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9.30 pm

Jim Cousins (Newcastle upon Tyne, Central) (Lab): I came to the debate thinking it likely that I would vote against the Government on the settlement. In Newcastle, there has been a failure to recognise a new and growing population of short-term residents, many of whom are young and many of whom have special needs. They are not counted properly in the figures. Tonight, my hon. Friend the Minister has made a statement that gives me some hope that we will sort that problem out. I was also concerned about the Government backing down on the issue of giving councils an incentive to grow business in their area. I acknowledge that my hon. Friend told us that he will move forward on that front. He will make changes, and he will not back down in the face of legal action.

I am also concerned that we cannot build long-term success for children and families and people with care needs in a city such as Newcastle on the basis of minimum grants that get smaller year by year. In his opening remarks, the Minister made a brief reference to the Government’s review of care. I hope that when he replies, and at a later date, he will come back to that point because it is important.

I say to the hon. Member for Falmouth and Camborne (Julia Goldsworthy) that we have a Liberal Democrat council in Newcastle, and it has just said that because of the minimum floor, it will have to cut care provision, including the closure of a respite and day centre care home in Shieldfield in my constituency. I also say to her that 300 yd from Napier house, the respite care centre that is being closed down, the same council has bought out the lease of a run-down furniture warehouse at a cost that I believe to be equal to the entire cost of the care budget cuts that the council is considering. Those decisions cannot be passed off on to the Government. This Liberal council says that it cannot modernise Napier house, but its capital funding from the Government has doubled in the last four years. Through economic benefits, it has raised £35 million in capital receipts from non-housing assets. The money was there to modernise that care home.

I can also tell the hon. Lady that tonight in Newcastle another top manager has been appointed in the civic centre, at a cost of £130,000 a year. Top management costs in Newcastle have risen by £1 million a year since the Liberal Democrats took over. The use of consultants is on a spectacular scale, and probably runs to more than another £1 million a year, including the employment of consultants to operate the bulk of the council’s internal audit service. That is a poor
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record, which shows that there is plenty of potential for dealing with those problems. Those matters must be addressed.

Robert Neill: Will the hon. Gentleman give way?

Jim Cousins: I am afraid that I cannot give way to Conservative Members, because I must conclude my remarks.

I must also tell the hon. Lady that the Liberal council in Newcastle declared reserves of £100 million at the end of the last financial year. What was that money for, except a rainy day? According to her logic the rainy day has arrived, but the £100 million is in reserve. We must do better.

We must come back next year and see where the Government have got to in recognising population change, in providing local authorities with an incentive to grow business, in funding schools and children’s services, and in funding care. Again, I tell the hon. Lady that since the Liberal Democrats took over in Newcastle we have lost 1,000 children from our schools. Another 1,000 children go over the border each day to be educated in other authorities. We would have had an extra £8 million a year in our schools had it not been for the combined effect of that.

For the moment, my hon. Friend is on notice in respect of what he must do in the next 12 months. I shall tell my constituents in Newcastle that in dealing with those issues through the local council we should freeze the cuts, the increases in top management, the use of consultants, and council tax for the next year. We should look closely at the council’s reserves. Local and national Government are now under question. I ask questions of the local council and the Government tonight. Over the next year, we will seek to resolve those issues.

9.37 pm

Mr. Robert Syms (Poole) (Con): I intend to make a few brief remarks about Poole borough council. It is an excellent, well-run council but it is 43rd out of the 46 unitary authorities when it comes to funding. Its formula funding per head is £191.95 whereas the average for unitary authorities is £376.96, nearly twice as much, and the highest is £603.31, which is three times as much. The authority is struggling and having great difficulty containing council tax because of all the burdens on it.

We mentioned the concessionary transport scheme earlier. Poole loses out: there is a funding gap of some £500,000 in that scheme, which falls on the council tax payer. Poole has had to put an additional £1 million a quarter into services for older people, £481,000 into services for those with disabilities, and £91,000 into waste services. Equal pay is also a major issue for local government, and Poole council will probably have to put £500,000 into that. However, in the three years of the settlement, Poole’s increases will be 2.2 per cent., 1.8 per cent. and 1.5 per cent. That is about half the increase announced earlier by the Minister.

Nobody would expect Poole to be at the top of the table, or even necessarily in the middle of the table. The
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real concern for Poole borough council is the spread of funding between those at the top and those at the bottom. A lot of services cost the same anywhere, such as teachers’ salaries and so on. That is putting real pressure on my constituents.

The Minister said that the settlement is tight. It is a tight settlement nationally, but it is a very tight settlement for those authorities that are funded at similar levels to Poole borough council. Things will be very difficult over the next three years. Poole has brought in some very low council tax increases for two or three years, but it looks like this year the increase will have to be 4.9 per cent. That is a pity. Many of my constituents have assets in the form of homes but are income poor and struggle to pay the rising council tax bills. The Local Government Association pointed out the major costs that local authorities face this year, for example, social care and migration. It stated that, in its opinion, there was a £1.3 billion shortfall. As we have heard, specific taxes on local authorities, such as landfill tax—the £144 million that goes back to the Treasury—and the changes in court charges, will place a much larger burden on local government.

My principal point is that I believe that my constituents are being unfairly treated. That applies not only to local government but police, fire and rescue and a range of other matters. Our outcomes are not too bad, but that is difficult to maintain against a general background of poor funding. I suspect that, to do the subject justice, I need to apply for an Adjournment debate, but I wanted to make those brief comments in the debate tonight.

9.40 pm

Mr. Andy Slaughter (Ealing, Acton and Shepherd's Bush) (Lab): I pay tribute to the Government for the increase in local government finance of 20 per cent. on average nationally that they have provided over 10 years and for the three-year settlement, which is welcome. It provides some certainty as well as scope for considerable growth over time. As my hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins) said, it focuses the spotlight on the competence of not only central Government but local government. I shall please the hon. Member for Bromley and Chislehurst (Robert Neill) by using Hammersmith and Fulham as an example of the way in which councils can go off the rails.

Before I do that, I cannot resist commenting on the remarks of the hon. Member for Falmouth and Camborne (Julia Goldsworthy). She related again the story of the magic money tree, in which the amount of money from central Government was too little, the council tax was too high and services were too stretched. Given all those parts of the equation, from where do Liberal Democrats expect the money to come, except out of taxpayers’ pockets? It is always their way, but I thought that, given that they have had some experience of government locally, even though they have none nationally, they would be less naive in proposing such policies.

In response to the interest that the hon. Member for Bromley and Chislehurst showed in what happens in west London, yes, it is possible to maintain and improve services while keeping council tax increases
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low, as was done under a Labour Government and a Labour council for nine years. As I said, the average increase in that time was 3 per cent. in council tax against 7 per cent. for London or nationally. Even with a tighter settlement, 3 per cent. efficiency savings and some difficulty, it should be possible to continue to protect council services. Yet, as I have said, the council cabinet in Hammersmith and Fulham will tonight agree £36 million of cuts. I doubt whether that figure will be equalled by any other local authority in the country. It is a rejection of the increases in funding that the Government have provided over years.

That may not be as bad as it sounds because, when one examines the detail, £12 million is described as efficiencies from outsourcing. I am not sure what sort of bank loan one would get if one asked for £12 million on the basis of such a one-line comment. Every contract that has been let—a £10 million refuse contract is being let tonight—has come in over budget. The chances of achieving any of those savings is therefore slim. There is a figure of £2.5 million for savings from debt reduction. Yet only 25 per cent. of the asset sales have been achieved so far, against officer advice that many of the sales were to the detriment of the local authority. Perhaps that should be cause for a cheer because those cuts will not go ahead. However, because the budget is being set in a way that demands such cuts, those perhaps innocent-sounding cuts will now constitute further cuts in front-line services and services for vulnerable people.

The authority had its comprehensive performance assessment almost a year ago. It has not been published because the authority is challenging, for the third time, its content, on the basis—I assume—that it is not happy with the findings. Last week, an arm’s length management organisation in the authority was given one star, with poor prospects of improvement. If that is not turned around in the next year, decent homes money of tens of millions of pounds will be lost to council tenants.

The overall effect for my constituents will include a 40 per cent. increase in meals on wheels charges; a 50 per cent. increase in parking charges in some areas; all charges, including rents, increasing by at least twice the rate of inflation; charges for recycling; a consultation on charging for home helps, despite an assurance to the contrary in the manifesto less than two years ago; the sale of assets from youth clubs, community centres, homeless hostels and secondary and primary schools; the closure of public toilets; the cutting of maintenance for pavements, again against officer advice; the cutting of the play schemes subsidy; the cutting of grants for school uniforms for poorer families, and for music and drama awards; the closure of reference and mobile libraries; an overall cut of up to 25 per cent. in voluntary sector budgets; the withdrawal of home help services for 1,400 people; and the sacking of 166 home helps. In addition, concierge services on housing estates will be reduced and residential caretaker services ended, even though they are the main measures that control crime and antisocial behaviour on estates, and there will be a 5 per cent. year-on-year cut in the housing revenue account budget.

I appreciate that such levels of cuts—or abominations—are not typical even of Conservative authorities; all that I would say to the Opposition is
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that if they wish to disown them, they now have an opportunity to do so. If they wish to associate themselves with those cuts, that will be the sort of standard in public services expected of them if they ever get back into government.

9.46 pm

Alistair Burt (North-East Bedfordshire) (Con): I congratulate my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) on his performance at the Dispatch Box in opening for our side and on dealing so ably with such a cunning fox on the other side. The Minister is a good man and handles his brief incredibly well, but his cunningness is such that he was able to carry off with great insouciance some of the things that he had to say, which my hon. Friend picked up so well.

To use a football analogy that will be familiar to one or two hon. Friends, when a defender has ruthlessly cut down the forward running through and committed the most atrocious foul, he protests to the referee with the grandest of gestures, claiming that it could be nothing to do with him. When the Minister talks about a tight financial settlement as if it were an act of God and not the responsibility of the Government, who have spent a colossal amount over the past 10 years and are now having to pull the horns in, it is the political equivalent of spreading one’s arms out to the referee and saying, “Nothing to do with me, guv,” but we know that it is. That is what my hon. Friend spotted, and I look forward to his contributions on the subject for some time to come. I am glad that he is there and I am not.

The settlement is wrong for two reasons. First, it is disingenuous. The general public understand inflation and think that if a council gets more than inflation, everything must be all right and that the money should be coming through effectively, but with the rise of 1 per cent. above inflation or whatever it is, the Government are giving the public the sense that, should there be any rises or cuts in services, they must be the council’s fault. However, the Minister knows full well—this has been well documented by hon. Members in all parts of the House—that the cost pressures in local government in some areas go well beyond 1 per cent. or whatever the gentle increase above inflation represented by the three-year settlement is.

Social services have been mentioned, and they include not only care for the elderly, but special needs care for the youngest. Fortunately, more young children with complex and special needs now survive infancy. The cost of that generation as it grows is substantial and mirrors the cost at the other end of life, when those who are fortunate to be living longer have a greater need for more expensive care. These pressures have not yet been fully compensated for in the settlement, and it will be some time before they are.

Colleagues have mentioned waste and highways. Some local examples from Bedfordshire will illustrate the disingenuousness. I pay tribute to the three local authorities in Bedfordshire with which I have close dealings, but they are coming to an end, because of local government reorganisation. The Conservatives have run two of them and been the majority party on the other, and all three have done remarkable things over the years. Bedfordshire county council has moved
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from having a rating of no stars to three in less than two years. Mid-Bedfordshire district council gets consistently good ratings for its local government performance, and Bedford borough council, on which Conservatives are in the majority, is rated an excellent council.

I pay tribute to those councils in passing, but each of them can provide an example of the difficulties that the settlement will produce. In regard to social services care for the county, there is the floor issue. For the third consecutive year, the county council will lose money. Being a floored authority has cost it £5.8 million, which has put £39 on the council tax. The local authority business growth incentives scheme—LABGI—will also cost it money.

Bedford borough council reports that the next three years’ increase in the amount given for the concessionary fares scheme has been calculated by the Government at £450,000, £460,000 and £470,000. The extra £10,000 a year hardly covers inflation increases, and does not say much for the anticipated increase in the numbers of people using the buses. Two or three years ago, Mid-Bedfordshire district council was rate-capped for having the audacity to raise its band D council tax by £1 per month. The hon. Member for Wigan (Mr. Turner) will understand this. It is now trying to provide weekly waste collections and to do the recycling that the Government want it to do, but it is not getting the support that it needs and will be in difficulty.

My first charge is that this is a disingenuous settlement, and that it will not deliver what the public expect. We could have seen better. The second thing that is wrong with it is that it does not take the opportunity given to it by the three-year change of delivering one of the things that Lyons spoke of, and that my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) mentioned. It could have taken the opportunity to cut through the question of who is responsible for the increases and what the respective responsibilities of the Government and the local authorities are.

Many of the contributions tonight have dealt with that dilemma. Colleagues have tried to say that, if the Government are responsible for one thing, the local council must be responsible for another. The Government just sit and let the blame be passed on. The Lyons report said that

Lyons could see that the confusion between the responsibilities of the Government and of local government was eating away at the public’s understanding of local government and of where responsibility for public finance lay. That is reducing the public’s confidence. If all they ever see of national and local politicians is an endless passing of the buck, they will end up saying, “A plague on both your houses.”

The need for greater transparency is something that we have all recognised in the past few days in another context. The Government could have taken this opportunity to do what Lyons suggested, and to put in place a mechanism to provide that independent voice and to look authoritatively at the responsibilities of local government and of Parliament and central
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Government, and at the future pressures. The Government need to answer the conundrum by asking where fault and responsibility lie, and who should be credited with certain changes. That would address the serious issue that is affecting the heart of local government and people’s relationship with it.

The Minister is a fair man who is interested in these issues. I think that he heard me speak on this subject at the local government finance conference in December. I truly would like to see the Government take away that suggestion in the Lyons report and do something with it. If they did so, we would not have to deal with a disingenuous settlement in future. Instead, we would be dealing with a measure that met the concerns of colleagues on both sides of the House. We would have an honest and authoritative arrangement in which we could attach blame where blame truly lay, and in which credit could be given where it was rightly due. That would provide better settlements in the future, and I hope that the Minister will address that point. I hope that those on our side will also do so in due course.

9.54 pm

John Healey: It would be fair to say and would be acknowledged that I gave way a great deal during my opening speech and answered many of the pressing questions put by hon. Members on both sides of the House. It would also be true to say that all Members from all parties have worked closely with their councils and raised strong concerns in their contributions to the debate. Some speak with significant experience of local government and central Government finances—

Mr. Eric Pickles (Brentwood and Ongar) (Con): Will the Minister give way?

John Healey: At this stage, given that I gave way so much earlier, I shall not.

I was talking about hon. Members with significant experience, and they include my hon. Friends the Members for Leeds, East (Mr. Mudie), for Wigan (Mr. Turner), for Newcastle upon Tyne, Central (Jim Cousins) and for Ealing, Acton and Shepherd’s Bush (Mr. Slaughter). It is also true that some Opposition Members speak with the same significant experience, including the right hon. Member for Skipton and Ripon (Mr. Curry), and the hon. Members for Bromley and Chislehurst (Robert Neill) and for North-East Bedfordshire (Alistair Burt). We have heard some reflective contributions in a good if slightly short debate.

My experience of seven or eight months of doing this job and being in the position to take decisions on how to distribute £27.5 billion suggests that almost every one of the 456 authorities in England feels that it has a special case and that it has in some way been uniquely disadvantaged by previous Government decisions. It is also the case that doing this job is not generally likely to win one many friends. However, let me read out to the House brief excerpts from two representations that I received during the consultation—in total, 340 representations were received from 246 authorities and organisations.

The first said that the settlement in December

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