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We were told that there would be a 2% limit on cuts; however, Corby council faces a cut of 15% in one year,
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because the figures did not include the housing and planning delivery grant. Corby council did the right thing: it gave planning permission for houses and economic development-and now it has had to pay for that with a 15% cut. I now give way to the hon. Member for Croydon Central.

Gavin Barwell: I am very grateful to the right hon. Gentleman for giving way. He is trying to make the point that the previous Government allocated money on the basis of need. Does he recognise that the result of the introduction in 2006-07 of the fourth block into the funding formula, according to the London Councils report, has been a shift in local authority funding

That is the result of the policies his Government introduced, and he did nothing to correct those decisions.

Mr Denham: If what the hon. Gentleman says means anything, he is arguing that we should have shifted more priority towards the poorest and that we actually made a mistake back in 2006. That does not fit coherently with the approach of his hon. Friends.

Mr Skinner: Does my right hon. Friend agree that we should not be too surprised at what this Tory Government are doing to shift the balance towards the wealthier areas of Britain, because every pit in Bolsover was shut by the previous Tory Government, throwing thousands of people on to the dole and creating deprivation that hitherto had not existed? Now the Tories are doing it again, but there is a difference because this time they are doing it under the cloak of so-called "respectability", using those tinpot Liberals to cover for them. The Liberals will undoubtedly have to pay for it at the end.

Mr Denham: My hon. Friend is absolutely right about that. One of the things that we need to recognise is that, sadly, in large areas of the country, particularly in my own area of the south, as well as in the south-east and the eastern region, local government has for too long been divided between the Tweedledum of the Tory party and the Tweedledee of the Liberal Democrats. The Liberal Democrats have often got away with claiming that they were a progressive alternative to the Tories, but that will no longer be allowed to stand. Somebody has to speak up for the people of the areas suffering cuts, and it will be the Labour party.

John Hemming (Birmingham, Yardley) (LD): There are perhaps two arguments here. One argument is about whether the cuts should be made now or later, and the other is about how they should be allocated. My personal view is that we must ensure that we fund local authorities on a needs basis-there is no question about that. The basic questions in this debate are about whether or not cuts should be made earlier and whether the quantum should be the size it is. If we do not do this, the interest rates will be higher. If we follow the Labour party's advice, we will actually have greater cuts because we will have to pay a higher interest rate on a higher level of debt. That is the fundamental truth of this argument, so the right hon. Gentleman is arguing for greater cuts in the long term.

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Mr Denham: The hon. Gentleman is right to say that there are two arguments-the cuts should be made now or they should be made later-but he has the unique distinction of having argued both of them within recent weeks.

John Hemming rose-

Mr Denham: No, I am not going to give way, because it was not worth it last time. The hon. Gentleman spent an election campaign saying that the cuts should not be made now, but he has spent every week since the election saying that they should be. That is ridiculous and he cannot expect to be taken seriously.

Ms Louise Bagshawe (Corby) (Con): When I was in my office, after a meeting, I heard the right hon. Gentleman take the name of Corby in vain. May I point out to him that the cuts allocated to Corby borough council are merely 1.1%, which puts it in the lower half of councils receiving cuts? Is the shadow Minister aware that Pat Fawcett, the Labour leader of Corby borough council, complained bitterly at the funding settlement that Corby received when his Government were in power?

Mr Denham: I will send the hon. Lady the letter from Corby borough council setting out why its cut had turned out to be much bigger than the 1% that it had originally been told about by the Secretary of State.

Several hon. Members rose -

Mr Denham: I should make some progress, because I have further important points to make to the House-unfortunately, the Secretary of State is not here to defend his case. When he made his announcement, he tried to sweeten the pill by promising local councils greater freedom in spending what was left of their money; he said that £1.7 billion would be taken outside the local government ring fence. That was fair enough, because that is the same direction of travel that the Labour Government had set and I am not going to argue with it, but what has happened since? This Government have now been forced to admit that it was all a mistake and that the figure was not £1.7 billion after all, but £1.2 billion, so we have another disappearing half a billion pounds. How could that be? The truth is that the Secretary of State and his Ministers are not on top of their brief, and they do not understand how local government finance works or where the money goes.

All that would be bad enough, but that is not all. What is being revealed bit by bit is this Government's limited vision of local democratic government. The country faces a major challenge as we and the world recover from a global recession, and effective, democratically accountable local government must be part of the solution, not part of the problem, but it is now clear that this right-wing coalition does not understand how important local government must be.

It is not just about the unfair cuts, the impact on front-line services and the impact on growth. It is quite clear that there is no decision too small for the Secretary of State to intervene in. We wanted local councils to be able to decide whether planning powers should be used to control the spread of houses in multiple occupation and to let them decide what was best for local people,
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but now the Secretary of State is tearing up those rules. Who is going to decide what is best for local people? He is. We wanted local councils to have a say in the big planning decisions that affected more than one district. Who will decide now? The Secretary of State. He wants to set the council tax in every council, how often the bins are collected and how often councils can communicate with the public. He imposes cuts from the centre and will not talk to local councils about how to do it-no wonder he will not turn up to speak in the House. Remember the power of general competence? Remember the Prime Minister, when he was Leader of the Opposition, saying that councils would be free to do whatever they like as long as it was legal? That did not last long under this Secretary of State. He needs to learn that there is a lot more to localism than sitting behind a desk in Whitehall giving orders to local councils.

Councils need to be leaders, shaping and delivering services in their area. Under Labour, councils were better financed-we reduced ring-fencing and targets and believed that local councils were often best placed to decide what was best for local people. Labour local councils had the lowest council taxes and Tory councils had the biggest increases. We trusted councils to deliver the things that local people wanted. That is why local councils were the right vehicle to deliver the 18 million free swimming sessions for pensioners and kids that will now be scrapped. The views of the Tory leader of Derby council will be shared by many. As he said:

It was our belief in local government that made us see why local councils should take the lead on council and social housing and in supporting the Kickstart schemes, all of which are now on hold or scrapped. That is why local councils were the right people to lead in tackling worklessness, and why so many local councils, including Tory councils such as Kent and Hampshire, were big bidders for and big users of the future jobs fund. They could see that it was right to offer real jobs to young people in their communities. Now, up to 80,000 jobs for young people will be lost.

We trusted local councils-Tory, Lib Dem and Labour. Yes, sometimes they let us down. I remember when the Tory-Lib Dem coalition in Birmingham failed to spend its working neighbourhoods fund money; perhaps we should have realised that that was the shape of things to come. However, many other councils repaid that trust many times over.

It was right that local councils led on Building Schools for the Future. There are now 750 schools in 90 local authorities whose schemes are on hold and in doubt.

Alison Seabeck (Plymouth, Moor View) (Lab): My right hon. Friend has set out in an extremely worrying way the effect of this right-wing Tory-Liberal Democrat coalition and of its cuts. Does he acknowledge that the coalition has not in any way flagged up the potential savings before going straight into the cuts programme? The Total Place project was one through which Tory councils in London and elsewhere said that they could make significant savings of tens of millions of pounds, yet there has been no mention of it from the Government. Will my right hon. Friend comment on that?

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Mr Denham: My hon. Friend is absolutely right, and I shall move straight to that point. It is very clear that the right-wing coalition is handling these cuts in a way that is creating much deeper damage than is needed. My hon. Friend should not be in any doubt: cuts would have had to be made under our deficit reduction programme. They would not have been as big or as fast, but difficult decisions would have had to be made none the less. There are big efficiency savings to be made, many of which were set out in the report that we published before the election, written by Sir Richard Leese, leader of Manchester city council, and Sir Steve Bullock, mayor of Lewisham. They set out very clearly the savings that could be made from sharing services, sharing staffing and reducing layers of management, but those changes need to be properly planned and implemented consistently over several years, always putting citizens first. The Government's approach of badly planned, short-term, unfair cuts and arbitrary suspension of key investment makes efficient savings impossible and ensures that the cuts will fall on front-line services and their users, not on the back office.

In government, we recognised-this was the point that my hon. Friend the Member for Plymouth, Moor View (Alison Seabeck) made-that the only way to make the best use of local public service spending was to look at it as a whole. We need to look at all the money spent on children, older people, offenders and drug and alcohol problems as a whole. Rather than worrying at the outset whether it is police money, health money, school money or council money, we need to look just at how best to use it.

We know that the most expensive children-the ones who are disruptive at school-are often those whose families are of most concern to social services. They cause the most nuisance to local people and the police and they probably have the highest need of adolescent mental health services. So we worked with local government and the Local Government Association to show that we could produce better services much more efficiently if we brought together all the money that is spent on that group. Our Total Place pilot showed that when we do that, we get a better service at lower cost.

The LGA says that government as a whole could save £20 billion over five years. I am cautious about the details behind that figure, but it is significant. That is what councils think they could offer to cut the deficit while protecting front-line services. That should be taken seriously.

Sir Paul Beresford (Mole Valley) (Con) rose-

George Hollingbery (Meon Valley) (Con) rose-

Mr Clive Betts (Sheffield South East) (Lab) rose-

Mr Denham: I shall give way to my hon. Friend.

Mr Betts: I completely agree with my right hon. Friend's analysis of Total Place. It is a way forward; it is not going to deliver immediate savings, but with proper planning it could deliver. However, it cannot be delivered properly through central diktat from the Secretary of State. If improvements are to be delivered, there has to be a real transfer and devolution of power not merely from the Department for Communities and Local
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Government, but from the Department for Transport, the Home Office and all other Departments, to allow local authorities to take the lead at local level.

Mr Denham: I agree with my hon. Friend, and I welcome him to his position as Chair of the Select Committee on Communities and Local Government, to which he will bring considerable experience and knowledge. That is exactly what we offered local government and local services in our last Budget, which offered a wide range and scope for local services to pool their money and use it in new ways. That is why I was confident that we could both deliver our deficit reduction programme and protect front-line services, but as my hon. Friend says, it can work only when it is backed from the top. There is no mention of it in the Budget or in the Red Book, and every Government policy works against that sensible, coherent approach. The Government are not just slashing local spending: they are fragmenting it. There is no point in giving councils more and more control over disappearing funds if, at the same time, school spending is disappearing into academies and free schools, if the chance to work with health money disappears into hundreds of GP budgets or if police funding rides off into the sunset with an elected sheriff. [ Interruption. ] I am sure that the hon. Member for Meon Valley (George Hollingbery) is right. I shall come to him in due course.

I do not know whether the Secretary of State simply lost all those arguments or whether he never made them, but he has not done well. I shall give way now to the hon. Member for Meon Valley and later to the hon. Member for Mole Valley (Sir Paul Beresford).

George Hollingbery: I am very grateful to the right hon. Gentleman for giving way. First, I make the point that in 13 years of Labour rule, there was little or no integration across local services. Indeed, we could honestly say that silos grew a great deal more than they merged together. We do not need central rules to make that integration happen; in Hampshire, we have Project Integra and PUSH-the partnership for urban South Hampshire-so he will know that there is plenty of co-operation at local council level.

On central control, does the right hon. Gentleman agree that when Winchester city council, of which I was a member for 11 years, made an assessment of the amount of spending it could control under the last Labour Government, it was below 5% of total spending?

Mr Denham: It is useful to have a discussion with a Hampshire MP, as we are both familiar with PUSH, but this is exactly my point: that partnership is very good and very important, but it is limited to the powers held by the local councils. Until those councils are able to help to lead and shape health spending and law and order spending in the area, we will not get the changes that we need.

The hon. Gentleman's second point is also reasonable, but he overstates it. He calculates that Winchester council did not have the budget for Winchester university-well, no, but nor should it. Winchester council did not have the budget for Winchester prison, or for the benefits bill in Winchester. Not every piece of spending is amenable to transfer to local authorities. However, together with local Government-particularly over the past few years-we
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did set out that stronger vision for local government. I am desperate that we should not lose that vision, and not just for the purpose of a party political debate here.

The integration of local services is critical now. If the Government prove me wrong I shall be the happiest person in the world, because we shall then have the chance to deliver front-line services that people want in a way that genuinely saves money. Every Member, on whichever side of the House they sit, should be interested in that debate.

Not so long ago, when he was Leader of the Opposition, the Prime Minister said, "If you want to know what a Conservative Government would look like, look at Conservative councils."

I am happy to give way to the hon. Member for Mole Valley, if he still wishes to intervene. It seems that he does not.

What the Prime Minister said constituted a fair warning. As some of my hon. Friends have already observed, what we are seeing is not the unavoidable consequence of a global recession or even of a Labour Government. The aim of the Tories, limply propped up by the Liberal Democrats, is and always has been to roll back an effective, caring and active state. Their vision is of the budget airline council, the sink-or-swim council, the no-frills council, where town halls offer only the bare minimum of service and people must pay twice to get a good service. I think of councils such as Wandsworth, whose leader said that the council wanted to

I think of councils such as Hammersmith and Fulham, which promise to protect the elderly and then hike up their charges. That council's leader has said:

I think of the Tory councils in London that want to knock down the homes of secure tenants and offer them insecure homes at a much higher rent, and of the threats to the future of secure council tenancies that the Minister for Housing has never denied. It is all there.

Yes, the country faces hard decisions as we recover from the global recession, but none of that justifies an ideologically driven attack on the basic idea of decent local services provided by well-run councils. We all know what the Tories are up to, but what are the Liberal Democrats doing supporting them? The answer is that they have sold their souls, and have forfeited the right to call themselves a progressive alternative to the Tories.

4.27 pm

The Minister for Housing (Grant Shapps): I beg to move an amendment, to leave out from "House" to the end of the Question and add:

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