Hilary Benn
Main Page: Hilary Benn (Labour - Leeds Central)(12 years, 3 months ago)
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Hilary Benn (Leeds Central) (Lab)
The right hon. Gentleman talks about transparency, and Nottingham city council should indeed publish that information, but does not he understand why local government gets a little cross when he and his colleagues lecture everyone on transparency but do not apply it to information on their ministerial hospitality and gifts? Can he explain why the latest such information published on his Department’s website, which I visited yesterday, is for eight months ago, even though it is meant to be published every three months?
Grant Shapps
First, the whole House will have noted that for the first time, as far as I am aware, a Labour Front Bencher has deplored Nottingham city council’s failure to publish its information transparently. Secondly, it is absolutely right to say that we have decided to publish everything as openly as possible, including not only all expenditure over £500, but every penny of expenditure under £500. The next set is about to be released, as publication is on a six-monthly timetable.
Many councils have made excellent progress in saving cash before cutting services, but there is more to do. Last year councils in England spent £61 billion on procurement, but billions more could be saved by tackling purchasing fraud, stopping duplicated payment, improving bulk buying and joint working, using electronic auctions, negotiating harder and opening up contracts to small and medium-sized firms by cutting tendering red tape. Councils can do more for less, and part of the Government’s plan is to help them do that, not by tinkering and controlling, but by giving them certainty about what is around the corner. That brings me to the two-year settlement.
Hilary Benn (Leeds Central) (Lab)
I welcome this opportunity to debate local government finance. I am conscious that we are entering a world of strange language—gearing and damping, floors and ceilings—and the Minister did not disappoint. I was slightly surprised, however, to hear so much about Greece and Italy, Ireland and France. Unless I am very much mistaken, when I last checked, those countries were not part of the local government funding settlement, but I stand to be corrected.
Local authorities provide services on which we all rely, and what they do has a huge effect on the quality of life of the citizens we represent and on the neighbourhoods in which they live. They are now having to deal, as every Member knows, with the biggest cut in resources that we have ever seen in our political lifetime. Councils have been forced to absorb a reduction in formula grant of almost 19.3% over the two years of the spending review. The cuts have been front-loaded. What that means, as the Local Government Association has pointed out, is that local government has borne the brunt of the reductions in the spending review rather than the burden being shared equally with other parts of Government.
Having heard the Minister’s contribution, it seems that he is still living on a completely different planet from the one on which communities and their councils have to exist. As the Institute for Fiscal Studies confirms, the total cuts to local government spending will outpace those of the public sector as a whole up to 2014-15.
Mr Redwood
We are discussing £72 billion in aggregate Exchequer finance for this year and next year, which is £1,200 for every man, woman and child in the country. That has to be taken off them in taxes in order to pay to local government. Will the right hon. Gentleman tell us how much more his party would like us to take off every man, woman and child in the country to make that Exchequer finance bigger?
Hilary Benn
My response to the right hon. Gentleman is that we would not cut so far and so fast, as he knows. We would certainly not have distributed the cuts in the fundamentally unfair way that this Government have done.
Mr Watts
Government Members suggest that just one or two deprived councils are being hit the hardest, but the document by SIGOMA—the special interest group of municipal authorities—shows that the vast majority, if not all, of the most deprived authorities are being hit the worst, while those in the most affluent areas, often represented by Conservative Members, are in some cases receiving more grant.
Hilary Benn
My hon. Friend is absolutely right, and he anticipates some of the figures I am going to give to the House.
First, however, it is important to note that the Secretary of State lost out to the Treasury—assuming, of course, that he tried to protect local councils in the first place, and there many who would doubt whether he put up much of a fight, given the glee with which he regularly attacks councils for what they do. The consequences of all this are: one, that local government has to deal with cuts that are unfairly distributed; two, that residents are having to come face to face with the consequences of those cuts, as services they rely on change or go; and, three, looking to next year, that councils face nothing but uncertainty about their future financial position. Let me deal with each of those in turn.
Despite the Secretary of State’s claim that what he has done is fair and sustainable, the House knows that the 10% most deprived upper-tier authorities are facing a reduction in their spending power that is nearly four times greater than that faced by the 10% least deprived authorities. That is why the Minister’s argument falls at the very first hurdle. It is also undermined by his Department’s figures.
Newcastle city council has done us all a very great service by laying out the facts. It looked at data taken from the Department for Communities and Local Government showing the cuts in 2010-11, 2011-12 and 2012-13, taking account of transition and council tax freeze grants and the provisional new homes bonus allocations. What do the figures show when all that is taken into account? Basingstoke and Deane will gain—I stress, gain—£6 a person overall, while Knowsley will lose £227 per person. East Dorset gains £3 a resident, while Manchester loses £186. In Greater London, everyone loses, but some lose much more than others. The borough of Richmond is down by £2 a head, whereas Hackney is hit by a whacking great loss of £234 a head. Why is that? Those are the raw figures behind the hard-faced politics that prove that the Chancellor is trying to balance the budget on the backs of the poor.
If Ministers do not like hearing the truth from Newcastle or from their own statistics, what about hearing it from the independent Institute for Fiscal Studies? Its analysis by region shows that London and the north of England have been especially badly hit. Every year it publishes the green budget before the real Budget, and the 2012 green budget shows that overall cuts in local government spending, excluding education, are largest in both absolute and proportional terms in London, the north-east and the north-west.
Mr George Howarth (Knowsley) (Lab)
My right hon. Friend mentioned Knowsley a moment ago when he was comparing figures. Does he agree that when we look at the acute levels of deprivation across the spectrum that we experience in Knowsley, those figures are even worse, because some of the poorest communities in the country are being punished severely in comparison with some of the better-off communities which are getting off almost scot-free?
Hilary Benn
My right hon. Friend argues the case for his constituents with great force and vigour, and he is absolutely right. This is fundamentally unfair. The reason it is happening—the Minister was remarkably reluctant to admit the truth—is that councils in deprived urban areas rely to a much greater extent than councils in more affluent areas on central grants from the Treasury, which have been cut significantly.
Brandon Lewis
Is it not important to make sure we understand the starting point for the councils the right hon. Gentleman mentioned? For example, the figure for a council such as Richmond was something like £150, but he is comparing it with that for Hackney, which was at £967 in the first place.
Hilary Benn
Of course there is a difference because there is much greater deprivation in Hackney than in Richmond. I should have thought even the hon. Gentleman would be able to work that out for himself.
Andrew Gwynne
My right hon. Friend is right to highlight the real impact of these cuts in areas such as the north-west of England where my constituency is based. May I share with him the impact of the cuts on Tameside, which saw a £38 million reduction last year and a £35 million reduction this year, and which will see a £32 million reduction next year? That will have a real impact on the delivery of services to one of our most deprived urban communities.
Hilary Benn
My hon. Friend is right. It is quite shocking that the Government have done this knowing what it will do, but at no time have they apologised, as they should, for the unfair way in which they have allocated these cuts, but it is time they did, because it is now clear that far from all of us being in it together, some are much more in it than others. This is not just about local authorities, because the same is true of funding for the fire service, which we are also discussing.
Mr Redwood
The right hon. Gentleman said that East Dorset and Basingstoke will gain money, but those districts do not get the increases for education and other county services. We are asked to approve a fall in East Dorset from £2.75 million to £2.5 million—a 10% fall—and a fall in Basingstoke from £6.74 million to £6.25 million, which is also quite a big fall because those districts will not get the other increases.
Hilary Benn
The right hon. Gentleman obviously did not listen carefully enough to the point I made. If he has not seen the figures produced by Newcastle city council he should do so, because it has looked at the impact of the cuts over three years and has taken account of transition grant and the new homes bonus allocation. In other words, it has looked at the total effect on those authorities of all the decisions the Government have taken, and that is what the figures show.
In relation to the fire service, there are brigade areas with a very high rate of incidents, such as Merseyside, Cleveland, Greater Manchester and West Midlands. What is happening to them? They are all facing reductions in funding per head, whereas areas with a lower rate of incidence, thank goodness, such as Hampshire, Royal Berkshire, and Hereford and Worcester, will get increases in their funding per head for the fire service. What that means for the losers is that fire stations are closing, pumps are going and firefighters are losing their jobs.
Mr Watts
Is my right hon. Friend aware that the most efficient fire authorities are in the metropolitan areas, and that they are the ones that are losing the most money? I thought that this Government wanted to incentivise local authorities and fire services to become more efficient, but that does not seem to be the case.
Hilary Benn
My hon. Friend is right. Certainly the West Yorkshire fire service does an extremely good job in meeting the needs of all our constituents.
Worse is to come if Ministers insist on proceeding with the cuts that they have planned for years 3 and 4. As the Minister will know, the metropolitan fire chiefs have been so worried about the prospect that they have given Ministers a stark warning in their response to the review, in which they say:
“The Mets have already shouldered 62% of the cuts in the English fire and rescue service outside London in the first two years…The cuts planned for years 3 and 4 are unsustainable and would lead to life threatening reductions in fire cover and national resilience capacity”.
Unless the Minister has a very good answer to that, he ought to reconsider his plans for the cuts in years 3 and 4.
Last year the Local Government Association warned that the consequences of the cuts in local government finance would be felt in front-line services, although—the Minister made this point—many councils have rationalised back-office services and cut costs. The approach of the Secretary of State and the Minister is to blame councils for all this, claiming that front-line cuts are not necessary. I was interested to read what the Minister told the Select Committee back in 2010, when he was questioned by its Chair, my hon. Friend the Member for Sheffield South East (Mr Betts). My hon. Friend put this to him:
“So the bottom line from your point of view, then, as a ministerial team, is that there is no need for any cuts in services in local government at all.”
The Minister replied:
“No, they shouldn’t be cutting the front-line services.”
Only a group of Ministers who were completely divorced from what was going on in the real world in local government could say such a thing in public. We know, however, that in private some of them have said something rather different. Last year the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell) wrote to fellow Liberal Democrats—[Hon. Members: “Where is he?”] He cannot be locked in the Division Lobby this time, but it would have been nice to see him here. In his letter, he described the local government settlement as “very disappointing”. A year ago, Liberal Democrat councillors published a letter in The Times in which they said that local government was
“being let done by the Communities and Local Government Secretary”.
Even a good friend of the Secretary of State and the Minister, the much respected Baroness Eaton, accused Ministers of being
“detached from the reality councils are dealing with”.
Derek Twigg
May I make a point about the impact of front-line cuts on people? In Halton, adaptations for people with disabilities can no longer be obtained because of Government cuts. The Minister did not answer my question earlier, when I asked why the much more prosperous Cheshire East authority has been subject to a much smaller cut than Halton, which is one of the most deprived boroughs in the country.
Hilary Benn
My hon. Friend makes an extremely good point, and has anticipated what I am about to say about the impact of the cuts.
Andrew Gwynne
My right hon. Friend is right to highlight the role of the Liberal Democrats. May I take him to the Stockport part of my constituency, which is Liberal Democrat-controlled, and remind him that throughout the years of the Labour Government, the council’s grant increased year on year? Year after year the council resolved that that money was not enough, but since 2010 it has faced a £54 million cut in its budget, and we have not heard a peep out of it. What has changed?
Hilary Benn
Sadly, when it comes to the Liberal Democrats, not much has changed at all. That is a pattern of behaviour with which many of us in the House are all too familiar.
We have discussed the figures, now let us turn to the consequences of all this. Before the election, the Prime Minister promised that he would protect Sure Start. Members may recall that he took the former Prime Minister to task for suggesting that that might not happen. What has actually happened? A reply given by Ministers just before Christmas shows that there are now 124 fewer Sure Start centres than there were when the coalition was formed. So much for the Prime Minister’s pledge.
DCLG figures show that last year 93 out of 152 councils —61% of them—cut spending on providing meals on wheels for the elderly compared with their spend in 2009-10, and 55 authorities cut spending on adult social care, although all of us know our authorities face increasing pressures in that area. Also, 75 councils reduced spending on equipment and adaptations for disabled and elderly adults, and according to another survey, 88% of councils were increasing their care charges.
Mr Andy Slaughter (Hammersmith) (Lab)
My right hon. Friend mentioned Sure Start. Conservative Hammersmith and Fulham council has cut the Sure Start budget by more than 45% in one year. Perhaps its councillors did not hear the Minister saying there should be no cuts in front-line services. I thought that all Members recognised that Sure Start is an initiative that in the long run will improve educational achievement and cut youth offending, and that it is therefore a good and efficient investment, yet almost 50% of its budget has been cut in one year by this authority.
Hilary Benn
My hon. Friend makes that point very forcefully. I wonder whether Hammersmith and Fulham will still be the Secretary of State’s favourite council once he becomes aware of what it has been doing, in marked contrast to what the Prime Minister of the party it supports said at the time of the election—but then that is sadly familiar, too.
We cannot get much more front line than making sure old people have a hot meal every day or get their shopping done, or helping people to remain in their own home by building a ramp or putting a shower on the ground floor, so whatever the Minister of State was thinking when he answered an earlier question, or whatever the Secretary of State was thinking in December when he described the draft settlement as
“enough to safeguard the most vulnerable, protect taxpayers’ interests and the front-line services they rely on”,
I would gently say to them that they must recognise the damage that such comments do to the credibility of DCLG Ministers. Every time they say such things councillors, officers and people in local communities look at each other and ask, “Don’t they have any idea of what is actually going on in the world we have to live in?”
Bill Esterson
My right hon. Friend talks about the damage being done and the reality on the ground, and that is precisely what my constituents are concerned about. They are concerned about the damage to services that my right hon. Friend has described. All that he has said is true in Sefton, which faces a 25% cut, in common with many other metropolitan boroughs.
Bill Esterson
I thank the Minister for that correction. Sefton also faces the impact of the associated job losses on local businesses that rely on the public sector, as well as the impact of the localisation of business rates. The local economy will suffer greatly as a result of the money taken out of it due to the local government cuts. Businesses will not be in a position to expand. They will also be contracting, and the council will not be able to take advantage of the changes in business rates. That will be disastrous for everybody in Sefton.
Hilary Benn
My hon. Friend makes an extremely powerful point about the impact of all this on the overall economy, and I shall say a few words about the effect on jobs shortly.
The Institute for Fiscal Studies reports on another area that has been affected. It says that significant reductions in expenditure on planning and economic development are being seen. Councils will need as much resource as possible to respond to the national planning policy framework, and in particular to draw up their new plans if they have not got them, or to revise the plans if they have got them, because if they do not do that, developers can come in and say, “We want to make use of the presumption in favour of sustainable development.” However, they will find that the resource they need to do that work will largely have disappeared.
I am reluctant to raise this point, but I shall: it is extraordinary that although the Minister stands up and says, “Money’s very tight,” his Secretary of State has found £0.25 billion to try to persuade councils to change their minds about how to collect their rubbish. The great localist thinks he knows better than they do how it should be done, even though household recycling rates have more than doubled since 1997, thus saving residents a lot of money in landfill levy, and the majority of councils whose minds he is trying to change with his cash are controlled by councillors from his own party. It is a very expensive family disagreement.
Mr Betts
Is it not incredible that this nest egg of money has been trailed before councils, which are to put in bids for a scheme we are not sure about? No prudent council would formulate next year’s budget on the basis that there might be some money at some time coming from the Secretary of State. Also, it is completely wrong of the Deputy Prime Minister to criticise Sheffield council for not taking account of this possible money before setting its budget for next year.
Hilary Benn
My hon. Friend is absolutely right, and it will be interesting to see in the end how many councils choose to take it up, not least because there is a knock-on consequence over the five years for which the Government are expecting them to change their system. Frankly, £250 million could have been better spent on social care, aid and adaptations, and meals on wheels.
As my hon. Friend the Member for Sefton Central (Bill Esterson) pointed out a moment ago, one consequence of all this has been huge job losses. As we know, the Office for Budget Responsibility announced in November a dramatic revision of its projection of the total number of jobs that would be lost in the public sector, including in local government—up from 410,000 to 710,000 in the years ahead—in part because of what has been happening in local government, and in part because of the front-loading of the cuts.
For England and Wales as a whole, the reduction in the number of workers employed by councils between the first quarter of 2010 and the second quarter of 2011 totalled 129,000, of which women accounted for two thirds. In other words, women are bearing the brunt of these reductions, and it is one of the reasons why the Chancellor’s economic plan is frankly in such a mess. In 2010, he boasted in his first Budget, “Never mind about the jobs that will be lost in the public sector, because they’re going to be replaced by jobs created in the private sector”, assuring us that that would be the case. What has actually happened? In the last quarter, for every 13 jobs that went in the public sector—all 67,000 of them—just one was created in the private sector. That is why the economy is not growing, the plan is not working and the Government are having to borrow more than they said they would.
I have a couple of specific questions that I hope the Minister will respond to. On academies funding, the Local Government Association’s view is that the £265 million that the Education Secretary has finally decided to top-slice—having at one point threatened to take even more—is too high a figure because it does not reflect the actual savings that will accrue to local education authorities. I agree with the LGA. Do Ministers share that view, have they argued local government’s case with the Education Secretary, and does the Minister think that will be enough to put off a resumption of the stalled judicial reviews on this matter? Secondly, on the business rates pooling account, I should be grateful if the Minister clarified whether the Government plan to run a surplus again this year, as they did last year, and if so how it complies with the law on the account’s operation.
The third and last area I wish to turn to is uncertainty, particularly that created by the Local Government Finance Bill. Many councils have no idea, frankly, what their financial position will be next year because the Government’s policy is to localise uncertainty and volatility. As things stand, no council knows what its baseline will be next year under the legislation going through the House, what top-slice share the Government want to take, how the levy will work, how the safety net will operate or what impact, for example, the closure of a large employer in its area would have on business rate income. Nor do councils know, given the 1% average limit on pay increases, how much will be taken off them by the Treasury, although there are estimates of £200 million in 2013-14 and £400 million in 2014-15.
Furthermore, on the council tax benefit, nobody knows exactly how the budget minus the 10% will be distributed, what the take-up will be, and how councils are meant to cope with a rise in unemployment and, therefore, with an increase in applications in their areas. I gently advise Government Members to have a very good look at what this will mean for their constituents, because many Government Members represent areas where the proportion of pensioners is higher than the average. The more that is true, the greater the cut in council tax benefit or, to put it another way, the bigger the council tax bill that will have to be paid by their voters on low incomes, who have absolutely no idea what the coalition Government have in store for them.
Mr Mike Hancock (Portsmouth South) (LD)
Once again, I declare my interest as a member of local government. I share the right hon. Gentleman’s worries that local authorities are not in a position even to guess what the situation will be next year. Does he agree that what is even more worrying is that the Government do not have a clue about what the position will be, and that that is the problem we face?
Hilary Benn
The hon. Gentleman is absolutely right, and we are talking about a change that the Government are apparently determined to push through in a very short space of time. [Interruption.] On the council tax benefit localisation, it is not a change, with the 10% cut, that I agree with. Government Members ought to listen to what council treasurers and leaders up and down the country are saying, and they should make their views forcefully known to their Front-Bench team before they find their constituents asking them, “What is it you voted for? Why did you do this to me?”
All this uncertainty has been created by the Secretary of State, because it is his Bill and his lack of clarity. What would a prudent authority do in these circumstances and faced with such uncertainty? What authorities actually do is build up reserves to guard against it, yet we know what the Secretary of State does to councils that have reserves—he attacks and vilifies them. That is a pattern of behaviour with which councillors of all political colours have become all too wearily familiar.
I shall now deal with council tax and the other motion before us. Let us remember that average council tax bills are lower under Labour-run councils than Conservative ones. No council, especially in the current circumstances, wants to raise council tax if it does not have to do so. Councils will do their best to avoid doing so, unlike the Secretary of State, who says that he wants to protect people from increases in council tax and then the next moment introduces legislation that will impose council tax increases on people on low incomes.
As my hon. Friends have said, this year’s council tax freeze grant is a one-off, unlike last year’s, and that creates a dilemma for councils. The Tory leader of Surrey county council, which I understand is not proposing to take the freeze grant, said very simply:
“The freeze would be a short-term gain for long-term pain.”
Why has he said that? He has done so because the freeze could mean that residents face bigger council tax increases next year and subsequently.
On the referendum proposal, capping powers have of course been in place since the Local Government Finance Act 1992 was passed by the previous Conservative Government. It is right that councils are accountable for the decisions they make, although if the Secretary of State were true to his “localist” principles, he would have allowed local residents to hold the trigger on any referendum. Instead, the legislation will provide that he will determine the benchmark—so he decides what is excessive. He will determine how the referendum is conducted, the question to be put, the publicity and expenditure levels to be permitted and how the votes are counted. He will even be able to direct that the referendum provisions do not apply and decree the council tax requirement that must actually operate. In effect, the Secretary of State will set the maximum level of council tax increase each year.
The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)
May I point out that the right hon. Gentleman was a member of the Cabinet that had capping, whereby the Secretary of State used to set the maximum council tax each year without even asking anyone?
Hilary Benn
Indeed, with the powers having been put in place by the previous Conservative Government and having remained in place when we were in government. I was merely pointing out to the Minister the inconsistency in the Secretary of State’s argument: he says he is a great localiser but on bins and on referendums it appears that he knows better than everyone else.
Hilary Benn
I have been very generous in giving way and I have given way to the hon. Gentleman once already, so I am going to conclude to allow others to speak.
On the question of how the 3.5% is calculated, however, after the exchange we have just heard, I would say that I think councils would welcome absolute clarity about what kind of increase would trigger a referendum, not least because of the costs that would result.
In conclusion, the settlement needs to be seen for what it is. The Minister referred to the Joseph Rowntree Foundation and, as he might have read, last month it talked to a number of senior council officials about the impact that reductions in local authority budgets will have on the most deprived communities. The BBC reported what one officer, who, incidentally, works for a Conservative-controlled authority, said, and I want to quote him. He said, very simply:
“This is the most unfair and unjust settlement I have ever seen”.
I agree. It is unfair to councils and unfair to local residents, and that is why we will vote against this motion.