Robert Neill
Main Page: Robert Neill (Conservative - Bromley and Chislehurst)Local Government Finance
Robert Neill Excerpts(12 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
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.
Mr Clive Betts (Sheffield South East) (Lab)
I was in a bit of agreement with the hon. Member for Harrow East (Bob Blackman), another member of the Select Committee, until he made his final comment, when we reached the point of complete disagreement.
First, the issue to which we return today is very much the issue that we debated in the House a year ago. It is about funding for local government, whereby the Government have an overall policy of cutting public expenditure by 19% but have decided that local government expenditure can be cut by 28%. That is the reality. Local government has been singled out for much larger cuts than the rest of the public services, presumably because Ministers believe that the services that local government provides are less important. That must be the reality.
Mr Betts
The Minister begins to shake his head, but, if he does not believe in that, why is he prepared to support the local authority grant reductions, which are so much larger than the reductions in other Government expenditure? That is the question to which Ministers have never really addressed themselves.
Robert Neill
The Department’s reduction in central costs and administrative expenditure is in excess of 30% and, in total administrative costs, rises to about 40%. We have put our money where our mouth is and reduced our costs more.
Mr Betts
I am sure that the Minister will provide some figures in due course.
We have heard from Ministers all the ways in which councils can save money. Of course there are many ways in which that can happen without front-line services being affected; the reality is that councils have been very good at that over the years. Through the period of the Labour Government, councils were forced to find about 2% in efficiency savings, year on year. Over the past 20 years, in fact, they have generally been much better at that than central Government. Councils have a good track record.
If the cuts were not so front-loaded, councils would have had more time to prepare and consider efficiency savings. Cuts to services cannot just be dreamed up overnight; they are often the product of complex negotiations between councils and other public bodies to make sure that the agreements are proper and genuinely deliver savings.
I have just had information about what is going on in Sheffield. Together with Government Departments and other public agencies, Sheffield city council is embarking on a look at the whole public estate—the buildings that the public sector owns or leases, and operates. With central Government Departments and agencies, the council is trying to get better value for money from the whole public estate.
That programme cannot be delivered overnight. There could be very large savings if it is carried out properly, but it must be done in a considered way, with everyone working together. The council cannot simply click its fingers and say that a certain number of millions of pounds in savings are coming next year. The process takes time. Many of us have been trying to argue that the savings can probably come about, but that they will take time.
In the meantime, front-line services are being hit. Concessionary bus fares for young people in Sheffield increased from 40p to 50p this year and will go up to 60p next year. Young people always appear to be getting the brunt of the cuts—tuition fees, the education maintenance allowance and the cuts to youth and career services. The other day, people at a school that I was visiting said that work experience has now stopped because Government funding to assist it has stopped and employers are not responding.
All those things are happening to young people. Sixty pence for a bus fare may not seem a lot, but when the Youth Parliament in Sheffield did an assessment of young people’s needs two or three years ago, buses came out as top of the list of things that are important to young people, as they mean mobility, independence and not having to rely on other people to get around.
Of course, we are seeing cuts in care services for the elderly. Let us congratulate councils such as Sheffield, which is cutting those services by only 5%, when 11% is coming off its total budget, and it is trying to concentrate on administration, management and back-room services. The council is trying to prioritise cuts on back-room services—15% in human resources, 14% in legal services and 26% in IT. But do not let us pretend that legal services, IT and other such services can simply be cut with no eventual impact on front-line services. If we are to make all the changes to the public estate that I mentioned, we will need legal officers in the council. Back-room services are important for the delivery of an efficient front line.
Sheffield council has decided to move to fortnightly refuse collections and to improve its recycling offer. That will save £2.5 million a year, and although it cannot simply exempt those services from the savings, it will try and improve its recycling. The Secretary of State has a view—presumably shared by Ministers—that such matters are all about localism until he has a particular policy or pet project that he wants to see implemented. He believes in weekly bin collection. That is up to him. The idea is that having abolished the vast majority of ring-fenced grants—and I support the Government’s policy on that—we should suddenly invent a new ring-fenced grant for this one issue. It is not quite a new ring-fenced grant, however, because the grant is not in place. Perhaps we may call it a new ring-fenced idea.
Local authorities now have to draw up budgets and decide what to do. They must be prudent, but when considering how their services will be delivered next year, they cannot take account of money that may arrive under a scheme that has not yet been announced. How on earth do Ministers expect local authorities to respond to their view of the world regarding refuse collection if they trail a grant in advance that will perhaps no longer be in place when councils start to formulate their budgets? Councils have no idea whether they will get any money, what will be the criteria for the scheme, how much money there will be in the first, second and third years, and when the money will run out, leaving them to pick up the bill.
Is it not a disgrace for Ministers to trail such a scheme, and then criticise councils—just as the Deputy Prime Minister criticised Sheffield council—for moving to a fortnightly refuse collection? Ministers say that councils should instead take advantage of Government money that has not yet been announced. That is a ridiculous way to run anything. If a parish council ran its affairs in such a way, Ministers would be on their feet, proclaiming that it was inefficient and incompetent. Labour Members can therefore say that this Government are inefficient and incompetent in their handling of this issue.
One or two other points have been raised. Of course we want to see the voluntary sector contribute, whether to the big society or to the delivery of better services for their communities. Again, I congratulate Sheffield council because it is cutting money to the voluntary sector by just 5% this year, compared with the 11% cut to the total council budget.
The voluntary sector depends on public sector employees working with it to deliver services. All the volunteers in my constituency who take part in environmental improvement schemes rely on two council officers, with a bit of seed money to provide training and materials. That is how it works. We cannot divorce the voluntary sector from the rest of the council services.
Neither can we divorce private jobs from public jobs. More than 550 public sector employees in Sheffield city council will lose their jobs, or posts will be held vacant, as a result of the council’s budget proposals. Fortnightly bin collections, however, are outsourced to Veolia, so it will be not public sector workers who lose their jobs but those in the private sector who are employed by that company. We cannot divorce the public and private sectors. The cuts that have necessarily been made by councils up and down the country will affect private sector employment as well as public sector employment. Orders from councils will be reduced as they will have less money to spend, and private sector companies will suffer as a result. The idea that private sector companies will grow jobs on the back of the cuts is fallacious. That is why the economy is heading for recession.
I conclude with one further point about the fire service. The other day, we went to see the Minister with responsibility for the fire service, who is responding to this debate. He kindly agreed to meet a delegation, and I hope that he listened carefully to the fact that the cuts to the fire service grants of the metropolitan fire authorities are twice the level of those for other fire authorities in the country. Fire chiefs are saying that if the cuts continue for a third and fourth year, they will not be able to deliver appropriate fire cover in their areas.
In my constituency, three fire stations are being closed and will be replaced by just two. That may be a more efficient way of delivering fire cover, but it will result in slower response times to some of the large industrial plants in Sheffield that still operate in the steel industry and other related industries. People are worried that if that happens, it could create greater risks at a time when we hope to see great Sheffield firms such as Sheffield Forgemasters continue. We would not want them to be put at greater risk by reduced fire cover. We hope that Ministers will listen to those concerns.
This settlement is unfair to many councils, and those in the greatest need are receiving the biggest cuts. In total, it demonstrates that the Government value the services provided by local councils less highly than other public expenditure, and I will certainly be in the Lobby with my right hon. and hon. Friends to vote against it this evening.
The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)
The debate has at times been a little like my experience in local government since I was first elected in 1974. There have been some serious and important contributions, some genuine commitment, and passages—particularly towards the end—of the utterly surreal. Towards the end of my local government career, I was dealing with Mr Ken Livingstone, and I have just listened to the hon. Member for Warrington North (Helen Jones) summing up—surrealism comes at the end. I am afraid that the official Opposition throw away any sense of credibility when they resort to the sort of rant that misses the fundamental reason why the tough settlement—my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) and others said that it is tough, which I accept, and the Government have never pretended that it is anything else—is necessary.
Why is it, sadly, necessary to have these reductions in public spending? Why does local government, as 25% of public spending, have to bear a share? The Labour party bankrupted the country. Its shameful failure has made every reduction necessary and the mealy-mouthed and, to many people in local government, distasteful unwillingness to accept responsibility condemns Labour Members from their own mouths. It condemns them to having no credibility and it is why, ultimately, they see the results they do in the opinion polls. It is no good blaming their leader, as it is not just that they do not listen to him but that nobody is listening to them. It is interesting that the Leader of the Opposition apparently recognises that there must be deficit reduction because of the mess that his Government left, and the shadow Chancellor appears to agree with that—it is about the only thing they do agree on, of course—but it never permeates down, as far as I can see, to the rest of the shadow Cabinet, never mind to anybody else. We have heard not a word about what the Labour party would have done to help local government in dealing with the inheritance that it left.
The coalition Government have faced up to economic necessity and have also given progressive, sensible tools to help local government through the immediate situation and out of it. The Government inherited the formula brought in by Labour towards the end of its period in government. We have had that formula grant for a long time and it has always, as we know, contained an element of ministerial discretion. The lack of transparency in how it operated quite rightly leads my hon. Friend the Member for Harrow East (Bob Blackman) and others to say that some people had suspicions about the objectiveness with which Labour used that formula.
Instead, what we have done is to increase the weighting given to the needs element in the formula for this year’s settlement to help those most in need, and for the longer term to move towards a more transparent system whereby local authorities can retain growth in the business rate and reward those who are entrepreneurial and go-ahead and want to do the best for their areas, rather than saying, “We must be locked for ever in a counsel of despair”, which involves grant dependency. One of the saddest aspects of this debate is the number of Opposition Members who have experience in local government but who are locked into that counsel of despair because they do not have enough faith in their own people and those who work for them.
Several hon. Members
Robert Neill
I shall give way once and once only, to the right hon. Member for Knowsley (Mr Howarth).
Mr George Howarth
I am grateful to the Minister. He is making a speech about local government finance. Has he noticed that he has not mentioned a single figure yet?
Robert Neill
Since the settlement is set out in reams of paper, I need not trouble the right hon. Gentleman too much with that, though he might like to know that the right hon. Member for Leeds Central (Hilary Benn), I regret to say, fell—unintentionally, I am sure—into error in his point about expenditure. The disabled facilities grant has in fact been increased this year, as it was last year. It was increased by a further £20 million. It has gone up from £167 million to £187 million, and it will go up to £207 million next year.
It is worth saying that central Government are providing £27.8 billion in all by way of formula grant to local authorities. In addition there are further specific grants. It is also worth saying, if the right hon. Member for Knowsley would like some figures, that we are providing a further £20 million in transition grant this year. That makes up for the slack in budgets that came when the Labour Government brought working neighbourhoods funds to an end, quite deliberately and in a planned fashion.
Brandon Lewis
I thank the Minister for giving way. Does he agree that one of the figures that is most important to the people whom we are here to represent is the one that relates to their council tax? The Government have allowed it to be frozen for a second year, which is a vast improvement on the years of multiple increases under the previous Government.
Robert Neill
It is ironic that we heard very little about whether the Opposition will encourage Labour councils to take the council tax freeze. I hope they will. Following the damascene conversion of the shadow Secretary of State to condemning the lack of transparency of Nottingham city council, I hope he will say that whatever the Opposition think about the Government overall, it is necessary above all to protect council tax payers and hard-pressed families and to adopt the council tax freeze.
Many authorities are doing that and they are using the breathing space. We have said that this year, because of the economic mess that we inherited, it is a one-year payment. Last year’s payment will be throughout the spending period. It gives local authorities a breathing space in which to manage the reconfiguration of their services. Good authorities are doing that.
Better procurement is an important issue and it should not be sneered at, as some hon. Members did. My hon. Friend the Member for Mid Dorset and North Poole is right to remind people that smaller authorities in rural areas often have less flexibility in managing budget pressures than larger authorities. We must recognise, therefore, that we cannot necessarily draw comparisons. Our system specifically builds in fairness, and not only because we have increased the needs element in the formula. I know it is a shock to Opposition Members, because they have the intellectual arrogance to think that only they have a conception of fairness; that they have a monopoly on the subject.
That is the fundamental arrogance that got Labour into opposition after all those years. The Opposition promised the electorate in their 1997 manifesto that they would hand back the business rate to councils, and they spent 13 years not doing that. The right hon. Member for Leeds Central said that he wanted certainty. Did it take him 13 years to be certain that he would not do it? That is what he managed to do. Instead, the coalition is getting on with it. Although it is not easy to fix a broken system, the coalition is making an honest stab, and local government deserves—
Robert Neill
I have given way twice already and made it clear that I will not do so again. I am sorry, but I do not want the hon. Gentleman to get too worked up about it. I want to be fair to the right hon. Member for Leeds Central by responding to his other specific point.
With regard to the top-slicing of the local authority central services equivalent grant, my right hon. Friend the Secretary of State will of course make an announcement in due course. As always, that is being considered through discussions between Government Departments. I hope that the right hon. Gentleman will welcome the fact that the Secretary of State, in making his decisions, has taken note of a number of recommendations and concerns raised by local authorities. We must strike a fair balance in that regard and will do so. In relation to pooling and whether there will be a surplus, I think that—
Robert Neill
I hope that the hon. Gentleman will do me the courtesy of letting me answer his party’s spokesman.
The right hon. Gentleman referred to pooling, but I think that he meant the provisions under the Local Government Finance Act 1988 by which the totality of the money raised by the national non-domestic rate, the business rate, must be returned to local government. That continues to be the case. In this year, when the totality of non-domestic rate raised was more than the formula grant, the rest was returned by way of grant to local authorities outside formula grant, and that remains an option. Everything comes back to local government one way or the other, and that is the statutory requirement that the Government have consistently met.
The right hon. Members for Wentworth and Dearne (John Healey) and for Leeds Central asked about referendums and what does and does not qualify. Referendum provisions apply to the billing authority in a two-tier area—a district or unitary council or a London borough—and to major precepting authorities: a county council, police authority or fire authority. In each case it is their own element that is subject to the referendum, so the district council cannot be forced into a referendum because of an increase by the county council, or vice versa. When we talk about levies, we are not talking about precepts, as the right hon. Member for Leeds Central knows, but about the rather more technical payments that we generally get from passenger transport authorities or drainage boards—