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Local Government Finance (Harborough)

1.29 pm

Mr. Edward Garnier (Harborough): I thank the Speaker for granting the debate, which is on an important subject for my constituents, and the Under-Secretary, the hon. Member for Stretford and Urmston (Ms Hughes), for coming to Westminster Hall to respond on behalf of the Government. Local government finance is an intensely complicated subject, and many Ministers have spent years in her Department and its predecessors without ever reaching a full understanding of it. I am sure that the hon. Lady is not in that category, but let me tell her something about the two local authorities in Harborough and explain why the debate is so important.

There are two local authorities in my constituency, excluding Leicestershire county council. Oadby and Wigston borough council is geographically small but has an electorate of about 40,000 and, obviously, a larger population. It covers the part of south-east Leicestershire that is closest to the city of Leicester, and consists of Oadby, a settlement of medieval origins, and South Wigston, which grew with the expansion of the canals and railways during the 19th century and housed the regimental headquarters of the Royal Leicestershire Regiment, the Tigers. Between those two places are Wigston Magna and Wigston Fields, which are also settlements of some antiquity and are on the routes of the old sheep and cattle droves to Leicester livestock market, which is now a multiscreen cinema and supermarket complex. I suppose that, nowadays, that is called progress.

The borough is now mostly residential but there are some factories, which are mostly, although not exclusively, related to food preparation, light engineering and textiles. We have in the borough Leicester race course, as well as the Leicester university botanical gardens and many student halls of residence. There are also a few farms.

Harborough district council covers the largest area of any Leicestershire district council--the whole of south and east Leicestershire--and has a population somewhat larger than that of the borough. Based on the ancient town of Market Harborough, it is made up of some of the finest grazing land in the country and, so far, it is thankfully free of foot and mouth, although it is designated as an at risk area because of cases confirmed to our north, south and west. It contains many small villages, rural settlements and farms, and rolling countryside of equal beauty to the fells and dales of the north. If I may say so, it is an undiscovered gem.

We are a largely contented but not complacent part of the world, with low unemployment, good schools and access to fine hospitals. The Government cannot claim credit for any of that--that position has obtained for many years. However, my two local authorities share an ever-increasing burden of Government-imposed targets and strategies, which are eating into their small revenue budgets, taking up and extending the already full working day of local government officers, and diminishing the level of public service that the dedicated and hard-working officers want and are able to provide to my constituents. Oadby and Wigston council has a general revenue fund budget for 2001-02 of £4,978,000,

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and Harborough council's net revenue budget is £6.3 million. In financial terms, both are small authorities.

We were not at all pleased when, in 1999, the Department of the Environment, Transport and the Regions subtracted nearly 1,000 citizens from the population of Oadby and Wigston, with a consequent reduction in its standard spending assessment, a loss of about £65,000 in revenue, a reduction in service provision and an increase in council tax.

I refer the Minister to a letter that was written by the director of resources, Alan White, to Mr. Lambirth of her Department on 21 January 2001, in which he outlines some problems that arose as a result of that arbitrary subtraction of population. He wrote:

Mr. White said that the council was non-confrontational and was not deliberately ignoring the content of advice from the Department. He said:

There appears to be a somewhat sanguine acceptance at the DETR that there are winners and losers in the game of local government finance, but it pays scant regard to the practical consequences, which can be quite dramatic for small authorities. For Oadby and Wigston, £65,000 is a significant sum. It is not acceptable to visit those consequences on the council without giving it a chance to plan in advance how best to accommodate the loss.

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It gets worse. Best value is no doubt a wonderful concept. To be fair to the Government and so as not to misrepresent my local authorities' concerns, I must point out that both Harborough and Oadby and Wigston have been prepared to accept that there is room for improvement in the administration and delivery of public services by local councils. They were by no means antipathetic to the introduction of the best value scheme. The chief executive of Harborough, Mr. Michael Wilson, tells me that his authority has

Best value has, however, become a monster, entailing more bureaucracy and escalating costs. The audit cost for Oadby and Wigston in 1998-99 was only £39,000. It will be £60,000 more in 2001-02. Thanks to best value, the total may be as high as £118,000. For Harborough, the total cost of the auditing exercise will be £65,000 for the basic audit, between £15,000 and £20,000 for the audit of the rent subsidy scheme and a further £20,000 for the best value audit. Oadby and Wigston's director of resources estimates that its overall cost--which includes the effort put in by existing staff who are diverting productive time to this increasingly process-driven system--must be about £160,000 a year.

The practical benefits are minimal, and there is a feeling that officers are being required by central Government to spend their time ticking boxes on forms instead of doing the job that they came into local government to do. There is a team of three in Oadby and Wigston trying to cope with best value, and it has a 1.5 in thick lever arch file of instructions from the Government on how to apply it. Now, as though things were not difficult enough, the best value unit has poached one of the borough's assistant directors to go and work for it--no doubt on a better salary and for a shorter working week.

Best value is in danger of becoming, if it has not reached that stage already, a missed opportunity of major proportions and a serious waste of local government resources and taxpayers' money. The resources now absorbed by writing about work, rather than doing it, cannot be justified. The volume of resources wasted on strategy production is now so great that it impacts on the levels of service that the borough can provide.

Everyone believes in sensible business planning, but smaller councils such as Oadby and Wigston borough council and Harborough district council are able to comprehend entire areas of activity without great difficulty, and without the complex written plans that authorities such as Birmingham or Manchester might

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require. Therefore, the "one size fits all" policy is counter-productive. The Government appear to believe that strategies are tangible achievements, whereas most sensible people realise that that is not the case.

The Government seem to be more concerned about control than production--I hope that I will not be accused of cynicism for saying that. Oadby and Wigston borough council is required to produce a range of strategies and implement many new regimes: a contaminated land strategy; a local Agenda 21 strategy; an air quality strategy; an asset management plan; a capital strategy; a crime and disorder disruption strategy that has spawned six action groups; resource accounting for housing; best value accounting; a community plan; a benefits verification framework; a strategy for e-government; a policy and action plan under race relations legislation; new political arrangements that the Government's reforms of local government require; local strategies based on local management needs; performance indicators; policies under the Human Rights Act; and enormous and costly, and not very welcome or well attended, areas of consultation.

The auditing of local government is no longer intended merely to ensure probity or value for money. Now, auditors and inspectors often arrive at a local authority armed with a Government agenda to reduce its funding, or to pillory its performance. The housing or council tax benefit systems provide a good example of that. The auditors are, in effect, instructed by the Department of Social Security. They decide how much work is required, and the authority has to pay whatever they charge. That has resulted in massive costs for small authorities such as those in my constituency. The auditors seek to reduce the council's grant claim by uncovering technical failures or omissions. The benefit schemes are now so complex that they cannot be perfectly administered, and innocent technical errors by clerical workers can result in massive financial penalties. Fortunately, that has not yet happened to either of the two authorities in my constituency, but it could easily occur. Bridgnorth district council has lost £2 million as a result of such clerical mistakes, and many others have also lost large sums. The beneficiaries of that are the Government, rather than my constituents.

The benefit fraud inspectorate has yet to visit Oadby and Wigston, but the director of resources predicts that, when it does pay a visit, it will issue a critical report, despite the fact that his council aggressively pursues and prosecutes fraud offences. His bleak prediction is based on his observation that the inspectorate never issues a good, or even an encouraging, report. The sclerotic effect of that hinders not only the officers of the council, but the work of the councillors themselves, and I will shortly explain why that is the case.

I have in my possession an internal report on staffing at Oadby and Wigston council. It lists the staffing consequences of several of the targets and strategies that have been imposed on the council by the Government. Oadby and Wigston borough council and Harborough district council do not have any spare staff. Therefore, many officers, such as housing officers, are having to work outside the areas of their immediate responsibility, and the chief executives of both authorities are doing the work of six people.

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The increasing burdens are having a terrible effect on staff morale in both authorities. In Oadby and Wigston, responsibility for the crime and disorder reduction strategy has been divided between the chief executive, the assistant chief executive and the community safety officer, who was appointed to Oadby and Wigston before the new legislation was introduced, and who already works half the time for Harborough. The chief executive, Mrs. Ruth Hyde, chairs two of the six action groups arising from the strategy. The work is time-intensive, as she must implement the decisions of all of the multi-agency groups that are involved. The work of the police liaison group and the crime and disorder steering group must also be considered. Staffing resources are not adequate to meet the costs of the work that arise from that area of Government policy alone, and I have a list of about 15 additional burdens that have already been placed on the council.

Further legislative duties will also be imposed on local authorities, and they look no less onerous. There is the duty to introduce e-government, the duty to introduce a policy under the Race Relations (Amendment) Act 2000, and the new political management arrangements, all of which will require further work from increasingly stretched and under-resourced local authority staff.

As I said, this sclerotic effect is hindering not just the officers of the borough council but the work of councillors themselves. I am not making a political complaint on behalf of my party. It is true that in Harborough the Conservative party is the largest party on the council, with the Liberal Democrats some way behind and the Labour party a poor third. However, in Oadly and Wigston there are 21 Liberal Democrat councillors and--following the crossing of the floor by a Liberal Democrat last autumn--five Conservatives. There are no Labour councillors.

The problem is easily demonstrated. Last week's policy and resources committee agenda ran to 321 pages, 219 of which were unnecessary but for the need to fulfil central Government requirements. The agenda for the equivalent meeting in March 2000 contained only 50 pages. The present Government, and certainly their Back Benchers, disapprove of late night sittings in this House, but at least they get paid a salary for their attendance, if not their attention. Borough councillors should not be expected to wade through this bureaucratic treacle into the small hours. Huge chunks of the agenda are bound to be dealt with without proper discussion or scrutiny, and I should not be surprised if councillors decided to take matters into their own hands by considering hundreds of pages en bloc, so as to finish at a reasonable hour.

I shall give another example of the madness that the Government have created for the borough. The business plan required under the housing finance regime consists of a spreadsheet of 77 pages, with thousands of information cells. This bureaucratic nightmare is in addition to the housing strategy document that the borough must submit to the DETR via the Government Office for the East Midlands. Given that the borough has only 1,400 council dwellings, I cannot help asking whether all this extra paperwork has by any perceptible measure improved the standard of housing management.

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I conclude by returning to Harborough district council, whose efforts to comply with the Government's demands are as courageous as the demands are burdensome. It is being put under huge strain in terms of personnel and finance, which is inhibiting the delivery of public services. I accept that it received some help from Whitehall for a homesearch project, for an e-government system in partnership with other authorities, for the delivery of care services with Leicestershire county council, for a home improvement agency with a housing association, and under the market towns initiative. However, there remains the underlying problem of the excessive and non-productive demands of central Government, which are not met with sufficient revenue support to allow any of the programmes to work satisfactorily. Harborough receives one of the lowest SSAs per head of population in the country, leading to a low level of net total spending per head.

Central Government's corporate demands on Harborough are truly staggering, and I shall list them as quickly as I can:

Will that list of demands lead to a sensible use of my local authorities' time, Mr. Deputy Speaker? If this Government value local government, they should, in the light of this evidence, provide my local authorities with the wherewithal to carry out their strategies, respond to their initiatives--eye-catching or otherwise--and hit their targets, or they should get off their backs. The Minister can choose, but she had better do so quickly.

1.49 pm

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Beverley Hughes) : I am grateful to the hon. and learned Member for Harborough (Mr. Garnier) for securing this opportunity to debate local government and the issues that he has raised. Our record on local government finance since taking office is good, and the debate provides the opportunity to demonstrate that.

We have given priority to education and personal social services. Leicestershire county council's funding has increased substantially over the past few years, which will benefit the hon. and learned Gentleman's constituents in the two district councils on which he concentrated today. However, we are aware of the valuable role that district councils play in the life of the local community, so we have increased provision for that tier of authority also.

The hon. and learned Gentleman gave a colourful picture of the two district councils in his constituency and the areas in which they are placed and he is clearly

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familiar with the work of both councils. Having spent 13 years as a local councillor and part of that as leader of a council, I am also familiar with the work of and the pressures that face local authorities.

I shall set out the general financial context because it is germane to the hon. and learned Gentleman's argument. Since taking office, we have provided local authorities with an increase in Government grant of about £8 billion. That is an increase of 14 per cent. in real terms, which compares starkly with the period when I was in local authority. We had a real-terms cut of 7 per cent. in the four years leading up to 1997-98, which really was a struggle. Provision for spending on education will increase next year by nearly £2 billion or just over 8 per cent. and on social services by about £580 million. Local authorities have received a significant injection of cash in real terms and have stability with the assurance that that will continue.

Despite what the hon. and learned Gentleman said, the authorities in his constituency have done very well from the increased investment. Government grant is paid to local authorities through the standard spending assessment system and he painted a bleak picture of the amount of grant that councils have received each year. I must put his comments in context. Leicestershire county council received a grant increase of almost £13 million. That is an increase of more than twice the rate of inflation and in line with the average for county councils and authorities in England. The district councils on which the hon. and learned Gentleman focused have also received above-average increases in standard spending assessment. Harborough's grant increase is below average for its class, but that is due to its tax base relative to the other district council that he spoke of. I shall give some details of how those local authorities have fared.

Harborourgh district council received an increase in standard spending assessment of 4.7 per cent. and an increase in grant of 2.4 per cent. That is a little less than the average for the class of authority, which was 3.9 per cent., but is accounted for by its higher and rising tax base. Oadby and Wigston district council received an increase in SSA of 6.3 per cent. and an increase in grant in the previous settlement of 7 per cent., which is twice the average for its class and, whatever baseline is used, three times the rate of inflation.

That is the context in which the hon. and learned Gentleman should locate his arguments. In addition to the general settlement, Leicestershire county council has received substantial neighbourhood renewal fund money. That does not relate specifically to the two district councils but has a knock-on effect in addressing some of the deep-seated problems in the area. Additional money has also been provided for specific purposes--for example, the Pathfinders award for local authority electronic service delivery to improve service and access, £1 million to the Welland partnership, which includes Harborough district council, and, in February, additional money through "invest to save" to provide internet-based services. Leicestershire county council, including Harborough, will receive almost £500,000 and another £2 million of funding will be provided for the Welland partnership via the single regeneration budget.

The hon. and learned Gentleman argued that the Government are requiring councils to be more strategic and focused and to deliver quality services but that that

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is not being matched by additional resources. I do not accept that argument. The increases in the general grant, as well as those for specific purposes, have been substantial and have gone to councils such as Harborough, and Oadby and Wigston.

Mr. Garnier : I know that the Minister is under some difficulty in responding to the debate. I am sorry that the e-mail system in her Department did not work last night, preventing her from receiving the draft of my speech that I sent her, and that the internal mail system failed to deliver the hard copy. She would have seen that I was concentrating not on Leicestershire county council, but on Harborough and Oadby and Wigston district councils. If she is proud to announce that one of my local authorities has received a 7 per cent. increase in grant and the other a 6 per cent. increase, will she restrict by equivalent proportions the burdens and duties to perform additional work that are placed on those authorities?

Ms Hughes : I think that the hon. and learned Gentleman is making two assumptions--first, about the relative costs of some of the extra requirements in terms of producing plans and so on, and secondly, about the extent to which we prescribe to local authorities the amount of money that they should spend on particular services. Local authorities, including the two district councils to which the hon. and learned Gentleman referred, have enormous flexibility in setting their own budgets and deciding on their priorities. He cannot claim evidence for his statement that a 7 per cent. increase in grant--or a 2.4 per cent. increase in the case of Harborough--may not be sufficient to accommodate extra demands.

I mentioned Leicestershire county council because it provides some of the most important services for people in those two district councils, including education and personal social services. It is relevant to point out the extent to which increasing the money that the county council receives for those services will have a beneficial effect.

One of the crucial issues at the heart of the hon. and learned Gentleman's speech was the performance of local government and whether there is room for improvement. I am aware that other authorities in the area surrounding his constituency face bigger challenges than those referred to today, and are arguably coping somewhat better. For example, Charnwood and Rushcliffe district councils have had very good reports from the Improvement and Development Agency, and their best value performance plans betray an excellent grasp of the requirements of best value and good performance across a significant range of council services. It is important to note that some district councils of comparable size are not only grasping the agenda but using it to improve their performance.

Mr. Garnier : Will the Minister give way?

Ms Hughes : I should like to make progress, because I must get to the point of the hon. and learned Gentleman's argument.

By comparison, it could be suggested that both Harborough and Oadby and Wigston district councils need to do more to improve the quality of their services

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and to organise the way in which they manage themselves in order to produce better efficiency and value for money. I was concerned to learn that under compulsory competitive tendering, Harborough had to disband its in-house direct service organisation, and to institute other changes, as a result of hiding continuing long-term losses that should have closed the DSO much earlier. In 1997-98, Oadby and Wigston was served notice for failures to meet financial objectives in sport and leisure and ground maintenance.

Mr. Garnier : May I interrupt the Minister?

Ms Hughes : I shall give way in a moment.

Oadby and Wigston received a qualified report on its best value performance plan for 2000-01. The plan lacked sufficient information on performance indicators, gave no indication of the resource implications for service selection and provided no framework for running best value reviews, and its strategy on challenge required improvement. I shall

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happily give way to the hon. and learned Gentleman at this point, but we have only a minute left and I ask him to bear that in mind.

Mr. Garnier : I do not want the Minister to mislead herself. The scandal over the Harborough direct service organisation is of some antiquity, and antedates best value. Is she content that the two little local authorities have to spend more than £100,000 a year in audit fees?

Ms Hughes : We have certainly tried to ensure that the fees for smaller councils are proportionate, and we are continuing to do so. The structure of the funding that the Government gave through the Audit Commission to support the cost of audit fees was front-loaded to assist smaller councils.

In conclusion, I say to the hon. and learned Gentleman that I make no apologies for the extra requirements on local authorities. We have a duty to ensure that we are encouraging all councils to come up to the standard of the best. The variance in the quality of service is still far too great.

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