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Efficiency Savings

Volume 507: debated on Tuesday 9 March 2010

2. What guidance he has issued to local authorities on achieving efficiency savings without reducing front-line services. (320997)

I asked an expert taskforce, chaired by Sir Steve Bullock, mayor of Lewisham, and Sir Richard Leese, leader of Manchester city council, to look at how best to achieve efficiency savings and protect front-line services. Their report “Putting the Frontline First: Meeting the local government challenge” was published on 1 March. It sets out 10 decisive steps that councils can take to achieve efficiency while delivering high-quality local services. Local people will rightly be intolerant of any council if they are told that front-line services like care provision, libraries or youth services will be cut because it has failed to carry through all the recommendations made in our experts’ taskforce report.

Will my right hon. Friend comment on the disgraceful situation at the now Conservative-led Lancashire county council? It has received a 5.1 per cent. increase in Government grant but has cut the budget by 3 per cent., with the likelihood that 200 to 300 jobs will now be lost. The council is also failing to support the staff at the National Football museum who need an agreement to be reached between Lancashire county council and Manchester city council so that the museum can remain at Preston and in Manchester as well.

First, may I pay tribute to my hon. Friend’s sterling efforts to support the football museum and to retain it for his constituency? He makes an important wider point, because some local authorities are trying to suggest that the cuts that they are making to front-line services in some way reflect cuts in central Government finance or the wider economic circumstances. As he has rightly highlighted, English local authorities received, on average, a 4 per cent. cash increase for the coming year, and the cuts that are being made reflect the decisions of Tory and Liberal local authorities to make them at a local level.

Will the Secretary of State join me in congratulating Hammersmith and Fulham council on delivering a council tax cut for the fourth year in a row while preserving its four-star quality rating for services? Will he also use this occasion to apologise to the leader of the council for saying that the leader had allegedly said of council tenants, “These people are hard to shift”? That is totally and utterly untrue, and it is time that the right hon. Gentleman apologised for that mis-statement.

I prefer the records of the eight Labour London local authorities that have frozen council tax while protecting front-line services. He will be aware of the impact of local decisions to raise charges for elderly people and of housing strategies that seem to be designed to deny security of tenure to people who have long enjoyed secure local housing. I do not share his assessment of his local authority’s record—indeed, far from it; I think it is a warning that should be broadcast to tenants up and down the country, and I will do my very best to make sure that it is.

Ryanair was recently voted the least family- friendly company in the country. In the light of that, what is my right hon. Friend’s view of local authorities that seek to make efficiency savings by instituting two-tier services, with a no-frills basic?

I worry greatly about councils that are proposing what they call a budget-airline or Ryanair approach to local government, with services stripped down to the most basic level. The only people who enjoy decent services are those who can afford to pay for them twice—once through the council tax, and once through charges. For example, I was told the other day that Wolverhampton council has made it part of its standing orders that every service should be charged at a full-cost recovery rate, unless specifically authorised otherwise by a cabinet member.

I think that that approach will leave large numbers of people on middle incomes unable to enjoy decent council services. It is a shame that it is being championed by the Opposition.

The Secretary of State seems very keen to talk about this year’s Budget settlement, but less keen to talk about Government grants looking ahead. What guidance has he received from the Treasury about the scale of future cuts that councils will need to make? Does he really believe that efficiencies alone will be able to halve the deficit?

I certainly believe that the budget reduction programme set out by my right hon. Friend the Chancellor of the Exchequer in the pre-Budget report is a credible one. It can be delivered in local government without damaging front-line services, provided that the hard decisions are taken to deliver efficiencies. My Department set out in the PBR where we expect savings to be made through operational efficiency and through savings on particular local government services. That can be done so that members of the public see their services protected and improved where they use them.

The problem is that the Institute for Fiscal Studies thinks that that is simply not possible, and that deep cuts will follow in years ahead. Given that no credible detail is forthcoming from either the Government or those on the Conservative Front Bench, should the right hon. Gentleman not be doing the responsible thing and advising councils to prepare for the worst-case scenario pointed out by the IFS—that is, reductions of up 23 per cent. over four years from 2011?

The hon. Lady is wrong on both counts. In reply to an earlier question, I said that we have published a report from two respected local government leaders on precisely the measures that local government should be planning to take now to make the most efficient use of the available resources. As the House knows, however, the reality is that there has not yet been a comprehensive spending review for the next three-year settlement because we have been through a year of the most extraordinary economic change. The policies that we have implemented have seen the Government, the country and local government through the crisis, because we rejected the calls from the Opposition to cut our spending last year. It would have been irresponsible to try to project exact levels of spending for four years from today, given the uncertainties of the past year. Clearly, spending plans will have to be set out, but the timing is a matter for my right hon. Friend the Chancellor of the Exchequer.

Given the levels of support that Birmingham city council has had from the Government over the past decade, why does my right hon. Friend feel that it has got itself into such a financial mess, to the extent that thousands of jobs are threatened and services to the public are being put at risk?

I can understand the concern of my hon. Friend and other Birmingham Members of Parliament. It is true that Birmingham has not received the highest rating, shall we say, from the Audit Commission, for the quality of its financial management. The record shows that it has been given resources by the Government for tackling worklessness, but that it has failed to devote them to tackling that problem. It is a shame that Birmingham’s Conservative-Liberal Democrat council is saying that front-line services will have to go, when issues about how the council manages its resources clearly need to be addressed closer to home.

Instead of shamelessly scaremongering, it would have been nice if the Secretary of State had acknowledged that local government has already had considerable success in delivering efficiency savings. Can he understand why councils feel so furious about being instructed to meet the £250 million shortfall in the Prime Minister’s latest commitment to personal care? The Government define a new burden as

“any new policy or initiative which increases the cost of providing local authority services.”

Will he explain which part of that £250 million is not covered by that doctrine?

It is a shame that the hon. Lady has not welcomed the fact that the Prime Minister’s proposals for free care at home for those with the highest needs involve the biggest single transfer of resources from the NHS to local government since the NHS was founded in 1948. It is a massive vote of confidence in the ability of local government to deliver the policy. I believe that the savings that local government is being asked to make can be achieved. As she herself has said, local government has proved its ability to make efficiency savings and to plough them into other front-line services.

We all want to see help for those who most need it. The question is where the money is coming from. The Government must be living in cloud cuckoo land if they believe that the £250 million bill for changes in personal care does not fall under the definition of an unfunded burden. Is it not the case that the efficiency savings earmarked for that policy will not materialise until 2012-13, yet the policy comes into force this year? Can the Minister explain to the House where the shortfall will be found, and whether the figure of £250 million is capped? If not, is it not the case that as well as being unfunded, the policy is uncosted?

In which case, Mr. Speaker, I will respond to the point that we all want to do something to help. I recall that when cross-party talks were taking place in an attempt to establish a consensus on social care, it was the Conservative party which broke out of those in order to launch a cheap-shot poster campaign, rather than try to address the serious issues that concern elderly people in this country.