Lord Pickles
Main Page: Lord Pickles (Conservative - Life peer)(13 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
Caroline Flint
That is another example of the devastating impact of the cuts in the first year. I say to the Secretary of State: is that a fiction?
Caroline Flint
I am very much looking forward to the missives I can hear being typed out in town halls in London and across the country to put the Secretary of State right on that one.
The Secretary of State for Communities and Local Government (Mr Eric Pickles)
I am most grateful to the right hon. Member for Don Valley (Caroline Flint). I could hear the gentle scribble of history being rewritten. I think that had Winston Smith been part of the process, he would have been down to his second stub of pencil by now. I would happily have walked into Room 101 just to hear the end of it.
We are really very pleased, in a way, that the motion has been tabled. We in the Department are very sensitive people, and we felt that we had done something wrong as far as the right hon. Lady was concerned. She doesn’t phone, she rarely writes, she asks few questions, and she seems to be unaware that we have laid statements. We thought somehow that she was not all that interested. So we are very pleased that she is now back in action, and is taking an interest in the Department. Admittedly it seemed a weird time for her to do so, given that the settlement is just a few days away, but then it occurred to me: she has a plan.
It is all about the business of the blank piece of paper. The right hon. Lady is actually going to write something down. She is going to give us some Labour policy. We are going to be told, in this debate—[Interruption.] I am optimistic. We are going to be told what percentage of cuts the right hon. Lady thinks reasonable. The Local Government Association has already given us a percentage. If the right hon. Lady—who spoke for hardly any time—wants to give us a percentage that she considers reasonable for the coming year, I will happily give way to her.
Mr Pickles
I will happily give way for a trip down memory lane. What does the hon. Gentleman want to tell us about the 1980s?
Mr Watts
It is the 1960s that I want to talk about. The Secretary of State is trying to take us back to them. Can he explain why he is front-loading the cuts? Everyone knows that he is doing it because a general election is coming. [Hon. Members: “What?”] Well, he knows when the election will come. Can he tell us why he is front-loading the cuts? It is a simple question.
Mr Pickles
The hon. Gentleman may be wondering why he is sitting on that side of the House. We have had a general election. His party lost and we won, which is why we are on this side of the House. As for the front-loading—[Interruption.]
Mr Speaker
Order. The Secretary of State is not a notably softly spoken man, but I am having considerable trouble hearing him. He says that he is a gentle and sensitive soul; that is as may be, but I can normally hear him. There is so much noise in the Chamber that I cannot hear him now, and I want him to be heard.
Mr Pickles
I am most grateful for your protection, Mr Speaker. As for the front-loading, the settlement has not been announced. Opposition Members are getting very excited about press reports, which is not a very sensible thing to do.
Mr Rob Wilson
I thank my right hon. Friend for giving way so early in what I am sure will be a brilliant speech. Does he agree that although we are very pleased to be having the debate today, it seems from the number of Labour Back Benchers who have turned up that they are not very pleased at all?
Mr Pickles
There is a point in that, but I have to say to my hon. Friend that we must give all the encouragement we can to the right hon. Lady the shadow Communities Secretary because it is very important that we have an Opposition and if we do so, she might table the occasional parliamentary question, in which case we would have an opportunity to come to the—
Hazel Blears
The right hon. Gentleman appears to be floundering a little at the start of his contribution, and I wonder whether I might, in a constructive spirit, offer him a small lifeline. My right hon. Friend the shadow Communities Secretary has made a powerful case against the front-loading of these cuts. As I understand it, there is a surplus of about £3.4 billion in the national non-domestic rate pool, and the leader of my council in Salford, Councillor John Merry, has written to the Secretary of State suggesting an ingenious way of smoothing out the front-loading of these cuts. If we were to put the £3.4 billion back into the formula grant, that would enable us to reduce some of the devastating impact of that first year of cuts, certainly on Salford council, which is facing cuts of £40 million. If the right hon. Gentleman accepts my lifeline I will be very happy.
Mr Pickles
I am most grateful to the right hon. Lady for that, and, to start on a positive note, may I say that the entire Front-Bench team likes her new hairstyle?
There is not a £3.5 billion surplus in non-domestic rates in the year coming. There is a potential £2 billion surplus in 2013-14. It is hoped that the new system of local government finance, which I will be making some reference to in the statement, will be in the process of being brought in, so it is theoretical at this stage.
Caroline Flint
The right hon. Gentleman teased the House a few seconds ago when he told us to wait and see what the financial settlement provides. Local council leaders have been pressing him to give some hint on, and recognition of, the problem of front-loading and whether that can be looked at. Can he not give some steer that the Government have listened to some of those concerns, because at present they are planning for huge cuts, based on what they expect to have to deliver come April 2011-12?
Mr Pickles
May I reassure the right hon. Lady both that we will be making a statement to the House, unlike last year when the statement was relegated to a written ministerial statement, and that we are going to ensure that the distribution is fair?
Mr Pickles
I want to make some progress first, but I will give way to the right hon. Lady in due course.
It is reasonable for us to have expected to hear in the speech of the right hon. Member for Don Valley how much she would cut from the budget. What percentage reduction does she want from each tier of local government? If she does not like the phasing, which other Department should be cut more next April?
The Opposition have simply lost touch with financial reality. They have got their head in the sand in respect of the urgent need to tackle the nation’s record overdraft and the slide towards a national debt of over £1 trillion. We need to reduce the deficit to keep long-term interest rates down, thereby directly helping families and businesses through the lower cost of loans and mortgages. By reducing spending and restoring the nation’s fiscal credibility, we avoid the massive debt interest bills—over £42 billion a year—which is sucking taxpayers’ money from front-line services.
We had a choice in the most recent spending review: we could face up to the legacy left by Labour—the crippling public debt, the black hole in the nation’s finances—or we could simply let Britain fall into the economic abyss. Looking around Europe, the situation that some of our neighbours continue to face reminds us just how dire the challenges remain.
Mr Pickles
In a moment.
The financial mess that the coalition has inherited is not just because of big banks; it is because of the irresponsible behaviour of big Government.
Simon Hughes
I sincerely hope that all Members, on both sides of the House, realise that local government must do its share of reducing expenditure to deal with the public debt and deficit that we inherited. Will the Secretary of State give me one explanation and one assurance? Will he explain why the comprehensive spending review’s four-year plan set out a greater reduction in the budget in years 1 and 2 than in year 3? Will he reassure me that, as I think Ministers have heard when we have come to see him in the Department, the whole of this year’s funding settlement for local government is being taken into account when the assessment of the reduction is made, not just the direct core funding provided by the grant from central Government?
Mr Pickles
My hon. Friend raises a very important point. The rules are different when sums are being reduced, rather than increased, so it is massively important that we examine all the finance available to local authorities and the gap in spending. I am going to address that most carefully, as I shall do for the precise phasing of the amounts. It is sensible to see these sums taken out at the beginning of the period, because the only way in which local government can approach a 26% reduction is not to salami-slice here and there, but to restructure, share services and the like. If it is going to do that, it had best get on with it.
Mr George Howarth (Knowsley) (Lab)
On phasing, will the Secretary of State accept that it is hugely important for boroughs such as Knowsley that the process of damping stays in place? If it does not, incredible swings will take place within a year—even greater than those he is proposing.
Mr Pickles
The right hon. Gentleman is absolutely right. Hon. Members may not be aware that some authorities, such as Knowsley’s, are heavily dependent on grant; if I recall it correctly, the percentage is in the upper 70s—
Mr Pickles
It appears that that is correct. There are other places, such as Surrey, where we are talking about 20%. If we were dealing with a cut across the board, the effect of an amount coming out of Knowsley’s budget would be considerably greater than if it came out of Surrey’s. That would not be desirable and we will be putting together a system that offers help.
Despite all the bluster and all the complaint, the Opposition would have made some of the same choices had they clung on to office. Perhaps Opposition Members would not like to be reminded that the Labour Government were quietly planning cuts of £52 billion over the next four years. The Treasury’s own figures show that those were front-loaded cuts, with a hit of £14 billion to fall in 2011-12. A small amount of those cuts were made public in the dying days of the previous Administration. The back of a fag packet small print of the March 2010 Budget reveals £480 million of cuts. Those were cuts to regional development agency regeneration, cuts to the working neighbourhoods fund, cuts to the local enterprise growth initiative, cuts to the housing and planning delivery grant, cuts to smaller Department for Communities and Local Government programmes and cuts to time-limited community programmes.
Let us deal directly with the issue of the working neighbourhoods fund. Whether the right hon. Member for Don Valley likes it or not, it was a three-year figure; the programme was coming to the end in March and no money was provided for it to be extended thereafter. We would have been facing precisely the same problem as we are now. Some Members have complained about the end of the working neighbourhoods fund, but we would have been facing this in March.
Mr Pickles
As was rightly said by my hon. Friend, to whom I shall give way in a moment, the current Labour leader made it very clear during the election that regeneration spending
“is not the biggest priority we face as we look at other competing priorities”,
and the then Prime Minister said:
“Housing is essentially a private sector activity…I don’t see a need for us to continue with such”
renovation programmes.
Stephen Lloyd
In the past 12 months, Eastbourne borough council restructured its senior management, producing a more dynamic and customer-focused team, while cutting the cost of its senior team by £300,000 a year. Does the Secretary of State agree that other local authorities can follow the example of Eastbourne borough council, saving money for the taxpayer and bringing local authority executive pay under control, which was something that Labour singularly failed to do?
Mr Pickles
My hon. Friend is right. There is increasingly a trend towards reducing backroom services and I welcome the support from the right hon. Member for Don Valley. Perhaps the clearest message that should go out from the Chamber today is that there is broad consensus on the sharing of services and it would be a very wise chief executive and leader of a council who continued with that process.
Of course, part of the problem is that the so-called operational savings that the Labour party promised were simply not met. When I opened the Department’s books, I noticed that almost £1 billion of planned efficiency savings promised by the Department and announced in the 2007 spending review and the 2009 Budget were never delivered by Labour Ministers.
We know that Labour had secret plans for cuts for local communities, but it did not have a route map to get there through constructive reform. The Labour Government had 13 years to improve the system of local government funding but they fluffed it. They introduced 10 different Acts that affected local government finance. They scrapped capping, then they reintroduced it. They gave pensioners an extra payment for their council tax, then they dropped it. They passed a law to hold a council tax revaluation, and then passed a law to delay it. They published a local government finance Green Paper, then a White Paper, then they held a balance of funding review, and then they held the Lyons inquiry review. They then extended the Lyons inquiry review and when the Lyons inquiry reported, they did not even bother to issue a formal response.
In the 2010 Labour manifesto, we were promised a cross-party commission on local government finance. Perhaps Labour just ran out of ideas and wanted to ask us. The final Labour initiative, with the third leader in three years, is the famous blank piece of paper. No wonder the shadow Housing Minister, the hon. Member for Plymouth, Moor View (Alison Seabeck), has admitted
“we won’t rush into policy making”—
[Interruption.] I am glad she has confirmed that. Perhaps they are waiting for the next Labour leader. I suspect that that will not be long now—like with buses, one waits around for ages and three come along pretty quickly.
Mr Pickles
I am sorry, but if I wanted to visit the 1980s I would watch an episode of “Life on Mars”.
I welcome the opportunity to lay to rest some of the reckless scaremongering that the Labour party has peddled in recent weeks, and particularly in the past few moments. We are a few days away from the settlement and it is important that we do not create a climate in which wacky, fictitious figures end up scaring people unnecessarily without adding anything to the debate.
Andrew Bridgen
Does the Secretary of State remember the words of the previous Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling)? Before the last general election, he said that if the Labour Government were re-elected, this country faced the biggest cuts in its history. My right hon. Friend might have noticed that that statement has not been repeated by those on the Opposition Front Bench.
Mr Pickles
I do indeed. From what I can understand from what the right hon. Member for Don Valley was saying, it seems that she is in favour of cuts but not specific cuts. She is in favour of financial prudence, but not if it involves cuts to local authority spending.
The key argument about the forthcoming grant reductions is that the right hon. Lady seems to think that they will be unfair. How she can assert that when she does not know what the settlement will be is a mystery to us all. Opposition Front Benchers point to briefing figures from the pressure group SIGOMA—special interest group of municipal authorities—without realising that they are being played. SIGOMA understandably wants to paint a dire picture for its members as part of a lobbying exercise ahead of the settlement. It is playing metropolitan areas off against shire counties.
Mr Marsden
The Secretary of State asks why these points are being raised by the Opposition, but he and his colleagues have a record on this issue. The figures and cuts that the Government Front-Bench team produced in June, with the abolition of area-based grants and various other measures, disproportionately hit the parts of the country that we have been talking about.
Mr Pickles
The hon. Gentleman is well aware that in the emergency Budget we had to prevent money that had not been paid out from being paid—it is difficult to take money from areas that have not received any at all. He seems to think that we live in a vacuum. Has he seen what has gone on in other parts of the continent and the problems that other Governments face? Had we not taken these decisions we could have found ourselves in precisely the same position.
Robert Halfon
Would not councils have had a lot more money in recent years if they had not had to spend millions on ridiculous inspection regimes?
Mr Pickles
My hon. Friend is absolutely right. As part of the deal in which local government will have less money and more power, we will reduce the number of unnecessary regimes.
Hazel Blears
I am glad that the right hon. Gentleman has got back to reality regarding what, if anything, can be done to mitigate the impact of the cuts on some of the poorest communities. I put to him again the issue of national non-domestic rates. He said that there would not be a surplus until 2012-13.
Hazel Blears
Well, the Office for Budget Responsibility’s forecast in the Treasury’s June Budget report indicated that there is likely to be a surplus of £3.4 billion. If that is the case, will the right hon. Gentleman agree now to redistribute the whole of any surplus there might be, as the legislation covering this area provides that any such surplus will be redistributed? That is something practical that he could do to mitigate the effects on the poorest communities.
Mr Pickles
I always enjoyed it when the right hon. Lady occupied my role, so I am sorry to tell her that this is not like a deficit; we have to pay down the debt in relation to non-domestic rates, so the money that she suggests will be available will not be available for what she suggests. In case she thinks I am just making a rhetorical point, I am willing to write to her, copying in the right hon. Member for Don Valley, explaining this issue. If £5.5 billion were suddenly available, I think I might have used it by now.
The points that SIGOMA makes could be made by the county councils network, the district councils network, the SPARSE Rural group and my dear chums at the London councils. They could produce similar figures on how the funding system seems to channel more money to certain areas. Before Labour jumps on these bandwagons, it needs to realise that it cannot play the mets against the shires and then campaign honestly at the May district council elections.
Mr Pickles
We will listen to all representations. We are moving to meet the points made by the Local Government Association and other interested parties. We intend to deliver a fair and sustainable settlement that protects the most vulnerable communities and spreads the impact in a manageable way.
Mr Pickles
The hon. Gentleman seems to have left the 1980s for the 1970s and “Jim’ll Fix It”. There is no intention to fix this or to hit vulnerable communities the hardest. We will be doing our best and I hope that the hon. Gentleman will be ready to praise me next week when we produce our proposals. Frankly, he should take with a pinch of salt some of the more alarmist predictions of jobs cuts that have been fed to the media by the unions and others. Such dossiers are based on looking at local media and projecting them out. We see unions being upset by stories that unions themselves have placed.
Reducing the number of posts is not the same as job cuts, as staffing can be reduced through natural wastage and freezing. The unions have intentionally misled on the issuing of section 188 notices, which allow the terms and conditions of workers to be changed to save money. The GMB has claimed that 26,000 staff in Birmingham face “the threat of redundancy”. Indeed, that would be a shocking figure—26,000 workers faced with redundancy. In fact, the process seeks to reform car allowances and staff parking, and is nothing more than that. It is designed to reduce the scope for redundancies. Even Leon Trotsky at his worst would not have taken to the streets over car parking. Such reforms reduce the scope for redundancies and do not increase them.
Sir Alan Beith
Speaking of redundancies, my right hon. Friend has some discretion over the limited amount of money that he has to allow capitalisation of redundancies in those authorities that have low reserves. I ask him to look carefully at Northumberland, whose reserves were low because of a forced reorganisation under the previous Government, and there is a very heavy claim on the county council at present because of the incredible snowfalls that we have had in Northumberland.
Mr Pickles
My right hon. Friend makes a good point. We warned about the effects of the various reorganisations, and stopped those intended for Norfolk and for Devon. Where money is tight, we cannot afford to waste it on a reorganisation of local government.
I am actively reviewing the amount available for recapitalisation. Clearly, there will be tough choices. The sharing of services and back-office consolidation will reduce the number of staff posts needed over time. The priority of local government is not to be a municipal job creation scheme, but rather to provide quality front-line services, keep local taxes down, and provide a positive environment for private sector job creation and the expansion of local business.
Mrs Mary Glindon (North Tyneside) (Lab)
Will the right hon. Gentleman comment on Pricewaterhouse- Cooper’s statement that for every public sector job lost, a private sector job will be lost too?
Mr Pickles
I do not believe the figures. If that is the case, we are beyond economic ruin, because our country has reached a point where we can no longer afford to level off spending. If the hon. Lady would like the United Kingdom to enter the world of Greece and our friends in Ireland—[Interruption.] Let us be fair. What is the biggest problem? Sovereign debt. Which country has the largest sovereign debt? Had my right hon. Friend the Chancellor not taken those brave decisions in the emergency Budget and in the spending review, and if we did not take those brave decisions to their logical conclusion, we would have been in the danger zone. We all know where the Opposition would have been—they would have been running for cover.
Nic Dakin (Scunthorpe) (Lab)
I am interested in the Secretary of State’s references to Trotsky and other people, but how many local government workers does he expect to see made redundant at the end of this year on the basis of his policies?
Mr Pickles
That is just a typical Labour intervention. It is not about the economy; it is all about getting as many bleeding stumps as possible. What we do know, through research, is that despite the various daft claims made about the number of people being made redundant in Birmingham, for example, the majority are going by way of natural wastage, turnover, mutuals and co-operatives being set up—something that Trotsky would have approved of—voluntary redundancies and early retirement. When it comes down to it, the likelihood is that the number of compulsory redundancies will be less than 4%. Frankly, these things can be managed with a will, and it is our intention that councils will manage them sensibly.
Owing to Labour’s planned cuts and the dire state of the public finances, the vast majority of councils have seen these difficult and challenging times coming, and they have been making sensible, constructive plans to address them. I want to support them with action, not meaningless words. I can make councillors’ and councils’ jobs a lot easier by scrapping regulations, tearing up unnecessary guidance and cutting through red tape. The Government are restoring real democratic accountability to local government, giving the power, the freedom and the authority to those who actually make the decisions. We have to be realistic. We realise that there is less money, but unlike the former Government, I do not intend to tell councils how they should spend it. The money given in this settlement will not come with strings attached. As we said during the spending review, with very few exceptions we have ended the ring-fencing of grants, so that councils can decide for themselves how their money should be prioritised and spent.
Under the spending review, we will allow councils to borrow against future business rates. We are also introducing powerful new financial incentives for councils, such as the new homes bonus. In addition, there is the £20 million through capitalisation, referred to by my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith). Councils can top that up with the sensible use of their £10 billion of reserves—they were prudent and repaired the roof when the sun was shining, unlike Labour, and they can now spend that money when it is rainy. There are a whole range of measures that proactive councils can take—for example, improving transparency, sharing services, cutting out waste, improving procurement practice and bringing senior pay under control.
Joan Ruddock
May I tell the Secretary of State that my council of Lewisham has done all the things that he has just mentioned? Over the past five years, it has saved £40 million through efficiency savings. He made the point about jobs. Let me tell him that the council has just taken a decision to cut £16 million from the budget. That would cost 300 jobs, but only 50% of them could be found through natural wastage. However, the council tells me that front-loading means that it will not be able to plan to get down even to that level, let alone the 4% that the Secretary of State has just spoken about.
Mr Pickles
The right hon. Lady’s council has just £1 million short of £60 million in reserve. The decision that has been taken is its own, and I would urge it now to look at other measures. I would urge the council to look towards a joint—[Interruption.] It might not be for the right hon. Lady—I know she lives a champagne lifestyle—but £60 million is a lot of money. Let the council look towards sharing a chief executive, or sharing an education authority or planning authority. Let it look at working together right across back-office services.
At the heart of the settlement, we want to ensure the protection of hard-working families and pensioners; support for vulnerable individuals; help for vulnerable communities; and fairness, for both north and south, and rural and urban England. Practical policies to protect the vulnerable include: £1 billion in extra grant for social care and a further £1 billion from the NHS; a new role for councils in public health, backed up with extra funding; £2 billion for decent homes, improving the quality of life for those in poor-quality housing; and £6.5 billion to support people and allow the vulnerable to lead independent lives. Labour talks about fairness, but when it was in government council tax more than doubled—in some years, above inflation—thanks to fiddled funding and unfunded burdens.
Caroline Flint
The right hon. Gentleman mentions funding for public health, which is estimated to represent at least 4% of the NHS budget. Will that move across to local government?
Mr Pickles
The right hon. Lady is playing a game whereby if money moves from the health service it represents a cut in the health service, but if it moves to local authorities it fills a hole. Conservative Members have been saying for years that there is a role for councils in public health, and we are backing that. I recall, at the Opposition Dispatch Box, asking the then Government for the kind of financial commitments that we are currently giving to deal with adult social care. Frankly, the right hon. Lady should be thanking us—[Interruption.] Well, I’m glad you’re supporting it. Just get behind the programme then, dear. That’d be marvellous.
Working families, pensioners and, indeed, the squeezed middle were hit the hardest. The hikes were equivalent to 3.5p on income tax, and the Labour Government were planning further local tax rises, as their local government manifesto for a fourth term revealed: removing the retail prices index cap on business rates, hammering local high streets; a council tax revaluation and rebanding, hitting cash-poor pensioners; and new taxes to empty bins, punishing struggling families. Labour’s answer to every policy problem was an extra rise in tax or more red tape. But, in six months, the new Government have scrapped Labour’s bin taxes, called off the council tax revaluation, increased small business rate relief and found £650 million a year of funding in each of the next four years to help to freeze council tax next year. Let me make it clear: that is completely new money; it is not top-sliced.
I intend this settlement to be the last ever to rely on such a complex and outdated system, which is not fit for purpose. It has trapped too many councils, making them financially dependent on central Government, and there is no incentive for them to invest in their local economy, given that the proceeds simply vanish to central Government to share out nationally. It makes planning difficult, weakens local accountability and stifles local innovation. It is part of the same trend that has led to some areas of the country becoming almost completely dependent on the public sector.
All that will become clearer when I present the full settlement to the House, but let me reassure Members that I and my ministerial team are doing everything possible to ensure that local government has a fair and sustainable settlement, to the good of the country and to the good of local communities.