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3 Feb 2010 : Column 402

Councils in my area have experienced a couple of issues that illustrate that point, and one of them is personal care at home. I know that that was covered in the House recently, but there are some specific issues about it, one of which is the cost. It is difficult to know what the cost will be. The Government have produced some airy figures, but it is difficult for councils to assess what the costs of the measure will be to them. First, there would be a loss of income from some of those who currently pay for care arranged by the council. Councils will need to assess what that loss might be, but that is not straightforward. It involves reviewing the detailed circumstances of everyone who currently receives domiciliary care to see whether they would be eligible for free personal care.

Secondly, some people will have not presented themselves to adult social care, but will decide to come forward if they can obtain care for free. Trying to work out the figures for that is almost an imponderable, but given the experience in Scotland, they are likely to be great. The other aspect of personal care at home is about placing the risk and determining where it lies. Given that the amount proposed for personal care at home in the area-based grant will be fixed, all the financial risk will be put on local authorities if the costs are higher than anticipated. The Association of Directors of Adult Social Services has already made its estimate, which is considerably higher than the original costing in the Budget. There is a review of that in 18 to 24 months, so that could leave significant pressure on councils until any changes are made.

The council side of that funding is supposed to come out of more efficiency savings. I rather took exception to the Secretary of State's comment that, when councils had shared services and shared their management with the primary care trust or whatever, they could complain about being made to make efficiency savings. My own county council and district council have shared services that are in operation; in fact, I was the person at the county council who put that in. The councils have shared senior management. We share a director of public health with the PCT. My district council has shared management with the neighbouring district council. Both those councils have year after year had robust and aggressive efficiency saving targets, which year after year they have met.

Perhaps in the winding-up speech the Minister-or if he would like to intervene now, the Secretary of State- would like to tell me what I am supposed to tell councils such as my own, which have already gone through the pain of that, registered that pain with their voters, come through and increased their majority at the county council elections. They will feel insulted that they are dismissed in that way and that all that effort and pain was, in his idea of things, for nothing.

Two other issues arise in respect of pressures on funding. I have no idea how widespread those issues are. I suspect that one is more widespread than the other. One is unaccompanied asylum seeker children. There have been ongoing pressures in that area in Oxfordshire since 2002-03. There was a special circumstances grant of just under £500,000 in 2008 for 2008-09, but it does not reflect the ongoing shortfall, and the current forecast for 2009-10 is for an overspend of £800,000. There is no suggestion that that will be funded by central Government.

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The last illustration of an area that has not been costed is the abolition of the Learning and Skills Council. That will pose a major challenge for directorates in county councils, which will have to reorganise their services to deliver what the Government want. There is not expected to be any additional funding to enable that to happen. There are burdens, too, from the micro-management of partnerships.

At the evidence session on the Child Poverty Bill, Paul Carter, leader of Kent county council, discussed the big outcomes of the first round of local area agreements. He admitted to having been a sceptic initially, but he was won round by the size of the outcomes. However, he complained bitterly about how the LAA had descended into micro-management and had become far too complex, and with that complexity will come considerable cost.

There are initiatives that could make a big difference on the cost side. One of them has been mentioned by many hon. Members, and that is Total Place, which is not just about the money that is saved by eliminating duplication. It is also about how services can be reconfigured. I want to stick to the money part of it. There is huge criticism of the way it operates. Again, at the evidence session on the Child Poverty Bill, the leader of Kent county council made it clear:

However, the biggest culprit as regards participating in an open way with Total Place is the Government, particularly the Department for Work and Pensions. Richard Kemp, the deputy chairman of the Local Government Association, who is a councillor in Liverpool, provided an example. He said:

The Government really need to look at themselves if they are to establish how they are going to make Total Place work.

I mentioned the evidence sessions on the Child Poverty Bill because this provides a very good example of the master-servant relationship that we have seen between central and local government this year. I will not detain the House by recapping the Bill, but broadly speaking, the Government set national targets in the first part of the Bill and then handed it all over-just dumped it-on to local government in the second part. They ignored the fact that many councils were already doing a tremendous amount of work, and they imposed a new duty that many people, including those we took evidence from, consistently said was not necessary. They imposed a level of bureaucracy, which must have a significant cost element to it.

When it came to the impact assessment, however, it showed a minimal cost amount. That is hardly surprising because the meat of the Bill was in the secondary legislation, which had not yet been introduced. How on earth was it possible to make an accurate costing of the effect on local councils and their budgets-in other
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words, how much would need to come from council tax-if the very secondary legislation was not there, not even in draft form, to enable such an assessment to be made? That is highly illustrative of the Government's approach and attitude towards local government. That is another nail in the coffin for people with talent, interest and enthusiasm coming forward to take part in local government.

It is time for the Government to play fair with councils and with council tax payers. It is time for some real localism and it is time that we set out to encourage real innovation. It is lying out there among the general public. They need to be brought into local government so that they have a chance to show their innovation, particularly in the delivery of services and particularly in the costing of those services so that they deliver real value for money.

6.52 pm

Mr. Andrew Pelling (Croydon, Central) (Ind): Many of us have confessed our local government experience, and I probably have more to confess in that respect than others, as I was elected to Croydon council in 1982, serving there until 2006, and I also served as a London Assembly Member. If I am allowed to be a little sentimental, I perhaps have an obsessive interest in local government financial settlement systems owing to the fact that my father was a senior civil servant who dealt with these issues in the 1970s, and matters associated with the Layfield report.

It is fair to say that during the extended period of economic growth, moneys to local authorities were very generous. Indeed, the amount given to local authorities has often been greater than the corresponding overall rate of growth in the UK economy. Nevertheless, it is a bad habit of Government to continue to centralise and to restrict the room for manoeuvre for local authorities, despite the slight row back on the part of Government in recent times.

I very much feel that the removal of the business rate inflicted substantial damage on the borough of Croydon and greatly undermined the very good work that Lord Bowness did for Croydon council and the town during the 1980s and early 1990s.

Sir Paul Beresford: Speaking as someone from Croydon or for central London, I believe that the removal of the business rate has had a positive side, but it has had a negative effect on much of the rest of the country where there is little business. That is why, in my personal opinion, there must be equalisation across the country; otherwise many local authorities with no or next to no businesses will be savaged.

Mr. Pelling: The hon. Gentleman has demonstrated his long-standing experience of local government, along with a recognition of the inevitability of Government involvement. In my view, while authorities continue to have a degree of discretion, equalisation is inevitable. I think that that 1980s Croydon local authority adopted a rather municipalist approach, perhaps a little more independent than the more robust conservatism represented by the hon. Gentleman.

The former Mayor of London rightly recognised that many suburban areas in outer London faced considerable challenges, and I think that that applies particularly to Croydon. We suffer, or perhaps enjoy, dynamic population
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changes-what could be described as "population churn"-while also confronting the challenge posed by the Government's desire to remove a significant number of public sector jobs from the area.

The Government are right to emphasise the £20 million of extra grant that Croydon will receive this year. There is no good reason why the borough should not be able to match the Labour authorities that are aiming for a zero per cent. increase-or, as that is rather a Brownism, perhaps I should say a freeze-in council tax. Nevertheless, Croydon has fundamental underlying problems.

I will make only the briefest reference to a Regional Select Committee, as another Member was chastised from the Chair in this regard. However, I think it is a positive result of the establishment of Regional Select Committees that the London Committee is examining the important issue of the forthcoming census and its impact on local government financial settlements and other public sector flows.

According to evidence given to the Committee by the London borough of Croydon, its population is likely to be 37,000 greater than the 340,800 that is presumed by the Office for National Statistics and used in local government financial settlement processes. Moreover, 41,034 migrants have registered with GPs in the last seven years, and 25,290 national insurance numbers have been given to non-British workers by Jobcentre Plus over the last three years. Those fundamental problems are undermining the credibility of the moneys given to the borough.

The operation of the area cost adjustment and the distinction that is made between west and east London-Croydon being regarded as an east London authority-have led to a cumulative shortfall of £16 million. Obviously the operation of the ACA is valuable, but the way in which it is not applied to specific grants has a distorting and unhelpful impact on Croydon's allocations. The difference between the amount given to one authority and the amount given to another can be hard to explain. The London borough of Croydon considers itself to face challenges similar to those faced by the London borough of Enfield-in fact, I think it faces rather more severe challenges-but Enfield receives £423 per head, while Croydon receives £348. That is difficult for the authority to explain to local residents and taxpayers.

In addition, the authority could face significant pressures as a result of changes in the funding of the freedom pass in London. Given that support for London local government as a whole is to be reduced by £28.6 million, Croydon will lose £1.3 million. Croydon must also spend £1.9 million a year on supporting migrants-or asylum seekers-who, having exhausted the legal system, find themselves with no recourse to public funds. There has been considerable controversy about the decision to close the asylum walk-in centre in Liverpool and to concentrate activities in Croydon. I feel that the Home Office has turned a deaf ear to our concerns, and I have organised a petition on the issue which is securing a great deal of local support.

I plead for the Department for Communities and Local Government to adopt a more open-minded approach, and to agree that, perhaps over the coming year, it will try to measure the number of additional asylum seekers who are resident in Croydon, in order to see whether the local authority's demand for a better allocation is fair.

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A couple of years ago, a former DCLG Minister, the current Minister for Borders and Immigration, the hon. Member for Oldham, East and Saddleworth (Mr. Woolas), got quite animated with me when I expressed concern about the amount of money that Croydon received, and reference was made to local enterprise growth initiative money. The point was made to me that £77 million of LEGI money came to Croydon, but in reality that money is not guaranteed, and there is a great deal of uncertainty as to whether it will continue to be given. That is an important concern.

I am also worried about the negative effect on a very weak local economy of the supplementary business rate in terms of all of that money being abstracted from Croydon businesses and being spent entirely on Crossrail. That will have an adverse effect on potential positive investments in the business improvement district in Croydon.

It is important that Croydon council aspires to achieve the same as some Labour councils in London have achieved: a council tax freeze this year. The incomes of many Croydon residents are either going down or are frozen, and they would find it entirely unaffordable to have yet another increase, especially bearing it in mind that the London Borough of Croydon has increased the council tax by the maximum amount allowed under the informal capping system. I am joined in this call for a council tax freeze by Labour councillors in Croydon, but they have no credibility as they previously increased the council tax by 27 per cent.

Let me turn now to a matter of great concern, on which I hope the Minister will be able to help. At a time when Croydon council is making real cuts-not merely efficiencies-in services, it has arranged for a loan of £145 million in order to build a new town hall. In addition, there is the prospect of £93 million of interest payments until 2036, making a total of £238 million. Considerable concern has been expressed to me by residents who have received a communication from the Labour party suggesting that the total cost will be £1,115 per household. That is a kind underestimate, as it does not take account of interest payments. The real cost for residents is £2,016 per household.

I well remember the very important speech given by Neil Kinnock at a Labour party conference about how it was obscene to see Derek Hatton's Liverpool council issuing redundancy notices by taxi. In some ways, I think it is similarly wrong for Croydon council to be setting about cutting services while at the same time putting aside the equivalent of £3.5 million a year to service such a large loan for such a project. Now is not the time to be building a new council headquarters for the benefit of councillors.

Mr. Slaughter: The hon. Gentleman has identified an interesting trend. The proudest boast of the leader of Hammersmith and Fulham council is that he has got rid of 1,000 jobs in the last three years-he has sacked 1,000 people in the middle of a recession-yet that same council is investing £35 million in a new extension to the town hall. These municipal monstrosities are examples of just the sort of grandiose projects of local government that we thought were things of the past, but they are not. This is not only happening in Croydon, therefore.

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Mr. Pelling: I am extremely interested to hear that similar projects are being pursued elsewhere in London. It has always been a great weakness of local government and local councillors that they are obsessed with the grandiose, and with aggrandisement at home in the town hall, when it is services that are important. It is wrong that services are being cut back at the same time as such new projects are being taken on. This loan with the Public Works Loan Board is in place, but it has not yet been drawn down. Will the Minister have an opportunity to assess whether this really is appropriate behaviour? I know that our appropriate approach is to say that local authorities should be given discretion to make their own mistakes, but I think that this mistake will fall very heavily on Croydon council tax payers in future, particularly given that the local authority refuses to provide much detail on what the contract involves. It has been taken out in partnership with John Laing plc, which is no longer a public company-it is in the ownership of a private equity fund. Bearing in mind the difficult state in which private equity finds itself in terms of financing from the City, this is a dangerous circumstance for the local authority to have involved itself in.

Bob Spink (Castle Point) (Ind): The hon. Gentleman may be surprised to learn that the same problem occurred in Castle Point a few years ago under a Conservative Administration. It built what is known locally as "the bunker", spending millions of pounds in the process. That has proved to be a very expensive waste, it is much underused and local people are still paying for it.

Mr. Pelling: A worrying trend is being revealed in this debate. It is incumbent on local authorities to be concerned primarily about services, rather than about building new town halls. If Croydon council desires to move location, the best way of doing so would be for it to become a tenant of Stanhope, which has the real desire to start developing on the site next to East Croydon station. No doubt many Members have taken a flight from Gatwick and seen the desolate site next to that station, which gives a bad impression of the town. If the development of that site can begin, that would provide confidence to others to invest in the town. Such an approach from the local authority would have more vision and would have a multiplier effect on investor confidence in Croydon.

It is also important to stress that local authorities face great dangers in being obsessed with their own party political propaganda. In many ways, I can often see little difference between what is produced by the chief executive's office and by the campaign of the Conservative parliamentary candidate in Croydon, Central. A recent example of that could be seen during the launch of a petition calling for extra police for Croydon. It is extraordinary that the council should be campaigning for extra police given that it has discretion to provide funding for extra police and that it is of the same party as the Mayor of London, who could decide to provide more police to Croydon. Indeed, the local London Assembly member, Steve O'Connell, is also chairman of the finance sub-committee that could decide to provide extra money for police. It is nonsense, and it is an abuse, for Croydon council to be spending money on this matter, given that at the same time as the council launched the petition it was also launched through e-mails from the Conservative parliamentary candidate.
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It is an inappropriate use of public money to have such a close relationship between a parliamentary campaign and the spending of council money.

As many Members have said in Westminster Hall debates, there are also great dangers in councils trying to get into the media business. The number of newspapers being produced by councils is unacceptable and risks undermining things. I know that the hon. Member for Ealing, Acton and Shepherd's Bush (Mr. Slaughter), who takes a great interest in the performance of Hammersmith and Fulham council, has been very critical of the way in which his local authority does that. I believe that the Your Croydon newspaper wrongly continues to be run so closely with the Conservative parliamentary party campaign and to give great prominence to things during this election purdah period.

Finally, I wish to return to the issue of the role of business, because the pro-business borough was at the very heart of Croydon's success in the 1960s. I know that, in many ways, the approach taken then had many weaknesses: it was very municipalist and dirigiste, and it was perhaps a little old-fashioned compared with the more appropriately aggressive and laissez-faire approach taken in the London borough of Wandsworth. Nevertheless, co-ordination and co-operation between the council and businesses has an important role to play.

It is fundamental to note that moneys are taken away through the business rate and the supplementary business rate, but we have no prospect of any of that supplementary business rate being reinvested in Croydon's economy. We need to deal with the significant issue of trying to improve confidence and reduce the fear of crime in the centre of Croydon-a justifiable fear, bearing in mind the number of killings that we have had along the A23 corridor-and of trying to leave some money behind. May I call on the Government-I know that the London Mayor also has some discretion-to try to use their persuasive powers so that some of that money comes back?

I am very impressed by the campaign that is being run by Max Menon of Allders, the only remaining Allders store in the country. Calling for some discretion and for moneys to be returned to Croydon means that we can defend an exposed and fragile economy that, unfortunately, has not been helped by some real lack of vision from the local authority in Croydon.

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