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29 Jun 2010 : Column 748

Mark Pawsey (Rugby) (Con): Did Advantage West Midlands not waste a lot of taxpayers' money when Ericsson was persuaded to go to Ansty business park-a completely unnecessary move?

Mr Cunningham: The hon. Gentleman has his facts wrong. It was Ericsson that wasted public money, because it misled everyone-including the Tory council in Coventry-into thinking that it was there to stay. The hon. Gentleman must not distort the facts.

The Secretary of State has sent a circular out to local authorities, but we want to know whether the Kings Hill and Keresley housing project will go ahead. I asked the Minister to clarify that last week, and I was told that Coventry council would be allowed to settle the matter. However, when the Tories were in opposition, they said that one of the first things that they would do was cancel that project, because it was being built on the green belt-which the hon. Member for Rugby (Mark Pawsey) knows something about, as Warwick district council is the planning authority and has been passing the buck.

If we are talking about the 1980s, let us remember that manufacturing in the west midlands was decimated, to say the least. In Coventry, we lost thousands of jobs every week. Are we going back to that? That is what the Government's proposals will mean. The Minister talked about council house building being the lowest since the war, but I do not remember many council houses being built in Coventry in the 1980s. I certainly remember that council houses were sold off and not replaced. The Minister has a lot of explaining to do there.

The other area of concern is what will happen to the voluntary sector especially, and to the much vaunted public sector, which the Government keep on about attacking. How much funding can the voluntary sector expect, if funding to the public sector is reduced? As in the 1980s, the public sector will be the whipping boy for the measures that the Government want to take. I could see their strategy when they were in opposition. They went on about gold-plated pensions and big salaries for chief executives. That is fair enough-we have to do something about it-but it obscured and masked the fact that many people in local government are on low pay, and they are the people who will be attacked. I was in contact with Coventry city council today. The real impact, by the way, will not be known until October or November, because the Government themselves do not yet know which cuts they are going to inflict-they have not worked out the details-not only in Coventry but in the rest of the country.

The Government blame us for the economic crisis, but I remember when it broke. The Conservatives thought that we just needed to bail out Northern Rock and that the crisis had just happened in this country, but it actually happened with Lehman Brothers in America. How any British Government can control what goes on in the American economy defies logic. It was only later that the Conservatives worked out a strategy. Incidentally, the present Governor of the Bank of England went along with the economic stimulus-the same man now advising the Government to go down the road of wholesale cuts. We had a programme to do that over four years, but theirs is a knee-jerk reaction. In other words, they have panicked, they are not in command of the economy and they do not have a strategy to get the country out of this situation.

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This is a typical Tory ploy. In the '80s, they used the Labour Government of the '70s to try to justify some of their policies, but they missed something out. Before that Labour Government of the '70s, we had a Tory Government. Do we remember the three-day week? Do we remember the OPEC crisis when petrol prices went through the roof? The American economy had problems because the American public reacted to the prices at the petrol pump. We then inherited, as a minority Government, a previous Tory Government's problems, and I predict that, in the future, we will be picking up the pieces once again for the damage that these people have done.

5.11 pm

Sir Paul Beresford (Mole Valley) (Con): I always find that the shadow Secretary of State's speeches display a convenient forgettery: he gets out his paint brush, forgets the damage that he and his predecessors did to local government, comes up with a few colourful pieces and ignores the fact that, time after time, the Communities and Local Government Committee told him and his predecessors where they were going wrong-and now he has suddenly changed his tune.

Under Labour, the local authorities central grant became less fair as the funding formula was progressively manipulated to the disbenefit of London and the south-east. Many services, along with funding, were moved to regional authorities and quangos, capital receipts were centralised for Government selective redistribution, and local government was crushed with inspections by most Departments of State and by targets in their hundreds if not thousands. New scheme after new scheme was brought forward and money applied to it, but it was allocated specifically, carefully and frequently politically by the Labour Government.

Like it or lump it, the committee structure, which enabled every councillor to have a say before decisions were made, was removed, and a new system of executive decisions inspected afterwards by committees was landed on councils regardless of cost increases. Standards committees and the standards quango were set up, again costing money, for frequently frivolous complaints that were easily dealt with under the previous regime. Central Government imposed rules and regulations on the private sector, making competing for local government functions utterly pointless, and the so-called best-value legislation was imposed, further limiting local authority freedoms.

Most of the centralising and manipulation was introduced by the then Deputy Prime Minister, with his clear desire to make local authorities effectively direct agents of his Department. The effect on local councils' morale was disastrous, and many complained that although they were local councils they were no longer local government. Incentives for lateral thinking to improve services and cut costs were destroyed, and local authorities in London and the south-east lost grant funding as the formula was changed three times. Even under the Conservatives, Surrey and places such as Wandsworth got among the lowest grants, but he came in and hit them with three funding formula changes, the last of which is notorious in Surrey. Under that change, it did not lose just a few million; the year-on-year loss to Surrey county council was £39 million. Event the Audit Commission pointed out the grant funding bias.

Over the years, the local government Select Committee, in its various guises, has increasingly pointed out the diminution of the freedom of local government. The
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last report was emphatic, and was swept aside. Latterly, there have been some gestures from various Secretaries of State. With a great flourish, one Secretary of State announced that the number of targets set by her Department would be diminished. The number had risen under her and her predecessors to well over 1,000. She was right; she did reduce the raw numbers. However, much of that was offset because there was a combining of targets, so they were still there, and there was increasing auditing of decisions made under the new freedom regulations. Although her Department tried, others did not, of course, so the number of targets increased.

My right hon. Friend the Secretary of State for Communities and Local Government, along with his Ministers, now have a unique opportunity, as the Minister has just said, to give local government back its freedom. From the removal of regulations, a massive reduction in Government expenditure and the removal of constant auditing will come enormous savings. From the point of view of the council tax payer, many of those savings may be quadrupled because it will be a case of reverse gearing.

I hope that my right hon. Friend will be generous enough to consider a few thoughts. Most of us believe that Government and local government should be small and efficient. To expand on one of the Minister's comments, the supermarket-type motto of "more, better, for less" is appropriate at this time. For local authorities to say that they are surprised about cuts is astonishing. They are not numerically dyslexic; they have been looking at these; they know they are coming; they have been working towards them.

In order to enable local authorities to respond, there must be a huge bonfire of regulations and inspections. The savings to local councils could amount to millions upon millions of pounds each from that alone. The reduction in the costs of the Audit Commission will be commensurate, as should the reduction of officials in the Department. Among the restrictive legislation that my right hon. Friend must remove should be the various incremental changes that made competitive tendering of the private sector for council functions non-competitive tendering. Local authorities should be encouraged to divest themselves of unused or unwanted properties by being able to retain the capital receipts, at least in part, for their own use. The business rate portion of Government grant should be separated from the actual Government grant.

Furthermore, I suggest that my right hon. Friend and his officials look at a slightly different approach to central funding. Education amounts to approximately 60% of local government expenditure. Under the previous Government, that was predominantly funded directly to schools, but through local education authorities. With the move for more independence of state or local authority schools, it would be timely to stop the previous Government's pretence and fund the schools directly.

If that were the case, the slight adjustments for local authorities could be effectively funded by the national business rate, distributed by a fair equalisation formula and by the council tax, which councils should be allowed to set themselves without interference. That would mean that local council tax payers-of course, they are almost always voters-would have a much more direct relationship with the local council in respect of its council tax and services.

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In addition, if council tax benefits were paid directly to the recipient and estimated on a fairly applied standard spending assessment basis, to use an old phrase, there would be a further incentive for these people to put pressure on their council. By that I mean that if the local authority set the council tax higher than had been estimated, those on benefits would have to pay more. Equally, where an efficient council sets a lower tax, the benefit recipient would pocket the difference.

Many Members want to speak, and the Minister has talked about many things. He has to build much more on those things to produce a bonanza Bill that cuts regulations. There is now a unique opportunity to turn back what the previous Government did to mutilate, damage and brutalise local government in this country.

5.19 pm

Andrew Gwynne (Denton and Reddish) (Lab): May I take this opportunity to say how pleasing it is to have not one but two Lancastrians as Deputy Speakers?

I draw the House's attention to my entry in the Register of Members' Financial Interests. I rent a constituency office from Tameside council and have parking permits from both Tameside and Stockport.

I pay tribute to the work done by all councillors, irrespective of party affiliation. Having served as a local councillor for 12 years before entering the House, I fully understand how difficult the role is. It is often a thankless task, yet to serve local communities in local government is also a massive privilege and honour. I do not think we do enough to recognise the work of those who serve in local government.

I also want to place on record my tribute to Councillor Roy Oldham CBE, who served as leader of Tameside metropolitan borough council from 1980 until this year. Those 30 years at the top made him the longest serving council leader in the country, and his achievement in transforming the borough from sleepy backwater into one of the leading metropolitan districts in the country-the best in the north-west according to the Audit Commission-is a testament to his drive and vision to make the borough a leading council. Roy is currently recovering from illness and I wish him well. I am sure the new council leader, Councillor Kieran Quinn, will want to make his mark on the borough too, and build on the excellent achievements of the past few years. It will be a tough job, not least because of the tightening financial situation, but I am sure he will do his best for the area and I have every confidence that Tameside will continue to be at the forefront of local government.

The recent Budget was called the "unavoidable" Budget, and some important choices were made in it that will impact heavily on local government. There was a certain irony in the use of that term, however, as the report earlier this month from the new Office for Budget Responsibility indicated that the previous Government's fiscal plans would have eliminated the bulk of the structural deficit by 2015. So these cuts that go so deep so quickly may not make the economic sense that the Government would have us believe. Clearly, they have decided to go further and faster, but these cuts seem more ideologically driven than based on sound economic
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fact. We will soon find out both if the Conservative-Liberal Government have been correct and about the wisdom of these actions.

It appears that the local government sector and workers will be facing the worst situation for a generation as the Chancellor tries to cut spending just as Baroness Thatcher did but in half the time. That will mean brutal cuts in the budgets of all Departments. The Chancellor is talking about 25% cuts across the board, but as we are told that the education, health and defence budgets will get off relatively lightly, I strongly suspect that other budgets, such as that for the Department for Communities and Local Government, will have to be cut by much more than a quarter. We will see what the real cost is to these Departments.

I urge caution. We need to be careful in how we address the local government cuts. Many local agencies now work in very close partnership one with another, so a cut in one area may well be to the serious detriment of activities in another. Budget cuts in local government will not be in "silos", as all agencies are now largely linked up. We therefore need to look at the interactions between various services. It is easy to cut the aids and adaptations budgets for adult social services, but if the result of cutting a £100 handrail for an elderly constituent is to have to pay thousands of pounds for a hip operation in the NHS, that will not have saved the public purse.

We must not miss the bigger picture. If the cuts start to dismantle these working arrangements, service provision will be back as it was in the 1980s: Department-based, with no thinking outside the box and little joint thinking. For example, interrupting good local management on antisocial behaviour, family intervention and domestic violence will have a real impact on the communities I represent-on people who truly depend on services that no one else will provide and that no one else is better placed to co-ordinate.

As I have said, the scale of the cuts poses a serious challenge to local authorities' ability to deliver services that meet the expectations of people-in my constituency, especially people who live in Stockport and Tameside-over the coming five years and beyond. The Tameside part of my constituency will be particularly affected. It has been ranked as an area of high deprivation, the 56th most deprived local authority area in England. Already, the changes to benefits and tax credits will have a disproportionate effect on Tameside residents due to the existing high levels of income deprivation, and may lead to even more people calling on council services in their time of need. This will be happening at the same time as further funding cuts to the council and its partners start to bite-a double whammy for the people of Tameside and the people of Reddish, to whom I will turn later in my remarks.

Tameside had expected to receive some £23.5 million of area-based grant funding in 2010-11. That has been reduced by £2.34 million-about 10%. Services will clearly be cut at a time when demand will inevitably rise, so Tameside is already anticipating and preparing for a number of hard choices over the coming years. The council has developed a medium-term financial strategy. It expects cuts of up to 10% a year for area-based grants and specific grants-about £5 million in total-on top of cuts to formula grant funding and restrictions on council tax, with a possibility of reductions in capital funding as well.

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There will also be an impact on voluntary and community sector grant funding, a sector which contributes significantly to the capacity to deliver improved outcomes through community-based work. Activities to provide opportunities to young people may have to be reduced, along with youth provision, which is non-statutory, in order to ensure that work with vulnerable and looked-after children is maintained. It is therefore crucial that the council and its partners be able to maintain their levels of investment, both grant and mainstream, in effective prevention work. This Government must be clear that local government plays a vital role in delivering crucial services across communities and should be a spending priority, rather than taking more than its fair share of the burden.

I am also extremely concerned about the knock-on implications for regeneration in my constituency. Excellent work has been done by the Denton South Partnership in Haughton Green, one of the deprived parts of my constituency. This has been a model of effective partnership working, bringing together all the agencies such as the council, the primary care trust, the police and local housing associations. I pay tribute to the work of David Howarth, the chair, and all the members of the partnership. However, such a proactive approach to solving problems will go if all the partner agencies face the same budget reductions, which will lead to massive disinvestment in the communities where help is needed most.

I turn briefly to the Stockport part of my constituency, where there is also a great deal of concern. Cuts of £1.69 million to the area-based grant-

Toby Perkins: My hon. Friend is highlighting the extent to which the cuts, which would not have been made under a Labour Government because of our commitment to supporting people in their efforts to get work, will be targeted at the most deprived people in our communities. Does he agree that targeting areas in which disadvantaged people are out of work is a particularly cruel measure for this Government to take?

Andrew Gwynne: It is, and I agree fully with my hon. Friend. Parts of my constituency are still trying to recover from the previous Tory Government's attack on those communities, despite the great work of the last Labour Government, and that progress needs to be maintained.

The area-based grant is finance used to help various services, such as those for deprived and vulnerable children. What is the alternative to cuts in services such as family intervention? If those services are cut locally, more children may be taken into care because there is no early intervention to fix problems quickly, which would cost the taxpayer significantly more. It costs approximately £24,000 a year to take a child into care. The cuts could well impact more harshly on less affluent areas of Stockport, such as Reddish. Liberal Democrat Stockport council does not do anything like enough for its most deprived communities, including the Reddish wards. I am concerned that they will be an easy target for the kind of cuts we now face. So there are a number of concerns for constituencies such as mine, because the Government's announcements will hit a host of services that affect local people. It is clear that the areas that will be most affected are poorer areas in the cities and metropolitan boroughs. Labour has a strong record of increasing funding for local authorities in those areas and using them to deliver national priorities by harnessing the best locally.

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This Government clearly have a new view of localism, which does not take much account of local people. These cuts fail, as they break all promises not to balance the books on the backs of the poorest, and they show that the Government's claims of fairness are pretty empty and do not seem to look much beyond the world outside the comfortable home counties.

Several hon. Members rose -

Mr Deputy Speaker: I am sure that Members will wish to respect the conventions associated with maiden speeches; I call Paul Uppal.

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