Communities and Local Government (CSR)

John Robertson Excerpts

Thursday 13th January 2011 Westminster Hall

[Paul Farrelly]

My hon. Friend raises the issue of housing. Does he agree that in order to tide themselves over the transition, many councils will be forced to dip into their reserves? That will clearly have an impact on future income generation. In Newcastle-under-Lyme in 2006, after transferring the housing stock, the Labour party left reserves of over £40 million. Under the Liberal Democrat and Conservative local government coalition, those reserves now stand at £24 million. At that rate of spend, it looks as if the reserves will run out by 2012. There has been no satisfactory explanation of how that situation was reached, or of whether council tax payers have gained value for money. Even though the council has been prudent in dealing with its housing stock, it could face having no reserves to dip into in order to tide it through a transition when the cuts are made.

[John Robertson (in the Chair)]

Order. Interventions should be kept a bit shorter than that.

[Mr Betts]

It is a difficult issue. The Minister will say, “Look at all the reserves in local government. They can help mitigate the cuts to services.” They can, but reserves run out; they are spent once and cannot be spent again. During ongoing reductions in spending, reserves can help a council through a problem, but they will not permanently deal with it. Furthermore, reserves are not equally distributed and often they are found in authorities that have made housing stock transfers and have a big dollop of money from that. Some of the reserves cited come from schools and are held at the centre by local authorities, some are housing revenue account reserves with a specific use, and some are needed for the cash-flow issues that councils face on a day-to-day basis. The reserves may help during the first year, but they are not a permanent solution to the cuts.

We know that capital spending on housing will be cut by half in the spending round. We have not been building enough social housing—or enough housing as a whole—in this country, and we can argue on another day about whether the proposals for the new homes bonus and the planning changes will help or hinder that. The Communities and Local Government Committee will produce a report on that issue in due course. Nevertheless, spending will be halved and after the existing commitments to build houses at current rent levels are met, there will be no central Government funding for houses other than those with rents that are linked to market rents—that does not necessarily mean 80% of market rent, but means rents that are linked to the market in some form. Those higher rents will help provide money to build new homes in the future. However, 150,000 new homes will not deal with the waiting list, and of those, any new starts will not have rent levels that many people can afford. That is the real problem.

The decent homes funding is also going to be cut. From the figures provided by the Minister, I calculate that the amount of money for decent homes over the next four years will be just over £1 billion, and the backlog of work still outstanding is around £4 billion. Therefore, it will be about 10 years—probably longer—before all council homes in the country are brought up to a decent standard. That is an awfully long time for people to wait.

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[Mr Betts]

It would treble the cost, probably.

[John Robertson (in the Chair)]

Order.

[Mr Jackson]

We could rely on it, though, to have a very well paid communications officer to explain to us why that was the case.

I am also slightly worried about community budgets in relation to early interventions. We need to roll that out across the country. There are substantial issues of economic and social deprivation in many parts of the country. Sixteen projects is good, but we need to draw on the lessons from the work by my right hon. Friend the Secretary of State for Work and Pensions and by the hon. Member for Nottingham North (Mr Allen) on early interventions. The hon. Member for Nottingham East (Chris Leslie) will know that his colleague has done a fantastic job in raising the profile of early interventions. We need to take forward some of the work that he has done.

Following on from that, we should be cognisant of the work that the Dilnot commission is doing on social care, because that will inform the Government’s position with regard to the £2 billion boost to social care funding. We are sitting on a demographic time bomb. There are things that we need to be doing in preparing for the number of over-85s doubling in the next 20 years, for instance. Ministers need to be working across Departments to ensure that those demographic changes are reviewed and reflected in the grant, particularly for personal social services.

As for social housing, the hon. Member for Sheffield South East and I have had a rather party political debate. To be fair, I pay tribute to the right hon. Member for Don Valley (Caroline Flint), who issued the rallying cry about tenure. She was royally slapped down by most people in the Labour party, but she was brave enough to mention tenure reform while in government. We must have that debate, as my hon. Friend the Member for Meon Valley (George Hollingbery) said, because it cannot be right that those who need housing most are not necessarily the ones who are prioritised, because of the existing tenure culture.

I see things in a very positive way, because I think that the linking of market values—80% of market values—to the provision of social housing will create significantly greater income streams for registered social landlords, to deliver not just social rented properties but intermediate housing, particularly key worker housing, which is very important in my constituency, and shared equity housing. So many local authorities and so many cities and towns in our country, particularly in the south and midlands, face the issue of the huge disparity between what working people can afford and the price and availability of mortgages.

This is a side issue, but I really hope that the Financial Services Authority keeps in mind the needs of first-time buyers and the availability of mortgages in its mortgage market review. I pay tribute to my right hon. Friend the Minister for Housing and Local Government, who met representatives of the FSA the other day to make the point that it should not be unduly prescriptive and prevent young people in particular from getting on the housing ladder. Developers and house builders are a major part of all our local economies, and for the sake of the country, we need that market to improve.

That is obviously part of the comprehensive spending review, but I will resist the temptation to meander down the path of having a full-blown debate on housing. We are not a million miles apart in many respects, although we have had some disputes about housing benefit and related issues.

It is a pretty stark statistic that in 1970, about 20% of people who lived in social housing were not in paid work, whereas now the figure is not far off 70%. It cannot be right that in the sixth biggest economy in the world, we are embedding welfare dependency in social housing. We need to break up the mono-tenure culture of social housing, because to leave millions of families, including millions of children, in the twilight world of welfare dependency and poor housing is immoral. That is why, if the Government do nothing else, they must tackle welfare dependency, poor housing and the other, related issues.

We need to have a bigger debate, and I hope that the Select Committee looks at the bigger debate, about the fiscal autonomy of local government. A very interesting document was produced not that long ago by the TaxPayers Alliance. It is not always friendly to Members of Parliament, I have to say, but it does produce some very good documents, and one was about the fact that we are the most centralised country, as between central and local government, in the developed world. Well under 20% of local authorities’ revenues come from taxes that they raise themselves locally; the average for Britain’s G7 competitors is more than 60%. This is the key point: the countries with the most efficient public sectors are all much less centralised than the United Kingdom. According to the European Central Bank, the United States, Australia, Japan and Switzerland enjoy an average efficiency lead over Britain of 20%. If Britain could match that efficiency level, spending could be cut by £140 billion with no diminution in the standard of public services.

The Treasury needs to consider that challenge. If we are not just talking, going through the motions, shadow-boxing and engaging in rhetoric about localism, trust and a renaissance of local government, we need to be thinking in the local government review about providing real power in terms of asset-backed vehicles, tax income and financing and other fiscal measures—for instance, the issuance of municipal bonds for bridges, community centres, street lighting and so on.

I do not always agree with my local authority on everything, but it has set up an asset-backed vehicle called the Peterborough development partnership, because it realised what the position was. Mine is a new city, and the Peterborough development corporation ceased in 1988. We simply cannot refresh and renovate all our infrastructure, which was built between 1968 and 1988 by the Peterborough development corporation, without accessing private capital through an asset-backed vehicle. It is vital for the Treasury to understand that and to make the requisite changes in policy in the course of this Parliament.

To finish, may I say a little about the big society? It constitutes a great opportunity and a paradigm shift for local authorities. I draw the House’s attention to a project in my constituency that is not necessarily linked closely to local government, but is nevertheless an exemplar: the St Giles Trust social impact bond at Peterborough prison. The charities involved will receive 46% of the indicative revenue funding to keep a prisoner in prison for a year if they keep that prisoner away from recidivism for a whole year. That is a good example because it gives a fiscal incentive for the charities to do that and it is good for society and good for the prisoners. We need to think more about such initiatives.

An example more closely linked to local government is that of Sandwell Community Caring Trust in the west midlands. That charitable trust has significantly reduced, for instance, staff sickness and the cost of delivering personal and social care, particularly to elderly people. It has been so successful that in 2008 it won the contract from Torbay unitary authority to do its social care. The trust is using the assets in the public realm to deliver more cheaply than local government. I do not see that it is a challenge for local government to work with such organisations; it is a question of square pegs for square holes. Local government is better at some things than others.

I pay tribute to my hon. Friend the Member for Dover (Charlie Elphicke) and his people’s port campaign in his constituency. It is an example of something that was going to slip from local and national control to an international consortium, which would have had little feedback from and interaction with people who care about the local area and the regeneration of the port of Dover, and in the long term, about the viability of that economy and that town. It helps to have Vera Lynn launching your campaign. I think she can sing better than my hon. Friend. That campaign is an example of people working together along the model of the big society.

The Minister will no doubt refer to the Localism Bill, in which we will see on Monday the right to challenge, to take over assets and encouragement for communities to run what the local authority may not want, or have the financial resources, to run. That is the bigger picture about tackling the concept of asset inequality, because, whether we like it or not, too few people control assets. I am very proud to say that my party ameliorated that in the 1980s with the right to buy, which was a wealth transfer to ordinary working people of assets to give them control over their lives. It was one of the best policies, if not the best, ever put forward by a radical, free-market supporting Government in this country. It gave people, and their children, a stake in their futures and their communities. I will never resile from the fact that it was positive. I see that and the growth of mutualism as positive developments in the Localism Bill. This Government, in many respects, is most radical on those issues, as with their welfare changes.

I am delighted to participate in this debate. The Opposition need to move on from the paradigm that more money will deliver better services. They need to understand that that model has been tested to destruction. There is a new model. It is important to take the best of what has been done before, under both Governments, but principally to trust local people in our communities and their elected representatives. They have the capacity and the commitment to deliver the goods for local communities now and in future.

[John Robertson (in the Chair)]

Order. Before we go any further, may I say that the two contributions we have had have been somewhat lengthy—well over half an hour in each case? If that were the case for the next few speakers, they would be all who would be allowed to speak. Would Members please look at the time? I intend to call the reply from the Committee at quarter to 5 and then the summing-ups. You have an hour between you, so you can work out how long you should speak for.

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[Mr Stewart Jackson]

rose—

[John Robertson (in the Chair)]

Order. Before the hon. Gentleman intervenes, I must ask the right hon. Member for Tottenham (Mr Lammy) to bring his comments to a conclusion.

[Mr Jackson]

Perhaps I could be so bold as to say that what kept the right hon. Gentleman on the straight and narrow was being educated at one of the best schools in the country—the King’s school, Peterborough. Looking more positively at some of the changes that are about to take place, I believe that they will encourage faith and community groups into the public square to take on work and to work collaboratively with local authorities to tackle very difficult social issues, such as social exclusion, deprivation, homelessness and drug misuse. They have not done that hitherto because there has been an element of institutionalisation in those groups.

[John Robertson (in the Chair)]

Will the hon. Gentleman please sit down?

[Mr Lammy]

I am grateful for all the help that I received in the city of Peterborough. It is a great city, but the hon. Gentleman will know too that it is a city with tremendous challenges, partly for the following reason. There are communities in Peterborough, as in mine, that do not have the necessary capacity. I am therefore very nervous about the springing up of wells in the “big society” and the expected support. Money must come from somewhere, which is why I spoke as I did.

I am grateful for the time that I have been allocated, Mr Robertson. I wanted to make three central points and I have done so.