. In fact, only a couple of weeks ago I received representations from small businesses in the area expressing concern about the threat to abolish that organisation. Let us consider Ansty business park. When we created a business park at Warwick university about 25 years ago, we were criticised by the then Tory Government, but later on it became the greatest thing since sliced bread. People in Coventry see the Ansty business park as preparation for the economic revival-
The hon. Gentleman has his facts wrong. It was Ericsson that wasted public money, because it misled everyone-including the Tory council in Coventry-into thinking that it was there to stay. The hon. Gentleman must not distort the facts.
The Secretary of State has sent a circular out to local authorities, but we want to know whether the Kings Hill and Keresley housing project will go ahead. I asked the Minister to clarify that last week, and I was told that Coventry council would be allowed to settle the matter. However, when the Tories were in opposition, they said that one of the first things that they would do was cancel that project, because it was being built on the green belt-which Mark Pawsey knows something about, as Warwick district council is the planning authority and has been passing the buck.
If we are talking about the 1980s, let us remember that manufacturing in the west midlands was decimated, to say the least. In Coventry, we lost thousands of jobs every week. Are we going back to that? That is what the Government's proposals will mean. The Minister talked about council house building being the lowest since the war, but I do not remember many council houses being built in Coventry in the 1980s. I certainly remember that council houses were sold off and not replaced. The Minister has a lot of explaining to do there.
The other area of concern is what will happen to the voluntary sector especially and to the much vaunted public sector, which the Government keep on about attacking. How much funding can the voluntary sector expect, if funding to the public sector is reduced? As in the 1980s, the public sector will be the whipping boy for the measures that the Government want to take. I could see their strategy when they were in opposition. They went on about gold-plated pensions and big salaries for chief executives. That is fair enough-we have to do something about it-but it obscured and masked the fact that many people in local government are on low pay, and they are the people who will be attacked. I was in contact with Coventry city council today. The real impact, by the way, will not be known until October or November, because the Government themselves do not yet know which cuts they are going to inflict-they have not worked out the details-not only in Coventry but in the rest of the country.
The Government blame us for the economic crisis, but I remember when it broke. The Conservatives thought that we just needed to bail out Northern Rock and that the crisis had just happened in this country, but it actually happened with Lehman Brothers in America. How any British Government can control what goes on in the American economy defies logic. It was only later that the Conservatives worked out a strategy. Incidentally, the present Governor of the Bank of England went along with the economic stimulus-the same man now advising the Government to go down the road of wholesale cuts. We had a programme to do that over the four years, but theirs is a knee-jerk reaction. In other words, they have panicked, they are not in command of the economy and they do not have a strategy to get the country out of this situation.
This is a typical Tory ploy. In the '80s, they used the Labour Government of the '70s to try to justify some of their policies, but they missed something out. Before that Labour Government of the '70s, we had a Tory Government. Do we remember the three-day week? Do we remember the OPEC crisis when petrol prices went through the roof? The American economy had problems because the American public reacted to the prices at the petrol pump. We then inherited, as a minority Government, a previous Tory Government's problems, and I predict that, in the future, we will be picking up the pieces once again for the damage that these people have done.
I always find that the shadow Secretary of State's speeches display a convenient forgettery: he gets out his paint brush, forgets the damage that he and his predecessors did to local government, comes up with a few colourful pieces and ignores the fact that, time after time, the Communities and Local Government Committee told him and his predecessors where they were going wrong-and now he has suddenly changed his tune.
Under Labour, the local authorities central grant became less fair as the funding formula was progressively manipulated to the disbenefit of London and the south-east. Many services, along with funding, were moved to regional authorities and quangos, capital receipts were centralised for Government selective redistribution, and local government was crushed with inspections by most Departments of State and by targets in their hundreds if not thousands. New scheme after new scheme was brought forward and money applied to it, but it was allocated specifically, carefully and frequently politically by the Labour Government.
Like it or lump it, the committee structure, which enabled every councillor to have a say before decisions were made, was removed, and a new system of executive decisions inspected afterwards by committees was landed on councils regardless of cost increases. Standards committees and the standards quango were set up, again costing money, for frequently frivolous complaints that were easily dealt with under the previous regime. Central Government imposed rules and regulations on the private sector, making competing for local government functions utterly pointless, and the so-called best-value legislation was imposed, further limiting local authority freedoms.
Most of the centralising and manipulation was introduced by the then Deputy Prime Minister, with his clear desire to make local authorities effectively direct agents of his Department. The effect on local councils' morale was disastrous, and many complained that although they were local councils they were no longer local government. Incentives for lateral thinking to improve services and cut costs were destroyed, and local authorities in London and the south-east lost grant funding as the formula was changed three times. Even under the Conservatives, Surrey and places such as Wandsworth got among the lowest grants, but he came in and hit them with three funding formula changes, the last of which is notorious in Surrey. Under that change, it did not lose just a few million; the year-on-year loss to Surrey county council was £39 million. Event the Audit Commission pointed out the grant funding bias.
Over the years, the local government Select Committee, in its various guises, has increasingly pointed out the diminution of the freedom of local government. The last report was emphatic, and was swept aside. Latterly, there have been some gestures from various Secretaries of State. With a great flourish, one Secretary of State announced that the number of targets set by her Department would be diminished. The number had risen under her and her predecessors to well over 1,000. She was right; she did reduce the raw numbers. However, much of that was offset because there was a combining of targets, so they were still there, and there was increasing auditing of decisions made under the new freedom regulations. Although her Department tried, others did not, of course, so the number of targets increased.
My right hon. Friend the Secretary of State for Communities and Local Government, along with his Ministers, now have a unique opportunity, as the Minister has just said, to give local government back its freedom. From the removal of regulations, a massive reduction in Government expenditure and the removal of constant auditing will come enormous savings. From the point of view of the council tax payer, many of those savings may be quadrupled because it will be a case of reverse gearing.
I hope that my right hon. Friend will be generous enough to consider a few thoughts. Most of us believe that Government and local government should be small and efficient. To expand on one of the Minister's comments, the supermarket-type motto of "more, better, for less" is appropriate at this time. For local authorities to say that they are surprised about cuts is astonishing. They are not numerically dyslexic; they have been looking at these; they know they are coming; they have been working towards them.
In order to enable local authorities to respond, there must be a huge bonfire of regulations and inspections. The savings to local councils could amount to millions upon millions of pounds each from that alone. The reduction in the costs of the Audit Commission will be commensurate, as should the reduction of officials from the Department. Among the restrictive legislation that my right hon. Friend must remove should be the various incremental changes that made competitive tendering of the private sector for council functions non-competitive tendering. Local authorities should be encouraged to divest themselves of unused or unwanted properties by being able to retain the capital receipts, at least in part, for their own use. The business rate portion of Government grant should be separated from the actual Government grant.
Furthermore, I suggest that my right hon. Friend and his officials look at a slightly different approach to central funding. Education amounts to approximately 60% of local government expenditure. Under the previous Government, that was predominantly funded directly to schools, but through local education authorities. With the move for more independence of state or local authority schools, it would be timely to stop the previous Government's pretence and fund the schools directly.
If that were the case, the slight adjustments for local authorities could be effectively funded by the national business rate, distributed by a fair equalisation formula and by the council tax, which councils should be allowed to set themselves without interference. That would mean that local council tax payers-of course, they are almost always voters-would have a much more direct relationship with the local council in respect of its council tax and services.
In addition, if council tax benefits were paid directly to the recipient and estimated on a fairly applied standard spending assessment basis, to use an old phrase, there would be a further incentive for these people to put pressure on their council. By that I mean that if the local authority set the council tax higher than had been estimated, those on benefits would have to pay more. Equally, where an efficient council sets a lower tax, the benefit recipient would pocket the difference.
Many Members want to speak, and the Minister has talked about many things. He has to build much more on those things to produce a bonanza Bill that cuts regulations. There is now a unique opportunity to turn back what the previous Government did to mutilate, damage and brutalise local government in this country.
May I take this opportunity to say how pleasing it is to have not one but two Lancastrians as Deputy Speakers?
I draw the House's attention to my entry in the Register of Members' Financial Interests. I rent a constituency office from Tameside council and have parking permits from both Tameside and Stockport.
I pay tribute to the work done by all councillors, irrespective of party affiliation. Having served as a local councillor for 12 years before entering the House, I fully understand how difficult the role is. It is often a thankless task, yet to serve local communities in local government is also a massive privilege and honour. I do not think we do enough to recognise the work of those who serve in local government.
I also want to place on record my tribute to Councillor Roy Oldham CBE, who served as leader of Tameside metropolitan borough council from 1980 until this year. Those 30 years at the top made him the longest serving council leader in the country, and his achievement in transforming the borough from sleepy backwater into one of the leading metropolitan districts in the country-the best in the north-west according to the Audit Commission-is a testament to his drive and vision to make the borough a leading council. Roy is currently recovering from illness and I wish him well. I am sure the new council leader, Councillor Kieran Quinn, will want to make his mark on the borough too, and build on the excellent achievements of the past few years. It will be a tough job, not least because of the tightening financial situation, but I am sure he will do his best for the area and I have every confidence that Tameside will continue to be at the forefront of local government.
The recent Budget was called the "unavoidable" Budget, and some important choices were made in it that will impact heavily on local government. There was a certain irony in the use of that term, however, as the report earlier this month from the new Office for Budget Responsibility indicated that the previous Government's fiscal plans would have eliminated the bulk of the structural deficit by 2015. So these cuts that go so deep so quickly may not make the economic sense that the Government would have us believe. Clearly, they have decided to go further and faster, but these cuts seem more ideologically driven than based on sound economic fact. We will soon find out both if the Conservative-Liberal Government have been correct and about the wisdom of these actions.
It appears that the local government sector and workers will be facing the worse situation for a generation as the Chancellor tries to cut spending just as the noble Baroness Thatcher did but in half the time. That will mean brutal cuts in the budgets of all Departments. The Chancellor is talking about 25% cuts across the board, but as we are told that the education, health and defence budgets will get off relatively lightly, I strongly suspect that other budgets, such as that for the Department for Communities and Local Government, will have to be cut by much more than a quarter. We will see what the real cost is to these Departments.
I urge caution. We need to be careful in how we address the local government cuts. Many local agencies now work in very close partnership one with another, so a cut in one area may well be to the serious detriment of activities in another. Budget cuts in local government will not be in "silos", as all agencies are now largely linked up. We therefore need to look at the interactions between various services. It is easy to cut the aids and adaptations budgets for adult social services, but if the result of cutting a £100 handrail for an elderly constituent is to have to pay thousands of pounds on a hip operation in the NHS, that will not have saved the public purse.
We must not miss the bigger picture. If the cuts start to dismantle these working arrangements, service provision will be back as it was in the 1980s: Department-based, with no thinking outside the box and little joint thinking. For example, interrupting good local management on antisocial behaviour, family intervention and domestic violence will have a real impact on the communities I represent-on people who truly depend on services that no one else will provide and that no one else is better placed to co-ordinate.
As I have said, the scale of the cuts poses a serious challenge to local authorities' ability to deliver services that meet the expectations of people-in my constituency, especially people who live in Stockport and Tameside-over the coming five years and beyond. The Tameside part of my constituency will be particularly affected. It has been ranked as an area of high deprivation, the 56th most deprived local authority area in England. Already, the changes to the benefits and tax credits will have a disproportionate effect on Tameside residents due to the existing high levels of income deprivation, and may lead to even more people calling on council services in their time of need. This will be happening at the same time as further funding cuts to the council and its partners start to bite-a double whammy for the people of Tameside and the people of Reddish, to whom I will turn later in my remarks.
Tameside had expected to receive some £23.5 million of area-based grant funding in 2010-11. That has been reduced by £2.34 million-about 10%. Services will clearly be cut at a time when demand will inevitably rise, so Tameside is already anticipating and preparing for a number of hard choices over the coming years. The council has developed a medium-term financial strategy. It expects cuts of up to 10% a year for area-based grants and specific grants-about £5 million in total-on top of cuts to formula grant funding and restrictions on council tax, with a possibility of reductions in capital funding as well.
There will also be an impact on voluntary and community sector grant funding, a sector which contributes significantly to the capacity to deliver improved outcomes through community-based work. Activities to provide opportunities to young people may have to be reduced, along with youth provision, which is non-statutory, in order to ensure that work with vulnerable and looked-after children is maintained. It is therefore crucial that the council and its partners be able to maintain their levels of investment, both grant and mainstream, in effective prevention work. This Government must be clear that local government plays a vital role in delivering crucial services across communities and should be a spending priority, rather than its taking more than its fair share of the burden.
I am also extremely concerned about the knock-on implications for regeneration in my constituency. Excellent work has been done by the Denton South Partnership in Haughton Green, one of the deprived parts of my constituency. This has been a model of effective partnership working, bringing together all the agencies such as the council, the primary care trust, the police and local housing associations. I pay tribute to the work of David Howarth, the chair, and all the members of the partnership. However, such a proactive approach to solving problems will go if all the partner agencies face the same budget reductions, which will lead to massive disinvestment in the communities where help is needed most.
I turn briefly to the Stockport part of my constituency, where there is also a great deal of concern. Cuts of £1.69 million to the area-based grant-
My hon. Friend is highlighting the extent to which the cuts, which would not have been made under a Labour Government because of our commitment to supporting people in their efforts to get work, will be targeted at the most deprived people in our communities. Does he agree that targeting areas in which disadvantaged people are out of work is a particularly cruel measure for this Government to take?
It is, and I agree fully with my hon. Friend. Parts of my constituency are still trying to recover from the previous Tory Government's attack on those communities, despite the great work of the last Labour Government, and that progress needs to be maintained.
The area-based grant is finance used to help various services, such as those for deprived and vulnerable children. What is the alternative to cuts in services such as family intervention? If those services are cut locally, more children may be taken into care because there is no early intervention to fix problems quickly, which would cost the taxpayer significantly more. It costs approximately £24,000 a year to take a child into care. The cuts could well impact more harshly on less affluent areas of Stockport, such as Reddish. Liberal Democrat Stockport council does not do anything like enough for its most deprived communities, including the Reddish wards. I am concerned that they will be an easy target for the kind of cuts we now face. So there are a number of concerns for constituencies such as mine, because the Government's announcements will hit a host of services that affect local people. It is clear that the areas that will be most affected are poorer areas in the cities and metropolitan boroughs. Labour has a strong record of increasing funding for local authorities in those areas and using them to deliver national priorities by harnessing the best locally.
This Government clearly have a new view of localism, which does not take much account of local people. These cuts fail, as they break all promises not to balance the books on the backs of the poorest, and they show that the Government's claims of fairness are pretty empty and do not seem to look much beyond the world outside the comfortable home counties.
Thank you, Mr Deputy Speaker, and may I belatedly congratulate you on your elevation and appointment? I also congratulate all Members who have delivered their maiden speeches in this House. I have been privileged to listen to many discussions and many maiden speeches, and I have waited patiently, deliberately not rushing to make this speech-after all, in reality, I have probably been waiting for more than a quarter of a century to make this speech. That long wait commenced during a particularly inspiring lecture by one of my A-level politics tutors on a wet Wednesday afternoon, so a few weeks, and indeed a couple of hours, are a small price to pay.
I have not traditionally been an individual who has subscribed to a fatalistic view of life, but I have found my scepticism tested by the fact that my majority of 691 that has bought me to this great House is exactly the same as that of another young Conservative Member of Parliament who won the seat of Wolverhampton South West for the first time in 1950-one Enoch Powell. I make that statement with my tongue firmly pressed against the inside of my cheek and an ironic smile on my face. I also appeal to all Members of the House to take me to one side and proofread any of my speeches should I feel compelled in 18 years' time to make a controversial speech at the Midland hotel. That is unlikely to happen, primarily because the hotel is no longer there, but I have lived enough of a life to know that one should never say never-I ask the Hansard reporters to note that my tongue is now firmly affixed to the other side of my cheek.
Am I here via the product of karma or kismet? I do not know, but I do know that by uttering those words I have probably created some confusion among those who record our statements, as I have introduced some Punjabi words into the rich texture of the records of Hansard. I have to state that I felt honour bound to do that as I am the first Sikh Member of Parliament to sit on the Conservative Benches.
As is customary during these speeches, I would like to pay tribute to my predecessor, Rob Marris. During the last few weeks of the election campaign, although we were political adversaries we did manage to have many convivial chats and conversations, and during those last few weeks I found Rob to be a man of his word and a thoroughly decent bloke. He was an assiduous consistency MP and will undoubtedly be a tough act to follow, but I will endeavour to fill those extremely large shoes.
In terms of the Wolverhampton South West constituency, perhaps one of the most impressive sights to meet anyone coming in from the city centre is the Molineux stadium, which is home to Wolverhampton Wanderers football club. I am delighted to say that I am a season ticket holder and fan, and I am even more delighted by the fact that we stayed in the premiership this year. The seat is entirely urban and it is also home to the Express & Star newspaper, the country's largest regional newspaper, which reaches more than 136,000 regular readers. One thing that does stand out for the Express & Star is that, uniquely, it has more than nine editions, covering local areas across the west midlands and maintaining a community base that is not just Wolverhampton-centric.
The constituency is also home to the brewer Marston's, and only recently I was honoured to be present at the opening of its new visitors centre. I would heartily recommend anybody visiting Wolverhampton, including fellow Members, to sample our fine local ale during a visit to the constituency. I could speak at length about the history of the city and its prominent attractions, but that would be to miss out the greatest strength and asset of Wolverhampton-its people. Wulfrunians are famed for a no-nonsense approach to life; they say it as it is, approaching life with an open mind and refreshing honesty. In many ways that attitude mirrors my own personal experiences of growing up in a Sikh family. It is a Punjabi tradition to live life to the full and with "dhel"-that is a Punjabi word for a generous spirit and courageous heart. That, in essence, sums up the vast majority of Wulfrunians. One will not find a city populated by a more decent people, who always speak straight from their soul. As my family always told me when I was growing up, "Real friends will tell you the truth. It is acquaintances who will tell you what you want to hear."
In Wolverhampton, I have spoken to representatives of various bodies about health care in the city, and that is why I have chosen to make my maiden speech in this debate, which is essentially about funding. We have the Phoenix centre, a walk-in centre that offers a wide variety of treatments, along with the Gem centre, which I passed every day during the general election campaign. However, through my discussions with various individuals and numerous bodies I have uncovered a great deal of frustration with the fact that for the last six years, under the last Government, just under £100 million of private investment in health care provision in Wolverhampton had not been spent after discussion after discussion after procrastination. It would appear that after years of waiting to spend this money, we now have a stalemate and it seems likely that with the passage of time Wolverhampton and my constituents will have missed out on more than £100 million of investment in health care because of dithering, indecision and inaction. I am not interested in apportioning blame, but have chosen to raise the matter as I feel passionately about it. The issues raised by such inaction could provide guidance to legislators and executives both nationally and locally. I am stoical in my view that we cannot change what happened yesterday, but we can change tomorrow.
To get to the nub of the issue, Wolverhampton has been involved in a dialogue with a LIFTCo-a local improvement finance trust company. A LIFTCo is essentially a PFI initiative to push forward service-led initiatives to bring about radical change in primary and social care. We can talk long and hard about the pros and cons of PFI initiatives, but, through my discussions with various bodies, I have discovered that total inaction is universally perceived to have been the worst option. Without going into the minutiae of the detail, the public and private sectors have essentially come together in good faith but, over a period of time, either the private sector has lost faith or the project has fallen away, as everybody feels that they are at a total impasse. I feel that the reason for that is that, eventually, somebody has to make a decision and ultimately take a risk. In the past few years, "risk" has become a somewhat dirty word associated with young men wearing garish braces and shouting colourful language across trading floors, leading ultimately to the likes of us picking up the bill for their recklessness. That is the point-in essence, I am talking about calculated risks and about people moving outside their comfort zone.
Perhaps I can illustrate my point more graphically by reciting another conversation with a similar colleague who has done a great deal of work on the role of young men in street gangs. I know I am veering away from the issue of health provision, but the subject of individual risk-taking is just as pertinent. My colleague spoke to many young men about their dreams and hopes and why they had eventually become gang members. One individual story jumped out more than the others. A group of teenagers would regularly meet at a park and it happened that their central meeting point revolved around a set of gymnastic parallel bars. There was a pecking order and young men would impress their peers and, importantly, young women by showing off their prowess on the bars. One day-almost inevitably-somebody fell off and, because of the resultant scratches and bruises, the local council felt honour bound to remove the bars after health and safety got involved. After a few years the youngsters had formed a gang and a pecking order became established, with antisocial behaviour becoming a badge of honour.
Having been a young man once, I can vaguely remember the desire and the engine that would drive a person to seek acceptance and admiration from their friends and to impress members of the opposite sex. Luckily for me, a sports field was my arena, but it comes back to that basic point: if we endeavour to eliminate risk, we emasculate society and it appears that young men in particular feel that acutely. To put this as bluntly as possible, in terms of our public-private service providers we need to put radical thinking and calculated risk taking and decision making at the centre of provision.
The motives of officers should not be just their salaries and pension pot at the end of their careers. I am under no illusion that this will be easy, but I dare say that governance of any sort over the next few years will be challenging. I-like many Members, I suspect-am always interested in the discussion of ideas, but some have said to me that that does not always happen in the Chamber with the new modern politics.
Forgive me if I have strayed on to controversial ground, but as I suggested earlier, straight talking and a no-nonsense approach is the Wolverhampton way. In that vein, I would make a plea for all Members to revisit the issue of postal voting fraud, which, I am sad to say, appears to be alive and well in many of our metropolitan areas. Since I was elected, I have been approached by numerous individuals in my own constituency who have spoken to me about the issue. In my case, it worked against me; I would say to Opposition Members that there might be cases where it will have worked against them. In any event, we are all very much at a crossroads. I can envisage a time soon when very easily and quickly we will all face an escalation of a fraudulent race here, as either side endeavours to outdo the other. I hope that Opposition Members will trust my motives for wading into this area, as it damages us all in this House and damages our reputation as a country.
It is all too easy to stereotype the motives of Members as partisan, mischievous or surreptitious. As a child, I often faced brutal stereotyping on my daily journey to school, but even more painful was the pigeonholing inflicted on me on my first day in a new primary school: I was placed in a remedial class for a few years because the natural assumption was that I could not speak English. I say that to illustrate that we are almost all guilty of occasionally judging a book by its cover. So when the Conservatives are castigated for being uncaring over the next few years, I ask hon. Members to remember that I am somebody's son, father, brother, husband, cousin and friend and that in their eyes one could not find a person further removed from that caricature.
I thank hon. Members for their patience and indulgence in letting me speak and I hope they will forgive me if I have troubled any sensibilities. This great House is nothing if not a reflection of the individual stories of its Members, and I hope that by adding my perspective I have added to the strength of its foundations and the breadth of debate.
Let me begin by congratulating Paul Uppal on his excellent maiden speech. He certainly covered the attributes and aspects of his constituency. I congratulate him on the special place that he has achieved in parliamentary history and in the history of the Conservative party. It was good to hear his very generous comments about his predecessor, Rob Marris, who was respected for his honesty, integrity and friendship on the Labour side of the House. I think that is appreciated.
I was just having a brief discussion with my right hon. Friend Mr Blunkett and my hon. Friend Angela Smith about the good things that come out of Wolverhampton. Unfortunately, the Wolverhampton Wanderers managed to sell to Sheffield Wednesday one Leon Clarke, whom the hon. Gentleman might remember. Leon Clarke finally scored a goal in the last game of the season, when we were struggling to avoid relegation. In celebrating his wonderful goal, he ran to the advertising hoardings and kicked them, breaking his toe, and was then substituted. I do not think it is true that everything that comes out of Wolverhampton is necessarily first class and admirable.
Let me move on to the debate. The Opposition have made it very clear that we have major reservations about the immediate impact of the cuts and about the proposals for the medium term. We believe it is unnecessary for the cuts to come immediately and that they go too far in the immediate term. We also believe that they are unfair in a number of respects. Bringing in cuts part way through the year has forced local councils to make the cuts that are available to them, which are not necessarily the cuts they would make if they had a bit more time to plan and bring them in properly. We also disagree fundamentally with the way the cuts have been targeted at funds that are themselves targeted at areas of deprivation. They are cuts against deprived communities, and they are the sort of cuts that the Under-Secretary of State for Communities and Local Government, Andrew Stunell, would have been on his feet protesting about only a few weeks ago.
I want to raise two concerns about where the Government are headed-with their approach to housing and their approach to the general cuts to local government that will be announced in the next few weeks. I did not get an answer earlier from the Minister for Housing about housing targets: he said that the Government do not have any. I did not get an answer about likely numbers, how that area will be funded or what the funding mechanisms will be. I have a real worry regarding the comments of Liberal Democrats about the last Government not building enough houses. I have some sympathy with those sentiments because I think that although we did brilliantly on the Decent Homes programme, we did not build enough social houses to rent. That needs to be rectified, but does any Lib Dem in the House seriously believe that this Government will do better when they have no idea how that will be achieved? That is complete nonsense.
The problem is that people are going to be much more careful about committing themselves to buying a house as we head towards a situation in which spending will be reined in, people will be fearful of losing their job, wages will fall and benefits will be cut. The likelihood is that the housing market will stagnate, at best, in the next few months. Whether a double-dip recession and the economy going down will produce a slowing down of the housing market, or whether a slowing down of the housing market will produce a double-dip recession, is a chicken-and-egg argument. The likelihood is that economic activity will stall and the housing market will stall.
If fewer people feel able to commit to buying a home, there will be more pressure on social renting and local authority waiting lists, so what have the Government done? The first thing they have done is to suspend the Kickstart programme and schemes whereby local authorities were going to build houses directly for the first time in a long time. Labour and the Lib Dems welcomed that approach when it was introduced, but the Lib Dems are now cutting and stopping it. That is the reality of the situation. If local authorities are no longer allowed to build, what are the alternatives? I have not heard any. We have been promised an announcement at some stage in the future.
We have also been told that the reforms to the housing revenue account have been put on hold. That was one of the few opportunities for local authorities to return to council house building. If they could depend on a given rental stream for the future, they could perhaps use prudential borrowing for that purpose.
The housing association building model depends on cross-subsidies from the selling of homes. If the private sector housing market is stalled, those cross-subsidies will not be available. We do not know what will happen to social housing, because there is complete silence from the Government. All we know is that people who are in social housing will have a tougher time with the housing benefit rules, and some may be forced out of their houses into private rented accommodation.
What does my hon. Friend make of the idea of providing help for people who wish to move to another part of the country to find work? None of us would oppose such an arrangement, but given the absence of any policies to create more affordable housing opportunities around the country, how exactly would it work?
Obviously it would be up to the Government to make any such announcement, but the idea that people should move from communities in the north, where there may be enough housing, to find jobs in the south, where there is a particularly chronic housing shortage, beggars belief. What would people on waiting lists in the south think of someone who arrived there and said, "I will have that house as a matter of priority, because I am moving down here to work"? The policy has not been thought through.
If any Member on the other side of the House can tell me where the mechanism and the funds will come from to enable new social rented housing to be built, I ask him or her to stand up and do so. So far, I have heard nothing from either the Conservatives or the Liberal Democrats. There are no funds for council house building-they have been stalled-and the funds for housing association building are limited. Given the reduction in cross-subsidy from the selling of homes, any money that the Homes and Communities Agency may have to fund housing association accommodation will produce fewer houses. Fewer social houses will be built as a result of this Government's policies, and I am aware of no commitment from Ministers to rectify the position.
What will the Government do about the overall funding situation? We have heard about 25% cuts, and also about protection for education. Presumably Departments other than those dealing with schools and defence will take a bigger hit. We are assuming that councils will receive at least 30%, but the arrangement is not fair, because we will have to protect adult social services and children's services. What is left? Libraries, parks, recreation, street cleaning, the environment and refuse collection. It is no use the Secretary of State's telling local authorities how to collect their refuse. Will they have the money to pay for one refuse collection a week?
Then we must consider the differing impacts on various councils. I opposed individual council tax caps when our Government introduced them, and refused to vote for them, but let us assume that they are imposed now. At least authorities will receive the same amount of money from council tax, but there will be cuts in their Government grant. Councils with the most deprivation in their areas receive a bigger amount of grant than those with the least deprivation, which receive more of their money from council tax. Council tax is to be frozen but Government grant is to be cut by 25%, which means that the councils that will suffer the biggest cuts in their overall budgets are those with the most deprivation. That is unfair, and we fundamentally oppose it. The Liberal Democrats used to oppose it as well, and it is time that one or two Members on the Government Benches, including the Minister, started to explain how they will make the system fair.
The fact is that the most disadvantaged councils and communities will be hit hardest by the 25% cuts in Government funding. In their areas, library, recreation and street cleaning budgets will be cut in half. If the Minister does not agree with that, he must explain why my figures are wrong. If such facilities as adults' and children's services are protected from the 30% cut in the grant, the impact on other services will be dramatic, especially in areas that receive a large amount of Government support because of deprivation.
I look forward to working with the hon. Gentleman on the Select Committee. It seems from his eloquent speech this afternoon that I have a great deal to learn. I have to say, however, that I am a little tired of Opposition Members targeting the "Tory shires", as if that were a pejorative term. We rightly receive less Government support for our citizens than more deprived boroughs, and I accept and understand that. However, the spending that comes to us is for our more deprived citizens, and cuts to our budgets, which have not been topped up as much over recent years as those in others places, are very important to us. We may be wealthier parts of the country, but the people we are looking after are not.
In the end, the Government grant reflects the amount of deprivation in an area. Clearly, there are deprived people even in affluent areas, but it is about the total amount of deprivation. Certainly other communities have more deprivation and that is why they get more Government funding and they will be harder hit. That is the point that I am making.
Right at the end of the Minister's speech we got a vague mention of Total Place. It is important that it is developed, but it should not be seen as a panacea. Total Place is at the pilot stage; it has produced some very interesting results and ideas about how public money can be spent better across Departments. The Government have to allow local authorities to take the lead on these matters. The DCLG must get a grip of its colleagues in other Departments and let go of the controls that exist, but that will not deliver overnight savings of 25%. We will not achieve 25% or 30% cuts by efficiency savings; there will be real damage to public services. We must recognise that, and the Government must explain and justify the cuts.
The Secretary of State says that his three priorities are localism, localism and localism, but let us take what the Minister said about refuse collection and people in town halls dictating things. Where is the dictation? The Secretary of State in his new spirit of localism is telling every council in this country how it must empty the bins. It is absolute nonsense. How can we have any trust or faith in a Government who talk about localism and setting local councils free when that is one of their first policy announcements?
It is clear that the Budget package was regressive. That has been shown by the Institute for Fiscal Studies. There was an interesting report in the newspapers at the weekend of an investigation into the totality of the Government cuts by Tim Horton and Howard Reed on behalf of the Fabian society. It showed that when one takes not merely the tax changes but the housing benefit changes and the spending cuts, including local government spending cuts, the poorest 10% of our community will have their spending power cut by six times as much as the richest 10%. That is the impact of the Government's policy. The Budget was not fair and the cuts that have been made so far to local council budgets are not fair. The deficit has truly been cut on the backs of the poorest in our communities.
I congratulate Paul Uppal on his excellent maiden speech. I am pleased that other hon. Members share my concern about how easy the Labour party made it to defraud the electoral process. Obviously, people know in Birmingham how the Labour party stole 4,000 people's votes in Bordesley Green ward and that 273 votes were arrested in Aston ward.
I must explain where I come from. I was a city councillor for 18 years. I believe that local government can do a lot for the communities that it serves. Local councillors from all parties have at the heart of their objectives to serve the whole community, so it is sad that we find ourselves in this situation. Let us recognise that. Part of the situation is an international problem; part of it is an exacerbation of the international problem by the failure of the Labour party. Like Germany, we should have entered this difficult situation in surplus. Instead, we have a deficit akin to that of Greece. Labour Members fail to recognise that there was a sovereign debt crisis in April across Europe. It drove up interest rates on sovereign debt for the countries with the bigger problems-the PIIGS: Portugal, Italy, Ireland, Greece and Spain. Those countries are having to make perhaps more extreme adjustments to their public sector spending than we are.
It is not unreasonable to say that the circumstances now are different from those in, say, March, and that we have to approach things in a different way. Six billion pounds is a lot of money, but it is a relatively small proportion of the deficit of £150 billion. Cuts of 25% in real terms are a lot, but 1% is a movement in the right direction. It is not a massive shift, but it is sufficient to reduce the interest rates paid on Government debt. By doing that, we do not have to make cuts as great as the Labour party would have done had it continued with its strategy, which I believe would have been derailed in any event.
Regardless of what we would like to do, we are driven down a route of making very serious economies. I do not think that people have fully recognised that. We had a debate earlier about 1.08% cuts as opposed to 1.1%. That pales into insignificance when we consider that we have to find 25% cuts in real terms, even over five years. We also have to recognise that it takes time to reorganise things.
The Opposition spokesman complained about Birmingham not spending all the money it had. Birmingham was well aware that financial difficulties were coming down the track and that spending all the money, as the Chief Secretary to the Treasury and the Labour party did and then told us that we had no money, was not the right strategy. It is worth keeping some few millions in the cocoa tin so that when we face the difficulties after the general election we do not end in such a mess that we say, "All the money's gone."
Birmingham made an initial announcement of £12 million savings. It is probably more like £20 million. Those figures can be worked out quite straightforwardly. They pale into insignificance when compared with what has to be saved over five years-£250 million to £300 million. That has to be planned for now.
Mr Betts explained that we could protect adults' and children's services. I am sure he is aware that, of the budget of metropolitan authorities such as Birmingham and Sheffield, something like two thirds is spent on adult and children's services. The schools grant goes directly to the schools. I am not sure that it will be possible to protect those services. Part of this debate has been the question, "Do we have to do this?" The answer is obviously yes. Another part of the debate is how we make cuts in an equitable manner.
I cannot comment on the detail of what has happened in Sheffield. I agree with the argument that deprivation has to be taken into account. There is no question about that. The idea of the pupil premium is that the money follows the individual rather than catchment areas from the national census. One of the difficulties with many of the calculations is that they have been done not on an individual basis but on a categorised basis.
The hon. Member for Sheffield South East makes a good point that if we cut the Government grant and do not look at the aggregate local government spend, that has an effect. There is an issue to be looked at there. People have asked whether we should cut 25% here, 26% there, 23% there and 27% somewhere else or whether, given that we face such a severe problem, the same figure should be cut everywhere on a formulaic basis. I am quite tempted by the latter argument. I think that that method was used in Sweden, which faced a serious problem. It had the same sort of deficit and it went through the process of getting rid of it.
One has to make judgments on the time scale based on the effect within the markets. We are not talking about paying off the debt over five years. There will still be net borrowing in the fifth year.
First, there needs to be an understanding of terms, because I heard the phrase, "Paying back the deficit." However, the deficit is the forecast difference between income and expenditure in the financial year, the debt is the amount of money that the country as a whole has borrowed and there is often a lot of confusion between the two figures. This year, if we borrow another £150 billion, that will be added to the debt, and next year, if we borrow some more, that too will be added to the debt. Although we are talking about reducing the debt during this Parliament as a proportion of gross domestic product, our financial strategy does not talk about paying back the debt in cash terms. In fact, at the end of this Parliament we will end up with a higher level of debt, so in comparison with Sweden we cannot pay it back. We would like to do so, but we cannot do things that quickly.
We have to make people confident that the country is solvent. The country could be liquid at this stage without any great difficulty, but we have to make people confident that it is solvent and capable of paying back the debt so that the interest is paid. We are not paying back the deficit, however. The deficit is the amount borrowed each year. [ Interruption. ] I have another four minutes and am quite happy to explain to the Labour party the basics of finance, because there is a lot of confusion about debt and deficit. "Deficit" is the amount of money borrowed each year on a net basis- [ Interruption. ] I shall get through to Opposition Members at some stage.
That will reduce the deficit because we will spend and, therefore, have to borrow less money this year. That is not complicated. If we spend less money, we do not have to borrow as much, because the money that we spend has to be borrowed on the gilts market. It would be nice if the reduction were done more cost-effectively at times, but £6 billion is not so great in comparison with the overall deficit. It is appalling for local authorities to pretend that they did not know that cuts were coming down the track, that the country had a major financial problem and that they had to do something. There will be difficulties, but Total Place is part of the solution rather than the problem, and there is no question but that we have to do something.
In the past I have explained how, through various regulations, the people who go round and wash people's feet are different from those who go round and cut their toenails, because they have to have different qualifications. That is not an efficient way of providing public services. If, through Total Place, the same person can go round and wash people's feet and cut their toenails, that will be more cost-effective and involve less travel time- [ Interruption. ] Chris Leslie should make an intervention if he wants to speak.
Interestingly, we did not ring-fence anything in our manifesto. We were clear that there was a severe financial problem and spending cuts would have to be found. The Labour party revealed so little in its budgets and concealed most of the figures and budget cuts, so it was difficult to put all the figures together, but Members will find that, when I explained the situation in debates during the general election, I made it clear that we faced serious problems. If the Opposition are going to have such a row about what is a minor point compared with the overall magnitude of the difficulty, I do not know what will happen over the next few years. There are some real problems to face, and we need to maintain services.
The point that the hon. Member for Sheffield South East made about adults' and children's services was very important. In Birmingham we use the brighter futures programme, and there are ways of working more closely with the people whom we support in communities, and of working with mutual bodies to try to ensure that services are provided. There have been problems with assessment systems in the past. The simple approach of just changing the priority on assessment did not result in any savings, because off the back of that all the assessments were changed. There are serious problems, and the Opposition should recognise that they are responsible for them. They should try to be part of the solution rather than the problem.
I congratulate Paul Uppal on his maiden speech, which he delivered with grace and a sense of humour. I am delighted that he is the first Sikh Conservative Member and wish him the greatest of success. Grace and a sense of humour might well be qualities that will stand him in good stead in the coming months. I also congratulate you on taking up your position, Madam Deputy Speaker. I have no doubt that you will be a great champion of us Back Benchers.
When I came to this debate I thought, "Local government finance? It's going to be bland, techie, full of references to area-based grant, formula grant, specific grants, ratios and numbers," but I have been pleasantly surprised, because the debate has been lively and, on occasions, combative. That is quite right, because it shows how much all of us care about our local authorities and how important the services are to the people whom we represent. We must never forget that, behind all the technical jargon that we sometimes hear, we are talking about people who are struggling to bring up their children; people who are often trying to hang on to a job; people who are sometimes caring for their elderly parents, with the tremendous stress that that puts them under; and people who are looking constantly for work in this difficult economic climate.
Under this Tory-Liberal Democrat Government-I refuse to call it a coalition, because it is what it is, a Tory-Liberal Democrat Government-the prospects look extremely worrying. We have already had £6 billion of cuts, but John Hemming said that that is not a great deal of money and does not know what we are all worried about. Well, I can tell him this: to my local authority it is a great deal of money. It is significant, but I have no doubt that further bad news is on its way, and that tremendous cuts will be made in the autumn. If they are signified by the same unfairness and north-south divide that we have already seen, Opposition Members will have a great deal to worry about. [ Interruption. ] I am delighted to welcome the Secretary of State, who has just taken up his seat on the Treasury Bench. I trust that he has hurried back from Bradford, and at the end of my speech I shall make a couple of remarks in which he might take a personal interest.
The Deputy Prime Minister once said that he wanted to see deep and savage cuts, and then he rowed back from that tremendously. However, he is about to have his wish fulfilled, and that is a bleak prospect. He also said:
"There will be no return to the kind of cuts we saw in the Thatcherite 1980s";
"We're not going to allow a great north-south divide to reappear"; and, most interestingly of all, that
"the coalition will ensure that the cuts are fair and we will protect the poorest and the most vulnerable."
He is wrong on all counts. He will face not only the wrath of his enraged constituents in Sheffield, quite rightly given his decision on Sheffield Forgemasters, but the anger of families throughout the country who will feel the brunt of the cuts that are made in local government services.
The Minister for Housing, Grant Shapps, who opened the debate, claimed that the Government were essentially about fairness, and we heard about them wanting to hard-wire fairness into the country's DNA. Let us straight away end that myth about fairness. Salford still has high levels of deprivation, but we are going to lose 1.1% of our budget, and Salford is of course Labour-controlled. If we look at the different impact of the cuts on neighbouring Trafford, which is Tory-controlled, we see just how fair those cuts are.
Compared with Trafford, Salford has double the number of people on housing benefit and council tax benefit; 3,000 more unemployed people; average earnings that are £40 a week less; and almost double the number of children in workless households. So, how is it fair for the coalition to reduce Salford's budget by 1.1% compared with a cut of just 0.6% in Trafford? How is it fair that Salford loses £3.5 million and Trafford just £1.5 million? That cannot be fair, because we in Salford have made considerable progress since 1997. We have seen a huge fall in unemployment throughout our area, but people are still looking for jobs, and we need to get them back to work. We will not do that, however, by cutting the council's funding to tackle worklessness. The working neighbourhoods fund-cut. The future jobs fund-cut. That is short-sighted, damaging and will crush the hopes of many young people in our communities.
My hon. Friend has made the extremely important point that despite what some Government Members have said, the working neighbourhood fund is a long-term programme that is beginning to get results. We are seeing from the evaluation that it works in an intensive, neighbourhood-focused way and is getting people from some of the most difficult cases of intergenerational unemployment back into work. What do we see now? We see a Government who profess to want to reform the welfare system and get people back into work cutting the very programmes that can succeed in our communities.
Perhaps I misheard, but I thought the shadow Secretary of State said earlier that if his Government had been returned, there would have been £40 billion of cuts from their side of the House. Would any of the schemes that the right hon. Lady has just mentioned have been affected, or would other schemes, on which people also rely, have been cut instead?
We would have made cuts because of the deficit; we have been absolutely straightforward about that. However, we would not have taken an extra £40 billion out of the economy while the recovery was fragile. Wanting to get rid of the deficit totally in the space of one Parliament is reckless and damaging. We will see the effects in each of our communities in the months and years to come.
The one thing that I think we would have protected are the programmes to get people back to work. If we get people back to work, they will pay tax and national insurance and we will not pay out for them in benefits. That is basic common sense. Cutting the future jobs fund and the working neighbourhoods fund, and making sure that the young people involved face the dole, is totally the wrong approach.
We have said that there should be no return to the 1980s. I remember that, in the 1980s, two of my wards in Salford had 50% male unemployment-half the men were out of work. There was 70% youth unemployment. That sounds Dickensian now; it sounds like 100 years ago, but it was not. It was only in the 1980s, as a result of that last Tory recession. There is no way in the world that we Labour Members want to go back to those days.
In Salford, we were also eagerly awaiting a Kickstart bus service. That sounds like a small affair, but it would have linked the whole of the outer part of Salford with MediaCity and Salford Quays. There are fantastic opportunities in MediaCity for getting new jobs in the creative and digital industries. We need to have public transport, so that people in our outlying areas can take advantage of those new jobs. That bus service is now under threat as a result of the cuts. Does it not make sense to fund a bus service to enable people to access the jobs on offer, instead of asking-or even forcing-them to move home? That is simple, basic common sense, but the provision is going to be cut.
We have seen cuts of £600 million in the housing programme, £300 million of that on the market renewal pathfinder programmes-all are targeted at low-demand areas in the north of England. Again, we are seeing the Thatcherite cuts and the north-south divide, with a disproportionate effect on northern cities. We are also likely to see damaging cuts to the police services. If there are going to be 25% cuts-at the Home Office, for example-that will involve about 4,000 police community support officers. The Minister is a Greater Manchester Member of Parliament. I should like to hear from him just what effect the cuts will have on the number of PCSOs in Greater Manchester; as I am sure he will know, PCSOs are hugely valued by the community.
As the Secretary of State knows, I am always a constructive politician. I should like to say a word or two about the Total Place programme, which I set up when I was Secretary of State. It is not simply about squeezing out efficiencies-yes, it is about bringing back-office services together, having call centres, not having 10 personnel departments and not duplicating all our services, but it is also about much more than that. It is about integrating services, redesigning the whole way in which public services work, bringing together the budgets of policing, health, education, regeneration and economic development and saying to a local area, "That's your total budget. What are your priorities? What do you want to get out of that investment?" The local area then has the freedom to decide.
In Cumbria, total public expenditure on all those services is about £6 billion. That is a lot of money by anybody's reckoning, and I genuinely believe that if there is imagination and creativity about public service reform, we can make some cuts and big savings without necessarily affecting the front-line services on which all our people depend. Today I found out from the Library that the figure in Greater Manchester is £22 billion. If we bring together health, education and policing in Greater Manchester, we will see that we often deal with the same families with multiple problems, each relating to those public services.
When I was policing Minister and responsible for antisocial behaviour, we brought in the family intervention projects. We were spending £250,000 on each of the families involved; multiple interventions were not really changing their behaviour. When we got one worker with sufficient clout in the system to get health, education and policing all working together, the families cost us about £30,000. We called the worker a "muscular social worker"-and I can tell Members that they had to be pretty muscular. Doing that saved money, and 80% of the families changed their behaviour sufficiently for them no longer to face eviction for antisocial behaviour. The initiative saved money, was commonsensical and it worked.
I urge the Government not to look at Total Place as simply an administrative, efficiency measure; it is actually about fundamental service redesign. The Department for Communities and Local Government will need to press every other part of the Government to get on board. We have all tried our best, but Government Departments build empires and take power back to themselves. If we simply have cuts across the board without using our intellects and imaginations, we will not make the progress that we want.
The Secretary of State has said that his priorities are localism, localism and localism. What we have seen today has given the lie to that. There has been no consultation with local government about the cuts. There has been no transparency; we do not know where £500 million of cuts are going to fall. There has been no involvement of local people. The Secretary of State's promise has proved about as meaningful as the Liberal Democrat pledge on VAT. He has a long way to go.
The cuts are a bit like those of the 1980s, as they are targeted on the poorest. There is at least one other consistency. When the Secretary of State was leader of Bradford city council, he was known-perhaps not entirely affectionately-as "the beast of Bradford". Teachers, caretakers, maintenance workers, crèche and nursery staff, social workers and council officers all lost their jobs. His ambition was to cut £50 million from the council budget and turn it into a holding company that met two or three times a year when the contracts would be handed out. Under the control of the right hon. Gentleman, Bradford city council was described as an example of Thatcherism at its most red-blooded. I wonder whether he told the people of Bradford this morning what he had in store for them. Heaven knows what he has in store for us, but we Labour Members will protect the poorest and most vulnerable, who depend on our council services. We will have no return to the Thatcherite 1980s.
The motion today is full of regrets and objections. It harks back to the programmes of the previous Government and makes veiled demands for the reinstatement of spending, but the context is an unprecedented deficit of £156 billion, bequeathed to the coalition Government by the Labour party. My right hon. Friend the Chancellor and many of his Front-Bench colleagues have spent several of the past few days rehearsing the reasons why we need to make savings. They have talked about the need to rebalance the economy, restructure our finances and grow the private sector.
The position in which we find ourselves is wholly unsustainable. As many as 30% of the work force in some areas of our country work for the Government. In 2015-16, social security and tax credit bills are projected to be £222 billion-that is, £3,580 for every man, woman and child in this country. Debt interest payments alone will rise to nearly 10% of all Government spending in the same period. Can it be any surprise at all that international markets have been spooked and that until last Tuesday, our share price-in the form of the price of sterling-was falling away on international markets?
Do Labour Members really think that there could not have been a debt crisis here? I assure them that there could have. If credit spreads on UK Treasury stocks had started to move out, that would have been an unmitigated disaster for all of us-every penny borrowed would have begun to cost more and more.
That is the context of the coalition Government's proposals to make savings of £6.22 billion this year, in year, of which £1.165 billion is to come from local government. The question is whether this is a fair proportion for local government to shoulder, and the simple answer must be yes. Local government represents about a quarter of all UK Government spending, and the reductions proposed are about 20% of spending, so merely in straight proportional terms, this is a fair amount for local government to shoulder.
Of course, as we must all admit, any in-year cuts are very difficult to find; particularly those of us who have been in local government will understand that. With budgets already set, it is a serious challenge to row back. However, the proposals make it clear that huge efforts have been made to protect front-line services, and they make it easier for local councils to prioritise the programmes they feel are most important to their local communities. Including guarantees for funding for schools, Sure Start and other programmes, no council will see its revenue grants cut by more than 2%, and no region by more than 1%.
Formula grant totalling £29 billion has been protected, thus directly supporting front-line services as used by our constituents. Some previously ring-fenced grants have been freed up for authorities to spend as they see fit. This reduction, from 10.6% to 7.7%, represents a welcome first step along the road to phasing out ring-fencing altogether. I recognise, at this point in my remarks, that I am now going down the technical, dry, percentage route that we were warned about a moment ago. The Government have committed to freezing council tax for at least one year, and will seek to do so in the following year, in co-operation with local authorities.
Looking at the motion before us, it is difficult to accept its argument that this programme
"fails to meet this test of fairness".
It seems to me that every effort has been made to ensure that these cuts have as little impact as possible on council tax payers and, of course, on recipients of services. More than half the savings come as reductions in revenue grants, but in total this represents two thirds of 1% of total revenue funding. Surely no one would suggest that that should be impossible for councils to find. The balance comes in reductions in capital grants, about half of which are specifically allocated.
A number of those savings will seem non-core to many authorities. In my experience, LABGI-the local authority business growth incentives scheme-is regarded by many local authorities as free pocket money. It has done very little to incentivise the building of new businesses, certainly in the area that I come from. I also believe that the housing and planning delivery grant has done little to increase the rate of building of houses and, in any event, current market conditions dictate that there is little that local authorities can do to influence completions at this stage. Even in more difficult areas, such as reductions in funding for the Department for Education and for Supporting People, the changes are targeted at non-core spending.
The motion asks us to condemn
"the failure of the Secretary of State to tell the House or local authorities where £504 million of cuts...will fall".
"Of the remaining grants, it was not possible to make allocations to individual authorities as, in most cases, the allocations have yet to be finalised".
It further says, on the same page:
"Section 4 of this note, reproduced from Annex C of the additional paper, explains the precise changes made to each grant and why, in some cases, it has not been possible to allocate the grant money to individual local authorities".
I recommend to Labour Members the detailed explanations on pages 9 to 13.
One smaller area of direct savings that I particularly welcome is the abolition of comprehensive area assessments. Having been involved in the "Baby Brother" version applied to district councils, I can personally attest to the uselessness and extraordinarily intrusive nature of these Big Brother-style information-gathering exercises. As the portfolio holder for performance management on Winchester city council, I was responsible for the production of much of the data required, almost none of which helped us to perform better or to manage anything better.
I have two examples that are particular favourites, one of which I will share with the House. It concerns the average time taken to re-let a council house. We had a number of council dwellings that were extremely hard to let, and we worked at that imaginatively and finally began to let them reasonably productively. However, our performance got considerably worse, because it was based on an average of the number of days taken to re-let a council house. That particular statistic took a lot of gathering and managing, but it never once contributed to a single change in a management decision or any improvement in services. The real point about nearly all those figures is that they were never used for anything other than to tick boxes. We collected the data, we sent it in, and the box was ticked. On a similar basis, I very much welcome the commitment to abolish the Standards Board for England. Never has an organisation been so abused for political and personal rivalries as this cumbersome and bureaucratic quango. I, for one, will not mourn its passing-nor, I expect, will many other people.
Finally, I would like to address the ideas involved in the Total Place initiative. I strongly believe that innovative local council officers and deliverers of local services are already more than capable of delivering changes such as those envisaged in Total Place. In southern Hampshire, we have PUSH-the partnership for urban south Hampshire-about which I had words with the shadow Secretary of State earlier, and the Integra arrangement for waste recycling. Only last week, I had a meeting with John Bonney, Hampshire's chief fire officer. He supports the ambulance service with community responder units that can often respond much faster than ambulance services, and he has saved more lives that way than he manages to save even through fire prevention. A huge amount can be done through initiatives such as Total Place, and that requires the breaking down of silos that was referred to a few moments ago.
My problem with Total Place is that the documents that back it up are of such byzantine complexity that I cannot find my way through them. The practitioner's guide is so full of flow charts, extraordinary diagrams and management speak that I, as somebody with an MBA from a decent school in the United States, struggled to make head or tail of it. I therefore say this to the Secretary of State: let us not lose the principle of Total Place, but please let us not follow the terrible bureaucratic nonsense that appears to have been emerging as an end part of the process.
We all regret that cuts have to be made in local government spending at this time. However, these balanced proposals make those cuts in as fair a way as possible, across services in as balanced a way as possible, and without hitting front-line services more than is necessary. I commend them to the House.
It is with no pleasure that I stand here today to talk about the impact of the coalition Government's cuts on my constituency. Like many others who have already spoken, I fully recognise the need to reduce the deficit, but the cuts that have been forced on my constituents in the past few weeks are in no way fair or well thought out; in fact, the reverse is true. The cuts to local government are patently unfair. They run the risk of damaging our fragile economic recovery and, put simply, they are too much, too soon.
My local authority, the London borough of Lewisham, has already had its budget cut by £3.1 million for this year. London Councils suggests that the capital will lose £355 million in the same period. Of the 15 boroughs in London to suffer the largest overall reductions in their area-based grants, 13 are Labour-controlled authorities in places such as Newham, Hackney and Haringey-proof, if anyone needed it, that these cuts will hit the poorest parts of London hardest.
In Lewisham, more than £500,000 has been slashed from the Connexions service that provides careers advice to young people, £75,000 has been taken away from projects set up to tackle teenage pregnancy, and £425,000 has been lost from business support and enterprise development services-not to mention the axing of the £135,000 grant that enabled the council to provide free swimming for children and pensioners. These are cuts forced on Lewisham's Labour council by the Tory-Lib Dem Government.
These cuts do not make sense. Take the £425,000 of cuts to LABGI. Under the previous Government, the local authority business growth incentives scheme did exactly what it said on the tin-it provided money to reward growth in the economy. In Lewisham, this money was vital. I know that my experience of how it was used is very different from that of George Hollingbery, but I found that in Lewisham it made a real difference.
Despite being one of the most populous inner London boroughs, Lewisham has the third smallest business base in the capital. Roughly 70% of Lewisham residents who work leave the borough every day to do so, and more than a third of the work force are employed in the public sector, the highest proportion in London.
Last week the Chancellor spoke of an emergent private sector, with new jobs and companies springing up to replace those lost in the public sector. He announced incentives for companies to set up outside London, and today we have heard more about the regional development fund. However, what about the parts of this capital city that need a bit of extra help? What about the parts of London that will be hit hardest by job losses in public services?
In Lambeth, Southwark, Lewisham and Croydon, 185,000 people work in the public sector, 30,000 more than the public sector work force of Tyne and Wear. In an era of public service retrenchment, where will the new jobs come from? LABGI could have provided some stimulus, and my fear for Lewisham is that the public sector will not magically emerge to fill the jobs gap left by what will be a decimated public service.
Let us be clear: the impact of cuts in local government will cost jobs. The first swing of the axe has already meant job losses at Lewisham council, but the impact of the cuts to local government will stretch well beyond the town hall. Many private companies depend on public sector contracts, and as those dry up, so too will the jobs. Some 35% of Lewisham council's money is spent in the private sector. As the cuts start to bite, the amount of money spent with private companies will fall.
What worries me most about the package of cuts, though, is what it says about the approach that the coalition will take to local government over its whole term of office. The Secretary of State has allowed local government to shoulder nearly 20% of all the cuts announced in May. In October, of course, we have the spending review to look forward to. Will he allow the same thing to happen then?
The Chancellor has already indicated that virtually all Departments will be expected to make 25% cuts over the next four years. If that is passed directly on to local government, the consequences will be stark. Yes, savings have to be made and parts of the public sector have to work closer together, but please let us listen to what councils up and down the country are telling us. Let us recognise that some budgets, especially in inner-city authorities, already face massive cost pressures-adult social care, environmental services and child protection to name but three.
Ensuring that the streets are swept regularly and that the bins and recycling are collected on time is the least that the public expect from their council. Ensuring that children can grow up in a safe and secure environment should never be put at risk because of money, and providing dignity to our older citizens is the least that 21st-century Britain should expect, but in the light of 25% cuts those things cannot be taken for granted.
Adult social care is probably one of the biggest challenges facing local authorities. Excluding money spent on schools, nearly £1 in every £3 of council money is spent on it, the vast majority of which is spent on the elderly. In the next 10 years, the number of people living beyond 85 is expected to increase by 25% in London. In the home counties, it is expected to increase by 100% in the same period. How we finance care packages for the elderly has to be addressed, not by scaremongering about death taxes and the like but by having a grown-up, sensible debate about the options.
My nan recently passed away after three years in a nursing home. She sold her house to pay for her care, using her modest savings as well. My parents did not begrudge the use of her money to pay for her care, nor did I. She was looked after in a way that I would have wanted at the end of her life, and that was all that was important. What I do begrudge is the fact that the system is not fair. My parents did not play the system to shift the cost of her care on to the state, but others do. It is local councils up and down the country that, year in and year out, have to deal with the implications of the unfair system that is already straining under the escalating costs associated with demographic change.
As others have said, we must not consider local government in isolation from other public services. Under the previous Government, Total Place explored how to deliver better public services for less. However, as was said earlier, it was not about slicing great big chunks out of existing budgets but rather about doing things differently. The Government's Back Benchers constantly bray about the Labour Government and what Labour would have done to reduce the deficit had it got back in. I accept that Total Place would not have provided immediate answers, but I believe that in the longer term, we can transform our public services by working closer together across organisational boundaries rather than by directing money off into an ever-increasing number of silos.
Finally, I ask the Minister how he would go about explaining to front-line social care staff that 30% will lose their jobs because the private sector has shrunk nationally-by much less than that, it has to be said. The state should shrink, but why should it shoulder such a high proportion of the burden? The new Tory-Liberal Government are going beyond Thatcherism in their determination to scale back the state. They claim to be doing it in the name of cutting the deficit and building a big society. Call me cynical, but it seems to me that it has much more to do with ideology than anything else.
I know that Opposition Members want to fight the battles of the 1980s, and it is important to set this debate in its historical context. As all hon. Members will know, successive Governments have centralised power to themselves over the past 50 years. We live in one of the most centralised countries in the developed world in terms of the relative powers and funding of central and local government. Over the past 30 years there have been several reviews of those powers, going back to the Layfield and Lyons inquiries. In the last Parliament there was the Communities and Local Government Select Committee report on the current state of central-local relations, so a lot of blood has been spilled in the debate about the financing and funding of local government over the past three decades. There has been a lot of philosophical inquiry but very little action. The current economic and fiscal crisis provides a unique opportunity for those of us who have been banging the drum for decentralisation and localism over the past two to three years. That is why I welcome the coalition Government's commitment to a fundamental review of local government finance.
In 1890, 23% of local government revenue came from central grants, with the rest coming from local taxation. As we stand here today, that position has been almost completely reversed. The central point of today's debate, which has revolved around cuts and the 1980s, is that, as we all agree, we have rising demand from the public for services. We also have rising expectations from citizens and users of the services provided by local government, and a public perception that local government is accountable for the delivery of those services. However, as hon. Members have pointed out, local politicians control democratically only 5% of total local expenditure, with myriad other organisations spending the rest. As many Members have said, we have a unique opportunity today to rethink some of the assumptions on which the powers, functions and funding of local government are based.
The Opposition talk as though the idea of cuts in local government spending were an invention of the coalition, but if we look back at the Budget of 2008-09, we see that the previous Government were already contemplating local government spending cuts in excess of 20% over four years. There is a considerable mismatch between the last Government's rhetoric and their reality.
The first half of the previous Government's time in office was characterised by what I would call a Prescottian regionalisation-the creation of a great deal of institutional complexity and an unaccountable regional tier of government that served little or no purpose. The second half of the previous Government's time in office-Mr Denham played a part in that-was spent in an attempt to unravel the mistakes of the first half.
Under the previous Government, that regionalisation became an embedded policy. It was unaccountable, undemocratic and served no purpose in economic development or improving local government's accountability.
I will not give way again.
Despite attempts by Labour Ministers in the Department for Communities and Local Government to get traction on the localist agenda, there was no commitment to it from the top. The Prime Minister and other Cabinet members simply had no trust in local government or communities and were philosophically unable to let go and let local government get on with its job.
Institutional complexity goes to the heart of the relationship between central Government and local government in this country. In the past two decades, particularly the past 13 years, it has been characterised by excessive, top-down, performance management culture. Recent figures show that the annual cost of regulating local government from Whitehall was estimated at more than £2.5 billion. The distorting effects of that top-down performance culture could be considerably greater on the shape and management of public services in this country.
Hazel Blears elevated the debate with her discussion of Total Place. I agree that the recent Total Place pilots revealed the true cost of not only compliance but public spending flows in local areas. We certainly need to build on that. Her example of Greater Manchester was compelling and shows that, once we get a grip on and an understanding of the total public expenditure that flows through an area, the implications for the shape and potential reform of public services, and the relationship between local government, the health service, the police and other aspects of delivering public services locally, are great. We need to build on that. I am therefore grateful to the right hon. Lady because her contribution elevated a debate that had been characterised by a rather knee-jerk reaction to every single item of the cuts. If we are truly to start reforming the relationship between local government and other public services, we need to identify the precise public spending flows through different areas.
The performance management culture, which other hon. Members have discussed, needs to be stopped. I therefore greatly welcome the Secretary of State's removing the comprehensive area assessment. That performance management culture, which has dominated local government in the past 13 years, needs to be replaced by an age of innovation, spurred by the fiscal context in which we live. That is why I am keen for the coalition Government to press ahead with the work on the Total Place pilots. The fiscal position demands that we ask fundamental and difficult questions about local government's role in providing local services.
Given that the average budgetary cuts for local authorities are 0.7%, how can a 1.2% cut for a borough of mine, Redcar and Cleveland council, with some of the poorest rural wards, and a cut of 1.3%-the sixth highest in the UK-for Middlesbrough local authority, with some of the poorest urban wards, be justified? How can innovation be introduced equitably across local authorities if the budgetary cuts in some areas are double those in others?
As other hon. Members have pointed out, we have to deal with the fiscal situation. Even if there had been a new Labour Government, local government would have to find considerable savings and efficiencies to drive innovation.
In my constituency, unemployment trebled in just over two years under the previous Labour Government. Businesses and households in my constituency had to tighten their belts. They have had to make substantial savings in their business incomes and their business and household expenditure. If I told them that they had to reduce just 1% of their household budget, they would think that that was getting off lightly.
My hon. Friend is right. The disciplines of the private sector are valuable and, in difficult times, we must be spurred on our way by looking innovatively at how we deliver services. We should not be afraid. Some hon. Members were derisive about the idea of a limited local authority, but it is perfectly valid to view local authorities as commissioners of services, not necessarily providers of all of them. We should consider innovative relationships between local government, social enterprise and the voluntary sector, and innovative ways to protect vulnerable people through relationships with social enterprise and the voluntary sector.
Opposition Members also made derisive comments about putting information in the public domain. An open and transparent information-sharing culture for local government and the public sector is precisely one of the ways in which we will drive innovation, reduce cost and continue to deliver excellent public services. There is no contradiction between those things.
It is important that regional quangos, operating as agents of central Government, do not dictate to us. We have heard little about democratic accountability and local people in the debate. We must ensure that we revert to the idea that funds that are controlled locally are spent in a way that is democratically accountable to the people. I am sure that my constituents in Halesowen and Rowley Regis would look forward to that.
We have the opportunity to decentralise power and simplify the institutional complexity so that we can truly reconnect local government with 21st century citizens.
I welcome you to the Chair, Madam Deputy Speaker.
I want to comment on two aspects of local government cuts that will affect the residents I represent in Wirral. I cannot claim to have as much experience of local government as some hon. Members, but I served as a local councillor for four years, which taught me a great deal about the impact that the cuts will have. I would like to bring that experience to the debate. I want to talk about employment in Wirral, our sense of place and the effect of the cuts on our localities.
In Merseyside, the future jobs fund helped 2,800 people find work. The impact of that cannot be underestimated. The employment picture in Merseyside, including Wirral, has historically been fragile. It was important that the Government stepped in during the downturn to help protect our position.
I thank the hon. Gentleman for his intervention, and I would like to comment on it. It is too early to say, but I can comment from my own experience of meeting people-young people, especially-who have gained work through the future jobs fund. They told me that it was vital to keep their CV consistent over time, and that, although the job might have been short term or perhaps not in the sector they wanted to go into eventually, it gave them good, work-based experience that they could put on their CV. That could help them to find work, perhaps in a different sector, once we came out of the downturn. I cannot emphasise enough how important that continuity is. It was so important in places such as Wirral, and in Merseyside and the north-west generally, that the Government stepped in and helped to protect our employment picture. I shall say more about that in a moment. If we also consider the cutting of the working neighbourhoods fund, which was doing a great deal to address the really deep-rooted problems of unemployment in my part of the world, protecting employment through local government in Wirral starts to look a lot more difficult.
In a wider sense, we shall feel the impact of the regional development agencies being abolished in the emergency Budget. It is interesting to note that the Government seem to be all over the shop when it comes to RDAs. Perhaps the Minister would like to comment on the observations that have been made about listening to the views of local business, local authorities and perhaps local Members of Parliament on the importance of RDAs. The Budget has abolished them, however, and that will cause great difficulty in my area.
The local authority serving my constituents in Wirral has done important work on apprenticeships. The Government have said that they are keen to support apprenticeships, and that is fantastic. We all agree-brilliant! Let us get on with it! I do not see, however, how the local government cuts are going to help Wirral. We were at the forefront in providing the Wirral apprenticeships scheme, which worked alongside the private sector to increase the number of apprenticeships. The cuts will cast a shadow over the local authority officers who were working on that programme. I do not believe that the cuts will help to reduce the deficit over this economic cycle. I think that they will put people on the dole, which will increase the burden on the state. That is incredibly unfortunate.
Does my hon. Friend agree that a misapprehension is being peddled-that making cuts in the public sector will have no effect on the private sector? For example, in local government in the north-east, £16 billion has been taken out of the county of Durham. That will directly affect not only suppliers to the county council but future building projects.
I could not agree more. If Conservative and Liberal Democrat Members do not agree with my hon. Friend and me, they are welcome to come and meet any of my constituents who run small businesses that have been helped by Invest Wirral or the regional development agency, or who have found apprentices through the Wirral apprenticeships scheme, and to ask them their views on working with the local authority, and on working alongside the public sector so that the public and private sectors can work together to address unemployment. That is the reality that we have seen over the past 13 years.
I am glad that the hon. Gentleman asked me that, because there has been a misapprehension that Labour had no plans when we were in government, and that we did not set any of them out. That is all very convenient, but the proposals were in our March Budget. There was a great deal of discussion about efficiencies, about what we would have done with the future jobs fund and the working neighbourhoods fund, and about how we would have looked at those funding programmes. All the detail is in our March Budget. My problem with the proposals in last week's Budget is not that we have to make cuts or that we have to reduce the deficit; it is the timing.
I want to talk about place shaping, and about the things that make Wirral a great place to live. I have spoken before about the importance of sport, the arts and culture to who we are in Wirral. The cutting of the free swimming programme will not help the Oval sports centre in my constituency to be successful. The cutting of free school meals will not help Grove Street primary school to carry on its great work on increasing food sustainability and nutrition. Getting rid of the libraries modernisation fund will certainly not help Wirral to bring our libraries up to the standard that my constituents expect.
The cuts could, of course, help to reduce the deficit-I do not disagree with that at all-and there are certain efficiencies that we might need to look at. My argument is that we are talking about marginal amounts. Cutting the libraries modernisation fund will not have a massive impact on reducing the deficit. The thing that will reduce the deficit is getting people back into employment. If we cut the deficit at the expense of all the things that people have come to rely on, we shall see a hollowing-out of town centres, and the retreat of the Government from supporting people in the things that they want to do in their lives. I do not think that that would be worth while. The impact of the cuts on employment and on the things in our communities that we hold dear will be very grave in Wirral.
It is worth mentioning the differential impact of the cuts. Wirral will be hit a lot harder than those in nearby Cheshire, or in Oxfordshire, who will not feel the same impact at all. For the past 13 years, the Labour Government made great strides towards resetting the economy. People no longer had to leave Merseyside to get a job. We have done great work on that, and it needed to continue. I fear that this withdrawal of the state from our area will result in our sliding back into the problems we had before. The Government's proposals represent a withdrawal of activist government.
The Under-Secretary of State for Communities and Local Government, Andrew Stunell, has spoken about removing layers of government, as though it were possible simply to cut away pieces of the work being done by regional development agencies or local authorities, and to hand the money over to someone else in the expectation that the work would still be done. My experience of local authorities might be limited, but I believe that to be unrealistic. The regeneration practices that local authorities have developed should be prized and used, and their proactive work with RDAs should not be overturned overnight in order to remove a layer of government. That is phraseology for the sake of it, and I do not think that it will help our country to develop economically.
My hon. Friend is making an excellent case for regional development agencies. One of the important roles of the RDAs was to put in place regional programmes of investment for major transport schemes. Does she think a region such as the north-west would be able to put together a major programme of transport improvements if it were left to the individual local authorities from Cumbria down to Crewe?
It would not be able to do it. Travel-to-work distances are a problem in Wirral-compared with, say, south-east England-and we simply do not have adequate connectivity to centres of employment such as Manchester, Warrington and the north Wales coast. The RDA was doing fantastic work in addressing that connectivity problem, working hand in hand with local authorities. I do not think that the Government fully understand those practices.
Certain ideologies in the Government are driving the cuts. The first is that less government is better. Conservative and Liberal Democrat Members might say that, but I believe-please forgive the truism-that better government is better. This is not the time for the state to withdraw entirely. Secondly, the Government believe that pure deficit reduction is all that matters, and that reducing the deficit will itself drive growth if we demonstrate to the City and the markets that we are being tough. I do not think that there is any evidence for that. I am a great believer in evidence-based policy making, and I would like to see some evidence for that.
I always look carefully at reports from the likes of Goldman Sachs, PWC and others. One thing that being a local councillor taught me was never to believe at first glance what the consultants say. However, I will certainly look into the report that the hon. Gentleman mentions. I have an open mind.
The Government want us to believe that there is no alternative. I have mentioned already that Labour's Budget in March detailed much that we could do to find efficiencies and talked about many of the things that we have heard from the Government. The question is not about reducing the deficit: it is about the timing and the manner in which it is done. I can only hope that my words today will make the Government realise some of the impact that their actions will have on my constituents in Wirral.
Thank you, Madam Deputy Speaker, for calling me to make my maiden speech, and I congratulate you on your new position. I also congratulate my hon. Friend Paul Uppal on his excellent maiden speech earlier.
Today is an Opposition day, so there are even more Labour Members than usual on the Opposition Benches. I am therefore more grateful than colleagues who made their maiden speeches in earlier debates that it is a tradition of the House to listen to a maiden speech without interruption or intervention. I am also pleased to see several fellow black country Members. I am incredibly proud to be black country born and bred. In fact, I could not be more proud of the area I have always called home.
As the new Member for Dudley South, I thank my predecessor, Ian Pearson, for his service to my constituency and its residents. From the moment that I was selected in September 2007, Mr Pearson was always courteous towards me-so courteous that in February this year he announced he would not contest the general election against me. Mr Pearson was elected in a by-election in December 1994 in Dudley West, and went on to hold several ministerial posts between 2002 and 2010. If I may say so, Graham Postles fought a valiant campaign for the Conservatives in 1994, but so much in politics is down to timing, and Dudley West was Tony Blair's first by-election as leader of the Labour party. It was therefore the first significant victory of the new Labour era, when Labour Members declared that they were the political wing of the British people. As they left the country on the verge of bankruptcy, that claim now has a hollow ring.
I also wish to pay tribute to the former Conservative Member for Dudley West, Dr John Blackburn, who sadly died following a heart attack in the Palace of Westminster in October 1994. I never had the pleasure of meeting John, but I know that he was widely admired by his constituents and even by his political foes. He was a hard-working local MP, and I intend to conduct myself during my time in this Chamber very much in the same manner. John's widow, Marjorie, is a supporter to this day and has been extremely kind to me during my time as the candidate in her late husband's old constituency.
If I may, I wish to pay tribute to the late former Member for Coventry South-West, John Butcher, or Butch as I knew him. If I won my seat, Butch and I were due to have dinner to celebrate and to discuss what he called the pitfalls of being an MP. Sadly, we never had the opportunity to dine together in this place.
Dudley South lies between Birmingham and Wolverhampton on the western fringe of the west midlands conurbation. We local people are fiercely proud of Dudley's own distinctive identity and heritage. The constituency is situated to the west of Dudley town centre and largely consists of residential suburbs and some rural fringes on the border of glorious south Staffordshire countryside. Wards include Brierley Hill; Brockmoor and Pensnett; Kingswinford North and Wall Heath; Kingswinford South; Netherton, Woodside and St Andrews; and Wordsley. Within my constituency, we have the Merry Hill shopping centre, now managed by Westfield, as well as the largest secure trading estate in Europe in the Pensnett estate, along with dozens of smaller trading estates employing many thousands of people in small and medium-sized businesses.
The businesses of Dudley South are the backbone of the British economy and typically employ no more than a dozen people each. It is the creativity and ingenuity of so many of my constituents-making, designing, building and fabricating myriad goods-that is so important to the viability of the British economy. I come from a business background and can see all around my constituency that the entrepreneurial spirit of local people is undimmed by 13 years of red tape, bureaucracy and increased taxation.
Many families in Dudley South are football households. The vast majority of my residents support either the Baggies-West Bromwich Albion, for those who do not know-or Wolves, as I do. In fact, I went to my first game at Molineux when we were in the old fourth division, and three of the four stands were then crumbling wrecks. Many of my constituents know me as a businessman from a well-known local company, headquartered literally in the shadows of the Hawthorns. However, for those constituents who are not Albion fans, I should add that the business also employs people in Kingswinford.
Not only am I proud of my constituency and my area, I am proud of my country. I am fortunate to have travelled extensively, but no matter how exotic or cosmopolitan the destination I have always yearned for England. Part of that is the people. The people of my borough are decent people who strive to do the right thing by society and, most importantly, by their families. As they told me during the general election, they get frustrated when they see others ahead of them who have not "done the right thing". Their sense of fairness was seriously challenged by the last Government. I am pleased to see this coalition Government restoring that sense of fairness and balance while addressing the scale of the deficit and debts bequeathed to us. That sense of fairness has been severely tested over the last 13 years as we have seen neighbouring Sandwell metropolitan borough council receiving far more per head from Whitehall than Dudley metropolitan borough council. That massive disparity cannot be fair, and my constituents have also expressed their unhappiness in large numbers about many of the local government funded quangos with questionable track records of productivity and efficiency, and a democratic deficit, when my constituents struggle to make ends meet and pay their council and personal tax bills.
I was born in 1978 under James Callaghan, but I am a child of Thatcher. I was honoured to receive letters from the former Prime Minister both during and after the election, and they now hang proudly on my wall. Baroness Thatcher truly is a guiding inspiration. She comprehensively proved that one person can make a positive difference. My political interest began at the age of 14, when I wrote to the Express and Star, still the largest circulation local paper in the country, about the increase in the entry fee at the local swimming baths. I then joined the Conservative party in 1996 at the age of 18 when I arrived at university in Headington in Oxford, to be greeted by the beaming faces of my hon. Friends the Members for Huntingdon (Mr Djanogly) and for North Swindon (Justin Tomlinson). The former was at that time the Conservative prospective parliamentary candidate for Oxford East, and the latter was the chairman of the university Conservative society. In 1996, who would have believed that, come 2010, Justin Tomlinson and I would join Jon Djanogly, who has been an MP for nine years already, on the Government Benches?
It is a huge honour to represent Dudley South in this Chamber, and I will work tirelessly to get a fair deal for my residents.
I congratulate Chris Kelly and welcome him to the House. He paid a decent tribute to his predecessor, Ian Pearson, and I too regret that he was not able to eat with John Butcher, whom I knew and who was a very decent man. I was warming very much to the hon. Gentleman's speech until his eulogy for Baroness Thatcher, who we remember in a slightly different vein in my city of Sheffield to those new Members who see themselves as her children. Children can have a blinkered view of their parents, and sometimes we see them through a glass darkly.
May I apologise to you, Madam Deputy Speaker, if I am not here for the whole of the rest of the evening. To put it delicately, it is not just the dog's legs that are crossed.
I am pleased that the Secretary of State has returned from west Yorkshire. He may be able to confirm that the Prime Minister this morning did an interview on Real Radio in west Yorkshire and told the story of the making of the coalition. He invited Mr Clegg to supper at his house and presented him with ham and baked potatoes. I am not sure who was the ham and who was the baked potatoes. It might be apocryphal, but I believe that the Deputy Prime Minister asked the Prime Minister where the vegetables were, and the Prime Minister said, "You're addressing them later to put the coalition together". Of course, that is based on a very old story, and I apologise for recycling it.
I want to deal with issues of contradiction. Who, in this House, could not be in favour of decentralisation, devolvement and localism, which some of us have preached and practised throughout our lives? However, what is taking place is not the decentralisation of power, but the decentralisation of pain and of the implementation of policy that will cause pain; it is not the devolvement of decision making, but the devolvement of responsibility for actions taken by central Government that will have to be inflicted on people-I underline, on people-at a local level. We can take out so much resource and argue in the long term about Total Place, of which I am totally in favour, but we should not quickly take out the billions-not millions-of pounds that, over the next four years, will be withdrawn from local government. If we take one in four pounds-perhaps even one in three-out of local government spending, we will take it not out of bureaucracy, but out of the lives and well-being of ordinary people. As has been described this afternoon, the people who deliver adult services or child protection, who open and staff the leisure centres, who provide library services and clean the streets, are not bureaucrats; they are people delivering at the sharp end services that have already been pared back over many years.
I want to outline the danger, in this contradiction, of believing one's own rhetoric-I have done it, so I should know-because Members will find that it catches up with them. It is possible to play off one set of people against another, as the Secretary of State for Work and Pension did yesterday when he said, "If we don't cut the welfare budget more than we intend at the moment, we will have to cut it out of education, housing or other services." That will turn the nearly-poor against the very-poor; it will turn those who aspire to something better against those whom they resent. The hon. Member for Dudley South was right about people feeling that, on occasion, there is unfairness-we were victims of that feeling at the general election-but we should not mistake resentment for unfairness. People often feel resentment towards those who do not have a job and are on benefits; they often feel resentment that someone is getting something they are not. However, we must not mistake that for an issue of fairness, because fairness is about protecting those who are most vulnerable. In the years ahead, local government will not have the capacity, as we had in the early '80s, to protect our people.
In the seven years that I was leader of Sheffield city council, we experienced the most enormous reductions in the local authority budget at a time when we had a broader base for local government expenditure. We had the national business rate, as it is now known, and the local domestic rate. My hon. Friend Mr Betts, who has been kind enough to wait around this afternoon, took over from me as leader and had to continue dealing with those expenditure cuts. We were able to raise the local rate, and amazingly people continued to vote for us in a way that would not be possible today. However, if council tax is frozen-in other words, if it is capped universally-if resources are dramatically reduced, if the health service is ring-fenced and so unable to help by intervening and crossing boundaries, and if there is no longer joint funding, as there was in the 1980s after it was introduced by Barbara Castle, those services will inevitably be decimated.
If a party is really about cutting expenditure, not services-and I wonder whether some people in the coalition want to cut the latter and not just the former-it must do so over a substantial time scale. Otherwise, next year and the year after, there will be the most enormous cutbacks in expenditure-to pay for redundancy payments for thousands of local authority workers. The benefits that will have to be paid to them and the loss in tax and national insurance will add up to the billions that the previous Government managed to cut from the welfare budget-£4 billion a year was eventually saved by a reduction in wasteful expenditure on cutback and retrenchment.
We are in a dangerous situation. We might find that, having cut expenditure and services, resentment and bitterness arise in a way that will lead to the kind of disturbances and lack of social cohesion experienced in the early 1980s. Fortunately, Sheffield was the only major town or city that did not experience disturbances at that time. I hope that that will be true of Britain as a whole in the future. However, great care needs to be taken, not just to involve people, to talk to them and to learn what they can contribute towards their services, but in order that the plug is not pulled on other aspects as well. This year's round of cuts is so unfair because aggregate external funding-to use a technical term-is designed for specific funding for specific purposes targeted at the most disadvantaged. That is what the area-based grant, the working neighbourhoods fund and the local enterprise growth initiative are about. Incidentally, the latter also triggers funding from Europe and external funding from elsewhere that will also be lost. Pull that out and we pull the plug on those services.
Some have said that we can un-ring-fence expenditure and that everything will be fine. The Minister of State, Department for Education, Mr Gibb gave me a written reply recently in which he referred to ring-fencing. It read:
"This flexibility means that reductions in spending could be managed without a reduction in jobs or frontline services."-[ Hansard, 28 June 2010; Vol. 512, c. 423W.]
That is either duplicity or complete naivety. In the four years ahead, we cannot afford for ordinary people to have their services destroyed because Ministers and Treasury officials do not understand the consequences of their actions. If that happens, we will regret it for many years to come.
It is a great pleasure to follow Mr Blunkett and to be in the Chamber for the maiden speeches of my hon. Friends the Members for Dudley South (Chris Kelly) and for Wolverhampton South West (Paul Uppal). Their speeches distinguished themselves from those of the Opposition who seem to be seeking to renew some of the battles of the past 13 years and who seem to have failed to recognise that the world has moved on.
It is appropriate that we are discussing local government funding in the context of the Budget debate of the past few days, which, it is important to remember, was an emergency Budget debate that arose as a consequence of the severity of the economic position in which the country finds itself-even worse than was expected. I want to consider why the local government funding debate is necessary and what other sectors have done already, and I want to put in perspective what local government is being asked to do and how it may do it. It is entirely appropriate that local government should make its contribution to tackling the budget deficit. Labour has left behind one of the largest budget deficits in Europe, and we are borrowing one pound for every four that we spend, increasing our national debt by £3 billion a week. The crisis in the eurozone shows that the consequences of not acting are severe, in terms of higher interest rates, sharper rises in unemployment and potentially even the end of the recovery. Those issues are recognised in the country.
It is now seven days since my right hon. Friend the Chancellor stood at the Dispatch Box and gave his Budget statement. As a new Member, I have had to come to terms with the massive amount of e-mail and letters that Members receive. On the Budget, I have had plenty of correspondence-from think-tanks and lobby groups-but since last Tuesday I have had very little from the electors in my Rugby constituency. The reason is that there was little in the Budget that electors were concerned about or surprised about-despite the protests of Labour Members, who do not want to hear about the true state of the public finances. The people in the country understand and support the measures that we need to take. These measures are necessary as a result of past mistakes, and the coalition Government have been forced to take strong and decisive action to sort out the deficit and ensure that confidence is not lost in UK markets. The public understand that the action that is being taken is unavoidable and that Britain must build a new economic model founded on the principles of freedom, fairness and responsibility.
The private sector has already borne the brunt of the recession, and it is important that this responsibility is shared by all of us. The private sector endured job losses and business closures during the dying days of the previous Government. Businesses have been forced to make savings, to cut back and to make redundancies, so it is only right that this pain is shared by all, because we are all in it together. [Laughter.]
I ran a business for 25 years, and I know that no matter how tightly run an organisation, there are always additional cost savings that can be made. Here we are looking at additional cost savings of between 1% and 2%; they are there if people look hard enough. It is interesting that the Local Government Association briefing document issued today makes
"a comprehensive and open offer to Government to work with them to... reform the state to achieve the required savings".
That shows that there is clear acceptance of the need for savings and a desire to get on with them.
There are many examples of current public sector waste. The Minister told us about some of them earlier when he spoke about tranquillity rooms, cappuccino machines and Pravda-style magazines. An article in The Sunday Times of
The message is going out loud and clear: this kind of waste cannot go on and should not happen. It is entirely right for the Government to conduct a full review of local government finance and right that that review should restore to our councils a general power of competence. For far too long, councils have been dictated to by central Government. Reference has already been made to the estimate that only 5% of local government spending is controlled by elected councils. That means that of the £7,000 a head spent on local public services, only £350 is under local democratic control.
I was a councillor for five years, and in that time I became increasingly frustrated with Government interference, much of which prevented me and my colleagues from doing our job. It is for that reason that local government has often been described as a delivery arm of central Government. We often took decisions not because they were the right ones for our community, but because the Government had told us that that was what they wanted us to do and they applied pressure through directives, centrally set targets, inspection regimes and the final sanction of taking away grants. It is refreshing for all involved in local government-both officers and councillors-that the coalition Government plans set out to provide councils with the freedom and the resources to concentrate on local priorities and deliver front-line services by stopping the ring-fencing of central Government grants.
Does the hon. Gentleman regard the recent Department for Work and Pensions policy of "on yer bike" as a centrally driven target?
It is not centrally driven at all.
The changes will be made by local authorities and I believe these changes, restoring freedom to local authorities, will encourage more people to put their names forward for the role of councillor. The previous Labour Government presided over more than a decade of economic prosperity during the '90s and the early part of this decade-and they should have been taking advantage of that; as we said, they should have been mending the roof while the sun was shining. They failed to do so, and it falls to the coalition Government to implement the efficiency savings, to cut the quangos and to reduce the regulatory burden, which are so desperately needed.
According to a PricewaterhouseCoopers report entitled "Mapping the Performance Landscape", commissioned by the Department for Communities and Local Government in 2006, it was estimated that a typical council spent £2.6 million a year in reporting performance information to central Government. The previous Government also failed to heed the warnings provided by the very councils that they so tightly guarded. In a comprehensive area assessment published in January 2010, the councils were warned that
"the burden of inspection has not been reduced as a consequence of Comprehensive Area Assessment", and
"nearly two-thirds of respondents to the latest CAA watch survey disagreed or strongly disagreed that the burden of inspection was being reduced as a consequences of CAA."
It is time that central Government stopped smothering local councils and provided them with the level of authority they need to get on with their role of serving and responding to the residents who elect them.
I believe that Labour Members are over-stating the effect of the changes that local government is being asked to make. We should remember that this is an emergency Budget in which local government is being asked to make £1.166 billion-worth of savings to the £6.2 billion of cross-government savings for 2010-11.
I am running out of time, so I will proceed, if I may.
Removing restrictions on how local authorities spend their money is a vital part of allowing them to deliver efficiencies and focus their budgets on front-line services. I refer again to the statement released by the Local Government Association, which understands the need for the plans that the Government are introducing.
In some areas, certain groups have had massively more than their fair share of funding, so it is only right that, during such times as these, they should reduce the burden. Let me cite the example of the £30 million that will be saved by ceasing the Gypsy and Traveller sites grant. Here is a relatively small community that has benefited hugely and, in my view, disproportionately from public expenditure and is a matter of great concern to the settled community in places such as Bulkington in my constituency. By way of showing that further savings can be made, I refer to my home Rugby borough council; by not replacing its chief executive, it is enabling savings of more than £100,000 a year. Another example is Warwickshire county council, which is estimated to have made savings of £19 million in value-for-money savings in 2008-09. So there are early signs that the councils themselves recognise the need for radical reform, which needs to begin immediately, and they are tackling the challenges posed by the new Government.
In addition to seeking savings in expenditure, the Government are taking steps to minimise the effect of council tax on individuals and businesses, and are providing support for hard-working families through a council tax freeze. They have demonstrated immediate support for front-line services by protecting £29 billion of formula grant. Unlike the Labour party, the coalition has listened to advice from those affected by poor over-regulation.
In conclusion, I believe the proposals on local government finance are reasoned and proportionate, and appropriate in difficult economic times, and I shall support the amendment.
May I welcome you to your new position, Madam Deputy Speaker? I know that you will watch over our proceedings carefully but firmly. I also want to congratulate the hon. Members for Dudley South (Chris Kelly) and for Wolverhampton South West (Paul Uppal) on their maiden speeches. The hon. Member for Wolverhampton South West, who is no longer in the Chamber, said we should think of him as a good and decent person, and I have no doubt that he is, but he is going to have his compassion-and, dare I say, his sense of social justice-tested by the proposals we are discussing today and those to come in the weeks and months ahead.
I also recommend that Mark Pawsey look back at his speech today because I think he has highlighted an important difficulty. Although we all want to decentralise, it can be tempting to suggest that we should take control when we think things are not being done quite right at the local level. He gave the example of the high salaries paid to some staff under the Tory-Liberal Democrat council at Brighton and Hove. That might point to another suggestion for the Secretary of State: that he should have some jurisdiction over local government salaries, as well as knowing about every budget over £500 that is spent in local government.
Yes, they probably have done that, but I have to say that I am in full agreement with what my right hon. Friend the shadow Secretary of State had decided in relation to Doncaster as it is important to get our services running properly, and the current Secretary of State has followed through that decision, so I do not think there is any disagreement between the two Front Benches on this. The proof of the decision, however, will be in what happens, and whether the salary paid to the chief executive is justified by our getting some results-sooner rather than later, hopefully.
The hon. Member for Rugby and others have said that Labour Members want to refight the battles of the 1980s. I can assure the hon. Gentleman that I do not want to do that, but neither do we want a return in our communities of the devastation that the '80s caused. Doncaster and other parts of south Yorkshire, as well as other areas of the country and of Wales and Scotland, have been on a journey over the last 13 years. There is a long way still to go, but progress has been made. Public investment went into detoxifying the coal pit areas in order to make them fit for other uses-to regenerate for leisure but also for jobs. That required a willingness to make sure that that land was not left barren and unusable by local communities. In '97, some primary schools had toilets that were outside and in a dilapidated state. We not only fixed the roof on many of our schools, but we brought the loos indoors so the kids could use them appropriately and properly.
We have had to deal with a lot of work like that. As has been mentioned, we inherited housing stock that was by no means of a decent standard. We had to make some tough choices by spending money on improving that stock while realising that that might prevent us from building more homes. Before the recession hit we were, however, up there, reaching our target of 240,000 new-builds each year. Unfortunately, the recession got in the way, but we were on that journey, making progress.
Not enough, actually, and for the reasons I outlined. First, we inherited a situation in which councils where people had sought the right to buy were not getting money back from that in capital receipts. Under the right to buy, the better homes were, of course, sold off earlier, which meant that the housing stock that was left was very poor. We addressed how we might improve the social housing sector by looking at not only council housing but housing associations.
I must say that we also took some tough decisions with our own Labour authorities about how they should improve their approach to social housing across the piece. That included making sure that tenants in both housing association and council housing had more of a say. We wanted to get rid of the idea, which tarred the Labour party, that every council tenant had to have their front door painted the same because it was a council home. We brought innovation and reform into the sector, and we can be justly proud of that.
However much the Con-Dem Government pretend otherwise, it is clear that the cuts in local government funding will hit hardest not Tory and Liberal Democrat Members or vast numbers in their constituencies-although I recognise that there are areas of deprivation in every constituency-but those communities and families who are vulnerable and need support, and which Labour Members disproportionately represent. Doncaster council has already had more than £4.5 million in funding cuts, and we have more to come: 20% of Doncaster funding-almost £80 million-is vulnerable.
As Labour Members have said, that money is linked to deprivation and need. Members on the Government Benches took issue with Opposition Members; they suggested, "You've had all the money coming your way. It's not fair that you've had all that money for your constituencies' families and communities." I do not take any joy in the levels of inequality in my constituency. I came into politics to make sure that people had a chance to have a better life and to address the social, economic and health inequalities that exist. In 13 years, we had improvements in our schools, improvements in health, improvements in housing and improvements in skills and jobs. The danger is that the journey stops here today because of the Con-Dem Government and what they will do, because they will stop the progress in its tracks.
In Doncaster, £800,000 will be cut from careers advice for young people, which helps young people to look for apprenticeships or full-time work. There will also be a cut of £150,000 in funding for activities for young people, including for disabled children and young people. Schemes such as the local enterprise growth initiative and the working neighbourhoods fund, which encourage investment, support local businesses, help to create jobs and boost incomes, and which in the long run save money, all now face an uncertain future.
I attended the Thorne carers forum just a couple of weeks ago. It was a day to get carers to come in, have a bit of relaxation, meet some of the different agencies that provide support and to enjoy themselves-to take some time out from their daily activity, which is filled with love but also with difficulties. I wonder what they are thinking about what will happen, because they will probably not get support for the core funding for that event, as it is discretionary, but it means a huge amount to those people, giving them a bit of respite in their daily lives.
At the weekend, I spoke to Maureen Tennyson at the Edlington gala. She is a key activist in Neighbourhood Watch and in tackling antisocial behaviour in our neighbourhood. One problem we have had is with private landlords who buy up cheap properties and then misuse that responsibility by either leaving them empty, letting them become derelict or not taking control of their tenants. There is concern about the selective licensing scheme we are getting going; people have worries in respect of the work being done to get that under way and to make some of these landlords get a licence or not be allowed to let. That will have a huge impact on neighbourhoods where in one street there might be a mixture of private ownership, private rented and council property alongside each other. This is one of the biggest blights. The people who make the money do not live in those communities, and if there is any action to cut back in this regard, then the Government are saying a really big, "We don't want to help you" to people in Edlington and elsewhere.
We are all in this House to help vulnerable people. Does the right hon. Lady not accept that in 13 years in power her Government increased inequality between the richest and poorest in our society and reduced social mobility? Does she not realise that the best way to help the very people she is talking about is to help them to find jobs and to create opportunities, not make them live of her handouts?
There is a case for arguing that the rich got richer, but at the same time we took thousands of children out of child poverty. I will tell the hon. Gentleman something else: cancelling the extension of free school meals to low-income families has prevented 50,000 more children from being taken out of poverty, so I will not take any lectures on fairness and tackling inequality. The Government could have got some extra money by doing what we suggested-by taking more money off the bankers, out of their bonuses-but they fell short on that. There are plenty of other areas that could be looked at, such as Government support for private education, in order to save some money for our schools. Some £100 million comes from Government to support private education in different forms. Perhaps we could look at making a cut there.
If I can make a bit of progress, I might come back to the hon. Gentleman; I have only two minutes left.
The cost to society will be huge if we take short-term decisions that fundamentally disrupt some of the progress that has been made in different communities. The point has already been made strongly about Total Place programmes: it is not just about people putting money into a pot; it involves a difficult journey, getting different organisations to put their separate cultures to one side and come together for the community good. That is not easy, but we have made that progress by bringing health closer to local authorities. I am very glad that we now have a jointly appointed public health director, and that we see joint commissioning happening. My worry is that if local authorities and local government retreat, others will retreat as well. They will go into a bunker silo mentality. It happens at Government level, but it also happens at local level, and what we will see is a retraction.
As my colleagues have said, it is one thing for hospitals to make sure they have policies that mean that older people leave hospital quicker. That is quite right, but if adult social care in the community is undermined, where will those older people go? Where will the support be to make sure the plan is put into action-that Elsie or Sam can ensure that their home is adapted before they leave hospital, so they can actually be at home? The danger is that what is happening is very short term.
The private sector depends on the public sector for growth and for contracts. For example, there is no doubt that Yorkshire Forward, the regional development agency, has been fundamental in helping our airport to get off the ground-literally, as it were. What is going to happen about the investment that RDAs are providing? What assessment has been made of the loss of private investment following the abolition of the RDAs?
There is a lot at stake here. Of course we have to make cuts and reduce the deficit, but our plans showed that we could do it in a meaningful way that did not put communities on hold or even take them backwards. That is the danger of the proposals before us tonight.
I want to start by adding my congratulations to my hon. Friends the Members for Dudley South (Chris Kelly) and for Wolverhampton South West (Paul Uppal) on their excellent maiden speeches. I am sure the rest of the House will join me in hoping that they will speak again in this Chamber in the very near future.
Today's debate is very important. As Members will know, local government financing represents approximately 25% of Government spending and is responsible for delivering many of the essential front-line services our constituents rely on. Such a level of spending therefore cannot be immune to the spending cuts forced on us by the parlous state of the finances we inherited from the previous Labour Government. The historic local government funding formula has for far too long been used, especially by the Labour Government, not as a political tool but as a political weapon-a weapon with which to beat the shire counties of England for having the temerity to vote Conservative.
Local government finance is a particular concern to me and my constituents, as my constituency suffers greatly under the historic funding regime. This year, each child in North West Leicestershire is having £3,888 spent on their education, compared with the £4,497 spent on each child in the city of Leicester-a difference of some £600 per child per year, and the disparity is increasing. Last year, the difference in funding was £550 per child.
Let me make a little progress and I am sure the theme will become clear.
That funding difference is putting the children of North West Leicestershire at a major disadvantage. The two biggest senior schools in my constituency-Ashby and King Edward-are disadvantaged by nearly £1 million and £500,000 respectively each year compared with the city of Leicester. That simply is not fair.
Perhaps the biggest unfairness emerges when we consider the level of deprivation in North West Leicestershire. According to the last census, in one ward in my constituency 468 children were living in income-deprived households, yet their educational needs were funded by £600 less this year than were those of pupils in the city of Leicester. That cannot be right, and I look forward to the pupil premium redressing this unfairness.
Despite these funding shortages, Leicestershire county council is performing excellently and is a four-star council. According to independent inspectors,
"the Council is good at managing its money and making savings to spend on the most important services".
The independent inspectorate also comments on how
"Leicestershire County Council manages its finances well. Council tax is low compared with other areas and it provides a wide range of good and excellent services. This means it provides good value for money. In 2008/2009 it saved almost £11 million and it is on track to make further savings this year. These savings are then spent on improving services".
It is vital that well-run local authorities such as Leicestershire be looked at sympathetically when it comes to departmental spending cuts. Fit organisations have little fat to cut away; it is the bloated authorities that have been disproportionately funded and badly managed that should be looking at trimming their organisations. Perhaps they will decide not to do that, and to pass on the costs of their inefficiency to the long-suffering taxpayer. I urge us to remove the cap on council tax increases, which will allow them to do just that. Councils that choose to take that path will then expose their profligacy, waste and poor management to the wrath of the electorate, leaving them fully accountable for their actions-hopefully through the ballot box.
It is not just in education where my constituents are suffering the effects of the previous Labour Government's policies, but also housing. The previous Labour district council in North West Leicestershire, before being relieved of office in 2007-with the biggest swing in the country against Labour in those elections, but that is another matter-left the council housing stock in a lamentable state, rated as "poor", with no stars. Despite this, owing to Labour Government policy we have the ludicrous situation in which a third of all the rents we collect every year are passed back to central Government to maintain housing stock in other areas, despite the fact that a third of our housing stock is classified as "sub-standard", that we have elderly residents who are still forced to rely on solid fuel for heating and water, and that rents are increasing. We need to end this unfair and inefficient arrangement. I also look forward to councils being able to retain moneys raised by selling council houses, so that they can be re-invested in building new council houses in the district.
When the Opposition talk about local councils not building social housing, they might want to consider the fact that, in answers to questions in the last Parliament, the Government conceded to my right hon. Friend Grant Shapps that the £200 million a year collected in local council rents nationally was not even spent on housing but simply entered the general taxation coffers. Despite this, they have left us with the largest deficit in the history of this country at £156 billion.
There is a comparison to be made between the financial management of the previous Labour Government and the management of North West Leicestershire district council when it was under Labour control. During those sad 33 years of Labour control, my constituents faced an above-inflation council tax rise, year in, year out.
I think we needed to have a shake-up of the Conservative party in North West Leicestershire, which came in 2007. When the people of my constituency make their minds up, they make their minds up, and we had the biggest swing against Labour in those elections, as I pointed out.
Even in the year when it was thrown out of office, the Labour council increased council tax by 4.1%, and its performance was rated as weak and some way behind that of comparable councils. Three years later, the situation is somewhat better. The council is now rated adequate and is improving year on year. This has not been achieved by the Labour methods of tax and spend. As Winston Churchill said, for any society to believe that it can tax itself to prosperity is as ridiculous as a man standing in a bucket and believing he can lift himself up by pulling on the handle. The Conservative-controlled district council has introduced below-inflation increases of 2% in 2008 and 2009, and this year has introduced the sort of increase that Mr Brown would doubtless describe as "a 0% increase". Much to the relief of local residents, the council is improving services through prudent financial management and by trimming away the fat of previous administrations.
The east midlands and Leicestershire have fared little better under Labour on other essential public services. On policing, based on the 2009-10 budget and the 2008-09 crime survey, the east midlands region has the lowest grant relative to the number of crimes in the whole of the UK. The east midlands receives just £1,330 in grant for every crime whereas the north-east region receives an extra £800 per crime to deal with the offences in its region. Let us consider what happens with other essential services. The combined fire service of Leicester, Leicestershire and Rutland is the lowest funded per capita of any shire county fire service in England. Those and many other inequalities must be borne in mind when funding decisions are made.
I must reiterate that the fat, bloated local authorities are the ones that need to put their house in order when it comes to the inevitable cuts, which must be made this year, next year and for several years to come because of the awful financial legacy of the Labour Government. In conclusion, all I ask on local government financing is for a fair settlement for the east midlands, for Leicestershire and for my constituency of North West Leicestershire.
Members on the Benches opposite are, understandably, repeating this desperate mantra about "unavoidable cuts". I suppose they think that if they can cling to that enough and repeat it often, somehow it will become true. These announcements of reductions-these swingeing cutbacks of public services-are not unavoidable; there are alternative strategies. Taking out 25% of public spending in these unprotected departmental expenditure limits within such a short period of time-four years-is to act too quickly and too harshly. There is no consensus among economists-that is certainly the case globally, let alone in this country-that this approach is the only way to protect our triple A rating and is essential in order to avoid a Greek-style arrangement. I suspect that either there is a little naivety on the part of the Liberal Democrats in propping up this ideological zeal to reduce public spending, which has always been present in the right wing of the Conservative party; or the Liberal Democrats-at least some of them-have sold their souls in order take on the trappings of high office. I hope that is not the case, but I am sure it is beginning to look to many of my hon. Friends as though it might be.
In my constituency, in Nottingham, the first tranche of service cutbacks-taking out the £6 billion and having £1 billion of reductions in local government spending-meant £4.5 million taken out of Nottingham's front-line services. Some £2.7 million has been taken out of the education area-based grant-that money is not just for the one-to-one tuition that we were hoping to have for children in most need, but for the school transport budget, the special educational needs budget and so on-and £1.2 million has been taken out of the working neighbourhoods fund. The title of that fund does not really capture what it does, because the fund helps to combat teenage pregnancy and ensures that welfare rights advice is given to people. It provided the money that went hand in hand with the future jobs fund to help to get young people off benefits and into work. Millions of pounds have been taken out of these services, with £350,000 being removed from road safety spending and £2 million from the transport capital grant.
Does the hon. Gentleman agree that Nottingham city council may have been assisted if it had not had to dispose of three chief executives before their contracts expired, because they could not get on with the Labour-controlled city council, and pay them settlement fees in excess of six figures?
No, I would not agree. The tactic of the hon. Gentleman and of many hon. Members on the Benches opposite is to pick one or two anecdotal examples of problems, creating from those a whole story about how the public sector is rife with inefficiency and difficulties, and has to be culled. I presume he thinks that the only way forward is this fantastic private sector drive, which is always correct in all circumstances. There are examples of poor practice in the public sector, just as there are in the private sector. All I say to him is that taking 25% of public spending out of these vital services within four years will affect his party and the Liberal Democrats at the ballot box, particularly in the local elections next year-it will be interesting to see the reaction from the Liberal Democrats then.
We are all constrained by time in this debate, but I wish to raise a couple of points, especially on the local government finance particulars that have not been addressed so far. Some of my hon. Friends have mentioned the difficulties created by the in-year reductions in the first wave of announcements. Strangely, there will probably be four chops of the axe: the first announcement at the end of May/beginning of June; the Budget; the spending review coming up in the autumn; and another Budget in March. One consequence is that the ability for any sensible local authority to plan ahead carefully, cautiously and sensibly on a medium to long-term framework containing some understanding of what settlements it might achieve, given that the vast majority of local government money comes from grant, has gone entirely. No sane or sensible local authority will be able to make any decisions about how it proceeds for the medium term until it has heard what is in the spending review. The danger in making some of the reductions within this mid-year period is that the short-termism will create extra harm, because changes will not be thought through or evidence-based, and unfortunately they will probably hit those in most need.
Another consequence of this short-termism is that it affects some of the carefully constructed partnerships between public agencies within localities, which we have all been hearing about. We all, of course, want Total Place and we want local authorities to work together, be it at local strategic partnership level or under the local area agreement frameworks. Those partnerships have been shattered into smithereens because each public agency will retrench into its shell, with local authorities having to focus very much on their own situation and being unable to pool discretionary resources with other agencies. I am sure that the same will be the case in respect of police authorities, health bodies and others, and I very much regret that move.
The Government also decided to scrap the local area agreement reward grant. Again, this is a technical area, but the grant was important in process terms because it encouraged some sharing of objectives between central and local government. Not every front-line service is determined by a local authority alone. Of course, as we have heard, all sorts of services depend on central and local government working in tandem. Driving a coach and horses through the local area agreement framework will mean that local authorities will have absolutely no incentive to work in partnership with central Government, because in doing so all they have been given is a slap in the face. That is a great pity, because although this approach may not necessarily be noticed by our constituents, it is a crucial piece of the jigsaw that made a big difference.
The notion that the Government have been so generous in removing the ring-fencing from a series of grants after they took the axe to area-based grant that already exists is worrying. If the first thing that the Government decide to cut is that budget, which already contained a degree of flexibility and involved local authorities having an amount of freedom-local councils were getting used to working without the constraints of the centre-and straight away the front-line thing that goes is the area based grant and that flexible money, what will be the reaction of any local authority when the next tranche of money is magically un-ring-fenced? Naturally, those will be the next sums of money to go through the exit door, be they for the de-trunking of roads or for housing market renewal-the Government say they are removing some of the ring-fencing from that. Those will be the items of expenditure that will probably be cut next, because that is the signal that the Government are sending.
The housing market renewal grant was obviously spent on renewing areas. Does the hon. Gentleman think that spending 10% of the total money-more than £300 million-on mini-quangos that simply passported the money through was sensible? Last year, more than £33 million was spent on these quangos, which basically just passported the money through. That has now been running for four years. More than £130 million, which could have been paid direct to local authorities to deliver the programme, was sent through totally unnecessary quangos set up by the Labour Government.
The hon. Gentleman can make these points, but they are dancing on the head of a pin. I think it is important that this money goes to the front line and gets spent, but it certainly will not help to cut these sums of money by a quarter-probably more than that-over four years. The hon. Gentleman seems to have these issues completely out of proportion. It is also interesting that in a written answer to me the Under-Secretary of State for Communities and Local Government, Robert Neill, had to correct the announcement that the Government had made to the House about the un-ring-fencing of so much money. They discovered that a mistake had been made when they said that £300 million of private sector renewal moneys and the housing and planning delivery grant had been un-ring-fenced. It turned out that that money was already flexible, so their totals were changed entirely.
I want to talk about one or two other points that have not been mentioned that much. Capital spending on infrastructure and on the improvement of the basic facilities in many of our constituencies is essential. Not only is capital grant being reduced significantly, but a little-spotted change was announced in the Budget in respect of prudential borrowing and the freedom that the previous Administration gave to local authorities so that they did not have to jump through all sorts of Treasury bureaucracy to be able to access capital loans from the Public Works Loans Board. An item in the small print in the Red Book now states that local authorities will have those requests from the PWLB scrutinised far more closely than before. In other words, it is a return to the days of centralism, if they get that money at all. Local authorities will have less capital grant as well as less ability to access PWLB money.
Does that mean that local authorities will have to go for bond finance, which is more expensive? I would certainly like to hear more from the Government about that; there was not an announcement in the Budget about bond finance. I would also like to hear where we stand in terms of accelerated development zones, tax increment financing and other measures that would be useful in encouraging innovation in the way in which local authorities access capital markets.
My final point concerns the choices that local authorities face and where they go with these difficult decisions. Many Government Members might have local authority members who are happy to take on the full burden of these reductions in the services that affect their constituents who are in most need. Many Labour authorities-and indeed, those run by the Liberal Democrats as they used to be-might want to try to temper that and to consider raising revenue from other sources. Traditionally, council tax has been the only option, although there is a quasi-capping arrangement going on with this supposed one-year council tax freeze deal. Most local authorities will probably be fairly daft not to accept the money that is on the table, although it is entirely unsustainable. There is no way that the Government will be able to extend that for long. After we have gone past this first year, we should be aware that the gearing ratio means that local council tax increases could easily be of the 10% to 15% variety. Does that mean that the Secretary of State will bring capping back in? Again, so much for his localism.
I suspect that the real burden will end up hidden away in the fees and charges that all our constituents have to pay, with a return to the easyJet council model-it will be hidden not just in planning charges, parking charges, swimming and library charges and so on but in those social care charges that hit the poorest most of all. Unfortunately, this is an ideological set of changes- although I hope that the Liberal Democrats will think again-that are certainly not in the interests of any of our constituents.
First, I congratulate my fellow west midlands colleagues, my hon. Friends the Members for Wolverhampton South West (Paul Uppal) and for Dudley South (Chris Kelly), on making excellent maiden speeches.
I have listened intently and with great interest to the debate. Opposition Members seem tireless in their criticisms of the measures that the coalition Government are having to make. I am afraid that the debate has been a little like a stuck record-technology that we were quite used to in the 1980s, and which they seem to hark back to. At that time, I remember that many small and medium-sized businesses occupied our industrial estates in my constituency. That was the case up until the mid-1990s, but unfortunately after 13 years of Labour Government many of the industrial units that I remember that used to be full with people in employment now stand empty. I hope that the coalition Government will put that right by refreshing and rejuvenating the private sector.
Opposition Members also make no apology for mortgaging our country to the hilt and they still seem to want to keep spending and spending. They talk about reducing the deficit, yet we still hear no tangible sign of how Labour would get us out of the black hole in the public finances that they spent many years putting us into.
Not only were the previous Government profligate with the public finances, but they were also profligate with their constant diktat to local government. Local councils have been subjected to the constant and never-ending grip of the previous Government, obsessed with performance management, inspections, ring-fencing and general micro-management.
Let me touch on the performance management regime operated by the previous Government. It spiralled completely out of control, with councils at times being asked to report on matters over which they had little or no influence and in which they certainly had no decision-making power. Under that regime, by 2008 a typical council was spending £2.6 million a year reporting performance information to central Government. That additional burden also cost front-line services. For example, essential services such as bin collections have been reduced. That has all happened in spite of the fact that council tax virtually doubled under the previous Government, not to mention the spiralling cost of fees and charges to the public-a practice that was actively encouraged under the previous Government, particularly by Lord Prescott, about whom we have heard quite a bit today.
The previous Government should have used the line "less for more", such was their contempt for local government and communities across the country. Reducing core services and doubling council tax is the legacy of 13 years of Labour Government. I need only look at my local council, Nuneaton and Bedworth-a council on which I was privileged to serve, and where I saw at first hand examples of how the heavy-handed clunking fist of the previous Government affected local government and the ability of local councillors to represent local people and make local decisions.
While it was under Labour control, the council was given a comprehensive performance assessment. Many Members who have been in local government will probably have enjoyed that experience. The Audit Commission gave the council a weak rating. On advice, the council responded by embarking on a two-year process of CPA voluntary engagement. That wasted thousands of hours of officer time, employed a number of additional consultants at a substantial cost to the authority and caused additional layers of bureaucracy that were added to the council's structure. What were the outcomes for local people? They were negligible and certainly not proportionate to the resources expended over several years.
I have no doubt that the comprehensive area assessment will be just as onerous, as my hon. Friend Mark Pawsey pointed out. I therefore welcome the decision made by my right hon. Friend the Secretary of State to abolish the CAA, which, I have no doubt, will reduce the inspection burden and free up vital resources to deliver services. My right hon. Friend has made an excellent start and my hope is that he will go further and work with the Local Government Association, which has suggested today how £4.5 billion of savings could be achieved through:
"Reducing the regulatory burden on councils and pruning out the maze of Quangos, middlemen, bureaucratic funding streams and audit arrangements in order to protect front line services on which the most vulnerable depend."
I also welcome the decision by the coalition Government to announce further removal of ring-fencing. The planning delivery grant is a prime example of how ring-fencing often fails, with councils often having almost to invent projects on which to justify spending grants. Again, my local authority was no exception when it was under Labour control. I recall it spending nearly £70,000 of planning delivery grant on audio equipment for the council chamber to improve the facilitation of council meetings. Until that point, and for some time thereafter, the council did not even hold planning meetings in the council chamber. When it did, the new audio system did little to add value to the planning process or to aid the expeditious construction of new property and houses in the area.
My experience tells me that councils will cope and adapt to the changes that the coalition Government are being forced to make. Many councils have already had to learn to work smarter in the past few years and are working with other authorities to deliver services in a smarter way. That can work especially well. My local authority has shared services such as payroll, IT, building control and procurement successfully with other local authorities. No doubt, councils up and down the country will be looking into putting shared arrangements in place. That is an extremely sensible and cost-effective move.
To conclude, I am glad that there appears to be such clear water between the Opposition side and the Government side. We acknowledge the tough times ahead, we are dealing with our debts head-on, we acknowledge that things will be difficult for local government in the next couple of years and we intend to allow councils to make their own decisions based on local need. We intend that local councillors will be freed from the central Government straitjacket that has strangled local government for so many years, so that they can do what they think is right for local people. That approach is diametrically opposed to the stance of Opposition Members, who are burying their heads in the sand regarding the debt that they are responsible for. They also seem to want the Government to keep our councils in their pocket-to keep them in a straitjacket and dictate how and where they must spend their money regardless of priorities. The very motion that they have put forward this evening explains that.
I know which approach I would prefer if I were still a council leader. I also know, from my dealings with local government and from my contact with fellow Conservative, Labour and Liberal Democrat councillors, which they would prefer-more autonomy for local authorities, not less, and I am sure that this coalition Government will provide that. That is why I support the Government's amendment.
I am very pleased to contribute to the debate, because it is important to remind everyone of the key role that local government plays in the delivery of services to our communities. I am very grateful to my right hon. Friend Mr Blunkett, who is not in his place, for outlining the importance of council services to vulnerable people. That is why we need to take a detailed look at where the £6.2 billion of additional cuts are falling. I shall speak later about the huge impact that the £16.8 million of additional cuts, in-year, to Durham county council's budget will have in Durham city.
Perhaps we should not be surprised by the coalition Government's callous approach to local government and the communities it serves, because, although the coalition document says a lot about enabling communities to run services, there is not a single mention of how those services will be paid for. Neither is there a single mention of what will be lost by those communities in terms of services that they will no longer get from their local councils. I am surprised that our Liberal Democrats in Durham, who are normally very good at saying how they support localism, have been strangely quiet in the past few weeks. Not one of them has come forward to condemn the outrageous cuts being inflicted on north-east councils.
The Labour-led council in Durham has shown how dreadful the cuts will be for our local communities. The Department for Communities and Local Government has said that it will make a cut of £6.34 million, but it has announced only the cut to the area-based grant. There is, in fact, a cut of £16.8 million, because other cuts that have not been clearly identified have been passed on to local government in relation to transport capital, the housing and planning delivery grant, the local area agreement award grant and many other areas. The cuts to Durham county council are savage already, even before the comprehensive spending review in October, which we know will go even further.
The two Government parties have to answer a number of questions. The headline percentage decrease reported by central Government has been calculated only against the area-based grant reduction. When other cuts are taken into consideration, the cut to Durham's budget will not be the 1% presented by the Government, but 4%. Why is there this lack of clarity?
Analysis of the reductions in grants shows that northern authorities have received the largest decreases in funding, with 31 of the top 50 authorities being in the north. That will add to the problems that we have in trying to rebuild the economy after the recession and in trying to improve life chances in some of the most disadvantaged communities in the country. That is not fairness. Why are the Government taking that approach?
Perhaps more outrageous still, considering the size of the reductions being made, is how they relate to the index of multiple deprivation. There is a strong trend of the most deprived authorities receiving the largest budget cuts. It is simply wrong that the poorest authorities seem to be the least protected. Again, the Government must make it clear to the Chamber why they are attacking the most disadvantaged communities in the country the most.
We have to get past the idea that the cuts are simply cuts to waste, because they are cuts to real services. Durham is experiencing a cut to its extended schools start-up costs. Providing those services is not profligate; they help parents to go to work and they give vital support to children.
It is because the hon. Gentleman's Government have cut the area-based grant and additional services that the cuts have to fall in the ways that I am describing. It would have been much more sensible not to have- [ Interruption. ] Is the hon. Gentleman going to listen to my answer or not? What I am saying to him is that if we did not have these additional cuts in-year and if there had been a proper programme of consultation, it might have been possible- [ Interruption. ] Will the hon. Gentleman let me finish? It might have been possible to identify other cuts that would not have had such a direct impact on front-line services. The way in which his Government have made these cuts has led to the attack on front-line services.
Clearly, the hon. Gentleman did not listen to the answer that I gave him and does not understand the impact that a cut to area-based grant and other grants has. As I was saying, there will be cuts not only to extended schools start-up costs, but to the careers service and to the Supporting People budget, so they will affect both young and older people.
The cuts are not just to the public sector. The Government parties have demonstrated again today that they do not understand the links between the public and private sectors. On Friday, I visited one of the private nursing homes in my constituency to discuss the problems that it was experiencing with its budget. The entire business of that private sector delivery organisation is being affected by the requirement for the local authority to raise its residential allowances, which will lead to a loss of jobs in the private sector. It also makes no sense to cut the working neighbourhood fund and the local enterprise growth initiative, especially in Durham, where the unemployment level is higher than the national average.
Do not get me wrong. The council and the regional development agency have worked hard in the last few years to try to ensure that unemployment remained at much lower levels than those experienced in the recessions of the 1980s and 1990s, and they were very successful in that regard. However, they need the working neighbourhood fund and support for local business if they are to ensure that unemployment does not rise further. According to the council, it has received funds in the past for projects to help people into work, deal with worklessness and enhance job creation, but those are the funds that are being cut now. I consider that action to be disgraceful, short-term and short-sighted. It shows no understanding of the need for measures to encourage people to seek employment. Furthermore, the loss of funds from the Home Office will reduce the amount of resources for tackling antisocial behaviour.
I could go on and on with the list, but my main point is that if local people were asked where to make cuts, I very much doubt that they would prioritise cuts in services that seek to tackle antisocial behaviour or help people back into employment. We all know that cuts have to be made, but the top-down way in which these cuts are being inflicted means that local authorities cannot have full control over the areas that they would protect and those in which they would make cuts. It also means that they cannot consult local people. Such a degree of centralisation imposed by the Government parties, whose members say that they support localism and devolution, is breathtaking.
As well as not allowing local government time to produce a sensible framework for reducing the deficit, the Government have provided no clarification in respect of key programmes. In the case of Building Schools for the Future, that is leading to considerable uncertainty in our communities about whether new schools will go ahead. We need clarification as soon as possible. My local authority wants an open dialogue with the Government, and greater consultation within the sector on the timing, extent and detail of future reductions so that they can plan for them properly-and, critically, so that they can ensure that those who are most vulnerable are protected as far as possible from the impact of the cuts that must be made.
Why are the Government parties picking on existing policies-particularly those designed for the long term-that seek to reduce inequality? I have two examples in mind: free school meals and free swimming. The task of protecting and improving health must not depend entirely on the national health service; we also need local policies and services that help our young people to develop healthier lifestyles and a more sensible approach to their eating habits. The way in which the Government's cuts are attacking free school meals will ensure that a central plank is removed from our plans for reducing inequality for the future, and I do not consider that acceptable.
I pay tribute to my hon. Friends the Members for Wolverhampton South West (Paul Uppal) and for Dudley South (Chris Kelly), who made their maiden speeches today-although they caused me a little pain by referring to the mighty rise of Wolverhampton Wanderers and West Bromwich Albion, as I recalled that Nottingham Forest's efforts to achieve promotion this year ended in dust. Fortunately, I was able to console myself then with the knowledge that, come the summer, England would probably win the World cup.
I am becoming increasingly frustrated by the series of Opposition Members who say, "We would have kept this or that bureaucratic scheme that would have protected vulnerable people", in the next breath say, "We would have made £40 million worth of cuts", and in the next breath do not specify where they would have made those cuts.
A number of schemes have been tied up in bureaucratic nonsense, and local authorities have had to jump through a number of hoops to deliver centrally issued targets that create an enormous amount of bureaucracy for local authorities. I shall say more about that shortly.
It is little wonder that the country's national finances were brought to the brink of an abyss, given the last Government's lack of vision and basic financial understanding. We only just avoided the intervention of the IMF in our finances; we were very close to that, as has been widely recognised.
It was widely recognised-globally-that this country's finances were in dire straits. Global economic markets were betting against our economy. We were saved only by the markets' recognition that an election was coming, and that hopefully a Conservative Government would take over. We are in the fortunate position that the coalition has tackled those issues and saved this country from the enormous abyss it was facing.
The only way to deal with local government is to give power back to local government. Local people are much better placed to make local decisions. I welcome the decentralisation of local government and its management, and I sincerely hope that when we pass that power down the structure, better decisions will be made. I am very much encouraged by the thought that that will happen.
I am quite frustrated by the number of Opposition Members who have said that the leafy shire counties are all right thank you very much. Hon. Members should come and look at Nottinghamshire and at Sherwood. We have some challenges and some areas of real deprivation, such as Ollerton, Rainworth, Blidworth and Bilsthorpe right in the middle of Nottinghamshire county.
I am grateful to the hon. Gentleman for referring to some of those areas, many of which are former pit villages. I have played cricket in a lot of them. The hon. Gentleman fails to understand that the areas he is on about are precisely the areas that are going to suffer from the cuts that his Government are making. We are talking about rich, southern shire counties such as Surrey, not his constituency. The hon. Gentleman is arguing for cuts that will greatly affect those mining villages.
The simple fact is that those areas of Nottinghamshire face enormous challenges. I am glad that the hon. Gentleman recognises that some of those shire counties face the issues that many hon. Members claim exist only in Labour seats. We are going to have to deal with the enormous mess that the Labour Government left and tidy up some enormous problems. That will be a really big challenge, make no bones about it. Conservative Members recognise that it will be a big challenge. I do not think that Labour Members recognise what an enormous problem that is going to be.
Nottinghamshire county council was under the control of Labour for 28 years. In the last 10 years of that Labour control, the council tax doubled. That is the sort of pressure that Labour-controlled county councils put on people in the villages I mentioned-on pensioners and vulnerable people. That was a great shame. Fortunately for the people of Nottinghamshire, the Conservative party took control of Nottinghamshire county council. The increase in the council tax this year under Conservative control was 0%. I am proud of that, and the council will attempt to deliver it again next year. It is about protecting and reducing the cost imposed on pensioners and vulnerable people in those areas.
Roberta Blackman-Woods mentioned Building Schools for the Future-a good example of how bureaucracy is built into policies. BSF was quite a good scheme. Two schools in my area-Dukeries college and Joseph Whittaker school-are desperate to be rebuilt. The county council had to spend £5 million to get itself to a position in which it could bid, and we have not laid a single brick. That £5 million could have been spent on improving the schools rather than jumping through the hoops that the previous Government required.
Fortunately, the county council is now able to prioritise and use the money available to it. One of the statistics that sticks in my mind is that for every £7,000 of Government spending available locally only £350 is not ring fenced and is available for local authorities to spend in the direction that they want. That is a shocking indictment of the centralisation and control and ring-fencing that has taken away local autonomy and the ability of local people to make local decisions. Fortunately, some councils under Conservative control are able to make the most of that £350 and prioritise things such as new pavements, filling pot holes and trying to recover some of the damage done by previous administrations. I very much welcome that.
The one thing that has really impacted on my constituency is the removal of the regional spatial strategy, and I am particularly grateful to the Minister for doing that straight away. It put enormous pressure on the green belt of Nottinghamshire in my constituency. I am grateful that we can now have a grown-up debate in Sherwood about where housing is to go and what sort of housing it should be. The sort of housing is just as important. In areas of my constituency we have had to build large houses where, frankly, they are inappropriate. We would be better building social housing so that vulnerable people could be housed and younger people could get on the housing ladder. In other areas, pensioners who live in four or five-bedroom houses on their own would like to move but cannot because there is nothing suitable locally. I welcome the fact that we can now have a grown-up debate about what sort of housing we put into Sherwood and where. We are desperate for the correct sort of housing and for the employment that goes with it.
Before Mr Denham left his place, he referred to Ashfield, my neighbouring constituency, and I would have welcomed his coming to look at the town. I was at a manufacturing company that falls under Ashfield district council in the town of Hucknall, called F. J. Bamkin and Son, which made socks for the Ministry of Defence for many years until the previous Government passed the contract to a far eastern supplier and, sadly, put enormous pressure on the company.
The most important thing that we can do is to remove some of the ring-fencing from the money that is passed to local government, and remove the enormous amount of bureaucracy that local authorities find in their way and the hoops that they have to jump through in order to tap into that money. Then, just maybe we can not only ensure that local people make the right decisions for their local areas, but protect the vulnerable people who were so badly let down under the previous Administration.
This is the first opportunity I have had to congratulate you on your appointment, Mr Deputy Speaker. I congratulate also the hon. Members for Wolverhampton South West (Paul Uppal) and for Dudley South (Chris Kelly) on their confident and assured maiden speeches. I wanted to find something in common with them and my constituency, and I noted that they both support Wolverhampton Wanderers, who are managed by Mick McCarthy. He is a Barnsley lad, and I now represent a part of Barnsley-if people are not aware of where Penistone is. Mick McCarthy is known to frequent a wonderful Indian restaurant in my constituency, the Dil Raj, in Dodworth, so there is the connection, and one of which I am proud.
I, like many hon. Friends, have a background in local government. I was a councillor in Sheffield for almost 10 years, and if I learned anything in that time it was that local government is absolutely vital to the smooth, coherent running of our society. Without it, our way of life would soon deteriorate, with all our constituents suffering the consequences. However, I must tell hon. Members what the coalition Government seem intent on doing, because we now know what the big society means. It means looking after oneself and doing things for oneself; it means, "I'm all right, Jack". Potentially and most worryingly, it means an erosion of the principle of democratic, elected accountability for the delivery of local services. That approach is based on an ideological belief in the small state; it is not the must-needs approach that Government Members have touted in recent weeks.
My constituency straddles two metropolitan boroughs in south Yorkshire, Barnsley and Sheffield. Both have every reason to remember the last time the Tories were in government, as they suffered deeply from the unfair cuts that were imposed on south Yorkshire local authorities. Judging by the cuts that the Department for Communities and Local Government has already announced, it looks as if they have much to fear this time around. It is not as if they are poor, inefficient authorities; they are not. Barnsley metropolitan borough council is renowned for the quality of its leadership and its efficient use of resources, and for having one of the best leaders in local government, Steve Houghton. Recently, through careful financial planning, it managed to freeze council tax for old-age pensioners and to give the under-16s not only free swimming but free bus passes. I applaud Barnsley on that achievement, which is now under threat.
Sheffield city council's efficiency has been praised for many years, or at least it was when it was Labour-controlled. The Audit Commission awarded it four stars on many occasions, and, although it is right that local authorities be as efficient as possible, the recently announced £1.65 billion of cuts to local authorities will have significant detrimental impacts on services, especially in places such as Barnsley and Sheffield. More worryingly, it very much looks like metropolitan authorities are being asked to take a larger share of the cuts, with a reduction of £12.22 per head in those areas, compared with an average of £8.75 for English authorities as a whole. If any Government Member can tell me what is fair about that, I will be incredibly impressed. I do not think that they can.
Further analysis shows that cuts have been made disproportionately in some of the most deprived areas in the country. For instance, Blackburn is ranked at No. 5 on the scale of multiple deprivation and it sees a cut of 1.7%. Meanwhile, Calderdale, ranked at No. 107 on the scale, suffers a 0.6% cut-less than half that suffered by Blackburn. Interestingly, while shire councils see only a small cut of 0.3% in their budgets, the mets are cut, on average, at 0.9%. Mr Osborne says that we are all in this together, but yet again it seems that some are in it more than others. In typical Tory style, it seems that those with the least are being asked to pay the price for Tory ideology.
How will people's lives be affected by the cuts already announced and those that will come later? In a report to be published shortly, the New Local Government Network concludes that many chief executives are saying that libraries, sports centres and street cleaning will be particularly vulnerable. Those of us with a background in local government know that all too well-we remember the last time around.
We hear from the Government Benches about the glories of decentralisation, but let me remind Government Members that in 1995 Sheffield set the budget that it wanted to set, to avoid cuts to libraries and street cleaning. It was told by the Tory Government of the time to go back and reset the budget in June that year; the budget was declared illegal. That is not what I call decentralisation.
I hear the issues that the hon. Lady has raised, particularly on behalf of the metropolitan borough that she represents. However, does she recall her Government's voting for capping motions in the last Parliament, to cap police authorities and other authorities, which were subject to her Government's decisions to restrict the rates that they wanted to set in their areas?
I do indeed remember the capping. I am with my hon. Friend Mr Betts on this-I do not believe that capping is right. However, the situation in 1995 was incredibly desperate. By that time, we had suffered 15 or 16 years of year-on-year cuts. In the mid-1990s, there was less cash for the housing budget, in real terms, than we had had in 1979. By the time Labour came to power in '97, there was a backlog of £1 billion in the housing budget.
I accept criticism of Labour's record on affordable housing and new housing; I think that the previous Minister for Housing accepted it. But we had a massive backlog of disinvestment to deal with.
We had 13 years, but we dealt with it and now almost every single council house in this country is up to standard.
Many chief executives are expecting a tsunami of cumulative funding cuts, with many saying that they will ramp up charges for sales, fees and services. Mr Spencer talked about local government bureaucracy, particularly in relation to the example of free school meals given by my hon. Friend Roberta Blackman-Woods. Finland manages to provide free school meals for every child from four to 19, without the bureaucracy mentioned by the hon. Gentleman. I do not accept his argument, and the cuts to free school meals pilots will not be forgotten.
The revenue cut for Barnsley is £2.75 million, a 1% cut to be put in place over a nine-month period-or, when other cuts are added, a £3.2 million cut in cash terms. However, the main focus of the cuts in Barnsley is the £1.7 million cut in the education area grant, whereby vulnerable children will be disproportionately affected. When that is coupled with a cut of £750,000 to the working neighbourhoods fund, it becomes obvious that the deprived, and those who most need help in Barnsley, are being targeted by the coalition.
Sheffield is England's fourth largest city and ranks at No. 63 on the scale of multiple deprivation. Its cut is £6.5 million, or 1% of its budget, over nine months. This cut in funding has to be put alongside the withdrawal of £12 million of funding for the cleaning up of the Outokumpu site, the withdrawal of £12 million of funding for the redevelopment of the city centre, and the cancellation of the £80 million loan to Forgemasters, all of which mean that the coalition seems to have taken a sledgehammer to the city, making Sheffield probably one of the worst affected cities in terms of the impact of the coalition's ideological approach to government.
If that were the end of the story, it would be bad enough, but on top of these cuts the national funding for local transport plans has been reduced by 25%, with a number of major schemes, including improvements to the road network, now being put on hold. In addition, the local integrated transport authority has indications of a 38% cut, which could mean for Barnsley a cut of £4.2 million. Government Members ought to tell me how people in Barnsley are going to get to work if their bus services and transport networks are to be so severely impacted by the cuts that are on the table. Interestingly, one of the aims of the coalition was a greener future. With cuts on this scale, there is no doubt that more people will be forced to use private cars. Even more worrying is the fact that, yet again, it will be the poor and the old, and those who cannot afford to use a car, who will suffer the most.
According to the Chancellor, this is only the beginning, with Departments being asked to make, on average, 25% cuts in their budgets as the required outcome of the comprehensive spending review. However, with spending on health and international development protected, the cuts in some Departments will have to be much larger than 25%. I started by saying how important I believe local government is. With, in some cases, cuts of about 38% being talked about, I fear very deeply that there are many things that local authorities will not be able to do in future.
Let us settle once and for all the claim that this coalition is progressive. The poor, the vulnerable and the least well-off will suffer the most as these cuts bite. As Brendan Barber has said,
"Not just the poor, but those on middle incomes will pay a heavy price for the government's rush to close the deficit...and rising joblessness will add up to a perfect storm".
Never mind fixing the roof while sun is shining-this coalition Government are set to trigger the perfect storm.
Order. Before I call the next Member, I remind the House that we have quite a lot of Members who want to speak. It would be very helpful if we could shorten speeches, because I would like to try to ensure that everybody contributes.
Thank you, Mr Deputy Speaker, for inviting me to speak in this debate. First, I join other Members in congratulating my hon. Friends the Members for Wolverhampton South West (Paul Uppal) and for Dudley South (Chris Kelly) on their very fine maiden speeches.
What we have heard from Labour Members throughout the debate has been a reinvention of the past 13 years. They have talked about a number of schemes that are desperately important, very much needed, and must be funded, many of which, I am sure, have been very welcome and have done sterling work. However, the question is where was the money going to keep coming from. At the front of the Red Book, there is a stark chart showing that for 2010-11 Government receipts were to be about £578 billion and Government spending more than £600 billion. That is unsustainable even in the short term, and that is why this Government are having to take the very tough decisions that have been discussed at great length today.
Angela Smith talked about decent homes funding. I would like her to explain to my local arm's length management organisation, Charnwood Neighbourhood Housing, why it thought that it was going to be bidding for decent homes funding and then found that that money had been diverted to build more social housing. I do not disagree that more social housing may be needed, but that was another example of the game changes in the middle of the year about which Labour Members have complained so bitterly.
Roberta Blackman-Woods talked about free school meals. Perhaps she could explain to a constituent who recently wrote to me about this why she and her husband, who are still together, struggling on a low income, and who really need free school meals for their children are unable to get them, while children of parents who have split up, with at least one parent certainly able to afford school meals, are getting them.
That brings us back to the point that my hon. Friend Mr Spencer made about bureaucratic schemes, in many of which the help is not getting to the people who actually need it.
This has been an interesting debate, and it was particularly interesting to listen to the three former Secretaries of State and the former Housing Minister on the Opposition Benches. I feel I should declare that I have never been a councillor, and I have learned a great deal about local government finance this afternoon, not least all the acronyms. I speak in this debate as a council tax payer, and I agree that local government is incredibly important. For many people who have come to my surgery so far, their experience of government comes from dealing with local government, whether through the administration of benefits, council tax, rubbish collection, social services or particularly education, the funding for which I shall come on to in a short while. The Local Government Association has said that town halls have already committed to making 4% efficiency savings this year, so they are leading the way where the former Government failed to do so.
As I mentioned in an intervention, one of the former Secretaries of State said that Labour had identified £40 billion-worth of cuts, but we do not know where those cuts were to be made. I believe that everybody in the House agrees that cuts have to be made. The former Housing Minister, Caroline Flint, talked about progress having stalled. I suggest to her and other hon. Members that progress stalled when the former Government ran up a deficit of £156 billion, which will lead to £70 billion of interest being paid-more than the budgets for education and many other things put together.
There has been little mention of council tax levels-although since I scribbled a note saying that, council tax has been mentioned. The level has increased, and in fact in Charnwood it more than doubled in the 13 years of the Labour Government. That has hit those on fixed incomes, particularly pensioners, very hard. I was approached by many pensioners during the election campaign who talked to me about how they were struggling to make council tax payments on a fixed income.
There has been talk this afternoon about ring-fencing. I welcome the fact that the Government have scrapped £1.7 billion of ring-fencing and got rid of the comprehensive area assessment, and that the £29 billion formula grant remains intact. Talking of the comprehensive area assessment, councils across Leicestershire used to employ 90 full-time staff to prepare 3,000 individual data items, leading to 83 inspections at a cost of £3.7 million a year. I defy any hon. Member, particularly any Opposition Member, to tell me that that could not be better spent on front-line services.
I am conscious of your exhortation not to speak for too long, Mr Deputy Speaker, but I wish to make two more points. First, we have heard a lot this afternoon about decentralisation, and I particularly welcome the Government's first move to abolish the regional spatial strategies. That is a huge step forward and has been welcomed enormously by my constituents. They recognise that new houses need to be built, but they are incredibly concerned about where they are to be built. It is welcome that elected local councillors will make decisions about that.
I agree entirely with what Hazel Blears said about the need for creativity and innovation in the delivery of services. That is absolutely right, and there has been too much overlap between what central and local government do. I am sure that we all have talented councillors in our constituencies, and many Members have spoken about their local government experience. Talented councillors and staff do not need Whitehall and central Government breathing down their necks.
I am sure I am not the only Member who is happy to say that they do not want to say too much about local planning matters, particularly when they boil down to extensions here or there, and so on. I am happy, and believe it is right, to leave it to the local planning authority and planning committee members to decide on such matters. This Budget provides an opportunity to reinvigorate local authorities by allowing our local councils really to take charge of local issues. I wish to make a plea to the Government and the Minister, however. I am concerned about recent changes to legislation on the conversion of houses to HMOs-houses in multiple occupation. Although I welcome the fact that local authorities are to make decisions on that, as they know their local areas best, if they are to do so they need regulations that have teeth. In my constituency, the conversion of houses into student-occupied homes is a matter of real concern.
Total Place has been mentioned this afternoon. I am not an expert, but I know that in Leicester and Leicestershire, Total Place has been considering drug and alcohol treatment. It is a huge step forward, which is to be welcomed, and I endorse comments from hon. Members of all parties about the way in which Total Place has worked. I hope that it will continue.
The trouble with speaking late in a debate is that other hon. Members often steal one's thunder, and my hon. Friend Andrew Bridgen, who is no longer in his place, did that effectively when he spoke about spending on education in Leicestershire, so I will not say too much about that. However, I left the Chamber earlier to meet some schoolchildren from De Lisle school in Loughborough. When I told them that I hoped to speak in the debate, they immediately asked what I would say, and I said that I would talk about funding for education in Leicestershire. My hon. Friend the Member for North West Leicestershire pointed out that the funding gap between schools in Leicester and in Leicestershire is now £600. The trouble is that there is no difference in national pay rates for staff, so schools in Leicestershire have less to spend on other things if they rightly want to retain a decent staff-pupil ratio. They were penalised when the direct support grant was introduced because Leicestershire had topped up school funding. The difference between average funding in the country and that for our schools in Leicestershire meant that a 300-place primary school in Leicestershire would be £99,000 worse off every year. That cannot be right.
My hon. Friend the Member for North West Leicestershire also mentioned police funding. In Leicestershire, we have received £9 million less than the average in the past four years. Despite all that, Leicestershire county council still managed a four-star rating. That shows that, with good management and good political leadership from councillors, local authorities can run services to a high standard on less money than they would ideally like.
I support the amendment. The Opposition have totally reinvented and forgotten the past 13 years, and all the projects and schemes that have been mentioned. The Government are now taking tough decisions, which mean that, in several years, we can fund our services fully, and help the vulnerable and the poor who have been mentioned in today's debate.
The Budget is bad news for Birmingham, a proud city, which suffered grievously in the 1980s and now faces unprecedented cuts in public investment. Why? The Con-Dem alliance says that it is Labour's legacy, but it is nothing of the kind. The Greek defence that it prays in aid is but an excuse for the modern Tory party-modern-day Leninists-to cut back the role of the state nationally and locally. As for the Liberal Democrats-a hollow shell of the once great, progressive party of Lloyd George, Beveridge and Keynes-never have so few let down so many for so little: a handful of ministerial cars and Red Boxes.
Birmingham was the birthplace of municipal government and municipal enterprise. It is Europe's biggest council, which employs more than 40,000 and funds thousands of community projects and voluntary initiatives. It is a key purchaser of goods and services from the midlands economy. It is also, historically, a champion of the people of Birmingham. In the best traditions of Chamberlain on the one hand and Dick Knowles on the other, next Tuesday, Sir Albert Bore and the Labour group on Birmingham city council will table a motion for debate that calls on all councillors to stand up and be counted in opposition to what the Tories said they would not do and the Liberals said they should not do: put up VAT. The motion calls on councillors to speak out against a broken promise-an unfair tax that will hit pensioners, the unemployed and the poor hardest, and a jobs tax, which will hit the economy of the midlands, from house building to retail.
My hon. Friend's comments about the motion that the Labour group in Birmingham will table remind me of what happened at a Sefton council meeting last week. The Labour group there tabled a similar motion, and I hope that the same result does not occur in Birmingham, because the Liberal Democrat and Conservative councillors in Sefton decided not to turn up to debate how to deal with the Budget crisis and the Government's national cuts.
It would appear that, in your local authority, they have found Lord Lucan, and they are now looking for the Liberal Democrat and Tory councillors. In Birmingham, they are going to have to stand up and be counted.
There is a grotesque contrast between the £2 billion levy on the banks-not on the bankers, by the way-on the one hand, and £11 billion off welfare and £12 billion on VAT on the other. I want to take this opportunity to pay tribute to the leadership shown last night by the truly honourable Members for Colchester (Bob Russell) and for Portsmouth South (Mr Hancock) when they voted against their own Government in opposition to the VAT increase.
The shadow Secretary of State was absolutely right to point out earlier that the areas with the greatest needs should not bear the brunt of the cuts. Birmingham has great problems of multiple deprivation and high unemployment, yet, as a consequence of the Budget, it will see the biggest cash reduction-more than £12 million. It will have the largest cut in area-based grant in any local authority in Britain, at £8 million, and the seventh largest cut to the school development fund, at £633,000. That money was designed to help struggling schools to succeed.
Birmingham will have the second largest cut to Connexions, at £2.7 million. This will harm the ability of our city to help the young into work and to get apprenticeships. It will also have the largest cut to the children's fund, at £1.14 million. That will damage the capacity of our city to reach out to disabled, disadvantaged, troubled and sometimes abandoned children. It will also see the largest cut to the working neighbourhoods fund-a highly successful programme of concentrated, co-ordinated, community-led action to get Birmingham's citizens off benefit and into work.
I have seen these programmes at first hand, in the form of the remarkable Employment Needs Training Agency in my constituency, and three excellent employment Connexions contracts focusing on the long-term unemployed, lone parents, ex-offenders, those who have engaged in alcohol abuse, and those who lost their jobs under Mrs Thatcher in the 1980s and never worked again. Those programmes have an outstanding track record of reaching out to those people, giving them hope, and helping them to rebuild their lives and get back into work.
The hon. Gentleman speaks eloquently about the problems in Birmingham without telling us how we got there in the first place. Does he think that borrowing £500 million, not every month or every week but every day, represents responsible behaviour towards the people of Birmingham?
There are more bankers on the Government green Benches than there are in the square mile of the City of London.
Those admirable community projects' money will run out in March 2011, and they are now facing a cut of up to one third. The impact of that on those projects and those communities will be absolutely devastating.
I am a former banker. I can see that the hon. Gentleman is probably still a trade unionist, rather than a former trade unionist. Does he realise that his party lost the election because it brought our country to the brink of bankruptcy? We are having to impose these cuts because of everything that you did or failed to do. They are your cuts, and there is no point in complaining about them now.
I was fascinated by the earlier contribution of Sajid Javid, in which he demanded equal treatment for Bromsgrove and Birmingham. Forgive me for saying this: if you cannot tell the difference between Eton, Esher and Erdington, I can.
The cuts falling on my city are in grotesque contrast to what is happening in West Oxfordshire district council area, where not 1p is coming off the working neighbourhoods fund. Whose constituency falls in that area? It is that of the Prime Minister.
It is vital that we have an intelligent approach to the role of government. We have the example in the west midlands of Advantage West Midlands, a hugely successful organisation responsible for creating and safeguarding tens of thousands of jobs, but now facing abolition. It is no wonder that leading voices in the private sector are speaking out in opposition to that decision, which would be folly if we believe in the importance of a renaissance of our manufacturing base. However, the issue is not only the work that AWM does in promoting our manufacturing economy. It is also the work that it does in terms of the big society. I was at the opening of the Perry Common community hall the Friday before last. That was an excellent community initiative, with inspiring leadership from a local community that has been through very tough times. That community hall could never have been opened without half the money being made available by AWM. Can we therefore stop posing big government against big society? What we see in Perry Common is an ideal combination of big government and big society working together.
Ms Harman has so far failed to explain exactly where Labour would have found savings in the unlikely event that it had been returned to power. As the hon. Gentleman is in love with every single expensive programme, can he indicate where we might be able to cut to save some money?
Our approach was fundamentally different. We think that it is folly to cut savagely and quickly. It risks threatening the economy with a double-dip recession and it is cities like Birmingham that would suffer grievously as a consequence.
We are already seeing the consequences of what the Con-Dem alliance is doing, not only in government but locally in the council chamber. The parties have been in power for six years. Earlier this year, 2,000 job cuts were announced, hitting hard nurseries, youth services, park rangers and the most vulnerable in our community-those in local old people's homes. I was in an old people's home in Kingstanding and I met excellent men and women. After our discussion, an 80-year-old woman took me to one side and told me the story of how she had had a double mastectomy and her wounds opened up at 3 o'clock one morning. She could not get help, because there were no longer wardens on site. She had to ring a call centre 150 miles away. She was eventually told to ring 999, but mercifully her son was 3 miles down the road and he came out to take her to hospital.
My view is simple: the good men and women of Birmingham who built that city and this country, and who are now in the twilight of their years, deserve better than to be abandoned by this Con-Dem alliance. You will; we never will.
Perhaps we could inject a dose of reality into the debate at this late stage. Listening to speeches by Labour Members, I could not help but be struck by the old adage, which they have obviously forgotten, that "You can't spend what you don't have." Interestingly, Labour members have clearly adopted the posture of collective amnesia when it comes to why this country is in this financial state and this economic mess, and why substantial savings are necessary in the Budget-it is because of their mismanagement of our economy. Why is it that of every £4 spent in this country, £1 is borrowed? How prudent is that? Why is it that 1 million nursing hours a week are spent on paperwork? It is because of Labour. Why is it there are as many managers in the national health service as there are beds? It is because of Labour. Why is it that the police spend 22% of their time on paperwork and only 14% on patrol? It is because of mismanagement by Labour.
Labour had 13 years to make the so-called improvements that it now claims we ought to make. Why did it not make those improvements? With the greatest respect, Labour Members are suffering from what can be called ostrich syndrome. They are sticking their heads in the sand, but the problem is that their hindquarters are still exposed. The hindquarters of this ostrich are there for all to see. It is disrespectful to the electorate to think that they are not intelligent enough to know why we are in this position. Why else did Labour achieve only 29% of the vote in last month's general election-its lowest in quite some time? The electorate can see who is responsible for the state of the nation's economy-Labour.
Speakers today and yesterday have railed against threatened cuts and savings, but these are Labour cuts. All day, public bodies have been cited and lists of endangered services highlighted, but Labour Members have made no acknowledgement of who pays for them-the taxpayer-and no suggestions about what Labour would do in respect of the cuts that are so obviously necessary. After all, we hear from some of them that billions of pounds of cuts are necessary and would have been necessary had we been in the unfortunate but highly unlikely circumstances of a Labour victory last month. Again, however, there is no collective memory of these issues.
Labour's tax-and-spend policies ended on such an irresponsible note that its Ministers were making spending commitments in the dying weeks of the last Administration which the country simply could not afford. "Grossly irresponsible" is not a sufficient phrase. Those outside this place who were led up the garden path by Labour will realise that these are Labour cuts when programmes have to be cut. Labour acted like a tenant who has fallen out with their landlord and decided in the last few weeks of their tenancy to spend as much as possible on utilities and then do a runner on the last month's tenancy arrangement.
In common with a number of largely rural shire counties, which have been spoken of with some disrespect by Labour Members today, Northamptonshire residents suffered severe prejudice in terms of central Government funding during the 13 years of the Labour Government. Strangely, this phenomenon was not evident in Labour-held or Labour-marginal areas over those 13 years. The funding that Northamptonshire receives is based on out-of-date statistics calculating our population at several tens of thousands-about 10%-less than the reality. In a county whose population has been increasing exponentially-Northamptonshire is the fastest growing county in the country-the use by central Government of these seriously out-of-date figures under the Labour regime has had an unfair effect on Northamptonshire.
No doubt Conservative Ministers will be looking at these figures in due course, but I want to emphasise the point. I spoke this morning to the leader of Northamptonshire county council, who confirmed that Northamptonshire is the fastest growing county in the United Kingdom. The Office for National Statistics' figures are two years out of date. More than 10,000 more people live in Northamptonshire than the statisticians think, and of course those people use Northamptonshire schools, bin collections and the like. This imbalance between the fastest growing county and our underfunding costs the county £5 million a year-the equivalent of 2% on council tax. Yet Northamptonshire has the lowest council tax in the United Kingdom-£30 a year lower, at band D, than the second lowest placed.
Local government finance accounts for 25% of the budget, so what needs to happen? Well, there needs to be decentralisation, and I am delighted to see that the coalition Government are already moving in that direction. There needs also to be an end to the obsessive red tape that Labour Members have created-the bureaucracy, the extreme state control-and there also needs to be an end to the top-down diktats. We need the axing of unelected and ineffective quangos, while radical reform of the planning system is also necessary to give neighbourhoods far more power to determine the shape of the places in which their inhabitants live.
In Northampton North, the constituency that I have the honour to represent, there have been examples-one in particular in the Booth Rise area-of how we have suffered under the Labour Government's style of planning regime. Despite opposition from local residents, from the local councils, from the planning committee on the borough council and from Members of Parliament-including my Labour predecessor, I might add-a decision was taken to build 111 compact homes on green-belt land in a gateway area to the town where traffic is already heavy. That was pushed through by a Labour-created quango. Around the country, people are left feeling entirely disconnected from the powers that make these decisions.
I will not, forgive me; Mr Deputy Speaker has indicated that we are in a rush.
In conclusion, we need to introduce new powers to help local communities to save facilities and services threatened with closure, giving communities the right to take over local state-run services. We need to cut the red tape and look with reality, unlike Labour Members, at what needs to be done to improve this country's economy and to improve the state of democracy for our local people and their elected representatives.
When Michael Ellis suggested that we were going to get a dose of reality, I was hopeful, but, sadly, those hopes were dashed. It is ironic that on a day when the Secretary of State should have been here answering the charge of betraying local councils, he should instead-like the spectre of Tory cuts past-return to Bradford, where he would no doubt have asked for many other crimes to be taken into account. What we are seeing, of course, is simply the return to the Tory cuts from which local government suffered so badly in the 1980s.
One thing that stands out from this whole debate is the fact that the Liberal Democrats have not been involved in it. As far as I am aware, there has been only one contribution from them-from John Hemming-yet the Liberal Democrats were supposed to be the party of local government. Here we are discussing 20% of the total cuts being made this year falling on the local government sector, and the Liberal Democrats are absent-absent without leave. I think it is simply scandalous that a party that prides itself on its contribution to local government should refuse even to engage in the debate.
Local government has not had a fair deal. Even in the current climate, local government has taken far more than its fair share of the cuts that have come this year. The cuts coming in future years will undoubtedly fall most substantially on the most deprived people in our communities.
Given the limitations of time, I want to focus on one particular area-the impact of the cuts on the voluntary sector. I spent the weekend at the Old Whittington and Brimington galas in Chesterfield. There were numerous examples of great community groups there. In every single case, they were worried about the funding they would receive. How can the Conservative Government possibly create the big society when the voluntary sector, which will be fundamental to it, is going to face such substantial cuts in their funding when these local government cuts go through?
What needs to be acknowledged is the vital role that local government plays in our society as the founding stone and bedrock of democracy. As to the funding cuts to area-based grants, they will specifically target the most deprived communities. What we have seen, then, is an ideological Budget and an ideological decision that specifically disadvantages the poorest people and reduces the ability of those in the more deprived communities to work their way out of poverty. It is a strategy of diminishing local government and scrapping the measures that would demonstrate the damage being done. Many of the measures the Government are currently taking will, under the cloak of reducing bureaucracy, actually reduce the accountability of local government and other public sector organisations, and reduce the ability of the public to hold those services to account. It is all part of the seizing of power by the Secretary of State under the cloak of localism.
These measures will reduce the ability of councils to provide their services. Council leaders know that when they want to provide their services they will be told they have more power, but they will not have the money to deliver the services, and neither will they have the ability to raise the money because the Secretary of State is informing them that they cannot increase council tax. Therefore, what they will actually have is simply a choice between scrapping services, which will disadvantage the most deprived people in our community, and hiking up charges on a whole raft of services, which will mean fewer people access them.
If the Secretary of State genuinely wants to make efficiencies, then let us see a commitment to Total Place, which is the ideal way of supporting partnership working to deliver the changes to communities and of reworking spending to be more efficient. That will also engage other organisations to work with local government, so we can create a progressive society out of the situation we are in, rather than our having these savage cuts that will disadvantage the most deprived people in our communities.
I will try to limit the length of my remarks to five minutes so as to allow others to speak.
The shadow Secretary of State set the tone for the debate. There was some good knockabout, but one got the impression that he does not actually understand the system that he was administering until very recently, and he had nothing to say about the fundamental problems with local government finance in this country. The reality is that councils are too dependent on central Government for their funding, and too much of the money that they get from central Government is controlled by central Government in respect of how they can spend it. Also, the grants system that is used to distribute money is hugely complex, not transparent, unpredictable and unfair.
Let me give an example involving my own local authority. In this financial year, Dorset county council received the largest increase in the country: 7.1%. The England average was 2.6%, and Croydon got 1.5%. I will not take up time by going back over the past four or five years, but the pattern is repeated. Has Croydon suddenly lost a large chunk of population, or are we suddenly a much more affluent place than we were a few years ago? No. The system makes no sense whatever.
The London borough that is most similar to us is Enfield. It receives £423 per head of population, whereas Croydon receives £348. If we received the same level of funding as the borough that is most like us, we could cut council tax bills by £200 per head. In London, we have the nonsense of the area cost adjustment that divides London up into three areas and pretends that the London borough of Croydon can pay people a lot less than the London borough of Sutton right next door. That is complete nonsense. The system is in urgent need of reform, yet we have heard nothing from the Opposition about any of these issues.
On savings, let me repeat something that I said in the Budget debate. Almost every Labour Member who has contributed today has said that we are driven by some kind of ideological passion to slash public services. The NHS saved my life when I was seven years old and had lymphatic cancer, and I also have two sons at state school. The most urgent issues in my constituency are the need for more police officers on the streets and the need to do a better job of repairing our roads. I did not come to this place to slash public services, but I and my constituents know that the Government cannot continue to spend money that they do not have. That does not work in the long term.
There is real scope for making savings in local government-my council saved 6.8% in the previous financial year-but there is no doubt that the level of savings envisaged over the course of this Parliament is significant and will lead to some really tough decisions for local authorities across the country. I have to say to Opposition Members that although the Chancellor has proposed going further than the Labour party was proposing, we are protecting fewer departmental budgets so in terms of the unprotected Departments there is actually very little difference between the plans. People who have sat here listening to the debate all day, as I have, would not have got that impression, however.
May I end by making a few pleas to my Front-Bench colleagues? They can do a number of things to make this situation easier for local authorities. First, they can press forward with the proposal for a general power of competence. In London, we used to have a mutual arrangement between the borough councils to buy insurance, but it was ruled to be illegal. Bulk purchasing of that kind can save local authorities sizeable amounts of money. I also agree, actually, with something that was said by the Opposition about the Total Place initiative. Croydon was a pilot for early years, to which a lot of bureaucracy is attached. There is real potential to drive up savings over the long term in that regard.
Finally, I ask that we look at the possibility of working across the public sector. In Croydon we have a PCT that is coterminous with the council. There are separate finance directors, separate human resources departments, separate properties. If we can bring the different bits of the public sector together, there is huge potential for saving money and protecting our front-line services.
There is so much more that I could have said, but other Members want to speak so I will take my seat.
I keep hearing from Tory MPs claiming that these are Labour cuts. Well, it is quite simple: if you do not like the cuts or do not agree with them-if you think they are Labour cuts-vote against them; do not impose them. It is a very simple point, but it is an opportunity open to all Members on the Government Benches, Tories and Lib Dems.
Of course, the reality is very different. The truth is that these are Tory and Lib Dem cuts, and they are enjoying making them. The face of the Secretary of State says it all: he is looking forward to them, and he has form on this, as other Members have said. If it is not the ideological passion of Gavin Barwell to make these cuts, then what is it? Economists have shown us that if we make these cuts now, they will be far too deep and far too early for the economic recovery to be sustained.
Cuts in-year in local government are unheard of. They are unplanned, and they undermine what councils and local people want to achieve in their communities. I spent 15 years as a local councillor, and I remember when the then Secretary of State was first getting started on this issue. I remember the leaky school buildings, the outside toilets, the teachers buying equipment out of their own pockets. I am proud that Labour fixed the roof while the sun was shining. I am proud that we built new schools, bought the textbooks, employed the support staff who freed teachers to teach, and provided free nursery places.
My friends' children have older brothers and sisters who went through the nursery system and went to school before there were free nursery places-before Sure Start was available to them. Their parents tell me the difference that the younger children have seen as a result of that Labour investment, of which I am very proud, and I will fight hard to protect it, as will other Labour Members.
While I was a local government children's services spokesman, I saw at first hand how many essential services are provided by education departments and social services, and the difference they make to the children and families who depend on those services. Sure Start children's centres are among a number of such examples. However, under threat from these cuts is the extended schools grant. It makes a huge difference to children who otherwise would not have breakfast to be able to go to breakfast clubs. It makes a huge difference that children can go to after-school clubs, and that working families are able to get by. The cuts to those grants will make a profound difference. They will cause real hardship for many children, young people and their families.
Thanks to the services now available, vulnerable children have a much better chance in life and an opportunity to get out of the cycle of deprivation, neglect and poor health that was previously the lot they faced in life. So the cuts in those services really will hurt those who can least afford to suffer them.
In Sefton we are facing £2.1 million in education service cuts. Cuts in local education services mean not the money that is going straight to schools, but the money that is there to support schools. So it is smoke and mirrors to claim that these cuts will not affect schools: they will, and badly.
The Labour group called a meeting in Sefton, and the Tory and Lib Dem councillors refused to turn up to take part in a debate about where the cuts should fall and how the budget should be managed. That was an abdication by the Conservatives and Liberal Democrats in Sefton, and the same tactic is clearly being tried by the Government, because they are asking councils to make cuts with no guidance, in-year, and yet the worst is still to come. A further £504 million of cuts have yet to be specified, so the worst is yet to come in this year. What the right-wing Tory-Lib Dem coalition Government in Parliament are doing is the same as what the right-wing coalition in Sefton is doing: they are abdicating their responsibility and they are going to hit the poorest hardest.
In light of the time, I shall be very brief. My hon. Friends have well made the point that the tough decisions that our Front-Bench team and the Government are making are based on the deficit that we have inherited and that that is a problem that we must deal with. I shall not take up time discussing that issue, because it has been well covered.
I wish to discuss my experience as a councillor for more than a decade under the old Labour Government; I was also a council leader. When I listened to the shadow Secretary of State waxing lyrical about what the Labour Government did on local government and what they had planned I did not recognise the fairy tale being told. The local government that I remember as a councillor and council leader is one where my officers wasted countless weeks throughout the year; they were not providing front-line services and were not looking at how we could do more for our residents, but were ticking boxes, filling in forms and keeping different auditors and quangos happy. At the time of the recent announcement of cuts for local government, I was on BBC "Look East" talking about Great Yarmouth and its 2% cut. Labour Members would say that this has happened only in certain areas, but that is not the case because Great Yarmouth's authority had one of the biggest cuts.
My local authority, which I am proud of, has turned around and said, "We can deal with this. Any good business can deal with a 2% cut, so we can deal with it and we will do so without dealing with front-line services." I said to the leader of my local council, "If we could wave a magic wand and if central Government could make life easier, faster and better for the council and, more importantly, for the residents of Great Yarmouth, what thing could we do? Is it provide more money?" He said no.
When I speak to councillors-I found that this was the case when I was a councillor too-I am told that this is not necessarily about the money, but about the ability to deliver services. It is about the ability to have real power and to make decisions locally on matters that matter to people locally. I fully support the Government and I give great credit to my right hon. Friend the Secretary of State for the work that the Government are doing so quickly to devolve power to local authorities. I say bring on more, so that we can get residents in areas such as Great Yarmouth to see that their council matters and their vote matters, because their councillors will be making decisions that will affect their lives, not ticking boxes for central Government and suits in Whitehall. I will therefore be fully supporting the amendment, and I say that the more power we can give to local councils to deliver local powers locally with residents, the better.
Local government has been at the vanguard of progressive change for more than a century. Some of the most significant and innovative advances originated in local government. The introduction of modern sewerage systems in our towns and cities, the replacement of slum dwellings with decent public housing, the development of comprehensive schools and the provision of care for elderly and disabled people are just a few examples of the improvements brought about by local government.
When the Tories were last in power they did their level best to annihilate local government, and now that they are back they have set their sights on finishing the job. It is the local government equivalent of the return of the Daleks, with Mr Pickles playing the role of Davros, the supreme leader of the Daleks, determined to exterminate progressive local government once and for all, aided and abetted by the Cybermen Liberal Democrats. The Secretary of State for Communities and Local Government should be standing up for local government, not seeking to strike it down.
Given the Secretary of State's dismal record as leader of Bradford city council, where he first gained his notoriety for vicious cuts, we should not be too surprised that he is now using the national stage to inflict his cuts agenda on the whole country. An article published last year in The Independent reminded us about his period as leader of Bradford city council. It stated that
"having gained control of the Conservatives' only inner-city council" he
"set about an unprecedented round of cuts, sell-offs, price rises and job losses. At the first meeting, £5.8 million was cut from the budget, chiefly in education. Council rents went up. So did charges for leisure centres, car parks, school meals, home helps, meals on wheels, OAP luncheon clubs and cemeteries."
He did not finish there. The article goes on to say:
"Teachers, caretakers, maintenance workers, crèche and nursery staff, social workers and council officers all lost their jobs. Old people's homes were sold off and Benefit Advice Centres closed."
Sounds familiar, does it not?
The hon. Gentleman should realise that the only people who sold off old peoples' homes were in the Labour council that followed. He should realise that there were more teachers at the end of my period as leader of the council. The people who cut the teaching numbers were in the Labour council.
As Corporal Jones used to say, "They don't like it up 'em," do they? The sad fact is that the Secretary of State for Communities and Local Government knows from his period as council leader that his cuts package will hit the poorest areas the hardest and he knows that some of our most vulnerable citizens throughout the country rely on the very council services that he wants to destroy. He knows, but he just does not care. He also knows that despite the local government aberration that was Bradford city council under his leadership, it was local government that helped to lead the resistance to the malevolent policies of Margaret Thatcher's and John Major's Administrations. It was local authorities-
No, I will not give way. It was local authorities such as Derby county council that resisted the Tories' wicked attempts to starve the miners back to work during their year-long strike. What Derbyshire county council did was to ensure that the miners' families had enough food to eat. It was councils-
No, I will not give way. It was councils such as Derby and Nottingham city councils that resisted the Tories' absurd bus deregulation policy by establishing arm's length public transport companies. The Secretary of State knows that by emasculating local government, he will make it much harder for councils to stand up to this Con-Dem coalition, yet in true Orwellian double-speak he recently told the ConservativeHome blog site that he was
"completely committed to localism and handing power back to people"- that is, handing power back to people to make cuts.
I think I have three minutes to make my speech, and I thank Chris Williamson for sitting down.
We have heard so much hot air from the Opposition, it is unbelievable. I am glad to be able to speak at the last minute, so that we can have some common sense. I do not think that the Opposition realise that they lost the general election. They lost the general election because they have no idea of the economic damage that they have done to our country. They have done that damage throughout our economy, including in local government finance. They have done that damage in local government finance because they have not understood that the allocation of local government funding should have been based on the needs of individuals in each constituency and not on petty party politics. When we look at the areas in which local government funding fell, we can see that wherever there were Labour voters, that was where the money went. It was not based at all on the needs of individuals.
As the Government make the reforms, we must ensure that the changes reflect the needs. Let us take one example from my constituency. Local school children got £900 less per head per year than those in neighbouring Birmingham. If anyone from the Opposition thinks that there are not vulnerable people in Bromsgrove, they are welcome to come and visit and I shall take them around myself and show them just how similar parts of my constituency are to urban Birmingham.
No matter what the constituency, none of them are uniformly affluent or poor. Areas of wealth and deprivation exist in them all and the needs of the vulnerable in my constituency are no less valid than those of the vulnerable in the constituencies of Opposition Members. As we are forced to make Labour's cuts to local government spending, it is essential that we also devolve local decision making and cut bureaucracy. Let me end by saying that we must make sure that never again is local government funding allocated according to petty party politics. It should be allocated according to local need. I support the amendment.
We have had the benefit of a full day's debate and, by goodness, we needed it to draw out from Members on the Government Benches the full colour of their rhetoric.
Let me pay tribute to the two maiden speeches made today by Paul Uppal, who, with great elegance and lightness of touch, paid tribute to both his Sikh heritage and his predecessor, and by Chris Kelly, who also praised his predecessor.
May I thank all Labour Members, who have contributed so strongly? My hon. Friends the Members for Coventry South (Mr Cunningham) and for Denton and Reddish (Andrew Gwynne) spoke about the shambolic way in which the Government have dealt with the programme of cuts, and my hon. Friend the Member for Denton and Reddish also talked about the holistic nature of agencies in local government. My hon. Friend Mr Betts, who chairs the Communities and Local Government Committee, gave a forensic dissection of the drift and incoherence of Government policy on social housing, and my right hon. Friend Hazel Blears rightly picked up on the human aspects of all this.
Other good speeches came from my hon. Friend Heidi Alexander, who talked about how unfair the cuts are, from my hon. Friend Alison McGovern, who talked about the impact on the future jobs fund in her constituency, and from my right hon. Friend Mr Blunkett, who reminded us in his powerful speech that it is the people who sweep our streets, who teach and who look after our elderly who are most affected. My right hon. Friend Caroline Flint made the point, which Members on the Government Benches would do well to listen to, that we did fix the roof while the sun was shining.
My hon. Friend Jack Dromey talked about the Conservative party as modern-day Leninists. I wonder whether the Secretary of State, as a modern-day Stalinist, would agree with that. My hon. Friend Toby Perkins talked about the impact on the voluntary sector and the big society, and, finally, we had a bravura performance involving Daleks and, again, the Secretary of State, from my hon. Friend Chris Williamson.
Those speeches, and the examples that hon. Members have given, have shown that the impact of the cuts is being felt already. As the Financial Times survey of
Those decisions are not based on evidence. The editor of the Local Government Chronicle has said that in this short-term world-the short-term world that Members on the Government Benches inhabit-it is judgment and ideology that are key to decision making. As I used to be told at school, it is like the old speakers' notes, "Argument weak here, shout like mad," for those on the Government side.
Analysis of the future jobs fund shows that there was significant improvement in relation to the 12% figure up to the end of January 2010. As the leader of Barnsley council said, the Government have scrapped the scheme when it was just getting going. The future jobs fund worked towards success and breaking a vicious cycle.
My right hon. Friend Mr Denham, in his excellent speech, talked about the way in which the Government have ignored Total Place and the way in which free schools, elected police officers and NHS commissioning are all part of pushing toward silo government. The Government are taking up positions based on departmental silos to avoid taking collective action across departments. What about their new policy proposals? Where will the equity be in schemes that will cream off significant amounts of money from that available? What will the position be for students with special educational needs, for example, in the new free schools? Total Place shows what can be done, but, unfortunately, the Government parties seem to have a completely confused approach to it. The danger is that their shambolic representation of this issue will entrench inefficiencies as those silos and the salami-slicing of budgets set in.
What do the Government expect to fill the vacuum? The voluntary sector and the big society. Although the coalition expects third sector bodies to play a key role, the cuts that have been announced will be a triple whammy for them. As was pointed out by my hon. Friend Richard Burden, councils will cut the sums that third sector bodies currently receive. The resulting financial pressure will restrict the capacity of those organisations at the very time when they are expected to take on a greater role-another point made by many Opposition Members.
In what environment will those third sector organisations that are expected to fill the void be expected to operate? Will they be able to secure proper service level agreements and guarantees, given that councils will be under significant funding pressures throughout the current Parliament? What will be in it for them, and will they even be able to perform that rescue job when their capacity has been hit in the ways that I have described? No wonder so many of those bodies and their representatives-the National Council for Voluntary Organisations, the chairman of the Charity Commission and the chief executive of the Association of Chief Executives of Voluntary Organisations-are criticising what the Government are doing. As Stephen Bubb has said, "If politicians in government would only recognise that there is a cost to volunteering, and that charities and other third sector organisations can't simply expand their volunteering to fill the gaps."
Many charities rely on public money to function, and funding from central and local government now accounts for 36% of charities' incomes. Apparently, the Secretary of State warned Tory councillors last Friday that they might experience cuts of between 30% and 40% during the current Parliament. No wonder-again-that third sector bodies such as Age UK, and outside experts such as the King's Fund, say that the Government's actions will leave councils with almost no money with which to support people in their own homes.
What about George Osborne's other great white hope- [Interruption.] What about the Chancellor-for now-and his great white hope, the private sector? As Opposition Members have pointed out quite straightforwardly, no account has been taken of the existing dependence on public contracts. No attempt has been made to squeeze out or drop out. Many refuse contracts are already outsourced; how will those contractors cope with Comrade Pickles's latest diktat about weekly refuse collections? [Interruption.] I refer to the right hon. Gentleman the Secretary of State.
The cuts faced by local government are part of a continuum: savage public sector cuts that will have a devastating effect on local economies. They should not be viewed merely within the framework of job losses in town halls or recruitment freezes. The ability of councils to boost economic development in deprived areas has been taken away, and those in the poorest communities will suffer most. Reports from the Greater Manchester business leadership council have already shown that public sector job cuts can push retailers into relocating from towns and cities with high public sector employment.
These Budget measures will lead to 725,000 job losses up to 2015. What structural abilities will be available to sort this out, given that the Government are leaving the regional development agencies in limbo and there are no successors around? The Government need to be wary of the dangers of a squeeze on public pay. With a work force demonised and demoralised by them, where will it lead us?
Given the way in which these cuts have been made, I want to make a final point about the financial structure. [Interruption.] If the Secretary of State had been here for most of the debate, we might have taken a little more notice of what he has had to say. What I want to say is that this huge leap in the dark- [Interruption.]
Order. Will Members contain themselves just a bit as we approach the end of the debate so that we can hear all the contributions, as opposed to all the private conversations that are taking place?
Thank you, Madam Deputy Speaker.
This huge leap in the dark is based on the market fetishism and sado-monetarism that are practised by so many Members on the Government Benches. The Office for Budget responsibility has shown that the Budget of my right hon. Friend Mr Darling was prudent in its estimate of the budgetary outlook.
No, I will not give way.
Government budgets are not like those of individual businesses or households. Cutting Government expenditure automatically reduces the income of private businesses and households. As the well-known economic expert in local government Tony Travers has said, Britain is about to submit itself to an enormous economic experiment. But it is Government Members who are submitting people to it and it is the people we care about who are going to suffer as a result of it. It is good that so many Labour Members have talked about the human impact on individuals of cutting programmes such as connecting communities, Connexions, and positive action for young people.
Local Government, as my protesting workers in Blackpool said to the council yesterday, is about connection and so-called social cohesion. Ultimately, it is about human respect and impact on individuals. While we have hollowed-out policies being put over by hollowed-out people opposite, we will not flourish. That is why we have moved this motion tonight.
It has been a lively debate with plenty of passionate opinions and not too many facts from those on the Opposition Benches. Thirty three hon. Members have contributed to the debate and before I deal with as many of those points as I can, I pay tribute to the hon. Members who made maiden speeches today- Paul Uppal, who demonstrated a light touch but also a determination to stick up for his constituents, and Chris Kelly, who is local and proud of it; his sense of fairness, he thinks, is embedded in his constituency.
We in the Government are under no illusion that local authorities face significant challenges, but deficit reduction and continuing to ensure economic recovery is the most pressing issue facing Britain today. Given that fact, it is fair that local authorities make a contribution to that reduction in Government spending-a proportionate reduction. It will enable the Government to take immediate action to tackle the UK's unprecedented £156 billion deficit inherited from the previous Government.
I will give way in a moment, but let us be clear that for every £300 of income we are getting, we are spending £400 and putting the extra £100 on the credit card; £156 billion is going on the card this year, adding to £1,400,000 billion of debt. Putting that right does not guarantee recovery, but failing to put it right guarantees failure of the British economy.
No local authority will face a reduction in its revenue grant of more than 2%, where councils have received final allocations. I want to nail one of the myths that came up in the debate-the idea that the other grants somehow are tilted against the north, or the inner-urban areas. The housing and planning delivery grant reduction has an impact of £1.45 per head in the metropolitan boroughs. In the shire districts, which Opposition Members thought were getting a free ride, the cost is £3.10 per head. The south-east is paying 90p a head, the north-east is paying 70p a head. Opposition Members' charge is completely misplaced.
The £29 billion of formula grant-the main source of funding for local government-will be protected. There are no controls on how that money is spent in these reductions. The ring fencing of non-schools revenue and capital funding is reduced from 10.6% to 7.7%.
I will give way in a moment, but I want to tell the right hon. Gentleman one or two facts that he has failed-
I shall give way in a moment, when the right hon. Gentleman has listened to this statistic. [Hon. Members: "Oh!"] Well, a few facts would not go amiss in this debate. In 1998, 4.6% of local government expenditure was ring-fenced. The previous Government put it up to 14%, and we are getting it down to 7.7%. That will give councils the freedom and flexibility that they need to concentrate on local priorities and to protect the front line.
Will the Minister repeat the statistic that he gave on the £29 billion revenue support grant and explain how it will be protected? What will a 30% cut in that grant mean in real terms to local government over the next four years?
My point was about the £6.2 billion of cuts that have been referred to throughout the debate. The decisions on the comprehensive spending review are not mine to reveal.
About the time that, instead of simply banks failing throughout the world, countries were failing throughout the world.
We expect councils to continue to protect essential, front-line services this year. The decision on where to make the changes to their budgets is one for them to take. We have given them the flexibility that they need to deliver that, and, with local government accounting for about one quarter of United Kingdom public sector spending, the level of cuts that they are taking is proportionate. In the context of greatly reduced public finance, it is right that all parts of the public sector bear some part of that.
Like Opposition Members, I wish that this programme were unnecessary or avoidable, but unlike them I remember my right hon. Friend the Secretary of State for Business, Innovation and Skills, when he was the Liberal Democrat Treasury spokesman, warning them time and again, year after year, Budget after Budget that they were following a path to fiscal destruction. On uncontrolled debt, unregulated banks and unfounded public spending, they would not listen then and do not want to listen now. They hollowed out Britain's economic base, mortgaged Britain's financial future, gambled on the banks and blew away our manufacturing industry, and now when the bailiffs are at the end of the street, they still want to spend, spend, spend.
It is time that the Opposition got real, faced up to their catastrophic destruction of this country's public finances, hung their heads in shame and confessed that their misplaced love affair with the casino bankers leaves this House, this Government and the British people with no choice but to tighten our belts, pick up Britain's economy and get it going again. I urge the House to support the Government's amendment.
Question accordingly agreed to.
The Deputy Speaker declared the main Question, as amended, to be agreed to (
That this House regrets the doubling of council tax under the last government, its cuts to services such as rubbish collections and its legacy of public debt; expresses concern that the prospect of paying for £70 billion a year in debt interest represents a total of more than is currently raised from council tax, business rates, stamp duty and inheritance tax combined; welcomes the new Government's immediate support for frontline services by protecting £29 billion of formula grant, removing £1.2 billion of ring-fencing and abolishing red tape such as the Comprehensive Area Assessment; backs the support for hard-working families and pensioners through a council tax freeze and the abolition of the previous government's plans for new bin taxes; further welcomes the scrapping of the unfair ports tax which threatened to harm Britain's whole manufacturing sector; supports the reductions in business rates for small firms; acknowledges the significant efficiency savings already delivered by local government but believes that there is further scope for savings through joint working, professional procurement practices and radical town hall transparency; and asserts the importance of delivering local economic growth to all local communities across the country, assisted by new financial incentives, and of giving new freedoms to councils to allow them to focus their help on local priorities and those most in need.