Local Government Financing

Part of Opposition Day — [2nd Allotted Day] – in the House of Commons at 6:17 pm on 29th June 2010.

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Photo of George Hollingbery George Hollingbery Conservative, Meon Valley 6:17 pm, 29th June 2010

I offer my congratulations to my hon. Friend Paul Uppal, whose eloquence was wonderful to hear. I am delighted to have been in the Chamber for his maiden speech.

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".

I believe that the figure of £504 million is derived from the excellent Library note on this issue. An avid reader of standard note SN/SG/5573 will have seen this text on page 4:

"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.

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