Local Government Financing

Part of Opposition Day — [2nd Allotted Day] – in the House of Commons at 6:27 pm on 29th June 2010.

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Photo of Heidi Alexander Heidi Alexander Labour, Lewisham East 6:27 pm, 29th June 2010

May I, too, congratulate Paul Uppal on a very thoughtful and witty maiden speech?

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.

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