Local Government Funding
Debate between James Morris and Tom Blenkinsop(13 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text
James Morris (Halesowen and Rowley Regis) (Con)
It is a pleasure to follow the hon. Member for Liverpool, Wavertree (Luciana Berger).
As other hon. Members have remarked, the debate comes at a crucial time for local government. Many local authorities have been preparing for these tough times because, as others have pointed out, if there had been a Labour Government there would probably have been cuts of about 20 to 25% in local government anyway. Responsible local government leaders and chief executive officers have been making plans over the past two years to deal with the overall fiscal situation that we face. In my previous capacity before coming to the House, as chief executive of Localis, the local government think-tank, I worked with a number of local authorities across the country that were already beginning to make strategic plans to cope with the situation. They knew that whatever the outcome of the general election, there would be significant service transformation.
I think we would all agree that the outcome of the comprehensive spending review is a tough settlement. As has been pointed out, we do not know the exact figures that the Minister will reveal next week, but we know they will be tough. However, the review also provides local government with a serious opportunity to consider how it can transform its services and improve its service delivery.
Some Opposition Members have touched on the hypothetical distribution of the spending cuts around the country and questioned their potential fairness. As the hon. Member for Bermondsey and Old Southwark (Simon Hughes) pointed out, the way in which the formula grant is calculated is very complicated, and we would all agree that for many years it has been thought to be completely lacking in transparency. I agree with him that there is an urgent need to reform how we calculate the distribution. In fact, in the last Parliament, the Communities and Local Government Committee recommended that the Government increase the transparency of the existing grant allocation process. I hope that will form part of the Government’s review of local government finance, because more transparency in the allocation process is critical.
I represent a constituency that straddles two metropolitan authorities in the west midlands—Dudley and Sandwell—one of which is Conservative-controlled and the other is Labour-controlled. My central focus is to ensure fairness in the grant allocation process. However, there is a discrepancy between these two metropolitan authorities. Dudley metropolitan council receives £60 million less funding than Sandwell metropolitan authority. They have similar levels of population and deprivation, yet there is a £60 million discrepancy. I am not making a value judgment about either authority; I am simply saying that we need to get to a point where this grant allocation does not throw up such significant discrepancies, not just between metropolitan boroughs and the shires—that has been debated tonight—but between metropolitan authorities within particular regions.
Funding shortfalls were not the only legacy that Labour left the country. As my hon. Friends have argued, the previous Labour Government kept local government on a tight leash through centralised control and regional bureaucracy. The changes implemented over the past 13 years have stifled innovation locally, and given local government and communities the feeling that they have limited control and ability to make decisions and effect change. Unaccountable quangos, such as the Standards Board for England, the regional development agencies, including Advantage West Midlands, and the regional spatial strategies, all contributed to this feeling, and I am pleased to say that they are all on the way out. Removing those unelected, unaccountable and unwanted regional structures and bodies is a first step in a vital development for a new era of local government.
Tom Blenkinsop
What will areas without a local enterprise partnership do to get money through the regional growth fund?
James Morris
They will need to make clear arguments to the Department for Business, Innovation and Skills and the Department for Communities and Local Government about why there should be a local enterprise partnership. However, local politicians should be arguing in favour of making applications to the regional growth fund because, even outside the LEPs, businesses, the voluntary sector and local authorities can make applications to the regional growth fund.
Local authorities will now be given back responsibility from central Government to start making real decisions about how they spend their money. As the Secretary of State said, the Government have freed up, or un-ring-fenced, grants worth £7 billion from 2011-12 onwards, which the Local Government Association described as
“an important move towards a simpler funding mechanism that will help councils do their job”.
However, that should be only the beginning. There is huge scope for the introduction of other levels of financial innovation in local government. For example, hon. Members have talked about the potential productive use of tax increment financing. This lack of ring-fencing, this devolution of financial autonomy to local government, should be only the beginning. We also need a systemic reform of the services delivered and a re-evaluation of how local people can influence the way services are run. This transformation, with the coming presentation of the localism and decentralisation Bill, is at the heart of Government policy. A bottom-up approach to service provision is vital.
Local Government Financing
Debate between James Morris and Tom Blenkinsop
James Morris
I will not give way again.
Despite attempts by Labour Ministers in the Department for Communities and Local Government to get traction on the localist agenda, there was no commitment to it from the top. The Prime Minister and other Cabinet members simply had no trust in local government or communities and were philosophically unable to let go and let local government get on with its job.
Institutional complexity goes to the heart of the relationship between central Government and local government in this country. In the past two decades, particularly the past 13 years, it has been characterised by excessive, top-down, performance management culture. Recent figures show that the annual cost of regulating local government from Whitehall was estimated at more than £2.5 billion. The distorting effects of that top-down performance culture could be considerably greater on the shape and management of public services in this country.
The right hon. Member for Salford and Eccles (Hazel Blears) elevated the debate with her discussion of Total Place. I agree that the recent Total Place pilots revealed the true cost of not only compliance but public spending flows in local areas. We certainly need to build on that. Her example of Greater Manchester was compelling and shows that, once we get a grip on and an understanding of the total public expenditure that flows through an area, the implications for the shape and potential reform of public services, and the relationship between local government, the health service, the police and other aspects of delivering public services locally, are great. We need to build on that. I am therefore grateful to the right hon. Lady because her contribution elevated a debate that had been characterised by a rather knee-jerk reaction to every single item of the cuts. If we are truly to start reforming the relationship between local government and other public services, we need to identify the precise public spending flows through different areas.
The performance management culture, which other hon. Members have discussed, needs to be stopped. I therefore greatly welcome the Secretary of State’s removing the comprehensive area assessment. That performance management culture, which has dominated local government in the past 13 years, needs to be replaced by an age of innovation, spurred by the fiscal context in which we live. That is why I am keen for the coalition Government to press ahead with the work on the Total Place pilots. The fiscal position demands that we ask fundamental and difficult questions about local government’s role in providing local services.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
Given that the average budgetary cuts for local authorities are 0.7%, how can a 1.2% cut for a borough of mine, Redcar and Cleveland council, with some of the poorest rural wards, and a cut of 1.3%—the sixth highest in the UK—for Middlesbrough local authority, with some of the poorest urban wards, be justified? How can innovation be introduced equitably across local authorities if the budgetary cuts in some areas are double those in others?
James Morris
As other hon. Members have pointed out, we have to deal with the fiscal situation. Even if there had been a new Labour Government, local government would have had to find considerable savings and efficiencies to drive innovation.