Local Government Financing

Part of Opposition Day — [2nd Allotted Day] – in the House of Commons at 7:08 pm on 29th June 2010.

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Photo of David Blunkett David Blunkett Labour, Sheffield, Brightside and Hillsborough 7:08 pm, 29th June 2010

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favour, but we should not quickly take out the billions-not millions-of pounds that, over the next four years, will be withdrawn from local government.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.

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