I thank Mr. Speaker for granting me this debate. I believe this is the first time, Mr. Amess, that I have spoken in a debate chaired by you, although we know each other quite well.
I start by considering the national situation. I wonder whether Opposition proposals are already being used locally in Coventry. There has been talk, should there be a change of Government, of a 1 per cent. cut in public service budgets. I hope that the Minister will answer that point, as such a policy would certainly have ramifications for Coventry.
Equally, if we are to believe what is being said—again, it will have ramifications for the public sector in Coventry—there has been talk about public sector pensions. I shall not debate that subject today, but employees have paid into pension schemes and at the end of the day they will get out of their pension schemes only what has been put into them.
The third thing that I would like the Minister to deal with relates to the interpretation of the Gershon review. I have had one or two meetings with the trade unions in Coventry, and it seems that the local authority may be suggesting that it cannot keep such savings. My understanding of the Gershon review is that local authorities and Departments can keep savings that they have made. I hope that the Minister will clarify the matter, so that we have it on record and know where we are going.
The other complaint made by the trade unions about the local authority in Coventry is its lack of consultation. We can always ask how long consultation should continue—it has always been a debatable matter—but when people in the trade unions in Coventry tell us about lack of consultation and lack of involvement in what is being planned by Coventry city council, we must take it seriously. Good employers should always try to take the trade unions with them. Again, I want to make the Minister aware of the problem. There are, of course, other concerns that he cannot answer, such as those about concessionary travel should there be a change of Government.
I shall dwell on the situation in Coventry. First, given the economic climate, I find it strange that the Government wish to make cuts in the voluntary sector. I am told by the trade unions and some in the voluntary sector that they will experience cuts of as much as 2 or 3 per cent. That could have a major impact, given the extension of services needed by the people of Coventry. I am told that such cuts would be across the board. There has been no proper consultation. However, the trade unions tell me that the council is blaming its officers; when the trade unions spoke to the council, it said that officers were telling the council to make the cuts.
I have been in local government and I know that there are always a number of options. One should not accept whatever officers say—it should be challenged. That is why we have local democracy. The problem alarms many people in Coventry.
Another matter that I hope the Minister will clarify is the question of housing associations. It was recently put to me that proposals were being made by one or two housing associations in Coventry to introduce hefty rent increases; they said that it was the Government’s fault. I hope the Minister will investigate that, as blaming the Government for something that the associations themselves are doing is serious.
In Coventry, cuts of £6.7 million from the council’s budget would mean that up to 154 jobs could go. That would include cuts to the neighbourhood warden service. It is well known that every city centre needs a neighbourhood warden service, particularly because of incidents at the weekend. The cuts would mean five wardens in the city centre losing their jobs, and nine throughout the whole area. That could put neighbourhood safety at risk, and it would also put an additional burden on the police. It certainly does not reassure the public, particularly pensioners, given the level of petty crime. The Government have launched effective campaigns over the years, not only against major and serious crime, but against petty crime.
The monetary effect is the need to borrow in excess of £9 million. That leads to questions. There will be hefty cuts, yet the council will have to borrow £9 million. In addition, there will be a cut of between £5 million and £6 million in the council’s revenue-generating activities, so council income may be lost. That suggests that the council is not well managed, either economically or financially.
There has also been a larger-than-average increase in council tax. Again, that will hit poorer families in Coventry, particularly pensioners.
I understand my hon. Friend’s logic, but how can it be that cuts are being made when, wherever it can, the council is making increases? It is receiving £4.1 million more than expected, yet borrowing is still on the increase and it is now making further cuts to reduce those borrowings. It seems that there is an imbalance in—or entire mismanagement of—the income and expenditure accounts.
There is a suggestion that the council has used considerable sums from its reserves for traffic schemes and renewing roads. I must be honest with my hon. Friend and say that I have not been able to work it out. I have heard about numerous sums coming out of reserves, but I shall try to bottom that out after the debate.
As well as increases in the half-price charge for services to pensioners, we are trying to help them with winter fuel allowances and that sort of thing, but the pensioners are faced with service increases and charges. It is worth pointing out that although Conservative Governments used to cut support, this Government have increased it, as my hon. Friend said, by £4.1 million above expectations. People did not think that the council would get such resources, yet front-line services are being cut.
That is having an effect on youth services. We are trying to get the youth off the streets, to become skilled and to be good citizens, yet we see planned cuts of £660,000 to youth services. That could cause the closure of 14 after-school clubs, and a loss of jobs. Again, I cannot bottom that out. Another problem is the fact that 23 summer play schemes will be cut. That will place a hefty burden on the public, yet at the same time we are trying to keep people in employment, get kids off the streets, be fair to pensioners so that they can pay their bills and so on, and we are also trying to help young families.
As I said earlier, some of those schemes are crucial to young couples. For example, during the summer, someone will be available to look after the kids so that they are fully occupied while the father and mother go to work. The cuts will affect as many as 6,000 children in Coventry. That is quite an impact.
We cannot get away from the fact that should we have a Conservative Government—I do not think we will—a cut of 1 per cent. will have quite an impact when added to some of the problems that already exist in Coventry. No real explanation has been given by the Opposition. I return to the question whether Coventry has been used as a trial run for a future Tory Government. There has been no explanation of where cuts will be made.
I hope that the Minister will respond to some of the points that I have made. I am seriously worried about how the council is being run, and about its finances, and I know that he will pick up on other things that I have not mentioned.
I join my hon. Friend the Member for Coventry, South (Mr. Cunningham) in saying what a pleasure it is, Mr. Amess, to serve under your chairmanship for the first time. I am sure that you will be good enough to extend our thanks to Mr. Speaker for granting the debate.
I thought that my hon. Friend’s exposition of the situation in Coventry was devastating, but it left many questions hanging. It was detailed and correct, and the subject was well researched and well spoken to, but I do not understand how we can have such a combination of factors in a council’s running of its affairs. It is cutting front-line services, the one thing we do not want to cut; instead, we try to cut costs through administration, natural wastage, retirement, retraining and so on. Nevertheless, front-line services are being cut by £6.7 million, yet through Government grants the council will receive £4.1 million more than it was expecting. Furthermore, it has imposed a larger-than-average council tax, which will bring in more money, while managing to increase borrowing by £9 million.
I do not know how one would set about trying to reconcile those conflicting policy effects in a local council managed by highly professional people. They may be trying to pay off borrowings, but that is not clear from the accounts. It would seem, as my hon. Friend said, that the council has borrowed heavily from the reserves for a major road improvement policy in the city. However, that has been very badly handled. Take Tile Hill library, in my constituency, for example. The pavement around it was a disgrace and the road a real hazard. The council put in a good crossing and rebuilt the library superbly under schemes that might have been around for a while, and it all looks very good. However, the pavement was not touched. What is the sense of a road-building programme that puts in place a good level crossing for elderly citizens, many of whom live in the area, and young children using the library, while leaving the pavement untouched and very dangerous? There are potholes everywhere. I have raised that matter several times.
That point goes back to the competence of the council. I do not know whether it is in the Minister’s power to authorise an inquiry into any of those matters. I have asked for an inquiry into Coventry’s business improvement district programme. The Government launched the BID programme, of which there are many good examples, and when Labour was in power the local authority left in place a very good scheme. However, it has been so mismanaged that 250—at last count, I think—small local companies have gone to court over promises made, and contractual commitments entered into, in the five-year plan. In the end, they did not refuse to pay; they were just making the point that, especially in respect of CCTV security coverage and broadband, which we all want to promote, the big companies simply have not delivered. I am sure that the Minister will tell me that is not directly the council’s responsibility, but it cannot collect a tax, as is its duty, knowing full well that it will not be used for the purposes for which it was raised. Again, we do not know where that money has gone or what it is doing.
Does the Minister not think that there is something a bit wrong with Coventry council? I do not understand how we have reached a position in which small BID companies, which allegedly voted for the schemes—although the fact that they went ahead on the basis of such a small majority is scandalous—are close to open revolt. I am pleased to say that I have been invited to a meeting with the BID chairman and an acting chief executive to see whether we can get a rebate or, preferably, a re-ballot. Would the Minister be good enough to look into that? The re-ballot might be more difficult, but what about a rebate? Those small companies pay 1.5 per cent. on the business rate—even at this time, in the depths of a recession—for services that they are not getting. I cannot understand how the council can be in such financial schtuck, given that we have increased our contribution. Nor can I understand how it has got itself involved in the BID programme, which is nothing but a disaster. It would be good if my hon. Friend responded to both those points.
It is a pleasure to serve under your chairmanship, Mr. Amess, as I have done quite a few times now. I congratulate my hon. Friend the Member for Coventry, South (Mr. Cunningham) on securing this important debate. I greatly enjoyed his robust, focused analysis of the problem. I also enjoyed the contribution from my hon. Friend the Member for Coventry, North-West (Mr. Robinson), who repeated and extended that argument.
The Government have a very good track record of investment in local services. In our first 10 years in office, we increased total Government grant by 39 per cent. in real terms, which provided a full decade of above-inflation increases in Government grant for authorities overall. That contrasts markedly with what my hon. Friend the Member for Coventry, South said about possible proposals from a future Conservative Administration of a real-terms 1 per cent. cut in local public services, which would have a devastating impact on the delivery of services on the ground for good, decent, hard-working citizens, such as those in my constituency and in Coventry.
This year, the settlement received by local government as a whole has been a good one. Not only have we continued to increase funding to a level that allows local authorities to deliver effective services at an affordable cost, but we announced last year the first ever three-year settlement for local government in England, precisely to give authorities the ability to plan for the longer term to ensure that they have schemes and strategies in place. That, ultimately, will result in cost savings.
As my hon. Friends know, the House approved the second year of the three-year settlement for local government on 4 February 2009. This Government have worked closely with local authorities in the context of the comprehensive spending review—I am looking at my hon. Friend the Member for Coventry, North-West, who is a distinguished former Treasury Minister—to examine all pressures on councils up to 2010-11 and how to manage them. Over the three-year settlement of the CSR period, we are providing an additional £8.9 billion to local authorities—an average 4.2 per cent. cash increase per year in funding. Again, I contrast that with the proposed 1 per cent. slash in local public services advocated by Conservative Front Benchers.
We expect those increases to be reciprocated by local authority efficiency gains, and we have made clear our intention to realise a further 3 per cent. a year through this route. Delivery of £4.9 billion net cash releasing savings by 2010-11 is key to enabling local authorities to meet those pressures. To help, the Government will provide an additional £185 million funding to support local authorities to achieve that value-for-money ambition.
Will the local authority be allowed to keep any Gershon savings?
As part of the co-ordination package, local authorities will be allowed to reallocate net cashing savings into front-line services. There should be no impact on the delivery of services provided to the citizens of Coventry and elsewhere. I hope that that clarifies matters.
It is good that the Minister can clarify that point so precisely, but why, therefore, is Coventry cutting front-line services so severely?
As a result of my hon. Friends’ excellent contributions, I shall certainly look into the matter.
The theme of my Department’s policy is to ensure that local authorities have the powers and priorities in place to respond to local needs. It is also up to them to ensure that they are accountable to the electorate. I am particularly keen to move away from time-limited funding streams for certain things. More grants should be mainstreamed, so that councils can take local circumstances into account. We have done an awful lot on that: for example, we have mainstreamed some £5.7 billion of grants over the CSR period and removed ring-fencing and other controls.
We have also delivered a reduced number of performance indicators, as promised in the local government White Paper. To be frank, we are setting local government free to ensure that it can do what it needs to do locally to deliver first-class services to its citizens at an affordable cost. I thank my hon. Friends for holding local government to account and for challenging it as much as possible in Coventry.
We have also said that there is no excuse for excessive council tax increases. The Government have made it clear that we will not hesitate to use our capping powers to deal with excessive council tax increases in future years, and we will require authorities to re-bill if necessary.
Coventry city council received an increase of £5.376 million in its formula grant in 2008-09, a 3.8 per cent. increase on the previous year. As my hon. Friends have said, in 2009-10 it will receive an increase of £4.134 million, an increase of a further 2.84 per cent. The provisional figure for 2010-11 is an increase of £3.614 million, or 2.4 per cent. Therefore, over the three years to 2010-11, we are providing the council with an additional £13.124 million. The 3 per cent. of cashable efficiency savings that we expect local authorities to deliver in 2009-10 will make an additional contribution of up to £11 million. By comparison, the city council anticipates a £4.2 million increase in its budget requirement for 2009-10.
In the real world, it is fair to say that local authorities face some challenging pressures from declining revenue streams—for example, there is a marked reduction in planning and building control income. They also face an increase in housing benefit and social care case load and an increase in energy costs. Coventry city council is no different from other local authorities in those respects. As a result, it has identified £9.3 million of efficiency savings in its 2009-10 budget, which has resulted in the loss of 190 jobs. However, the local authority has informed my Department that some of those posts are vacant.
Every council is required to make tough decisions. Coventry, like other local authorities, has to balance staffing levels against other savings to deliver the best possible services in the current economic circumstances. I say to my hon. Friends—they may want to challenge their local authority on this matter—that the latest Local Government Association survey is very interesting, particularly on the impact of the recession. It shows that 84 per cent. of councils do not plan to cut jobs as a result of the downturn, and some 77 per cent. are actively recruiting. I am fully aligned with my hon. Friends here when I say that efficiency savings should not and do not entail service cuts. Between 2004 and 2008, councils made £3.45 billion of efficiency savings. That is the equivalent of £193 off the average band D council tax bill. Councils were free to use the savings either to cut council tax or to reinvest in local services.
Up and down the country, local authorities are innovating to save money and help us through the recession. We know that some local authorities are making considerable progress in reducing the additional pressures that they face: for example, more than 50 per cent. are making efforts to reduce petrol consumption, and more than 60 per cent. are succeeding in reducing electricity consumption, helping to save not only the planet but money for hard-working council tax payers. Compare that with the mere 16 per cent that say they expect to make service cuts. Again, I say to my hon. Friends that they should take those figures back to Coventry city council.
If I have the figures right—I am sure that the Minister will correct me if I am wrong—84 per cent. of councils are making no cuts because of the recession and some 77 per cent. are recruiting. We will go back to the council on that. On his third point, when he again said that we could go back, what we were trying to say was that as MPs, our job is very much here. He has a whole Department and his own leadership to use in getting to the root of the problem. We will do our bit, but I hope that he does his, too.
I believe that my hon. Friend has done his bit in bringing the matter to our attention in this Chamber. He has done an excellent job in making Coventry city council’s politicians accountable for their whole strategy and their financial delivery programme. He has tried to ensure that they can make efficiency savings, while providing the best possible services for local people.
To my mind, energy costs illustrate the fact that cost pressures are not all one way. The latest Audit Commission report identifies that fuel costs dropped by almost 12 per cent. in July to October 2008, to below April 2008 levels. Since then, petrol prices have dropped even further, by almost 30 per cent. from their peak in July last year. Such price falls are already being fed into the cost of other goods and should impact on energy bills in due course. I hope that local authorities will take advantage of that.
The level of inflation expected in 2009-10 also means that the Government grant will go further than it would otherwise have done. Although I accept that there may now be additional pressures on local government as a result of rising costs and falling revenue streams—Coventry is no different from any other local authority in that respect—I have to say in the strongest possible terms that those authorities that demonstrate good leadership and financial management are finding innovative ways of dealing with such pressures.
In recent years, the city council has been fortunate in the expertise on which it has been able to call. The previous chief executive was instrumental in developing a strong local strategic partnership and agreeing a robust local area agreement. I understand that she has now moved on. I know that my hon. Friends would not want to attach any criticism to officers, who are merely carrying out the instructions of their political masters and mistresses. We need to challenge the political direction of the authority to ensure that it delivers efficiency savings—the theme of today’s debate—provides good value for money in a time of recession and maintains first-class services.
I have touched on flexibility. The watchword of Government policy is flexibilities for local authorities. I would like to see Coventry capitalise on the flexibilities that we have given councils. For example, I know that it has agreed to revisit its local enterprise growth initiative package to respond to an increasing number of small-scale redundancies with smaller employers. I was disturbed to hear what my hon. Friend the Member for Coventry, North said about the council imposing a 1.5 per cent. increase in rates while providing no services. I promise that I will take that point away and respond to my hon. Friends in due course.
I also know that council officers are working closely with the new Homes and Communities Agency to find innovative ways of maintaining regeneration, delivering affordable housing and minimising the impact on mortgages. The council will also need to make effective use of the value for money strategic partnership that it has developed with PricewaterhouseCoopers in response to the Government’s transformation agenda. If properly managed, that should realise up to £5 million of sustainable savings per annum by 2010 without any cuts to front-line services.
My hon. Friends suggest that the city council is struggling to deliver an appropriate level of service to its citizens within the agreed budget. I agree that challenge and accountability are necessary to ensure that political priorities are considered. We in central Government have set in place sufficient financial support and flexibilities to enable Coventry city council to maintain services. The fact that other councils are doing just that is testament to what I have been saying. We will continue to support local government through these difficult times, but we look to local authorities such as Coventry to take the right political and financial decisions and to demonstrate the best possible leadership to minimise the impact on services that has been the subject of this excellent debate.