"If we took Tory advice and cut spending and raised taxes precipitately, growth would stop. Unemployment and benefit spending would rise further. Tax revenue would stall."
Now the Lib Dems support these cuts, and their credibility as a progressive alternative to the Tories is shot to pieces. These are cuts that no local council had any chance to prepare for, coming as they do well into the financial year. As the Tory leader of West Berkshire council told us,
"This is unprecedented. We have never faced cuts in the middle of the year."
"this is money that we had planned to spend this year and will now have to be cut."
Toby Perkins (Chesterfield) (Lab): My right hon. Friend is right to be furious that the Secretary of State is not attending the debate. The Secretary of State seems to see himself as some sort of Conservative John Prescott. Does my right hon. Friend share my feeling that that fine gentleman would have been proud to stick up for his Department instead of letting it take the majority of the cuts, and would have come here to defend his decision rather than skulking off to the scene of former crimes?
Mr Denham: My hon. Friend makes a good point. Despite some apparent superficial similarities between the two gentlemen, one thing is clear: John Prescott never ran away from a debate or argument, unlike the Secretary of State- [Interruption.] I did not say he never ran away from a fight; I just said he never ran away from an argument.
The truth is that the cuts were not only made too fast, but made without consultation. There was no discussion with local councils about whether or how they could be made. The Local Government Association initially put out a press release welcoming the fact that it had been promised consultation, but ended up sending a desperate letter two weeks later saying, "Will you please tell us what's going on?" The cuts came ahead of the Budget, which sets out cuts of 25%, 30% or 35% to local council services.
Graham Stringer (Blackley and Broughton) (Lab): Does my right hon. Friend agree that the basis of the cuts is simply party political prejudice, which is why they were done so quickly? Otherwise, how could deprived Salford have twice the rate of cuts of affluent Trafford?
Mr Denham: My hon. Friend makes two important points, both of which I will deal with, about the unfairness of the cuts and the real agenda l behind them. Of course the deficit needs to be tackled, and we set out our plans to reduce it by more than half over four years. That was a tough enough target, but the cuts now laid out go much further than we would have gone; they go much faster than we would have gone; and are being done in ways that we would not have chosen.
Joan Walley (Stoke-on-Trent North) (Lab): Does my right hon. Friend share my concern that the cuts will be felt disproportionately in heartland areas that have suffered a great decline in manufacturing, such as Stoke-on-Trent? I am particularly concerned about their impact on the Supporting People programme and the money providing care for people in the community. How can we plan for that?
Mr Denham: This is an important debate. The way in which the Secretary of State is handling these first cuts warns us all of what lies ahead and the unnecessary damage that will be done to the local services on which the people we represent rely. When he made his cuts, he had choices to make about how to make them-to make them fairly, or not to make them fairly. So let us remember the promises that the right-wing coalition made:
"We are all in this together. I am not going to balance the budget on the backs of the poor",
"Our core aim is to hard-wire fairness back into national life",
"we will ensure that fairness is at the heart of those decisions so that all those most in need are protected."
Let us take two boroughs next door to each other in the same conurbation. One is 15th in the deprivation index; the other 178th. One has 27,000 people on housing benefit; the other has 13,000. One has 11,000 unemployed people; the other has 8,000. One has an average weekly income £40 below the other. One is poor; the other comfortable. So what does "We are all in it together" mean? Which one gets the bigger cut under the right-wing coalition? The poor one, of course! Salford loses twice as much as Trafford. And that is not an isolated example. According to the Secretary of State's own figures, Newham, the sixth most deprived borough in the country, loses £4.6 million, while Richmond, the 309th most deprived borough, loses less than £1 million. In the Prime Minister's district council, there will be no cut. His county of Oxfordshire, which has a deprivation index of 10.85, gets a cut of 0.7%.
If we look at the Deputy Prime Minister's area, we see that Sheffield has a deprivation index of 27.8 and a 1% cut-perhaps the real price of coalition. As for the councils losing the highest proportion of the their income, they are in places that have been left behind-the Lancashire mill towns like Burnley, the ex-coalfield areas like Ashfield and the struggling seaside towns like Hastings. Among the metropolitan boroughs, it is the poorest that lose most. Why? Because it is what these Tories and Liberal Democrats believe in. As the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill)-who I see is not here to answer this debate either-said at oral questions with refreshing honesty:
"Those in greatest need ultimately bear the burden of paying off the debt".-[ Official Report, 10 June 2010; Vol. 511, c. 450.]
Andrew Percy (Brigg and Goole) (Con): The right hon. Gentleman cannot honestly defend the previous funding regime that saw authorities such as mine in East Riding receive hundreds of pounds less per pupil than those in neighbouring Hull. Is he suggesting that he wants to have cuts dished out to authorities that are already disproportionately doing badly out of the funding, which would mean deprived pupils in my area doing even worse than deprived pupils in neighbouring authorities?
Mr Denham: There is the true voice of the Tory shires. The truth is that the local government funding formula-widely debated, widely discussed, widely consulted on-does give a weighting towards those areas with the highest social need and the highest deprivation, because the challenge of delivering services in those areas and of bringing about the equality of outcomes that we should all seek is greatest there. I do defend that. I do defend programmes like the working neighbourhoods fund, which has been targeted by this coalition Government, and through which money has of course been spent in areas of higher worklessness. It is because of that that those areas saw more people coming off incapacity benefit as local authorities used that money to help get people off benefit and into work-something we hear so much cant about from Government Members. So I say to the hon. Gentleman, yes, I do defend that approach.
Clive Efford (Eltham) (Lab): Is my right hon. Friend aware that during the opening of yesterday's debate on the Budget, in an exchange about cutting benefit to the long-term unemployed who are seeking work, the Secretary of State for Work and Pensions referred to pensioners living in houses that were too big for them and that they were unable to look after. Does that not give away what is really behind these benefit changes-that the pensioners and the poorest in our communities are going to pay the price?
Mr Denham: That would fit with a Budget that increased VAT on everything pensioners buy with no attempt whatever to protect those pensioners from the increase in their living costs, so my hon. Friend indeed raises a good point.
Richard Burden (Birmingham, Northfield) (Lab): Does my right hon. Friend agree that another area where the coalition's words are just not matched by its actions is in the talk about big societies and strengthening civic society? The reality of the cuts in Birmingham is a slashing of grants to those very voluntary organisations that our city relies on to provide the services that supplement those of the local authority and statutory agencies, which ordinary people need.
Mr Denham: I have some sympathy with my hon. Friend, as I have been involved at a local level in working the voluntary sector's Shopmobility scheme, which the local Conservative council wanted to cut. Here was an organisation that had only a small amount of public money but engaged huge numbers of volunteers, enabling thousands of people to get around the town centre. It is funny, is it not, that that should be the Tories' first target, despite all the talk about the big society?
What is quite clear is that all this is not an accident; it reflects the values of the coalition. I have talked so far about the Secretary of State's figures. When he published the written ministerial statement, he said with great flourish that no council would lose more than 2% of its budget this year. That is bad enough; it is not trivial. It
feels about 30% worse than that, however, if we take into account the cuts implemented from today. By the time most councils have been able to put cuts into practice, it is going to feel like twice that level of cut.
The truth is far worse, because the Secretary of State consciously withheld the true situation from the House. In the figures that were published, over £500 million of the £1.16 billion of cuts was not allocated to local authorities, so no one could tell what the impact would be: it was kept secret-kept under wraps, kept from this House. A few days before, the centralising, dictatorial Secretary of State had instructed local authorities, under threat of punishment by law if they refused, to publish details of every item of spending over £500. As his hapless Minister told the House, no one had even bothered to work out what that would cost local taxpayers; it was just another diktat from behind the big man's desk. Yet the same Secretary of State who can tell councils what to do down to the last £500 could not manage to tell this House or local councils where he was cutting £500 million. It is ridiculous.
Rushanara Ali (Bethnal Green and Bow) (Lab): Does my right hon. Friend agree that the current cuts in local government belie any notion of fairness or progressiveness? The London borough of Tower Hamlets is the third most deprived borough in the country yet it faces one of the largest cuts: £9 million, of which £1 million is from the working neighbourhoods fund. That is in addition to a likely £55 million of cuts over the next three years. We should compare that with the figure of £1.3 million for the London borough of Richmond upon Thames, which includes the seat of the Secretary of State for Business, Innovation and Skills, the right hon. Member for Twickenham (Vince Cable). How is it possible that the poorest have to suffer so much compared with one of the richest boroughs in the country?
Mr Denham: My hon. Friend makes a very good point, and also underlines the point I am about to make, because on the original figures published by the Secretary of State, the Tower Hamlets cut was nowhere near as big as that. Earlier, I used the example of Newham, for which his table gives the figure of £4.6 million, which was the biggest cut in London. Now that the dust has settled, however, we find that Tower Hamlets is up there as well, with a figure of about £9 million, and Hackney loses £8.6 million-but as my hon. Friend said, "Don't worry, because Richmond is still doing all right."
Dr John Pugh (Southport) (LD): I rise to say a few words in the interests of fairness, because the right hon. Gentleman obviously thinks that, apart from eating babies, there is very little the coalition does not do. Can he tell us which of the £40 billion of unallocated cuts the Labour party was likely to implement were going to fall on local government? That would be a transparent, open, rational and reasonable thing to do.
The hon. Gentleman needs to explain something to his constituents: why he is supporting a cut that goes tens of billions of pounds deeper than the plans we set out. That is what is causing the pain. During the election campaign, he opposed the cuts I am
talking about. He and his party colleagues said that these £6 billion of cuts would damage the economy. He is the one with questions to answer for his constituents, such as how he managed to run an election campaign against a VAT increase and these cuts, yet here he is standing up in the House defending the cuts-and no doubt in due course defending the VAT increase as well.
Sajid Javid: I thank the right hon. Gentleman for giving way. Why does he treat Members as if they are fools? If he wants the truth, it is that his Labour Government's funding formula was based on petty party politics and had absolutely nothing to do with the needs of individuals. If we want to use examples, the schoolchildren in my constituency of Bromsgrove get £900 less per annum than those in neighbouring Birmingham. The reason for that is very simple: over the past 13 years areas where there are Labour voters got far more money, and the truth is that what we are doing is, in this terrible economic climate, restoring some fairness in the system.
Mr Denham: I think the whole House should take full note of that intervention, because the statement of principle we have just heard from the hon. Gentleman flies in the face of the commitment made during the general election by the then shadow Chancellor, now Chancellor, who said:
"We are all in this together. I am not going to balance the budget on the backs of the poor."
We have now heard the authentic voice of the Conservative party, however. Irrespective of any economic challenges faced by this country, the Conservatives would have wanted to hammer the poor, and that is what they intend to do. It will not come as any surprise to Labour Members to know that that is what the Tories stand for. What the Liberal Democrats are doing supporting it, I have no idea.
Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab): Does my right hon. Friend not agree that the interventions he has just taken from the hon. Members for Brigg and Goole (Andrew Percy) and for Bromsgrove (Sajid Javid) both demonstrate that the coalition is intent on redistributing grant away from the poorest boroughs and the poorest education services and towards the better-off? Does that not completely give the lie to the idea that the so-called pupil premium will put more money back into the very boroughs and authorities that those Members have just attacked?
I must say that this debate is turning out to be rather more useful than I expected. Just a small scratch on the surface of the Government's supporters tells us what they really believe, stand for and intend to do. As a
number of Members have said, this has got nothing to do with the economic crisis or the deficit; they just think that our spending more money in the areas of greatest need was the wrong thing to do. Let us agree that that is the difference between the Government and the Opposition.
Hazel Blears (Salford and Eccles) (Lab): I wonder whether my right hon. Friend is experiencing, as I am, a slightly spooky feeling of déjà vu. If we think about political gerrymandering, we all remember the days when Westminster and Wandsworth were able to levy zero council tax because of the fix that had been done on the allocation and distribution of grant. What we are seeing from Government Members is history replaying itself. We are seeing not a new, centrist, Cameron-friendly Tory party but the same old right-wing Tories, determined to balance the books on the backs of the poor.
Mr Denham: My right hon. Friend is right. She too has done the job that I did until the election, and she knows that there are many people in local government who are not of our party, but who have a genuine commitment to the communities they serve and by whom they were elected. Among the people who have been kicked in the teeth by these budget cuts are the locally elected representatives of this Government. The Tory leader of Blackpool council said:
"We are one of the most deprived areas in the land and we shouldn't be singled out like this."
"I understand that some of the leafy lanes of Surrey and places have got away with it; well that can't be right."
"we are a deprived borough but once again we are suffering. I am disappointed and sick of us being kicked by budget cuts in Burnley."
Andrew Gwynne: I am grateful to my right hon. Friend, who is making a very good case. Is he as surprised as I am that members of Liberal Democrat-controlled Stockport council, who were extremely vocal in the run-up to the election about the fact that their grant settlement was not enough, have not uttered a single word of protest at the cuts now being forced on them?
Mr Denham: They have obviously been nobbled, but it remains to be seen whether they will stay nobbled once people at local level in my hon. Friend's constituency understand what is really happening to them.