House of Commons Hansard Debates for 3 Feb 1997 (pt 15)

Mr. Jon Trickett (Hemsworth): When will the Government have the nerve to call the general election?

Mr. Sumberg: The really important vote will be called soon, because it will take place in Bury council chamber some time in March to decide what priority the Labour council gives to the services enjoyed by my constituents. I make no bones about the fact that some elements of the situation are unfair to Bury and to the council. However, just as we in our private lives must accept the situations that we face and deal with them, so must local councils. We cannot pretend that our bank manager is charging us 5 per cent. when he is charging 15 per cent. on our overdrafts, because that would result in financial disaster. Equally, while the situation may be difficult and harsh, the council cannot pretend that it lives on another planet.

If my community is to maintain our excellent education services--which is what I and the people whom I represent want--every other aspect of council spending must be examined. Some harsh, politically difficult decisions must be taken by people in the Labour party, who, I accept, hold their views very sincerely. As Aneurin Bevan said, they must use the language of priorities. Our children's education should be a priority. If the Labour council in Bury is prepared to do that, to put aside political prejudice and to work to find a solution that will preserve our excellent primary and secondary schools and adult education, it will rightly command the respect and admiration of the community; it will also have my total support.

5.23 pm

Mr. Jim Marshall (Leicester, South): Mr. Deputy Speaker, the last time I was involved in a local government finance debate, I think that you were also involved. We both realise how long ago that was. As I listened to the Secretary of State's bluster, I reflected that I had not missed much over the past few years. If it were not for an pressing problem in the city of Leicester--I mention that to ensure that the Minister knows where my constituency is--the Secretary of State might well have driven me from the Chamber. I cannot but believe that his speech, and that of the hon. Member for Bury, South (Mr. Sumberg), had more to do with the coming general election than with the needs of local government. However, like the hon. Member for Bury, South, I am seeking the Secretary of State's assistance, so perhaps I should curtail my criticism and get on with my substantive point.

I think that all hon. Members accept that councils of all political persuasions--even the few remaining Tory administrations--agree that this year's proposed spending limits are inadequate. Despite the vehemence with which Ministers put their argument, local government and local authority bodies believe that, on a like-on-like basis, local authority spending in 1997-98 will increase by 1.5 per cent., not by 2.5 per cent. as Ministers claim. Inevitably, that will increase pressure on service provision and lead to the difficult problems highlighted by the hon. Member for Bury, South.

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Nowhere are such problems clearer than in Leicester. The Minister received a deputation from Leicester in December 1996. He knows that Leicester will become a unitary authority in April. Everyone in Leicester agrees that this is one of the most traumatic periods in the political life of the city council. At this traumatic time, the city is faced with the worst budget settlement in its history. The Minister knows that Leicester is the only 1997 unitary authority that is capped at its notional 1996-97 budget plus 1 per cent., even though Ministers accept that inflation forecasts are running at between 2.5 and 3 per cent. The council faces the lowest budget settlement of any reorganised authority, this year or last. If that goes through unaltered, it will have disastrous consequences for service provision and development.

The Minister knows that, as a non-metropolitan district, Leicester is permitted to overspend to the tune of 40 per cent. above standard spending assessment. It gives me no pleasure to say that, because I know that political opponents will seek to attack it, but that is the reality. As part of the agreement with the Government, the council pursues a strategy of managed budget reduction. When it becomes a unitary authority in April 1997, it will be an authority with a spending limit of 2 to 2.5 per cent. above SSA. If the council does not receive additional assistance from Government, it will have to reduce its budget by £15 million to £18 million.

If services transferred from the county council, such as education and social services, are ring-fenced and protected from cuts to avoid the draconian action that the hon. Member for Bury, South described, the consequences for services presently provided by the non-metropolitan district, such as leisure, housing and planning, will be horrendous. The housing renewal strategy in the inner city, which assists owner-occupiers, will be especially hard hit; it will virtually cease. Neighbourhood centres throughout the city will face closure. Leisure service provision in Leicester will be decimated.

There is real disquiet among city council employees who sense the threat of redundancy. They have already seen the present Leicestershire county council issue 600 redundancy notices as a consequence of reorganisation. We hope that many of those redundancies will not occur. Nevertheless, the redundancy threat is having an enduring effect on the morale of staff of the county and city councils, which will persist long after 1 April 1997.

I hope that the city of Leicester and I can convince the Secretary of State and the Minister that it would be disastrous for the new unitary authority to start its life with large service cuts and redundancies as a consequence of the unexpected harshness of the revenue settlement. I realise--I am sure that my realisation will be borne out by experience as the debate continues--that the Government will be subjected to special pleading from hon. Members on both sides of the House. Nevertheless, I hope that Ministers will take further action to ameliorate the consequences of the decisions that they have taken already regarding the city of Leicester. Some of the worst consequences may be avoided if they consider the views and options identified by the delegation that met the Minister. I await the Minister's reply in hopeful anticipation of further assistance for the city of Leicester.

5.30 pm

Sir David Madel (South-West Bedfordshire): The hon. Member for Leicester, South (Mr. Marshall) and my hon. Friend the Member for Bury, South (Mr. Sumberg) drew

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attention to the fact that the debate is about the important issue of state spending levels. The hon. Member and my hon. Friend drew attention to education and its importance locally and nationally, and both pointed to the relentless pressure on Government for increased state spending. That is particularly true at local government level, as I believe that the country is now much better informed about the activities of local authorities. Local authorities today spend much more time informing the electorate of their aims and achievements, and Governments will face continuing debate about how much the country can afford to give them in order to assist with important expenditure items.

Like the hon. Member for Leicester, South and my hon. Friend the Member for Bury, South, I shall devote my remarks to my local situation. I believe that the debate is not so much a time for special pleading but a time for drawing special attention to particular local problems. I am grateful to my right hon. Friend the Minister for Local Government, Housing and Urban Regeneration for receiving a delegation from Bedfordshire county council that my hon. Friend the Member for North Bedfordshire (Sir T. Skeet) and I brought to see him last month. Some progress has been made following that meeting, which I shall outline later.

My right hon. Friend is well aware that Bedfordshire faces particular difficulties as a consequence of local government reorganisation. Luton has been separated from Bedfordshire for the second time in 35 years, and it will become a unitary authority. One may ask whether Luton should have been joined with Bedfordshire in 1972 or been allowed to retain its county borough status--which it was granted in 1962, and thus had enjoyed for a mere 10 years. The answer is that it should have remained as it was and been allowed to develop in that direction. However, in the 1970s the Government of the day were involved in Common Market negotiations, in altering housing benefit, introducing value added tax, reforming industrial relations, and changing Ulster's constitution--it was helter-skelter legislation. Against such a background--with the Government desperate to move on--mistakes will inevitably occur, and I think that the Government's decision regarding Luton in 1972 was a mistake.

Nevertheless, Luton will become a unitary authority on 1 April. I believe that the consequences of local government reorganisation in Bedfordshire require further rapid detailed discussion between the county and the Department of the Environment. The reorganisation decision will result in the transfer of resources to Luton. The problem is that Bedfordshire's assessment of how much is currently spent in Luton is different from the Department of the Environment's provisional assessment--that is, the notional amount. Based on current expenditure levels, the county estimated that the notional amount should be £6 million more than the Department's initial estimate. As my right hon. Friend knows, that factor formed part of our representations to Government.

The transitional costs of local government reorganisation involve two elements: making the change--that is, providing information to Luton about services and reorganising the county--and compensating staff, especially those who are made redundant.

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The greatest concern in Bedfordshire at present is the cost of redundancies. It is impossible to predict what that will be, as the county is in the middle of reorganisation and Luton is still recruiting staff. The Government have made available resources of £2.5 million over two years, which the county council has supplemented with resources generated internally.

The Government have asked what Bedfordshire county council is doing about the reorganisation problem, and the response has been good. The district auditor has commented:

"Bedfordshire County Council is handling the challenge of local government reorganisation well."

I draw my right hon. Friend's attention to three developments in Bedfordshire. First, departmental structures have been reorganised and there has been a 60 per cent. saving in chief officer posts, with the number of departments reduced to four. Secondly, staffing structures for core staff are being filled at only 60 per cent. of current staffing levels, which amounts to a saving of £4.5 million after adjustments for the transfer to Luton. Thirdly, central support services, such as finance and legal, have been reduced more than front-line services.

I thank my right hon. Friend for the changes that he has made to the damping grant. The Government have confirmed that Bedfordshire will receive an extra £4.2 million in Government grant, which aims to reduce the impact of local council tax increases caused by the cost of local government reorganisation. Departmental estimates suggest that that will be worth £33 to the average band D council tax payer in the county. That was one welcome consequence of our meeting with my right hon. Friend last month.

However, other problems remain, which I ask my right hon. Friend to consider. Bedfordshire county council expects to have reserves of about £1.5 million at the beginning of 1997-98. That leaves no scope for using reserves in the short term while long-term savings are realised. I offer two suggestions to my right hon. Friend which could assist the county. The Government could provide additional capital approvals or allow the county council to utilise some of the capital receipts that are frozen. That would allow expenditure to be incurred in order to achieve long-term savings.

In making that plea, I do not suggest that the Government should take the general brake off local government spending. We know what would happen if they did so: someone, in the guise of the late Anthony Crosland, would have to say "the party is over"--we all remember those vivid words. There is a risk that spending would shoot out of control, as it did when Mr. Crosland was Secretary of State for the Environment in 1974. However, I believe that there are several different brakes that could be eased gently when it comes to local government reorganisation, and one of them applies to Bedfordshire.